The Solvency II regulations, due to go live on 1 January 2016 after a number of delays, are causing the UK’s biggest insurer to contemplate selling its British operations or spin it out into a separate listed company, according to Sunday Times sources.
Earlier this year in its annual report, Prudential said its business in Asia faced a £1.9bn bill as a direct consequence of Solvency II.
The official line from the insurer continues to be that London remains a very attractive place to be domiciled but that as a large international group it regularly reviews the structure of the business.
On another front, The Financial Stability Board (FSB), established after the G-20 London summit in April 2009 as a successor to the Financial Stability Forum, met on 25 September in London to discuss its ‘too big to fail’ policies for banks and insurers.
The meeting endorsed the first version of what it terms the higher loss absorbency (HLA) requirement for global systemically important insurers developed by the International Association of Insurance Supervisors (IAIS).
The nine insurance groups identified by the FSB as systemically important, are: Aviva and Prudential (in the UK); AIG, MetLife and Prudential Financial (the US); Allianz (Germany), Axa (France); Assicurazioni Generali (Italy); and Ping An Insurance (Group) Company of China (China).
But a number of these insurers disagreed with the proposed methodology for the HLA, stating in a joint letter on 21 August that it was “too blunt a tool built on still uncertain foundations”.
The finalised HLA proposal to the FSB is expected to get G20 endorsement in November this year.
