Insurance companies are ready to take the field to directly finance companies that are struggling to find the necessary credit in the bank and thus support the real economy. These are the amendments to regulation no. 36 of IVASS (the supervisory authority of the sector) to finally make this novelty possible, never so awaited as in these times. Today it will be discussed in the workshop promoted by ANIA, the association of insurance companies, on new investment opportunities for Italian companies, which will be held in the Milan headquarters of the association, in Via Aldo Rossi n.4 and, via videoconference , in Rome at Via di San Nicola da Tolentino, n.72.
Dario Focarelli, the director general of ANIA, explains its aims to FIRSTonline.
FIRSTonline – Director, what is the meaning of your initiative?
FOCARELLI – The workshop that ANIA has organized for today takes its cue from the recent update of IVASS regulation no. 36 on the subject of investments by insurance companies. The purpose of the meeting is to illustrate the characteristics of the new legislation and, at the same time, to directly compare the companies with those institutional investors who are offering them new investment strategies. The first session of the workshop will be dedicated to the analysis of the forthcoming regulation and its operational implications, with interventions by the supervisory authority, exponents of the financial industry and ANIA. In the second part of the day the institutional investors present will illustrate their programs in front of an audience of insurers.
FIRSTonline – But what exactly are the upcoming news?
FOCARELLI – The reference scenario of the sector is changing. The trend of low interest rates which characterizes the financial markets in Europe is particularly challenging for a sector, such as the insurance sector, which traditionally concentrates a substantial part of its investments in government bonds. The assets cover the commitments undertaken with the policyholders and directly concern, among other things, large portfolios of life policies which often contain the guarantee of capital or a minimum return. From this point of view, therefore, the decrease in interest rates can only be worrying because it reduces the margins thanks to which the insurance companies can offer those guarantees. At the same time, however, what is happening in the financial markets offers new opportunities to companies. An extensive process of deleveraging is affecting the world of credit. Due to the more stringent capital constraints imposed by supervisory provisions, banks are selling large loan portfolios. The deterioration of credits induced by the economic crisis also contributes in the same direction.
The reduced supply of bank credit pushes companies to look elsewhere for the financing they need. In this research they also meet the insurance companies that represent the largest European institutional investors. The new role that the insurance sector can play in supporting the economy has been discussed for some time. The amendments to regulation no. 36, which implement the guidelines of a recent law, are intended precisely to favor new operating possibilities for companies which will also be able to finance companies directly, under certain conditions. After much reflection, it is time to move on to the operational phase and we hope that our meeting will also favor the take-off of the many projects in the making.
FIRSTonline – However, insurance companies are also grappling with a new regulatory environment. The new supervisory legislation (Solvency II), at least in the initial version of the regulators, seems to hinder rather than encourage new investment opportunities for companies, imposing strong capital requirements. It is not so?
FOCARELLI – It's true. The insurance industry has repeatedly complained about the pro-cyclical nature of the incoming regulation which is ill-suited to the characteristics of a business, that of policies, placed on a long investment horizon and therefore able to absorb temporary excesses of market volatility. Our requests have sometimes been granted. For example, the capital ratios on securitization transactions have been mitigated for the less risky tranches but remain excessively high, for example, on investments in infrastructure works. The latter represent an important driving force for economic recovery on the continent and insurers can make their contribution to activating that lever. Provided, precisely, that the regulatory environment permits it.
