Britain's updated regulatory framework for insurers, designed to drive more investment into domestic infrastructure and long-term productive assets, is not achieving its goal, according to Aviva executive Arno Albici.
Speaking at the Insurance Investor Live forum in London, Albici, who oversees private asset origination for Aviva’s annuity business, said the Prudential Regulation Authority (PRA) had aimed to make UK insurers more competitive and to encourage investment in real assets that contribute to economic growth. However, he noted that the industry has moved in the opposite direction.
According to a report from the Infrastructure Investor, the UK insurance sector had pledged to invest £100 billion into productive assets over the next decade, but Albici said recent acquisitions of UK insurers by foreign firms are making that target harder to reach.
In recent months, Bain Capital of Boston has acquired UK insurance distributor Jensten Group, Apollo-backed European insurer Athora is purchasing Pension Insurance Corporation, and Canada’s Brookfield has agreed to buy Just Group, a British bulk purchase annuities provider.
Albici explained that these new North American owners are likely to prioritise investments in asset classes that they can manage directly, often outside the UK. He said this trend could divert capital away from domestic infrastructure and economic growth, adding that the regulatory framework is not fulfilling its intended purpose.
He acknowledged that the PRA’s new solvency regime has helped strengthen insurers’ balance sheets and provided greater flexibility to invest in a wider range of assets. However, he cautioned that it remains to be seen whether these benefits can be sustained as market conditions evolve.
Xavier Solano, head of prudential regulation at the Association of British Insurers, offered a more positive view. He said the industry remains committed to its £100 billion investment pledge and noted that recent changes to the matching adjustment rules now allow insurers to invest in assets with more variable cashflows, such as infrastructure projects with uncertain construction phases or supply chain risks.
Solano added that while there is room for improvement, the UK is showing progress in terms of regulatory innovation. He said that if the new framework fails to fully enable insurers to invest further and faster, alternative approaches such as controlled trials through regulatory sandboxes may need to be considered.
