For quite a long time the European Supervisory Authorities have been discussing a new approach for the calculation of Solvency in Insurance Companies, in both Life and General classes, in order to raise policyholder’s protection, to provide a better guarantees in the solvency of companies and to ensure more regular control in Europe. Such approach will establish a continuous process of risk management completely changing the existing management system.

This project, called "Solvency II", will imply a specific rules and/or appropriate standards to be followed. Apart from compliance rules that will be imposed by the law, insurance companies’ problems connected to Solvency represent a fundamental need that must be dealt with. The operative answers to such problems have to take into account other specific requirements of the companies such as market competitiveness, increases of shareholders’ profits, aspects that are strictly connected with management improvement and the optimization of timing and executive modalities of the insurance processes. The new approach’s goal, through a continuous checking progress is to give companies’ top management and shareholders specific information relating to:

	Risk monitoring and related calculations
	Minimum solvency level, with both standard and internal models
	Capital that is necessary to face the minimum solvency level
	ROE
	Risk Management improvement
	Impact about the portfolio’s profitability

The Italian Insurance Authority, ISVAP, by the rule n. 577/2005, anticipated "Solvency II", and introduced the role of Risk Manager. Crenca & Associati has performed several assignments in this field, including outsourcing in Life and General Insurance. In fact, Crenca & Associati has a multidisciplinary staff, that can deal, partially or totally, with all the tasks from identification and mapping of risks, to calculation by quantitative models, standard and internal, with stress tests in each.

Moreover, Crenca & Associati constantly offers assistance in compilation of various documents QIS, in order to give useful information for the development of the Solvency II project.

We can add other considerations, specifically in reporting and the introduction in the Italian law of the New International Financial Reporting Standard (IFRS), already known as IAS (International Accounting Standard), which will develop in two phases.

The standards, based on the Fair Value concept, involve significant change in management and balance-sheets of insurance companies, in particular, for the products’ classification (including also the unbundling and embedded derivatives approach) and for Assets and Liabilities evaluations applying specific techniques, analysis and elaborations like Liability Adequacy Test and Shadow Accounting (IFRS4).

Crenca & Associati, drawing from our experience in the national and international markets, supports Life and General Insurance Companies in all the new aspects related to the implementation of the New International Accounting Standards. Another way we do this is prospectively through specific modelling, in order to evaluate technical reserves at fair value (stage II and ideal passage to Solvency II).

Another area in which Crenca & Associati has a wide knowledge base is the evaluation of Companies’ obligations through a defined benefit plan according to the International Accounting Standard IAS19.

This evaluation has been frequently applied to the Termination Indemnity (TFR), extending also in other even more complex accrued funds in order to finance future deferred benefits. In this field, Crenca & Associati has already faced the problems related to destination of TFR into a Pension Found. Moreover, Crenca & Associati has accrued much experience in the evaluation of stock option plans, taking into account the indications supplied by the International Accounting Standard IFRS2, in the financial evaluation according to the International Accounting Standard IAS39, and in the evaluation of leasing operations related to International Accounting Standard IAS17.