 I was going to give a lengthy introduction explaining where Gabriel came from and where he's going to. And then I look around the room and I realize that everybody knows the importance of Europa, everybody knows the effectiveness of Gabriel Bernardino, and it must be effective because he got to bring you for a second term. My sins, yes. But even though you came from Portugal, I mean we on the Atlantic periphery of Europe, we sometimes can make the breakthrough into... Oh yeah. Gabriel, it's an honour and a pleasure to have you here, and I'm not going to say anything more and ask you to proceed to tell us what you want to tell us about insurance and insurance regulation in Europe. Very good. Thanks a lot. And stand up or sit down, whichever you like. Thanks a lot Patrick, and thanks a lot for the invitation. It's really always a pleasure to be in here and to be in Dublin, of course, I was telling Patrick, this is a place where you smell professionalism in insurance, so it's very good to definitely be in here as someone that likes, of course, otherwise I wouldn't be doing this, I like insurance and pensions of course. The presentation on today, I'll put a couple of slides and just to try to explain you a little bit where are we and what are we doing in a number of areas. And of course, the title there is related to systemic risk, but I'm going to talk a little bit more beyond systemic risk, I think that's important to understand what is going on right now from a micro and a micro supervisory perspective and how do we believe that we should complete the framework that we started with, of course, the development of Solvency to a number of years ago. So just a couple of elements, if I can go back. First on systemic risk and the macro potential policy, so to explain a little bit our views in this area, which is an area that have been of course dealt with also internationally and where there is a lot of, I would say, evolution, then recovery resolution, some points about insurance guarantee schemes and of course, happy to have questions afterwards. So in terms of systemic risk and macro potential policy, we have been of course in the insurance sector confronted with all the discussions about to be to fail and about systemic risk in the sequence of the crisis. And what it was obvious was that in the banking side, there was a lot of already literature, research, discussion, definitions, understanding, and the insurance sector that was definitely not the case. So we entered in all this, I would say, post-crisis scenario with, I would definitely say, a lack of an overall narrative about what is systemic risk in insurance, what does it mean, and this element related to macro potential policy. And so after a number of years where definitely internationally also there was a need to deliver something and something was delivered, you know, there was a creation of global systemic insurers with, I would say, a number of good things being developed there. But we also believe at AOPA that we would need to take a little bit of a step back and think about what do we have in Europe and how can we have a proper discussion, more insurance based in these areas. And that's what we have done with the publication of these three papers, the first one where we pose ourselves the question, does insurance create or amplify systemic risk? The second one where we looked at the tools that we had already in place. So do we have already in place in our regulatory framework basically insolvency to already tools to deal with that? And thirdly, you know, are other tools needed? Is this sufficient what we have if we are not covering everything? What can we and should we devise? And so these were the three topics that we had in this area and we published a number of papers on these and now we are at a stage where we are trying to put more meat to the bones in terms of the concepts of the last part of it with the potential tools. These has evolved, of course, and right now I'm quite happy also that not only I think the idea that we had that this should be part of the Solvency to Review is there, definitely also from the commission side. I think that after some reluctance during some time, I think they recognize that. And this is part of the call for advice that they gave us for the review of Solvency to for 2020. I will not go in too much detail on this. This is very complex, but just to explain a little bit what was the mindset from our side. So we really tried to look at insurance from a perspective of what are the activities and what are the risks that really deliver or can be originators of systemic risk. And so this element of looking at the risk profile of the companies for us was always the point of departure. And then, of course, to look at what kind of sources we could have that could prompt the amplification or the creation of systemic risk. And we created this kind of framework where we have entity-based sources. So linked, of course, to the individual company and the failure that you can have of a company due to this business model and these activities. Activity-based sources, which, of course, you will have activities that have a greater potential to derive systemic risk. And finally, something that we also wanted to cover, which is what we call a behavior-based sources, which it's not related to one company individually or one group, but collectively. For example, if a group of companies that have a similar type of business model very much dependent on interest rates, for example, is that the case that collectively they will do the same thing in a certain point in time and this could create or amplify systemic risk. So this is basically the kind of framework that we had. And of course, we developed it and we tried to have a good narrative around this. The important point in here is that, and that's a big part of what we published, is that every time we looked at deeply, of course, we found some situations and some activities where insurers can create systemic risk, but most of the times was that they can amplify systemic risk due to the interconnectedness, of course, that insurers have, either through their investment policy in the financial markets, etc. So amplification being, I would say, a much bigger point. Then, in