The UK’s insurance giants have hailed reforms to Solvency II as a “significant opportunity” to channel cash into the economy today, after the government announced it would legislate reforms to the rules.
Andy Briggs, boss of Phoenix Group, which has around £270bn assets under administration, said the changes would “mobilise the UK’s £3.4trn of pension wealth”.
“These regulations are an important component of the changes needed to the wider UK investment landscape which will enable Phoenix to meet its ambition to invest more in the future,” he said in a statement.
“Phoenix plans to invest £40-50bn in illiquid assets and sustainable investments over the next five years to support house building, green energy, and local communities across the country without compromising policyholder protection in any way”.
EU-era Solvency II rules have been targeted by the government in a bid to unlock a flood of investment locked up on the balance sheet of the UK’s insurance giants. The plans are set to allow firms to pump cash into long term illiquid infrastructure.
The insurance and pensions giant Aviva, which has long championed changes to the rules, cheered the government’s announced today.
“This is a very welcome boost for UK investment,” she said. “We estimate reforms to Solvency 2 will allow Aviva to invest at least £25bn over the next ten years across the UK, including in critical areas such as social housing, schools, hospitals and green energy projects.”
The reforms have been at the centre of a dispute with the Prudential Regulation Authority however, over fears they may reduce the capital buffers of the UK’s insurance giants.