Tigran Kalberer: Solvency II will have different impacts on different regions. We have seen quite a consolidation in Switzerland. We see companies as a non-life, getting more professional about their business. They value their business on a market-consistent basis. Suddenly, they understand what negative value high guarantees can have, and they see that a new business perhaps is not as profitable as they might have hoped for and start to think about things. On the non-life side, we have a large desire for non-life companies, because of Solvency II, to get more diversification. So we’re actually wondering how they can get access, let’s say, to life risks.
Typically, a non-life company thinks about the diversification angle alone and forgets that perhaps you have not only diversification, but also might have negative expected values, basically, that life companies struggle with in these times of low interest rates, with the high guarantees and might not be worth much and it might be a negative return on investment.
I don’t think that we will see a fast and quick move toward a consolidated market because companies first have to get used to this new world where you measure value market consistently where you really look at risk and risk capital. They’re actually not used to that. It will take a long time. In Switzerland it took 10 years until the whole concept was really embraced and people understood it. But then things are going to be happening.