EU’s Hill hopes for early adoption of infrastructure as Solvency II asset

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European Union (EU) commissioner for financial stability Jonathan Hill has said he hopes legislation now in progress that will see infrastructure defined as an asset class for Solvency II purposes will take effect soon and let insurers plough more money into the Continent’s infrastructure.

Speaking to an audience in Brussels, Hill said: “By making changes to Solvency II, we can define infrastructure as an asset class and reduce the capital ratios associated with it by about one-third.”

He cited this as one way the European Commission had acted early to support long-term investment in infrastructure.

This step was described by Hill as part of the commission’s work to build a single market for capital, the Capital Markets Union (CMU).

“This will allow the insurance industry to invest more of the €10trn it manages in European infrastructure,” he said, according to a text of his speech. 

“We have already put forward a delegated act making this change, and I hope it can be put into effect as rapidly as possible.”

Speaking about plans to make it easier for both smaller and larger companies to tap capital markets, Hill said he launched a proposal earlier this week to overhaul the Prospectus Directive.

“We need a regime that is simpler, faster and cheaper,” he said.

Since prospectuses, under the current system, could run to hundreds of pages, the commission is now going to exempt more companies from having to produce them, he said.

The threshold at which firms have to issue one will rise to €500,000 from €100,000, and member states will be able to raise that limit further to €10m – twice the current threshold.

At the other end of the scale, the commission will help larger companies that tapped the markets more frequently, by creating a “frequent issuer regime”, where they only have to produce a universal registration document once a year.

“This will reduce the approval times for raising capital from 10 days to five,” Hill said.

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