The European Commission's newly published announcement on its review of Solvency II rules for European Union (EU) insurers and reinsurers offers a more generous package than most commentators had expected. However, AM Best feels that question marks remain over the extent to which the measures will contribute to EU policy objectives for green investment, and other investment and insurability related targets.
A new Best's Commentary, "More Generous: European Commission Proposes Solvency II Review Rules", notes that the Commission's proposed changes overall are somewhat more favourable for insurers' stated regulatory solvency than the advice proffered by the European Insurance and Occupational Pensions Authority in December 2020.
Nonetheless, according to the commentary, the Commission's review is not all good news for (re)insurers. It also outlines a reduction in discount rates over the longer term, albeit this will be phased in over several years.
In its communique, the Commission said its proposals could release up to EUR 90 billion of capital and stated that it intended some of that capital would support the implementation of the European green deal.
However, AM Best sees scope for doubt that the freeing up of capital either by reducing capital requirements or by increasing available capital will necessarily lead to an increase in green or even real economy investment on a similar scale.
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AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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Contacts:
Tony Silverman
Director, Credit Rating
Criteria Research Analytics
+44 20 7397 0264
anthony.silverman@ambest.com
Richard Banks
Director, Industry Research EMEA
+44 20 7397 0322
richard.banks@ambest.com
Edem Kuenyehia
Director, Market Development Communications
+44 20 7397 0280
edem.kuenyehia@ambest.com
