Solvency II should take a “more realistic” approach to the treatment of infrastructure investments, said Kurt Svoboda, CFO and CRO at Austrian insurer Uniqa, after the company’s annual results press conference.
He said the 50% capital requirement on such investments were “relatively high” and “strongly hindered” insurers’ engagement in this area.
“If the EU wants institutional investors to help finance this segment, it needs to offer some support, especially when the investments have economic relevance,” Svoboda said.
He added that the idea of a Capital Markets Union across Europe “might help” facilitate institutional lending.
And he is optimistic this capital requirement in Solvency II will be amended, as “talks are ongoing” and the demand was supported by EIOPA and other stakeholder groups.
Given Uniqa’s “relatively small size”, Svoboda is only looking to invest in funds for infrastructure debt, not directly.
Currently, the market for such vehicles is sufficient only in certain segments such as road construction, he said.
“But there are not enough if you look for diversification,” he added.
One region where Svoboda would “really like” to invest in infrastructure is Central and Eastern Europe (CEE) because “they need it, and it would be a good opportunity”.
The problem, he said, was very often lack of political will and stability.
Uniqa chief executive Andreas Brandstetter also confirmed the company’s strategic interest in CEE.
“It is the only real chance for growth we have,” he said.