Legal & General reported it had improved its Solvency II position, with a surplus of £7bn and a coverage ration of 188 per cent.
Under the Solvency II rules, all insurance companies must hold a risk margin above their best estimate liabilities.
This risk margin is designed to allow a theoretical institution to take on the risks of the company after a one-in-200 year event occurs
The insurance provider’s last update, at its full year results, showed a surplus of £5.7bn and a coverage ratio of 171 per cent.
L&G described its capital balance as ‘strong’ and ‘high quality’, and said this was reflected by its AA-credit rating with Standard & Poor’s
The update followed complaints from the insurer that the regulator was “effectively overruling the judgment of the board’ by setting stringent capital requirements.
L&G said in December that under new Solvency II rules, the Prudential Regulation Authority is “effectively overruling the judgment of the board” when it comes to setting capital requirements, and is taking a more “directive” approach when approving transactions.
“Boards do not feel empowered to make commercial decisions without reference to the regulator,” it said. The comments were made to the Treasury select committee., which was inquiring into the future of Solvency II rules after Brexit.
Solvency II rules were introduced at the start of last year, having taken more than a decade to create.
rosie.murray-west@ft.com
