In the case of annuity firms, the reforms are reliant on our confidence in the level of MA benefit taken – and hence on the fundamental spread being appropriately calculated. More broadly, in addition to the use of safeguards where appropriate, the reforms are contingent on the continued effectiveness of a central pillar of the Solvency II regime, the quality of firms’ own risk management. That will remain at the core of firm-to-supervisor dialogue and engagement. Our overall work on potential Solvency II reform has already benefited from the effective engagement as part of the pre-consultation phase of the review. Following the publication of our DP at the end of April, we are requesting more information from firms and I am looking forward to our next series of meetings in order to hear the views of firms, their investors and other stakeholders. Thank you. I am grateful to Saoirse Carberry, Craig Turnbull, Alan Sheppard, Avni Gangadia and Miranda Hewkin Smith for their assistance in helping me prepare this speech. 1. Review of Solvency II: Call for Evidence | HM Treasury 2. Brave new world - speech by Sam Woods | Bank of England. 3. Four Rs: Creating the conditions for long-term sustainable growth in the life annuity sector – speech by Charlotte Gerken | Bank of England 4. The Prudential Regulation Authority’s approach to insurance supervision | Bank of England Section 1 explains the PRA’s objectives. 5. At YE21 ‘Investment and cash excluding participations’ - Insurance aggregate data report | Bank of England, 6.
Once the existing distribution reserve has been depleted, we will most likely have to reduce our profit distributions significantly. Cosa initiative The people’s initiative “National Bank profits for the Old Age and Survivors' Insurance Fund (AHV/AVS)” – better known as the Cosa initiative – proposes allocating the SNB’s profits which remain after deducting the CHF 1 billion for the cantons to the Old Age and Survivors’ Insurance Fund (AHV/AVS). An obligation of this kind would impact on the National Bank’s independence, putting it under political pressure to distribute higher profits, which in turn would only be possible were the SNB to expand the money supply, reduce the currency reserves or take greater risks. This would undermine the SNB’s credibility and freedom of action as well as compromise the stability of the Swiss franc. The National Bank’s most important task is to conduct monetary policy geared towards price stability. In order to do this, we have to be able to take monetary policy decisions – even in difficult situations – without political pressure or the obligation to generate a return. 2  BIS Review 86/2005  BIS Review 86/2005  3