terms of sources, so I just mentioned that entity-based, the activity-based and the behavior-based, really important was to understand what should be the operational objectives that we should have with any kind of systemic risk framework or macro-potential framework. And these were the objectives that we defined since the beginning and I think that that's particularly important because if you look at them, this is where you start to see that there are some differences in relation to what is the usual construction and thinking on the banking side. It's to ensure a sufficient loss-absorbing capacity and reserving, and in here, of course, we all know insurance is usually about the reserving, you know, 80-85% of a balance sheet of a company is in there, so this is fundamental to understand the potential and for amplification of systemic risk. Secondly, to discourage excessive involvement in certain products of activities, and again, that's what we've saw, that there were certain types of products and certain types of activities that were really, really prone to the possibility to create or amplify systemic risk, so one objective of the framework should be to have tools to discourage that excessive involvement, then to discourage also excessive levels of exposures and concentrations, and this is a very important element because if we look back at many failures in the insurance side, very often it's about this, it's about concentrations, mainly on the investment side, and this is something that, of course, needed to be dealt with also in a macro basis. When you see, for example, not going in details, but when you see in certain countries, the huge own buyers in terms of honing of sovereign debt that you have also in the insurance sector, this is something where, of course, from a macro perspective and the potential amplification of systemic risk, this needs to be captured also in the insurance sector. And finally, of course, limit prosyclicality because especially in a risk-based regime like Solvency II, we know that some of the measures of capital insolvency will be inherently prosyclical in some ways during, of course, depending on the cycle, so how can we ensure that we have tools to capture that and limit that prosyclicality and finally discourage a risky behavior, a normal one? So these really operational objectives are very important from our side. Some of the elements of the tools that are already in place and that was something that was also interesting to develop because when we put in place and when we developed Solvency II and it took us 15 years, we are always, of course, focused on micro supervision. That's the essence of Solvency II. But of course, as we were developing a risk-based regime with these elements of volatility, et cetera, we created a number of tools that have a macro-prudential impact at the end of the day. And so we analyzed these very deeply and there's a number of elements already in the regime, be it in pillar one and with volatility adjustment, matting adjustment, et cetera, recovery periods, which are, of course, powers of the supervisors to take in terms of crisis situations, also some situations of prohibition or restriction of certain types of activities. So the regime has already a number of tools that have a direct macro-prudential impact. But then are other tools needed and are especially some areas where we definitely need more. And the conclusion was quite clear that especially in areas related to, for example, liquidity, we need more because, of course, different business models in insurance have different elements in terms of liquidity, of course. We need, that's what we believe, some more enhanced reporting and monitoring in that area. And also we need some intervention powers in terms of situations where really the manifestation of potential systemic risk is really heading up. And things like, for example, having a capital add-on that is possible today with the Solvency II regime, but specifically when we see that there is potential for amplification of systemic risk. There were other tools that we considered, but that we didn't believe from our side that they would be well adapted to a regime like Solvency II. For example, the traditional counter-seq capital buffer that you have in the banking side, we believe that that doesn't make so much sense in a construction like Solvency II. But definitely things like recovery plans and resolution plans, this pre-emptive planning to be ready if something happened. And so in a preventive way, we believe that this would be a fundamental point in this kind of macro-prudential regime there. So this is what we have done until now. We have been working since this, of course, and we're putting meat to the bones on these other types of tools that we will consult in a couple of months' time. And we want to integrate this in the discussion of the review of Solvency II. A little bit about recovery and resolution. What is the situation right now in Europe? The situation is clear. It's a patchwork. You know, you don't find two countries that have the same regime. You know, some countries have already developed some recovery and resolution regimes. Some have been more inspired from the banking side. Others created somehow different approaches. Many countries don't have anything. And especially what concerns me, and we have seen situations in real life, is that there's many situations where the supervisors don't have the proper tools to deal with the situation. So either they basically, you know, they kick the can down the road. There's other names for these things, of course. I don't want to use the word for barons, but sometimes we see that. We need to take actions, but there's always the, let's see if this works a little bit. Or because what? Because the only alternative that they have is liquidation. Is the winding up directive that exists? That is, of course, in the framework. There needs to be, of course, and there are tools that can be used in between. We have, of course, you know, the portfolio transfers that are used in many of these situations, which are, which is a tool that works and that can be used and it should be used. So we're not departing from scratch, but we need to have a minimum organization of