Solvency II is a regulatory framework designed for insurance companies in the European Union. It aims to ensure that these companies maintain sufficient capital to meet their obligations to policyholders. The framework emphasizes risk management and requires insurers to assess their financial health based on the risks they face. The Solvency II framework consists of three pillars: Pillar 1 focuses on quantitative requirements, including capital calculations; Pillar 2 addresses governance and risk management; and Pillar 3 involves disclosure and transparency. Together, these pillars help promote stability and protect consumers in the insurance market.