UK insurers create investment facility to capitalise on solvency rules
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Senior industry leaders have come together to form a new forum that will act as a “catalyst and facilitator” for driving investment into UK infrastructure projects.
Established by the Association of British Insurers, the Investment Delivery Forum was formed to take advantage of the reforms of Solvency II in the UK, which is expected to unlock £100bn of investment over the next 10 years to help grow the economy.
The Forum will look to work with many partners, including regulators, local government and those leading infrastructure projects to ensure that the investments can be made in a timely manner.
Chancellor Jeremy Hunt said: “This new forum is incredibly welcome and sets us on the right track to grasp this opportunity with both hands.”
The £100bn commitment is expected to help insurers play a “powerful role” as institutional investors and contribute to supporting energy security and the transition to net zero.
“Boosting investment in green and good projects across the UK is needed more than ever, and the insurance and long-term savings sector is uniquely placed to help meet this challenge,” said Hannah Gurga, ABI director general.
Gurga added: “We need to build on the momentum that the implementation of Solvency UK will bring and ensure our investment is being directed to the projects that will best meet everyone’s needs, whilst continuing to ensure high standards of policyholder protection remain in place.”
The Forum is chaired by Baroness Nicky Morgan with three delivery groups, each chaired at C-suite level, to drive the work in more detail.
Clare Bousfield, chief executive officer of retail and savings at M&G, will lead work on energy networks.
Craig Thornton, general insurance, protection and investments director at Lloyds Banking Group, will lead a group looking at housing.
Mike Eakins, chief investment officer at Phoenix Group, will focus on sources of energy generation.
Consultancy Deloitte will also provide project management and delivery support to the Forum.
Founding members
The firms and representatives who will sit on the Investment Delivery Forum are:
Aviva: Doug Brown, CEO of UK and Ireland life insurance
Just Group: David Richardson, group CEO
Lloyds Banking Group: Craig Thornton, general Insurance, protection and investments director
M&G: Clare Bousfield, CEO, retail and savings
Phoenix Group: Andy Briggs, group CEO
Rothesay: Tom Pearce, CEO
Royal London: Barry O’Dwyer, group CEO
How can the Forum benefit from the reforms of Solvency II in the UK?
Solvency II is expected to become Solvency UK by the end of 2024. The reforms of the UK solvency regime are expected to broaden the range of assets in which insurers can invest.
The Forum was formed to ensure the industry is ready as Solvency UK becomes enshrined in law and the regulatory rulebook.
The Forum said on its website: “Through knowledge-sharing, collaboration and research, the Forum will act as a facilitator and catalyst, helping the industry, government and key stakeholders avoid delay and move forward together.”
Specifically, the Forum will build a “solid understanding of the pipeline of investments”, based on the expected wider pool of assets eligible for the matching adjustment and the improved processes around MA regulatory approvals expected under Solvency UK.
Last week, the Prudential Regulation Authority launched its first consultation on a major set of reforms to Solvency II, with a second consultation expected in September.
Solvency UK will be implemented in stages. It is expected to be fully in force by the end of 2024.
The reforms are part of the UK government’s desire to regain control of the financial services rulebook following Brexit through the Financial Services and Markets Act 2023.
What kind of projects do you expect insurers to invest in?
