December 9th 2016
Re: Review of the standard formula Solvency Capital Requirement
Dear Title Surname,
The Central Bank of Ireland ("Central Bank") has recently carried out a review of the solvency capital requirement ("SCR") calculations for a number of life insurance companies. This has highlighted some key control issues relating to these calculations. The purpose of this letter is to bring these issues to your attention so that you can ensure that they or similar issues are not present within your own firm. The general findings were as follows:
Inadequate controls: Our review has evidenced inadequate controls and testing around manual spreadsheets used in the SCR calculations. Additionally, the Central Bank has evidenced a large number of instances where the model parameters have been updated incorrectly. There have also been examples of wrong currencies being assumed for funds which understated the SCR results.
Not meeting Solvency II regulations: There were a number of instances w
…