Significant New International Capital Requirements Announced for Global Insurers, with Potential Impact on M&A Activity

9 October 2015
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Key takeaways

  • The International Association of Insurance Supervisors (“IAIS”) has announced the details of the new “Higher Loss Absorbency” (“HLA”) requirements applicable to the largest global insurers (“G-SIIs”).
  • The HLA is expected to increase G-SIIs capital requirements by approximately 10%, compared to the Basic Capital Requirement (“BCR”).
  • The HLA will apply to all group activities, with capital requirements expected to increase by up to 18.75% in some non-traditional areas.
  • The new standards are likely to lead to an increased level of downstream M&A, as insurers attempt to lessen the impact of the requirements.