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EU cuts capital charges for insurers investing in infrastructure
[LONDON] Insurers in the European Union will not have to set aside as much capital to cover investments in infrastructure under a reform aimed at channelling more funds into growth.
The cut in capital charges for insurers wanting to invest in digital networks, transport and other infrastructure projects will be cut from April 2, the EU's executive European Commission said.
Less than 1 per cent of total assets of insurers in the EU is invested in stakes or loans to infrastructure projects.
The so-called risk calibration - a per centage figure that determines how much capital must be set aside - for investment in unlisted equity shares has been cut to 30 per cent from 49 per cent.
Risk charges for investments in infrastructure debt has been cut by up to 40 per cent.
The reform is part of the EU's Capital Markets Union project to encourage more market-based financing of the economy and reduce the bloc's dependence on banks for funds.