Reviving securitisation requires more than lower capital charges
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EIOPA article arguing that insurers' low investment in securitisations is driven not by capital requirements but by risk-return profiles, asset-liability management and product complexity. It expects the lower Solvency II charges alone not to be a significant driver.
Key points
- Short durations and prepayment risk make it hard to match cash flows with long-term liabilities
- The standard formula cut does not affect large insurers using internal models
- Calls for reliable loan-level data, more standardised products and issuance platforms at scale
Who is affected
Insurers, securitisation originators and legislators
Plain-language version
A securitisation is a bundle of loans, such as mortgages, turned into a security sold to investors. EIOPA, the EU watchdog for insurers and pension plans, thinks insurers buy few of them not because of capital rules but because they aren't worth it: short terms, the risk of early repayment and complex products. Lowering capital charges alone won't fix that.
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Summary produced with artificial intelligence from the official publication. It may contain errors: always check the original document.
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