FRSGlobal

nrpn, 5th December 2011: Regulator considers imposing Solvency II-lite for pension funds

Kris Van Bavel, vice-president of EMEA at Wolters Kluwer Financial Services’ FRSGlobal, says life insurers are reducing their equity exposure to falling markets in favour of government bonds, which are treated more favourably under Solvency II.

While increasing fixed income holdings help to deal with the likely capital charges laid out under the directive, they creates their own challenges. First, is the issue of low interest rates. Mr Van Bavel says: “The greatest risk to life insurers in the longer term is a lasting low level of interest rates. Finanstilsynet states the introduction Solvency II will increase the value of liabilities, since liabilities will be measured at fair value and low interest rates.”

Read the full article here courtesy of nrpn »