On 6 August 2018, the Insurance Authority (IA) of Hong Kong released the technical specifications for the Second Quantitative Impact Study (QIS 2) associated with its developing Risk-based Capital regime (HKRBC). Following the release of these specifications, life insurance companies in Hong Kong will need to submit QIS 2 results by 30 November 2018 with a valuation date of 31 December 2017. The IA has emphasised that QIS 2 is an important step to evaluate holistically the solvency positions of both individual insurers and the industry as a whole, and to define the key criteria for risk capital.

In this e-Alert, we give an overview of QIS 2 and highlight some of the key differences from the First Quantitative Impact Study (QIS 1) that include:

• Stochastic valuation for Time Value of Options and Guarantees
• Margin Over Current Estimate
• Correlation matrices for risk aggregation
• Matching adjustment