Dynamic future for post-Solvency II asset allocation
Solvency II is set to dramatically overhaul insurers’ approach to asset allocation – with potentially dramatic consequences for the bond markets. Aaron Woolner reports
The progress of Solvency II has so far been characterised by a series of passionate debates – swaps versus government bonds? Liquidity premium or market consistency? – that have centred on the impact the directive will make on liabilities. But attention is now focusing on the asset side of the balance sheet.
Solvency II’s impact on asset allocation is likely to be felt most strongly by property and casualty (P&C) firms. The inclusion of a diversification credit provides opportunities for a
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