No Brexit bonanza in UK’s insurance reforms

No Brexit bonanza in UK’s insurance reforms

Opinion















Boris Johnson’s Conservative government, desperate to show the benefits of quitting the European Union, has called for an “investment big bang”: He’ll clear regulatory obstacles so that pension funds and insurers can channel tens of billions of additional pounds into modernising Great Britain and raising living standards.

But the upcoming overhaul of capital rules for insurers has little to do with Brexit and likely won’t be a bonanza for shareholders or investment.

Reform has been under discussion since last year and the government is close to agreeing to changes with regulators and the industry, according to the Financial Times. The pitch is that Britain is now free to scrap European rules that restrict insurers’ ability to pour money into things like green infrastructure or better housing.

The changes could help reduce some of the costs related to investing in such things, but Britain’s big life insurers already have almost one-third of their relevant funds in illiquid assets like these; the rest is mainly investments in publicly traded bonds.

One of Britain’s biggest life companies, Legal & General Plc does a lot of this kind of investing and is known