Brexit bounty

24 February 2021 By Aimee Donnellan Follow @aimeedonnellan

Domestic firms want the government to ease capital requirements following the UK’s departure from the EU. It’s true dividend restrictions mean they may already have ample capital. But amid a slump that’s not enough to make already confusing solvency metrics even more so.

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The Association of British Insurers on Feb. 23 called on the UK government to ease the European Union’s insurance regulatory regime known as Solvency II.

The changes would free up 95 billion pounds of capital, the trade body added.

The ABI is calling for the so-called risk margin, an insurance capital buffer, to be reduced. It says this would free up 35 billion pounds of capital. A similar change to the so-called matching adjustment would allow insurers to invest an extra 60 billion pounds in renewable energy, the ABI claimed.

Former London Stock Exchange Chief Executive Xavier Rolet and Matthew Elliott, co-founder of pro-Brexit group Vote Leave, also called on Feb. 23 for a reform of Solvency II, arguing that looser rules would allow insurance companies and pension funds to invest more in renewable energy assets. The report was published by broker Shore Capital.

The Bank of England told insurers on Feb. 10 not to expect any big reduction in capital requirements after Brexit, adding that more capital could be “part of the answer” to meeting a 1.7 billion pound bill for Covid-19 claims.

Context News

The Association of British Insurers on Feb. 23 called on the UK government to ease the European Union’s insurance regulatory regime known as Solvency II.

The changes would free up 95 billion pounds of capital, the trade body added.

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