LONDON (Reuters) -The Bank of England said on Friday it would consider changing rules to make it easier for life insurers to access capital markets, after industry players voiced concerns about it
Bank of England Considers Easing Capital Market Access for Life Insurers
Proposed Changes to Insurance Regulation
LONDON (Reuters) -The Bank of England said on Friday it would consider changing rules to make it easier for life insurers to access capital markets, after industry players voiced concerns about it becoming harder to raise funds in equity and debt markets.
Current Rules and Limitations
The Prudential Regulation Authority, which sits within the BoE, said it was examining possible tweaks to its Insurance Special Purpose Vehicle regime as well as other methods used in sectors such as banking.
Potential Reforms and Stakeholder Input
An ISPV is a PRA-authorised entity used to transfer risk to capital markets.
Discussion Paper Overview
Currently, ISPVs are not allowed to transfer life insurance business to capital markets, because they can be longer term and more complex than general insurance where legal structures are more straightforward and assets held are low risk.
Managing Risks with Increased Flexibility
However, the PRA said it was open to reforming those rules.
Britain's large life insurance sector has more than 2 trillion pounds ($2.7 trillion) of assets, according to the BoE. Aviva, Legal & General and Phoenix are among the biggest players.
The regulator is not proposing specific rule changes yet and is instead seeking input from stakeholders on their capital needs, what form that capital should take and structures that could improve access.
Its discussion paper has also asked for views on how regulators and firms should manage risks created by greater flexibility in accessing funding.
($1 = 0.7451 pounds)
(Reporting by Phoebe Seers; Editing by Tommy Reggiori Wilkes and Alison Williams)
