British insurance giant Aviva
is looking to boost returns by investing £10 billion in infrastructure around the world over the next five years, chief executive Mark Wilson has revealed.
Speaking to the Financial Times
, Wilson said Aviva
is making the additional investment following the £4 billion that it has invested so far in infrastructure.
Wilson warns, however, against one factor that would hinder Aviva
’s plan: regulation that seeks to make insurers safer and investing in infrastructure more expensive.
“The government and the regulators need to play ball here. Europe and the UK need infrastructure and the regulations are fighting against us doing it,” Wilson told the Financial Times.
Wilson said a Canada-based firm investing £100 million in a green wind farm would only need to place an extra £3 million of capital. A company in the UK or Europe, on the other hand, would need an additional £10 million to £12 million.
“That’s at least three times more capital. That makes no sense,” he lamented.
“Solvency II penalises long-term investment like infrastructure. I don’t think that’s acceptable and I don’t think that’s sustainable,” the Financial Times
quoted Wilson as saying.
According to the publication, insurance companies are more and more resorting to infrastructure investments as alternatives to low-yielding government and corporate bonds.
Infrastructure projects such as roads, energy plants, schools and hospitals are a good fit for insurers’ long-term liabilities, the news agency noted, since they pay out over years and decades.
Allianz to invest US$500 million in infrastructure in World Bank tie-up
AXA to proceed building London’s tallest tower