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.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

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

Security Council should ‘nurture’ Colombian consensus against return to violence, top UN official urges

The cost of generating renewable energy has fallen – a lot

A European young student speaks about the Youth Policies of the European Commission

Vote at 16 in Malta: next stop Europe

Bankruptcy or referendum: which one is going to be first?

25 years after population conference, women still face challenges to ‘well-being and human rights’, says UN chief

Trade negotiations with US can start under certain conditions

EU to spend €135.5 billion in 2014 or 6.5% less than this year

Why Climate Change Matters for Future Health Professionals

Juncker Plan reaches almost €410 billion in triggered investment across the EU

Women-Friendly Spaces for Rohingya refugees: A place for protection and care

EU food watchdog: more transparency, better risk prevention

E-energy declaration: will energy digitalization be beneficial to the climate?

“TTIP can boost the European project”; the Sting reports live from EBS 2015 on TTIP

‘Proving our worth through action’: 5 things Guterres wants the UN to focus on in 2019

Unemployment and immigrants haunt the EU; who can offer relief?

The financial future of Eurozone on the agenda of Friday’s ECOFIN council

Why are so few women buying into Bitcoin?

UN chief condemns deadly terrorist attack on church in southern Philippines

UN human rights chief denounces grave ‘assaults’ on fundamental rights of Palestinian people

Cocaine and opium production worldwide hit ‘absolute record highs’ – major threat to public health says UN study

Preparing for developing countries the ‘Greek cure’

Who the US and China have trade disputes with

Human Rights breaches in Iran, Kazakhstan and Guatemala

Germany resists Macron’s plan for closer and more cohesive Eurozone; Paris and Berlin at odds

Flexible jobs can make work-life balance worse, a German study finds

Sweden well ahead in digital transformation yet has more to do

Here are three technology trends changing the way you travel

‘Exercise restraint’ Guterres urges Sri Lankans, as political crisis deepens

New York City has a plan to fight fast fashion waste. Here’s how it works

G20 LIVE: G20 leaders reaffirm OECD’s role in ensuring strong, sustainable and inclusive growth

1.4 million refugees set to need urgent resettlement in 2020: UNHCR

These 11 EU states already meet their 2020 renewable energy targets

Who cares more about taxpayers? The US by being harsh on major banks or the EU still caressing them?

‘Virginity testing’: a human rights violation, with no scientific basis – UN

It’s time for financial services to embrace the Fourth Industrial Revolution. Here’s why

Service and Sacrifice: For Ghana, UN peacekeeping is a ‘noble opportunity to serve humanity’

MEPs condemn attacks on civilians, including children, in Yemen

The Czech economy is thriving but boosting skills and productivity and transitioning to a low-carbon productive model is vital to sustainable and inclusive growth

EU Summit/Migration: Parliament calls for joint solutions based on solidarity

What is ‘South-South cooperation’ and why does it matter?

5 reasons to protect mangrove forests for the future

Afghanistan: Bring ‘architects’ of latest ‘appalling’ suicide bombing to justice, says deputy UN mission chief

The Europe we want: Just, Sustainable, Democratic and Inclusive

MEPs back EU partnership agreement with Armenia

These are the best cities for tech

MEPs want to ensure sufficient funding for Connecting Europe’s future

New Mozambique storm rips off roofs, brings lashing rain as aid response kicks in

How young people are turning the tide against corruption

In Finland, speeding tickets are linked to your income

Azerbaijan chooses Greek corridor for its natural gas flow to EU

Climate change helped destroy these four ancient civilisations

A European Discovers China: 3 First Impressions

Commission deepens criticism on German economic policies

The Brexit factor in the US-China trade war and other conflicts

I have a rare disease. This is my hope for the future of medicine

5 things you probably didn’t know about global health

Safer Internet Day: ‘Be kind online’, says UNICEF, urging action to prevent cyberbullying, harassment

The Chinese film boom luring Hollywood’s stars

“As long as we work together through thick and thin, more benefits can be delivered to the people of Eurasia”, China’s Premier Li Keqiang highlights from ASEM in Brussels

More Stings?

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