EU insurance watchdog eases securitisation capital rule

LONDON Thu Dec 19, 2013 11:29am EST

LONDON Dec 19 (Reuters) - The European Union's insurance watchdog said on Thursday it will reduce the amount of capital insurers must hold against top quality securitised debt and other investments to help generate funds for economic recovery.

The European Insurance and Occupational Pensions Authority said it proposes to reduce the current 7 percent capital charge to 4.3 percent, while increasing the charge on risky ones to 12.5 percent.

The change comes in an EIOPA report following a call from the EU's executive European Commission to help insurers invest in economic growth.

EIOPA is fleshing out the detail of new EU capital rules from insurers known as Solvency II.

"In view of the current economic situation, its purpose was to examine whether the capital requirements for certain long-term investments under Solvency II can be reduced without jeopardising the prudential nature of the regime," EIOPA said in a statement.

The report also confirms the currently proposed risk charges for a number of investments including private equity, loans to small and medium sized enterprises and socially responsible investments, EIOPA said.

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