There’s good news from the European Commission.
Solvency II implementing rules have been amended to help insurers provide long-term finance by investing in equity and private debt. How? By allowing them to hold less capital for such investments, making it easier and more attractive for insurers to pour money into the economy.
In its announcement, the European Commission noted: “This will further help mobilise private sector investment – a key objective of the Capital Markets Union (CMU).
“The newly adopted rules, which take the form of a Delegated Regulation, amend the EU prudential rules for the insurance sector, known as Solvency II, and follow up from the mid-term review of the CMU Action Plan.”
Aligning the rules applicable to insurers and banks, the Delegated Act lowers the capital requirements for equity and private debt investments by insurers. The move was based not only on in-depth analyses by the Commission but also expert advice from the European Insurance and Occupational Pensions Authority (EIOPA).
Other changes include new simplifications in the calculation of capital requirements as well as updated principles and standard parameters to better reflect developments in risk management and the most recent data.
“One of the main objectives of the CMU is to foster economic growth in Europe by removing barriers to investment,” commented Commission vice president Valdis Dombrovskis, whose remit includes financial stability in financial services.
“Insurers were highlighting that some of the Solvency II rules were preventing them from investing more in equity and private debt. We have listened to their concerns.”
Jyrki Katainen – vice president responsible for jobs, growth, investment, and competitiveness – pointed to the potential of small- and medium-sized enterprises (SMEs) to play a crucial role in job creation and sustainable economic growth.
“To fulfil that role, they need access to a broad range of financing options, including via equity and privately-placed debt,” said Katainen. “Today’s (March 08) actions will allow SMEs and other companies to have better access to such financing instruments from insurers.
“I am confident that this change will contribute to growth and prosperity across the Union.”
Meanwhile the amendments will now be subject to a scrutiny period of three months by the European Parliament and the Council.
