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L&G CEO supports Solvency II review and changes

L&G CEO supports Solvency II review and changes | Insurance Business

L&G CEO supports Solvency II review and changes

The CEO of insurance company Legal & General (L&G), Nigel Wilson, has voiced his support for potential changes to the European Union’s Solvency II directive – a set of regulations which dictates the amount of capital insurers must hold to reduce their insolvency risks.

During an insurance conference held by Reuters, Wilson said that he supported a Bank of England review into capital rules. The review is looking into potentially expanding the range of assets that insurance companies can hold once the Brexit transition period ends in December.

“There’s a good positive feeling that actually giving us access, and the right to invest, in lots of different and new asset classes is a much better solution than... buying old asset classes,” the chief executive said.

Under Solvency II, liquid assets are treated more favourably than illiquid assets such as infrastructure.

Aside from the assets clause, Wilson believes there are other parts of the insurance capital regime that are “overly technical” and could be “moderated”.

“This is just giving us less requirement to do excessive structuring, which I think we and the regulators would agree is the right thing to do,” he said.

Wilson also believes the current Solvency II rules on the so-called risk margin are “very bizarre,” and that they should be changed as well. Those risk margin rules require some companies to hold more capital than their counterparts in other countries.