* EU could allow national variations to Solvency II - CEO
* L&G spent 129 mln stg preparing for Solvency II - CEO
* L&G 9-month sales ahead of forecasts, shares up 2.9 pct
By Myles Neligan
LONDON, Nov 1 Strict proposed capital rules for
insurers based in the European Union are unlikely to work in
their current form and may be redrawn, the head of Britain's
Legal & General Plc (L&G) said.
L&G chief Nigel Wilson said the EU was likely to abandon
efforts to agree a harmonised set of rules and would instead
allow European governments to modify their approach to suit the
needs of insurers based in their countries.
"I suspect there'll be a more pragmatic solution developed
over the next few years which meets the needs of customers and
regulators in France, Germany, the UK, Italy etc," Wilson said
on a conference call on Thursday.
"To try and harmonise 27 countries across Europe in the
midst of a financial crisis is an extraordinarily difficult
task, and everybody's realising that this is just going to be
Solvency II, aimed at making insurers hold capital in
proportion to the risks they cover, is officially due to take
effect in 2014, but has been held up by wrangling between EU
governments over how it should apply to life insurers.
Insurers and regulators now say the rules are unlikely to
come into force before 2016 at the earliest. The European
Commission, author of the Solvency II project, has not set a new
implementation deadline despite pressure to do so from the
Wilson said there was a growing realisation that Solvency II
could penalise insurers and restrict their ability to invest,
increasingly seen as vital to kick-starting Europe's flagging
He also hit out at the cost of getting ready for Solvency
II, with L&G spending 129 million pounds ($207.8 million) over
the last three years, a small part of the "many many billions"
committed by the EU industry as a whole.
"The fact we've spent an incredible amount of money so far
is the thing that's galling," Wilson said.
L&G, Britain's fourth-biggest insurer, would be among the
companies most directly affected by Solvency II due to its
strong presence in the market for annuities, which could attract
a higher capital charge under the new regime.
Wilson was speaking shortly after L&G reported a
higher-than-expected 6 percent increase in nine-month sales,
helped by strong demand for protection policies as more
companies and consumers seek cover against financial risk.
L&G's sales rose 6 percent to 1.42 billion pounds in the
period, beating the 1.34 billion expected by analysts in a
L&G shares were up 2.9 percent by 0935 GMT, making them the
fourth-biggest riser in the FTSE 100 share index at that
The stock has risen 35 percent so far this year, beating a
24 percent increase for the STOXX Europe 600 insurance index