Solvency II asset charges will not stop insurers providing bank funding, say economists

Demand for covered bonds and shorter duration corporate paper likely to increase, according to exclusive analysis by economists at Dutch central bank

Solvency II will not have a material impact on the financial markets or the real economy as a result of changes in insurers' investment behaviour. The new European risk-based capital regime will also not be detrimental to insurers providing a stable source of funding for banks through bond holdings, analysis by economists at De Nederlandsche Bank (DNB), the Dutch central bank, has found.

The paper, published exclusively by Life & Pension Risk, suggests that corporate bonds will remain attractive