This report reviews recent as well as planned changes to accounting and solvency regulations affecting insurers and pension funds and how they may impact long-term investing by these institutions. The review of existing evidence focuses mainly on the impact of risk-based solvency requirements, identifying instances where such regulations may have driven changes in investment strategies and potentially led to pro-cyclical investment behaviour such as the fire-sale of assets in market downturns. The report concludes with a note of caution regarding the application of strict fair value and risk-based solvency rules.
The Effect of Solvency Regulations and Accounting Standards on Long-Term Investing
Implications for Insurers and Pension Funds
Working paper
OECD Working Papers on Finance, Insurance and Private Pensions
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Abstract
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