An analysis of protected cell companies under Solvency II

Abstract

Purpose This study aims to analyse how Insurance Protected Cell Companies are to be influenced by the new Solvency II EU legislation, which is to be implemented on the 1st of January 2016. Design To arrive at the final conclusion the study was split into five sections: Chapter 1: An introduction and explanation of PCCs’ and Solvency II; Chapter 2: An analysis of the study through previous literature; Chapter 3: The research methods and methodology applied; Chapter 4: The presentation of the findings; and, Chapter 5: The conclusion together with recommendations. Findings Solvency II will bring about positive improvements to PCCs and the third parties investing. Yet, challenges are dealt with too. It is true that PCCs benefit from economies of scale when compared to stand alone insurers, but such companies are still dealing with the issue of a rise in costs due to the implementation of Solvency II. Moreover, a number of PCCs are being challenged by the 20% capping on the own funds. Conclusion The findings led the researcher to one conclusion; overall PCCs under Solvency II will benefit from a number of advantages. Yet, like any other thing, challenges will be present too. Recommendations were also provided by the researcher on areas which need improvement or even further studies.