Treasury investment bank or trust could be good investment
Legal & General group chief executive Tim Breedon wants the government t to fund recovery with long term financial products insurers can buy to match their pension and other long-term liabilities, the FT reports.
"Insurance companies are desperate to find the long-dated assets needed to match the long-dated cash flows we need," he said, "but appropriate long-dated instruments are relatively scarce."
Breedon wants the Treasury to create an infrastructure bank or fund to help get projects off the ground. It could then parcel out the debt to insurers and pension funds at credit ratings they would find attractive.
Solvency II
He warned that the European Commission's Solvency II legislation from 2012 was "a significant hurdle". It would create more onerous capital requirements for insurers than for banks.
In a separate story, the FT said L&G was the top performer in a weak London stock market yesterday, up 3.7% to 79p after Credit Suisse moved to "outperform" in a sector review that said Solvency II would be watered down.
L&G's "enviable scale" in the life and pensions markets "would be attractive to any company wishing to gain scale in the UK market", it said.
Move in the right direction
"It is difficult to see L&G as a bid target at the moment given the uncertainty over Solvency II that remains," the broker said. "If Solvency II starts to move in the right direction and acquirers gain confidence in the outcome, then this view could change."
The FTSE 100 closed down 42.6 points or 0.8 per cent at 5,260.31.
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