General Insurance Article - CMU Solvency II reforms helpful - EY comments

  'We welcome the change in the infrastructure calibration proposed by EIOPA which recognises the lower default history of infrastructure projects and the higher recovery rates by way of reduced capital charges for qualifying assets. Insurers are now incentivised to invest in qualifying infrastructure assets through capital requirements which are meaningfully lower than equivalently rated corporate bonds. Where yields are in excess of liquid assets, which we would expect given the illiquidity of infrastructure loans, there will be a significantly higher risk adjusted return on capital for infrastructure loans under the new proposal.'