With just over a year before the Solvency II implementation, the insurance industry is beset with uncertainty, a KPMG report claimed today.
Its report, Public reporting in a Solvency II environment, published today, KPMG found firms fear that guidance or regulator positions could change ahead of the capital rules implementation and are keen to avoid disclosing either too much or too little information as a result.
KPMG's report looked at 11 multinational insurance companies in the UK and continental Europe. It stated that: 'Firms are increasingly considering what SII disclosures are needed before SII implementation so they can manage expectations and educate the investor and analyst community.
'Firms are weighing up what they should reveal and when. We see greater appetite from analysts for some of SII results as implementation draws closer.
'But overall, we see concerns. Firms are concerned about disclosing too much, or disclosing the wrong thing, so they have to backtrack if guidance changes.'
KPMG said own funds, SCR (Solvency Capital Requirement) and surplus are the most common metrics that firms intend to disclose, both before and after SII implementation.
It also said this was to be expected given that these are the basic metrics for SII and are also required for the Pillar III Solvency and Financial Condition report.
Elsewhere in the report, KPMG found that nine firms currently report embedded value - present value of future profits plus adjusted net asset value.
Five firms plan to stop reporting embedded value, four plan to stop after FY15 disclosers and one will stop after FY14.
KPMG said most firms plan to drop embedded value after FY15, those that will continue said it would be less important or that they would disclose it less frequently. It noted that it was less clear what would replace embedded value.
Additionally, three firms are taking the opportunity to reconsider how they define 'cash' post implementation of SII.
All firms surveyed intend to continue reporting their new business metrics and in particular, new business value.
And out of all of the firms surveyed, nine do not plan on changing their approach to determining IFRS (International Financial Reporting Standards) liabilities ahead of IRFS 4 phase 2, with two remaining undecided.
