become smaller. reasonable people can debate whether or not it is sensible for this element of provisions to be so sensitive to risk - free rates, and it may be that once we are into a solvency ii world some firms will choose to hedge this exposure. however, that debate is for another day : the risk margin and its calculation are part of the law and our job is to implement it. more specifically, the directive is clear that the solvency capital requirement ( scr ) and the risk margin are separate concepts : put simply, firms have to survive a 1 - in200 stress, using the capital held to meet their scr, and then have the risk margin available to provide for the costs incurred in an orderly transfer of liabilities. it is obvious that in this respect solvency ii is more demanding than the icas regime, even if other elements of the regime are not. a related source of tension is our use of the quantitative indicator ( qi ) framework as part of our assessment of internal model applications. this framework describes a set of judgements, based on evidence and analysis that provide an assessment of the most common risks faced by uk insurers, such as longevity risk for life insurers, and how they relate to each other. many of the areas covered by the framework involve a significant degree of judgement, and accordingly we are flexible in how we use the framework and consider it just one input into our consideration of whether firms ’ models meet the tests and standards for approval under solvency ii. the way we use the qi framework has also been, and continues to be, informed by evidence and practices presented to us by firms. however, it would be odd indeed if a regulator ( or a firm for that matter ) were to change their view of conditions in the real world because of a change in regulatory regime. clearly, despite the lofty ambitions of european legislators, the move from solvency i to solvency ii doesn ’ t change how long people will live for, or the probability of a north american windstorm. so our beliefs about the nature of the risks to which insurance companies are exposed will persist as we move into the new regime. but the regime requirements are different, and we will embrace that change. people should not confuse these two things. adapting to the new regime solvency ii introduces some important reforms to modernise the regulatory regime for insurers in the uk. but a sudden implementation of these changes by firms, and particularly on the life side given

important factor. we do not merely make an analysis, write a report and disappear. we are still here and can continue the discussion whenever necessary. the problems that were indicated in the evaluation were more of an administrative nature. for instance, it is difficult to find a place in a foreign aid context for low - cost projects like this, as they do not really follow the set patterns for other aid efforts. finally, i can mention that the riksbank has allocated resources in our internal business plan for next year to extend our cooperation with some of the central banks in sida ’ s cooperating countries. we consider that our work has been both interesting and rewarding and we hope that it has also helped some of our colleagues to make their own institutions stronger.