Tom Broughton, editor

After months of wrangling, cross-border jockeying, political wrangles and thousands of pages of convoluted reports, Solvency II is to finally see the light of day.

The Brussels bureaucrats have given the nod to the landmark legislation designed to better manage the way insurers look after their risk in relation to capital adequacy. The rules, due to be implemented in 2012, will drive insurers to reposition their empires and take tough decisions on their tax domicile status, organisational structure and cost base.

But will it do what it’s supposed to? In some circles it is heralded as the ultimate solution to avert any future financial meltdown and to stop the kind of uncertainty seen at the tail end of last year.

Our experts, however, point to it being the first step on a long road to a considered, uniform, global regulation, even if some of the key clauses on cross-border control have been removed (see pages 16-18). This legislation marks the first building block in the process of rebuilding confidence in the financial sector.  

Watch out for a flurry of acquisitions

So just how much private equity money is waiting in the wings for when the market turns in the second half of the year? How many MBOs are being considered within consolidator empires by entrepreneurs no longer seeing value? The answers could drive a whole new ranch of structural change in the market by the beginning of 2010.

It was only a year ago that the likes of Zurich, Axa, Allstate, Allianz and some serious private equity cash were circling the insurance division of RBS. Has all that money now dried up? The financial crisis left the leading players facing unprecedented scrutiny over their capital provision, with the challenge even greater for those with life businesses. So perhaps insurers, such as RSA, that are solely focused on the general market and who have long been the target of takeover speculation, may just start making some acquisitions of their own.

  • Richard Hobbs, chairman of Beachcroft Regulatory Services, will chair a Solvency II discussion at the second Insurance Times Forum at the Hilton Tower Bridge on 15 October.Visit www.insurancetimes.co.uk/itforum and quote EB01 to claim your £100 discount, valid until 30 April.

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