In 2009, the European Council and the European Parliament adopted the Second Directive aimed at improving supervision on European insurance companies: Solvency II. The ‘total balance sheet’ approach, at which assets and liabilities are reported at fair market value, should provide supervisory agents a better insight on the financial health of insurers. Professor Antoon Pelsser, of Maastricht University, an expert on risk management, has conducted research on the asset and liability management of insurance companies. He shares his observations on Solvency II.
In 2010, the European Commission (EC) made a number of proposals concerning reform in the over-the-counter (OTC) derivatives market. The EC is of the opinion that OTC derivatives contributed to the worldwide contagion of the crisis in the American housing market. The results of the reform should deliver a safer and more effi cient OTC market in order to reduce these systemic risks.
The problem of inflation is nearly as old as currency itself, and inflation-linked products have been around for centuries as well. In this article, consultant Rogier Galesloot discusses the history of inflation-linked products and shows how inflation-linked bonds, swaps, and caps/floors can be of interest to an organization or institution looking to hedge against inflation.