VAG Reporting: new version successfully implemented

Context

The German Insurance Supervision Act (Versicherungsaufsichtsgesetz) establishes supervisory obligations of BaFin towards insurance companies as well as pension and provident funds in Germany. To implement these, BaFin has imposed various reporting obligations on the supervised companies, such as the "investment fund" or various "statements". This "BaFin reporting" can differ according to the type of company, as can be seen, for example, in the different formats of the statements. The so-called "VAG-Reporting" or the BVI data sheet is to be placed in this context. It is a format provided by the BVI, with which the data required for BaFin reporting can be collected for investment funds.

The main basis of what is needed to fill these statements is the "Ordinance on the Investment of the Security Assets of Pension Funds, Mortality Funds and Small Insurance Companies" (Anlageverordnung or AnlV) and the so-called " Omnibus Decree Concerning the Reporting Obligations of Insurance Companies on their Investments". In July 2021, BaFin published a new version of this omnibus decree, and on October 08, BVI published an updated version of the VAG Reporting, which was intended to implement the changes in the omnibus decree.

Implementation of the new requirements

It subsequently emerged, however, that essential regulations in the new omnibus decree were at least open to interpretation. Together with the market participants, the BVI made very intensive efforts to obtain clarification and, in the end, also to postpone the entry into force of the new reporting requirements. The latter, unfortunately, was not successful; as of the beginning of this year, the requirements of the new omnibus decree are to be applied. Two points are to be considered here as examples for the questions that arose during implementation:

• The shares in so-called "bail in bonds" are to be reported in line 37. In individual cases, the exact delineation of this term causes difficulties, and it turned out that these investments were not uniformly classified as bail-in eligible by different market data vendors. Therefore, pragmatic solutions had to be found for the implementation of the new standard.
• In lines 32 to 36, "bonds and investments in credit institutions" have to be broken down and reported according to specific rating classes. The structure used in the new standard can be transferred directly to statements 670 and 671, i.e. the reporting requirements for pension funds and Solvency I companies. Unfortunately, this does not apply to pension funds. For them, statement 678 applies, and a different breakdown is required there.

What happens next?

From October 2021, these and other issues were discussed very intensively, leading the BVI to publish updated versions of the standard in December 2021, and even more recently at the beginning of February 2022. But it must be expected that there will be further adjustments.

Should there be further updates to the VAG standard, IDS will ensure that these are implemented for its customers.

IDS VAG Service upgrade

At the same time, the update was also used to revise the reporting, which has remained almost unchanged since 2011, not only in terms of content, but also technologically. The service was migrated to a new platform. In addition to more efficient process flows, this upgrade also offers greater flexibility in the enrichment of market data from different sources and further options in the delivery of the required data. This allows IDS' customers to easily provide existing Solvency II TPTs. IDS uses the information contained therein for the production of the ISA report itself or for a lookthrough on potential target funds.

How can IDS help?

IDS VAG Service can help you to be fully compliant with the latest VAG requirements.

Contact our experts