Zurich Reinsurance Company Ltd (ZRe), the reinsurance arm of global insurer Zurich, has been advised by the Swiss Financial Market Supervisory Authority (FINMA) that it must use an internal model over the standard model, prompting the reinsurer to apply for approval.
According to a section on the Swiss solvency test (SST) within the reinsurer’s 2017 Financial Condition Report, it is currently preparing to apply to FINMA for Internal Model Approval (IMAP), which is expected to reach FINMA by the end of October, 2018.
The Financial Condition Report notes that the wider Zurich Group expects to have the reinsurance unit’s approved internal model integrated within the overall company’s internal model framework.
In the fourth-quarter of 2017, FINMA approved ZRe’s use of a transitional internal model, which has been used to produce the 2017 solvency results, and, which the report says is consistent with that used for 2016 year-end and also for the preceding insurance license application to FINMA.
As at January 1st, 2018, ZRe’s SST ratio for 2018 was 430% and 808% for 2017. The report also reveals that as at January 1st, 2018, ZRe’s risk bearing capital and target capital were $404.9 million $107 million, respectively.
While as at January 1st, 2017, the reinsurer’s risk bearing capital and target capital were $432.1 million and $68.2 million, respectively.