Capital Markets Union: Making it easier for insurers to invest in the real economy

euro currency 2019

© European Union , 2018 / Source: EC – Audiovisual Service / Photo: Mauro Bottaro

This article is brought to you in association with the European Commission.


The European Commission adopted today new rules to help insurers to invest in equity and private debt and to provide long-term capital financing.

The insurance industry is well-equipped to provide long-term finance by investing in equity and private debt, including of small and medium enterprises (SMEs), but the actual share of their investments in the real economy remains limited. As a result of today’s rules, insurers will have to hold less capital for such investments and will therefore find it more attractive to invest in the economy. This will further help mobilise private sector investment – a key objective of the Capital Markets Union. 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.

Commission Vice-President Valdis Dombrovskis, responsible for the Euro and Social Dialogue, also in charge of Financial Stability, Financial Services and Capital Markets Union, said: “One of the main objectives of the CMU is to foster economic growth in Europe by removing barriers to investment. 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. The amendments adopted today will make it easier and more attractive for them to invest in SMEs and to provide long-term funding to the economy”.

Jyrki Katainen, Vice-President responsible for Jobs, Growth, Investment and Competitiveness said:“SMEs can 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. Today’s 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”.

Based on expert advice from the European Insurance and Occupational Pensions Authority (EIOPA) and in-depth analyses by the Commission, today’s Delegated Act lowers the capital requirements for insurers’ investments in equity and private debt, also aligning the rules applicable to banks and insurers.

Today’s amendments also change various other aspects of the Solvency II implementing rules, such as:

  • new simplifications in the calculation of capital requirements,
  • improved alignment between the insurance and banking prudential legislations,
  • updated principles and standard parameters to better reflect developments in risk management and the most recent data (including a better treatment of financial hedging strategies).

This will improve the balance between burden and risk and ensure that Solvency II remains up-to-date.

Next steps:

The amendments will now be subject to a scrutiny period of 3 months by the European Parliament and the Council.

Background:

This legislation takes the form of an amendment to Commission Delegated Regulation (EU) 2015/35 (Solvency II implementing rules). Solvency II is the first harmonised, risk-based EU-wide prudential framework for the insurance sector. This amendment is part of a scheduled review of the implementing rules of the Solvency II insurance regulatory framework, which precedes a more fundamental review of the Solvency II Directive in 2020.

Several previous targeted amendments to the Solvency II implementing rules adopted between 2015 and 2018 have already contributed to the objectives of the Capital Markets Union Action Plan, and supported insurers’ investments in the real economy. In particular, in 2015 and 2017, the Commission introduced preferential treatments in the standard formula capital requirements to equity and debt investments in infrastructure projects and infrastructure corporates. In 2018, the Implementing Measures were amended to introduce more tailored capital requirements for simple, transparent and standardised securitisation.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Coal addiction ‘must be overcome’ to ease climate change, UN chief says in Bangkok

The EU now has rules that say household appliances must be easier to fix

UN mobilizes in Rohingya camps to support babies born of rape; young mothers face stigma

US-China trade war: Washington now wants control of the renminbi-yuan

Larger species are more at risk of extinction than smaller ones – here’s why

Von der Leyen in Ireland: Our mutual solidarity is here to stay

MEPs call for EU rules to better protect minorities’ rights

Responsible Artificial Intelligence

Ukraine: The West and Russia negotiate shares of influence

Commission tries to solidify the EU statistical system

9 climate tipping points pushing Earth to the point of no return

We can make sure Globalization 4.0 leaves no one behind. This is how

Legal Manager – 2050

Taking fast road to ‘e-mobility’ central to a sustainable future: COP24

Why exchange programs are essential for the medical students of the 21st century

GSMA Announces First Keynote Speakers for 2019 “MWC Los Angeles, in Partnership with CTIA”

Is a full course lunch, a new Commissioner and 2 million anti-TTIP citizens what you would call a “Fresh Start”?

Mood changes in Europe in favour of growth and jobs

These deepwater fish farms could help natural stocks recover

Greater investment in family-friendly policies critical to support breastfeeding – UNICEF

What can each individual do to lessen the burden of mental health in times of the pandemic?

Venezuela: UN human rights office calls for ‘maximum restraint’ by authorities in face of new demonstrations

UN police officer recognized for protecting vulnerable Somali women from abuse

Scotland and First Minister Salmond enter the most challenging battlefield for independence: Europe

Team Europe: EU and Germany join forces with the Government of Bangladesh to safeguard the livelihoods of workers in export-oriented industries

The Five Chinese Girls

ECB to support only banks not Peoples

Why is the EU launching a doomed policy in stopping immigrant waves? What are the real targets?

Is the English language too powerful?

State aid: Commission amends Short-term export-credit insurance Communication in light of economic impact of coronavirus outbreak

Who can unlock the stalled Brexit negotiations? UK Premier sticks to her proposal

JADE Spring Meeting 2017 – day 3: JADE Academy trainings, networking session and gala dinner – Excellence Awards winners revealed

Japan must urgently address long-standing concerns over foreign bribery enforcement

3 ways business leaders can build digital trust

This wall of shoes is for the women killed by domestic violence

Here’s how the EU is doing on gender equality

The vegan economy is booming – and Big Food wants a slice of it

Greek-Turkish border: MEPs reject Turkey’s pressure, demand common asylum rules

How can consumers be effectively protected from insurance sellers?

The Changing Scope of International Economic Relations – Chinese Leadership in the 21st Century

‘Mosques should be safe havens, not sites of terror’, says Guterres announcing UN plan to help safeguard religious sites

Gender equality and medicine in the 21st century

Sri Lanka PM: This is how I will make my country rich by 2025

Fairer, simpler, more flexible EU farm policy: MEPs vote on post-2020 reform

Calculators didn’t replace mathematicians, and AI won’t replace humans

At UN, Yemen Foreign Minister demands end to ‘Iranian-Houthi coup d’etat’

Parliament wants to grant EU consumers a “right to repair”

Which countries get the most sleep – and how much do we really need?

Brazilian mountain farmers reap recognition, through UN heritage listing

To what extent can renewable energy empower women in rural communities?

UN forum spotlights cities, where struggle for sustainability ‘will be won or lost’

Britain declares trade war on mainland Europe

Education should be like everything else. An on-demand service

Business can be profitable AND drive progress on societal priorities

Pride in health care during Pride Month: Are we ready for a dignified health care for LGBTQI+ patients?

EP negotiators: recovery plan crucial, but do not trade long-term for short-term

MEPs back EU partnership agreement with Armenia

Gaza probe finds ‘reasonable grounds’ Israeli forces committed international human rights violations

Minding the information gap and why it’s important in tackling COVID-19

Energy Union: deals on efficiency targets and governance

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s