this regime throughout Europe. And what we have done was really to try to look at what should be the minimum content of this recovery resolution policy. We sent an opinion to the European institutions already in 2017, I believe. We had some reaction from the commission, but not so enthusiastic at that point in time. But now I think that at least they are getting, I would say, more serious in this area, and we received now a real concrete call for advice to work on these also in the context of the Solvency to Review. Just to let you know a little bit on, I'm going back, on what we have in there. Just the building blocks, so the normal building blocks of recovery resolution, so we didn't invent any wheels in here. Preparation planning, early intervention, recovery resolution and, of course, cooperation in coordination between supervisors. The recovery we didn't need to, because we had already in Solvency to a framework for recovery, and so the Solvency to Lateral Intervention is already there. In terms of the particular elements, of course, very importantly, and this is the message, because I hear sometimes some industry colleagues telling, Solvency to already deals with this, we have recovery plans, yes, we have, but it's post, it's when things already are on the wrong side of the road. That's not what we want in here, it's pre-emptive. It's to have, of course, the possibility to have companies doing these assessments of recovery and resolution. And let me be very concrete and clear in here. The last point, proportionality. That's what we mentioned in there. We don't intend to have a regime of recovery and resolution that is across the board to all the companies in the same way. Personally, I believe that recovery plans should be part of a sound risk management. You do your own risk assessment, you also, having a recovery plan is just a natural extension of that. What am I gonna do if things go wrong? You look at different states of the world in the future. What am I gonna do, how I'm gonna do, what kind of actions that I'm gonna take. That's good business practice. Now, of course, bigger institutions, they are more complex, they will need to have it, of course, much more detailed and complex. Smaller institutions, they are smaller, they have less risks, they will do it much more simpler. So, proportionality is in there. In terms of resolution, I believe that really resolution planning and resolvability assessments should be more focused on the real bigger groups, bigger companies, the ones that have a lot of complexity of business, also cross-border, et cetera. So, I think proportionality should work in here. Early intervention, we don't want to reinvent the wheel, we want, we have solvency too. Solvency too has triggers, has already definitions in there, so we don't have any intention to define other hard early intervention triggers. What we want is to make sure that there is a logic and a sequencing that the supervisors will have sufficient information to start to monitor what happens in the companies when, of course, you're approaching to breach an SCR and then from there to have, of course, convergence of practices on how to do this. And this is very important because, let me be very honest, today we have already, in some countries, some of these limits already defined. There are some supervisors that said already, when you're approaching 130%, you need to say this and this and that, and we need to harmonize this throughout Europe in the internal market. Resolution, of course, the normal things, designation of a resolution authority, but a lot of flexibility in there because we believe that this is inherently different also from banking, so we could definitely have different possibilities of choice of the authority. To define very well the objectives of resolution. And in here, I think it's very important because contrary to the banking, where, of course, the focus is on financial stability and rightly so understandably, the way that we look at recovery resolution is to balance much more the principle of stability but also, definitely, policy of the protection. So this is linked then with the number of resolution powers, for example, where we say that, of course, that the resolution authority should have the power to bail in creditors. There should be a less ratio power of bail in policy holders only if all the other possibilities don't deliver a better treatment. So this issue of having a balance between the objectives of policy or the protection and financial stability, it's very important. The rest, of course, it's the natural things, the exercise of powers, of course, needs to be within a strong framework and strong safeguards, et cetera, et cetera. Just to say, for example, the situation, I know a country in Europe that where there is the power from the supervisor to bail in policy holders but it doesn't have the power to bail in creditors. It doesn't make any sense, it doesn't have logic. So we really need to take care to have a good convergence in this. And finally, of course, cross-border cooperation coordination, setting up crisis management groups, all those kinds of things which are already normal, normal practice. So just to say that what we are proposing is not a copy-paste of the banking regime. What we are proposing is to have a minimum framework of harmonization that could work within a single market where all the supervisors will have similar powers and similar tools and all the companies will be treated in a similar way and a level playing field, which is not what we have right now in this area. What about guarantee schemes to finalize? Well, the situation in there, it's even worse, I would say, because we have now, I think, the latest number that we had published, I think, 18 countries that have guarantee schemes. So you see already a good number of them that don't have anything. On top of that, there's huge disparity on the ones that have it. In between the scope, some have only for life, others have only for non-life, others have for two different types of schemes, different types of institutions. Some are guarantee schemes properly, others are companies that have been set up within arrangements. Coverage is also very different limits, type of course of coverage. The