BaFin - Navigation & Service

Go to:

Stand:updated on 01.01.2016 | Topic Solvency Solvency I – Own funds and own funds requirements

Section 214 of the German Insurance Supervision Act (Versicherungsaufsichtsgesetz – VAG) lists own-fund items eligible for covering the Solvency Capital Requirement. The own funds of Pensionsfonds are governed by a German regulation.

Solvency Capital Requirement (SCR) and Minimum Capital Requirement (MCR)

Section 213 of the VAG stipulates that small insurance undertakings within the meaning of section 211 of the VAG and death benefit funds must at all times have available own funds in an amount equivalent to the SCR specified by a regulation pursuant to section 217 sentence 1 no. 1 of the VAG. The SCR for Pensionskassen is governed by a regulation pursuant to section 235 sentence 1 no. 1 of the VAG. Provisions on the financial adequacy of Pensionsfonds are contained in section 238 of the VAG; the respective regulation will be issued pursuant to section 240 sentence 1 no. 9 of the VAG.

One-third of the SCR constitutes the MCR.

Except for Pensionsfonds, the calculation and the level of the SCR as well as the minimum amount of the MCR applying to the individual lines of business are governed by the Capital Resources Regulation (Kapitalausstattungsverordnung – KapAusstV). The Regulation on the Supervision of Pensionsfonds (Pensionsfonds-Aufsichtsverordnung – PFAV) applies to Pensionsfonds.

The SCR for all lines of business except life insurance is calculated on the basis of the higher of two indices: the premium index (annual premiums) or the claims index (average claims expenses incurred during the last three financial years).
The SCR of life insurance business is primarily calculated based on the amount of the premium reserves and risk capital. On this basis, the SCR is calculated using a factor-based approach. The same applies to Pensionsfonds to the extent that they are guarantee schemes, which bear the risks themselves.

The Capital Resources Regulation also contains specific provisions for Pensionskassen and death benefit funds.

Did you find this article helpful?

We appreciate your feedback

Your feedback helps us to continuously improve the website and to keep it up to date. If you have any questions and would like us to contact you, please use our contact form. Please send any disclosures about actual or suspected violations of supervisory provisions to our contact point for whistleblowers.

We appreciate your feedback

* Mandatory field

Publications on this topic

Format Article Erscheinung: from 18.10.2021 De­ferred tax­es: In­sur­ers must pass a post-stress recog­ni­tion test – a dou­ble chal­lenge

Deferred taxes can mitigate own funds losses – specifically if they change in a stress scenario. If this results in deferred tax assets, insurers must pass a post-stress recognition test. And this is no simple task, as BaFin has established.

Format Article Erscheinung: from 16.09.2021 De­ferred tax as­sets re­quire recog­ni­tion test

Insurers must include deferred taxes in their Solvency II balance sheets, and they are required to provide evidence to justify the recognition of deferred tax assets. But, as BaFin has established, they are not always able to do this.

Format Article Erscheinung: from 13.05.2020 Well-found­ed, not ar­ti­fi­cial­ly con­struct­ed

Some insurers can only meet the solvency requirements under Solvency II with the help of transitional measures. On 1 January 2032 at the latest they must be able to do it alone. They document their progress towards this goal by submitting forecast calculations to the supervisory authority. Now BaFin is specifying uniform assumptions for the development of risk-free interest rates.

Format Article Erscheinung: from 25.02.2019 Re­port­ing of vari­a­tion anal­y­sis tem­plates

An initial review by BaFin shows that the Solvency II own funds of insurers are increasing and that the undertakings can provide conclusive explanations for most of the variations in own funds.

Format Article Erscheinung: from 09.10.2018 Sol­ven­cy II: Qual­i­ty progress in sol­ven­cy and fi­nan­cial re­port­ing

Insurance undertakings subject to Solvency II had to publish a Solvency and Financial Condition Report (SFCR) for the second time this year. A random survey on the quality of the reports confirmed BaFin's expectation that more experience with disclosure would have a positive effect on the quality of the SFCRs.

All documents