Solvency II changes could enable more investment risk from insurers

Reduced Solvency II capital requirements could encourage insurers to take on higher investment risk and may underestimate life insurers’ spread risk, said a new report.

According to Fitch Ratings, the proposed changes to Solvency II by the European Commission (EC) could be mildly credit negative for European insurers. The delegated regulation remains subject to negotiation among EU standard-setters. However, it is likely to increase insurers’ sensitivity to equity and credit risk, it said.

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