funding completely different, some are completely exposed, others have ex-ante elements also in there, and also the functions themselves. Some are integrated with the motor guarantee funds, others are completely separated. There's, it's definitely a patchwork right now. So it's huge fragmentation. And my strong point is that this really creates huge problems, not only in terms of the logic of having consistency and convergence and having all the European citizens at the end of the day having the same level of protection throughout the internal market. But definitely, when we see the cross-border business, this creates a lot of problems. And this is something that I believe, in the past, I remember to write a letter to the commission in 2009, I will still say ups, I believe, leading and raising this issue that this created issues in the internal market because of cross-border, we didn't have huge evidence at that point in time because of course we're still in solvency one. We didn't have the framework that we have today. Fortunately or unfortunately today, we have evidence. We have clear evidence that this doesn't work. And so what we have been doing is, we really decided at our board to touch upon this and Sylvia knows it was not easy, that because of course this is an area where there is a lot of, what's the word that I can, skepticism. That's a good word, but you understand. So we started really looking at this. We have a special group looking at the area of insurance guarantee schemes. We've done of course a stock take exercise and in that analysis of the pros and the cons of harmonization, we tried of course to be fair to put all the points there. But definitely, our view and this, I hope that we can proceed with that, is to have an harmonized approach to insurance guarantee schemes throughout Europe. A minimum harmonization, at least in terms of some of the elements that I mentioned there. In terms of the scope, in terms of the coverage, in terms of, you know, minimally, say in terms of funding also, to make sure that we can at least close this hole that exists in the internal market for the protection of consumers. We published a discussion paper last year. We're now working on, you know, hopefully an opinion that we can publish. In March, we'll have a good discussion, I would say, in terms of the way ahead. And I'm quite positive still that we can get there. But really the evidence, I think it's clear, you know. Just a couple of, these are public data, so I'm not saying anything that I shouldn't. But there has been a number of failures and actually some of them impacted in your market. You should know the names very well. You know, in 2014, Setanta, a company coming from Malta, approximately 75,000 policy holders, mainly here in Ireland, cross-border. No Maltese insurance guarantee scheme. And you had all these issues in relation to the way that your guarantee fund would, of course, be protecting this and the rules were amended, of course, to cover for third-party damages. A big case between Romania and Hungary in 2015, Astra, which was the market leader in Romania, that after a balance sheet review that EOPA made there, we found that they were not very well. So they went in liquidation. He was a big market leader. A lot of cross-border also in Hungary. And in here it was the complete opposite because the Hungarian customers, they were double protect, they were having double protection because they were covered by the home fund of Romania, but they also had, were covered by the Hungarian fund, which was, it shows that this is really not consistent. Finally, an agreement was reached between the two funds, but this was really also a critical situation. Then other situations. Gable insurance from Lichtenstein in 2016, 130,000 policy orders. Some of them in here, but not so big, if I remember. But again, the same thing. No Lichtenstein insurance guarantee scheme. A few national solutions. The Danish had to change their guarantee fund to cover the losses in Denmark, for example. So again, another repercussion. And finally, more recently, two Danish companies, Alpha and Kudus, both of them with business in Ireland, but in many other countries throughout Europe. Good number of policy orders, you know, 1,200,000 in Kudus situation. And in the first one, the Danish insurance guarantee scheme covered according to the rules, of course, there. And in relation to Kudus, it was a very delicate situation because the Danish authorities decided to change the scope of the guarantee fund. And that from the 1st of January this year, doesn't cover anymore the business outside of Denmark. So you can imagine that it was touchy at the end of 2018. A lot of engagement that it was possible that bankruptcy was declared in the last days of 2018. And then the fund still covered the clients throughout Europe, including here in Ireland. So you see that what do we need more? This is clear evidence that the framework that we have right now doesn't work. You may say, ah, why do you put this in a presentation on systemic risk? Yeah, my friends, this is, I believe, a systemic risk because it's not that the companies are the biggest companies in Europe, that's by far not the case. But this creates, I think, a lot of problems for the sector overall because it creates a lot of mistrust. Firstly, in cross-border business, which I think it is at stake right now, and we need to realize that. And secondly, of course, it doesn't bring really good name to the insurance sector overall because in all these situations, there was some detriment to consumers at the end of the day. So my message is very clear, is we need to, within this review of the Solvency to Framework, we need to complete the framework. I don't think that we need a huge overall. I think that we need some fine tuning and to put some pieces of the puzzle that are really, really missing. And I hope that we can definitely do that before we have one big company in this list. And then we will have a huge crisis. And as I usually say, I believe that one day there will be centralized insurance supervision in Europe. But I would hate that that would come because of a crisis. Let's not wait for a crisis. Let's deal with this situation. It's more than time. Thank you.