Rudyard Ekindi

Rudyard Ekindi

Director within the Global Investment Solutions team


David Niddam

David Niddam

Head of Custom Solutions

Lyxor Asset Management


Optimising Investment strategies under Solvency II

23 Nov 2017

Corporate

On 1 January, 2016, the Solvency II directive came into effect across the EU. Solvency II regulates the amount of capital the region’s insurance and reinsurance companies must hold, with the objective of ensuring insurers’ financial stability.

The directive imposes a series of qualitative and quantitative requirements on insurance companies, which have a major impact on the viability and return potential of the investment strategies managed internally by insurers. In particular, Solvency II has made guaranteed and long-duration insurance products more capital-intensive and therefore commercially less attractive. Conversely, unit-linked insurance products, where policyholders bear the investment risk, have become more advantageous.

In this Expert Opinion, David Niddam, Head of Custom Solutions and Rudyard Ekindi, director within the Global Investment Solutions team at Lyxor Asset Management, explain how insurance companies can optimise their investment strategies under the new regulatory regime.

 

Speed Read:

 

  • With Solvency II, Europe’s insurance industry is going through a period of change, which has a major impact on how companies structure their insurance business and invest
  • Guaranteed investment contracts have become more expensive for insurers to offer, while unit-linked insurance business has received a boost from the regulation
  • Optimised investment solutions developed by Lyxor can deliver better policyholder protection, a lower capital requirement, and hence a higher equity-to-SCR ratio and a higher return on capital for the insurance company
  • Lyxor’s Enhanced Architecture Program (LEAP) offers clients a step change in operational efficiency through a combination of risk management and derivatives expertise, an open architecture fund platform, economies of scale and a technology portal ensuring high levels of transparency

 


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