SimˈpōzēəmSeamus Creedon, Solvency II Project Manager, Groupe Consultatif I welcome the opportunity to contribute to this important debate on sound regulation of long-term promises to Europe’s economically active consumers. While the immediate issue is valuation of long-term guarantee products by insurers, this is only one element of economically sound management of all forms of provision of income in retirement. The majority of actuaries in the EU/EEA (more than 30,000) are concerned with the soundness of life insurers (and pensions programmes), and an understanding of the economics of balance sheets is critically important. That is why most actuaries have consistently supported the key aim of Solvency II to harmonise regulation on a basis which recognises the economic realities of markets and all forms of risks. Actuaries also support the application of economically realistic valuation to assets and liabilities, provided account is taken holistically of the context of employer or other sponsorship. The fall-out from the financial crisis has led to unprecedented economic and financial market conditions, including at times, dysfunctional sovereign bond markets in the Eurozone1. As well as recent and current volatility, the future course of inflation and currency movements is quite exceptionally uncertain. These conditions present valuation and solvency assessment challenges which few of us have seen before. Most actuaries therefore agree with other contributors here that Solvency II needs refining. We continue to support the aims, but believe that two quite distinct changes are required: The liquidity and predictability of commitments is crucially relevant to valuation and needs to be recognised through an economically justifiable Matching Adjustment; and Flexible transitional measures are required to manage the application of market-consistency to historic long-term guarantee liabilities, but only to prevent threatening financial stability.