'Solvency II will hit capital'

2 February 2012 | By Rob Langston, Tom Selby

Prudential has warned that Solvency II could stifle insurers’ ability to provide capital to the economy and invest in infrastructure and corporate bonds.

In an interview with Bloomberg TV at the World Economic Forum in Davos last week, chief executive Tidjane Thiam warned of the unintended consequences of Solvency II regulations.

He said: “We are the first holders of bank papers, that is, we are the first providers of capital to the banks. There is a global effort to get banks to raise their capital levels. We have a key role to play in that.

“If Solvency II or certain versions are implemented, it will make that impossible.”

Hargreaves Lansdown head of advice Danny Cox says: “Increasing capital requirements for insurers will inevitably lead to a fall in the amount they invest in the economy but I think the proposals are too far down the track for the industry to force through any substantive changes.”

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