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The Impact of European Initiatives on the Treatment of Insurers’ Infrastructure Investments Under Solvency II

Author

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  • Nadine Gatzert

    (Friedrich-Alexander University Erlangen-Nürnberg (FAU))

  • Thomas Kosub

    (Friedrich-Alexander University Erlangen-Nürnberg (FAU))

Abstract

Against the background of seriously underfunded infrastructure and the risk of resulting lower competitiveness of the European Economic Area, the European Commission aims to incentivise private and institutional investments in infrastructure, thereby laying one main focus on pension funds and insurance companies. At the same time, insurers seek attractive long-term investment opportunities with stable cash flows that help match their long-term liabilities as an alternative to long-term government bonds, which currently suffer from low interest rates. However, financing volumes are still low, indicating the existence of certain investment barriers. The aim of this paper is to study these major barriers to infrastructure investments with a focus on the insurance industry and Solvency II, along with the impact of several European initiatives that are intended to reduce barriers, thereby also providing numerical examples regarding solvency capital requirements.

Suggested Citation

  • Nadine Gatzert & Thomas Kosub, 2017. "The Impact of European Initiatives on the Treatment of Insurers’ Infrastructure Investments Under Solvency II," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 42(4), pages 708-731, October.
    • Handle: RePEc:pal:gpprii:v:42:y:2017:i:4:d:10.1057_s41288-017-0042-7
    DOI: 10.1057/s41288-017-0042-7
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    References listed on IDEAS

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