01 June 2018

Capital Markets Union: Making it easier for insurers to invest in new class of securitised assets

If soundly structured, securitisation is an important channel for diversifying funding sources and enabling a broader distribution of risk across financial markets participants. To this end, today's amendments will make the EU insurance legislation ('Solvency II') compatible with the harmonised rules on STS securitisation, adopted by co-legislators in 2017 and that will apply as of 1 January 2019. In particular, these rules will provide for a more risk-sensitive approach in the calculation of the amount of capital that insurers need to set aside when they invest in the new asset class. This will contribute to the creation of an integrated Capital Markets Union. Vice-President Valdis Dombrovskis, responsible for Financial Services, Financial Stability and Capital Markets Union, said: “The CMU is an ambitious programme to diversify funding sources for companies, knock down barriers to investment and increase options for investors. If the EU securitisation issuance were built up again to pre-crisis average, it would generate up to €150bn in additional funding for the economy. That's why we need more risk-sensitive capital requirements to make it easier for insurers to invest in STS securitisation and to play a more important role in financing the real economy". The new amendments are also in line with the revised prudential treatment of banks' investments set out in the STS securitisation framework. The Commission decision takes the form of a delegated regulation. Changes will apply directly as of 1 January 2019 if the European Parliament and the Council raise no objection to it.

Full press release

Commission delegated regulation amending Delegated Regulation 2015/35 as regards the calculation of regulatory capital requirements for securitisations and simple, transparent and standardised securitisations held by insurance and reinsurance undertakings

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