This article was produced by Invesco as part of their valued industry partnership with Insurance Investor.
This marketing communication is for professional investors only.
Solvency II reform: what it could mean for insurers
From 30 January 2027, changes to Solvency II are expected to improve the capital treatment of certain senior securitisations, potentially creating new opportunities for European insurers to reassess the asset class. The reforms seek to align regulatory treatment more closely with underlying risk characteristics while maintaining existing investor protections.
Historically, securitised credit has represented a relatively small share of insurer portfolios, despite structural enhancements, diversified collateral pools and a strong long-term credit record. Regulatory capital requirements have been a key consideration for many insurers when assessing allocations.
Under the revised framework, capital charges are expected to decline for a range of highly rated senior securitisation exposures. Senior residential mortgage-backed securities RMBS, consumer asset-backed securities (ABS), commercial mortgage-backed securities (CMBS) and AAA-rated collateralised loan obligations (CLOs) are among the areas likely to benefit, although outcomes will vary based on factors such as structure, seniority and credit quality.
For insurers, the changes may broaden the range of portfolio construction options available. Depending on objectives, selected securitised assets could potentially help improve the balance between income generation and capital efficiency or provide additional diversification relative to traditional corporate credit exposures. Model portfolio analysis suggests insurers may be able to reduce capital consumption, enhance income, or pursue a combination of both, though results will depend on portfolio-specific circumstances.
Importantly, lower regulatory capital charges do not reduce investment risk. As with any fixed income allocation, outcomes remain dependent on factors including collateral quality, security selection, diversification, due diligence and ongoing monitoring.
As capital treatment becomes more closely aligned with underlying risk, securitised credit may become an increasingly relevant consideration for insurers evaluating how best to balance investment income, solvency management and portfolio resilience.
For a deeper look at how the 2027 Solvency II reforms could influence insurers' capital efficiency, income opportunities and securitised credit allocations, explore the full article on the Invesco website.
Investment Risks
The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.
Important information
This marketing communication is exclusively for use by professional investors in Continental Europe as defined below, and Professional Clients in Dubai, Ireland and the UK. For Professional Clients, Exempt Investors, Accredited Investors or Non-Natural Qualified Investors in the Middle East. It is not intended for and should not be distributed to the public.
For the distribution of this communication
- Continental Europe is defined as Austria, Belgium, Denmark, Finland, France, Germany, Italy, Liechtenstein, Luxembourg, The Netherlands, Norway, Portugal, Spain, Sweden and Switzerland
- The Middle East is defined as Bahrain, Qatar, Oman, Kuwait, Saudi Arabia and United Arab Emirates.
Data as at 30 September 2026, unless otherwise stated. By accepting this material, you consent to communicate with us in English, unless you inform us otherwise.
This is marketing material and not financial advice. It is not intended as a recommendation to buy or sell any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. Views and opinions are based on current market conditions and are subject to change.
Issued by: Invesco Management S.A., President Building, 37A Avenue JF Kennedy, L-1855 Luxembourg, regulated by the Commission de Surveillance du Secteur Financier, Luxembourg; Invesco Asset Management, (Schweiz) AG, Talacker 34, 8001 Zurich, Switzerland; Invesco Asset Management Limited, Perpetual Park, Perpetual Park Drive, Henley-on-Thames, Oxfordshire RG9 1HH, UK. Authorised and regulated by the Financial Conduct Authority; Invesco Asset Management Limited, Index Tower Level 6 - Unit 616, P.O. Box 506599, Al Mustaqbal Street, DIFC, Dubai, United Arab Emirates. Regulated by the Dubai Financial Services Authority.
EMEA6020828/2026
Sign in to read the full article or Register for FREE and get access
SIGN IN
FREE PREMIUM ACCOUNT
Don't have an account yet?
To access
the premium content FOR FREE on Insurance Investor, you must first sign in to your account.
Not subscribed? Sign up today for free
Why subscribe? Click here for more details
