Pru boss Thiam says regulation could have “unintended consequences”
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Tidjane Thiam, chief executive of Prudential, has warned of the “unintended consequences” that European regulation will have on the insurance group at the World Economic Forum in Davos.
Tidjane Thiam
In an interview with Bloomberg TV, Thiam warns of difficulties if Solvency II regulations do “not land in the right place”, arguing that insurance companies are the provider of long-term capital to the economy.
He says: “We are the first holders of bank papers – ie we are the first providers of capital to the banks.
“There is a global effort to get banks to raise their capital levels. We have a key role to play in that.”
Thiam adds: “If Solvency II, or certain versions, are implemented, that will make that impossible.”
The Prudential boss says the regulations would make it hard for the insurer to invest in infrastructure, which could put the future payment of pensions in jeopardy. According to Thiam, the insurance group – which includes asset manager M&G – has £11 billion of infrastructure investments in the UK, alone.
The regulations would also make corporate bond investment difficult, which Thiam says the insurance industry is another first holder of.
Thiam says the industry was lobbying hard against the regulations as it could potentially be a threat to recovery in Europe.
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