Managing Solvency II's equity capital charge

The capital charge imposed by Solvency II on equities could be costly for many life insurers. Blake Evans-Pritchard reports on where efficiency improvements could be made

The market volatility that consumed 2008 and 2009 made many investors reconsider their equity positions. Some life insurers drifted slowly away from the asset class, anxious about uncertainty in the marketplace and disappointed with the level of return on offer.

But there is only so far that the life industry can go. Unit-linked products require a reasonable level of return, over and above inflation, and equity exposure is often the simplest way of providing this. Equity is similarly integral to