German insurers urge easing green energy investment rules

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Germany's insurers want politicians and regulators to ease rules restricting their ability to invest in renewable energy and infrastructure, insurance trade body GDV said on Wednesday (20 March).

"Long-term insurance business fits well with investments in ecologically and economically sustainable energy and infrastructure projects," GDV Managing Director Jörg von Fürstenwerth said in a statement.

"To invest more in this area, we need an investment environment with legal certainty and long-term stability," he added.

Rock-bottom yields on the government bonds in which insurers mainly invest are forcing the sector to seek alternative investments with better returns.

Investments in solar and wind parks, as well as oil, gas and electricity transmission grids not only provide stable and higher income, they also match well with insurers' long-term obligations to policy holders.

Allianz, Europe's biggest insurer, has poured about €1.5 billion into solar and on-shore wind parks, while reinsurer Munich Re has earmarked €2.5 billion for green energy investments through 2016.

The GDV said tweaking the rules could enable insurers to boost investments, without denting public sector budgets.

It also said insurers needed planning certainty and warned against any move to retroactively undo existing agreements.

German Chancellor Angela Merkel and Environment Minister Peter Altmaier have been seeking ways to put a brake on rising energy prices following a boom in renewable energy production.

The GDV urged European insurance regulators to treat energy and infrastructure in a separate class to riskier hedge fund and private equity investments under the Solvency II capital rules for insurers, expected to be introduced in 2016 or 2017.

EU rules separating investment in energy production and transport could be eased, without endangering the goal of maintaining competition in the energy market, the GDV said.

In the run-up to Solvency II, insurers have increased their risk-management capabilities to such an extent that rules restricting investments in infrastructure funds could also be eased without compromising safety, which would open up prospects for investments by small and mid-sized insurers, the GDV added.

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