Strategic implications arising from Solvency II

Strategic implications arising from Solvency II

The insurance industry is growing increasingly complex, with challenges created by the continuing low interest rate environment, increasing competition and pressure on pricing combined with disruption from innovation and new entrants. Following on from the recent Internal Model Approval Process notifications, KPMG has considered the strategic implications that we believe will arise from Solvency II when it goes live on 1 January 2016.

Strategic implications arising from Solvency II

Key highlights:

  • The sector has responded to these underlying market dynamics with a wave of mergers and acquisitions, cost cutting and strategic rationalisations over the last 12 months. We believe that Solvency II will act as a further accelerator of this kind of activity.
  • A number of trends are expected to develop across life and non-life sectors including; portfolio rationalisation, simplification, disruption, diversification and risk mitigation, capital market solutions, balance sheet optimisation, legal entity restructuring and infrastructure.
  • Agility and speed of execution will be key attributes of the insurers that are leading the sector in two years’ time.

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