Currencies

Nomura rounds up markets’ biggest misses in 2016

Forecasting markets a year in advance is never easy, but with “year-ahead investment themes” season well underway, Nomura has provided a handy reminder of quite how difficult it is, with an overview of markets’ biggest hits and misses (OK, mostly misses) from the start of 2016. The biggest miss among analysts, according to Nomura’s Sam […]

Continue Reading

Property

Spanish construction rebuilds after market collapse

Property developer Olivier Crambade founded Therus Invest in Madrid in 2004 to build offices and retail space. For five years business went quite well, and Therus developed and sold more than €300m of properties. Then Spain’s economy imploded, taking property with it, and Mr Crambade spent six years tending to Dhamma Energy, a solar energy […]

Continue Reading

Currencies

Euro suffers worst month against the pound since financial crisis

Political risks are still all the rage in the currency markets. The euro has suffered its worst slump against the pound since 2009 in November, as investors hone in on a series of looming battles between eurosceptic populists and establishment parties at the ballot box. The single currency has shed 4.5 per cent against sterling […]

Continue Reading

Banks

RBS falls 2% after failing BoE stress test

Royal Bank of Scotland shares have slipped 2 per cent in early trading this morning, after the state-controlled lender emerged as the biggest loser in the Bank of England’s latest round of annual stress tests. The lender has now given regulators a plan to bulk up its capital levels by cutting costs and selling assets, […]

Continue Reading

Currencies

China capital curbs reflect buyer’s remorse over market reforms

Last year the reformist head of China’s central bank convinced his Communist party bosses to give market forces a bigger say in setting the renminbi’s daily “reference rate” against the US dollar. In return, Zhou Xiaochuan assured his more conservative party colleagues that the redback would finally secure coveted recognition as an official reserve currency […]

Continue Reading

Categorized | Financial, Insurance

UK insurers eye Solvency II changes


Posted on September 29, 2016

File photo dated 27/11/15 of the Union flag and the EU flag. Some of the City's biggest hitters have delivered a withering critique of Theresa May's Brexit negotiations ahead of the 100 day anniversary of Britain's decision to quit the European Union. PRESS ASSOCIATION Photo. Issue date: Sunday September 25, 2016. The likes of Ryanair boss Michael O'Leary and financial PR guru Roland Rudd rubbished the prime minister's oft-used "Brexit means Brexit" catchphrase, while Sir Martin Sorrell has urged the Government to maintain access to the single market. See PA story CITY Brexit. Photo credit should read: Toby Melville/PA Wire©PA

The UK’s insurance industry has given the biggest hint yet that it will push for changes to the Solvency II capital rules following Britain’s vote to leave the EU.

Solvency II, introduced at the start of the year, was designed to harmonise insurance regulation across the EU. But some of the rules have raised the hackles of the UK’s big insurers, which complain that they make it more difficult for them to do business.

    In a new submission to the UK government, the Association of British Insurers has called for a regulatory environment that “is appropriate for the UK market”.

    “There are certainly changes to Solvency II that could be made,” ABI chief executive Huw Evans told the Financial Times. “There’s an opportunity to improve it in the UK.”

    One of the most contentious areas is the so-called risk margin, which is in effect an extra layer for capital that has to be held for some types of long-term business. Mr Evans also said there could be changes to the Prudential Regulation Authority’s reporting requirements, which he said were “pretty onerous”.

    However, he added there was unlikely to be a wholesale rewriting of the rule book. “It makes no sense to tear up Solvency II completely and saddle the industry with hundreds of millions of pounds of unimplementation costs on top of the £4bn implementation costs.”

    The ABI is also concerned about the prospect of the UK losing its seat at the negotiating table when it comes to future changes to Solvency II.

    Although the UK might be free to create its own rules post-Brexit, insurers warn that the new regime would have to have “equivalence” with EU rules, so the future shape of Solvency II will have a bearing on how UK insurers operate.

    “As the largest sector in Europe, it is not feasible to be in a position where we have no say on how we are regulated,” said Mr Evans.

    London’s insurers rush to cover the Brexit bases

    Industry is wary of losing ‘passporting’ rights but confident it will adapt

    Possible changes to Solvency II have already attracted interest elsewhere. Earlier this month, parliament’s Treasury select committee launched an inquiry into how the regime would operate in the UK after Brexit.

    The ABI’s submission also focuses on the need, post-Brexit, to maintain common rules on how companies use data. “The data point has had the least air time,” said Mr Evans. “The key thing is to ensure that we don’t have our own data regime. That would be terrible . . .  it has the potential to be a massive disruptive effect.”

    Among the other points that the ABI raised with the government was a desire to maintain passporting rules, which the insurance industry uses extensively, and the need for a migration regime that will allow the industry to recruit skilled staff from around the world.