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EC tweaks Solvency II rules to facilitate insurers' investment in infrastructure projects

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EC tweaks Solvency II rules to facilitate insurers' investment in infrastructure projects

TheEuropean Commission said April 1 that insurers will find it "moreattractive and cheaper" to invest in European infrastructure projects asof April 2 following an amendment to Solvency II rules.

Basedon advice from the European Insurance and Occupational Pensions Authority, theEC's move lowers certain requirements for investing in so-called qualifyinginfrastructure projects.

Inparticular, the amendment lowers the risk charges for insurers' equity and debtinvestments in such projects under the standard formula for calculating capitalrequirements in Solvency II. The risk calibration for investment in unlistedequity shares of such projects was reduced to 30% from 49%, while the riskcharges for investments in infrastructure debt were reduced by up to 40%.

"Insurers told us that some of the Solvency II ruleswere putting them off investing in infrastructure. We have listened to whatthey said — as from today they will find it easier and more attractive toinvest in European infrastructure projects. I hope they will take advantage ofthis change," Jonathan Hill, European commissioner for financial services,financial stability and capital markets union, said April 1.

Currentlyless than 1% of the insurance industry's total assets are allocated forinvesting in equity shares and loans of infrastructure projects, according tothe news release.