Analysing Solvency and Financial Condition across AFM members in 2022

Analysis of Solvency statements for 2022

July 2023

The majority of Solvency and Financial Condition Reports (“SFCRs”) for 2022 have now been published and, as in previous years, AFM Associate member OAC has helpfully produced a summary of various metrics using the publicly available data for AFM members and other firms of a similar nature and size.

27 insurers have been included, with total assets of £9.8bn, the majority being members of AFM, and a summary of key metrics is outlined below:

  • Asset values have fallen by just under 10% over the period reported. This reflects the stockmarket downturn and higher bond yields. The impact of this is to reduce insurers’ own funds but also to reduce their exposure to market risk.
  • Risk margins have reduced significantly this year owing to the large increase in risk free rates. This is ahead of the material reductions to the risk margin proposed under the Solvency UK reforms which are now expected to come into effect before the 2023 year end.
  • With the fall in own funds more than offset by a fall in technical provisions, solvency ratios have improved over 2022. They will improve significantly further assuming the proposed changes to the risk margin are implemented.
  • There is an expectation that the increased capital resources brought about by the proposed reforms will allow more investment in “productive assets” such as social infrastructure and green energy.

For the full report, click here.

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