Aviva is “very happy” with the current state of the UK’s plans to overturn the EU rules that govern the amounts of capital insurers must hold on their balance sheets, one of the firm’s top execs told City A.M.
Adam Winslow, the chief executive of Aviva’s UK & Ireland general insurance business, said Aviva is “very happy with where the reform landed” after the UK government set out its plans for the overhaul in November last year.
The EU’s Solvency II directive governs the amounts of capital insurers must hold on their balance sheets to reduce the risk of bankruptcy.
In November, the government outlined its final plans to overhaul the EU directive and replace it with a UK equivalent.
“We were very positive in what was announced,” Winslow said.
The UK’s plans are set to see the government overturn the EU’s Solvency II laws to free up billions of pounds worth of capital on insurers’ balance sheets for investment in British infrastructure projects.
Winslow claimed that in Aviva’s case the reforms will unlock an extra £25bn over the next decade alone, as he explained that the newly freed-up cash could be invested in boosting Britain’s resilience towards threats such as climate change.
He explained to City A.M. that the UK’s post-Brexit reforms will let Aviva, the UK’s largest insurer, invest tens-of-billions more into “asset classes that weren’t within the original perimeter of Solvency II” such as renewable energy projects.
The Aviva exec said the planned reforms will also “help fulfill some of the government’s policy in levelling up” by letting it invest in hospitals and social housing.
However, Winslow warned that boosting the UK’s long-term resilience also requires action and direction from government.
He noted that building flood defences will “inevitably” require “government investment” as the Aviva exec said greening the UK grid will also require favourable policies.
“Government needs to decide whether onshore wind is something it wants to encourage,” Winslow said, as he argued the government needs to “allow” onshore wind farms “to be approved” for a large-scale buildout of capacity. “That’s not an insurance issue that’s a government issue,” he said.
The exec said the global energy transition also poses an opportunity for Aviva. He noted the insurer’s book of renewable projects is now three times larger than the book of fossil fuel power production projects it pulled away from underwriting in 2019.
Winslow’s comments come after Aviva’s 2023 risk report showed confidence in the UK economy has collapsed from rates of +5 per cent in 2021 to -50 per cent the following year.
Businesses surveyed by Aviva cited economic concerns and skills shortages as their top two risks, as they raised concerns about soaring energy costs, struggles in attracting and retaining staff, and global supply chain disruption.