CAA information note on technical interest rates applicable to reinsurance companies.
Rates Applied
Proposed would re-fix effective Oct. 1, 2020, technical interest rates used in allocation.
As part of financial balance to the provisions for fluctuation of reinsurance companies.
After review of interest rate developments, issued a draft circular amending LC 16/10.
After consulting with AGERE, decided to postpone final decision until mid-Sep. 2020.
Delay
This delay of decision will allow LUX CAA to continue to observe the insurance markets.
Briefing note is to inform of CAA intentions for proposal of a new circular, if applicable to be implemented Oct. 1, 2020, and allow firms to begin the necessary preparations.
For account closings until Sep. 30, 2020, technical rates in CAA LC 16/10 still apply.
Circular revised technical interest rates applicable to reinsurers, from Oct. 1, 2020.
Compared to Feb. 2020 proposals a downward revision of the rates for USD, GBP, NOK currencies has been adopted, by virtue of the market movements that have occurred.
Dec. 2022 Circular Letter 22/23
On Dec. 22, 2022, LUX CAA issued circular letter 22/23, amending the circular letter 20/16 relating to the technical interest rates applicable to reinsurance companies.
Document dated Dec. 22, 2022, received from LUX CAA Jan. 4, 2023, added Jan. 7.
All currencies rates revised upward due to the market movements over the past year.
New rates established for the EUR currency at 1.5%, for CHF at 0.75%, for DKK at 1.25%, for SEK at 1.5%, for GBP at 2.25%, for NOK at 2.75 %, for the USD at 2.75%.
The new rates will be applicable for the accounting closures from Dec. 31, 2022.
Dec. 2023 Amending Circular Letter
On Dec. 21, 2023, LUX CAA issued circular letter 23/16 amending the circular letter 22/23 relating to technical interest rates applicable to reinsurance companies.
Upward revision of rates for all currencies was retained due to market movements.
New rates will be established for the EUR currency at 3.00%; for the CHF currency at 1.25 %; for the DKK currency at 2.75%; as well as for the GBP currency at 4.00%.
For the NOK currency at 3.50% (compared to 2.75% previously), for the SEK currency at 2.50% (compared to 1.50% previously) and for the USD currency at 4.00%.
The new rates will be applicable for the accounting closures from Dec. 31, 2023.
Nov. 2024 Circular Letter 24/12
On Nov. 22, 2024, LUX CAA published circular letter 24/12 amending circular letter 23/16 on the technical interest rates applicable to reinsurance undertakings.
Updated list of rates applicable in the various currencies to be used by reinsurance undertakings for calculation of financial balance attributable to fluctuation in claims.
For the EUR currency at 3.00%; CHF currency at 1.00%; SEK currency at 2.25%; NOK at 3.75%; DKK currency at 2.50%; USD currency at 4.25%; GBP currency at 4.00%.
The new rates will be applicable for the accounting closures from Dec. 31, 2024.
