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Report urges more freedom for insurance firms to invest in VC

Insurance companies need more regulatory freedom to invest more heavily in venture capital and private equity, says a study from the British Venture Capital Association.

The report, UK Venture Capital and Private Equity as an Asset Class for Insurance Companies, was conducted by the London Business School with the support of the ABI.

It examines the potential barriers UK insurance companies face when investing in venture capital and private equity investment vehicles.

Gartmore chief executive Paul Myners is conducting a broad look into institutional investment on behalf of the Treasury.

Last year, UK insurance companies accounted for 9 per cent of the total funds raised by UK private equity firms. According to the authors of the report, this is bigger than any other group.

The study says insurers with a low free-asset ratio are punished by the regulatory structure governing admissibility limits.

The report says a potential solution to this barrier is for smaller players to invest through funds of funds.

It also concludes that the capital gains tax system poses many barriers to life offices.

BVCA investor relations committee spokesman Edmund Truell says: “We urge the Government to read the report and do something about the fiscal and regulatory barriers which are facing these institutions when they consider private equity investment.”

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