Insurance Europe, the representative body of the European insurance industry, has published its response to the Commission’s STS securitisation proposals.
As with many stakeholders in European finance, Insurance Europe is favourable to the Commission’s approach to reforming the regulations around securitisation through the STS definition. In common with most other voices in this debate, including PCS, it believes the proposed STS definition is broadly correct and workable.
The response does focus though on some of the same issues to which we, at PCS, had drawn attention. These include the non-neutrality of capital charges. The inexplicably high degree of non-neutrality which we had analysed in the context of bank investors and the CRR proposals exist equally in the context of insurance investors and Solvency II and Insurance Europe presents some possible answers in their paper.
Insurance Europe also draws attention, as have all other investors and investor bodies, to the necessity of some form of independent third party certification system if we wish to see new investors to the securitisation market.
In addition, Insurance Europe focuses sensibly on how to avoid the duplication of due diligence when insurance companies invest through asset managers.
Finally, Insurance Europe pleads for an acceleration of the process amending Solvency II since the current proposals currently have no deadline for this.