The Effect of Solvency Regulations and Accounting Standards on Long-Term Investing: Implications for Insurers and Pension Funds

Clara Severinson and Juan Yermo
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Clara Severinson: OECD
Juan Yermo: OECD

No 30, OECD Working Papers on Finance, Insurance and Private Pensions from OECD Publishing

Abstract: 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.

Les effets des normes prudentielles et comptables sur l'investissement à long terme : conséquences pour les assureurs et les fonds de pensions Ce rapport passe en revue les modifications récentes et à venir des règles prudentielles et comptables applicables aux assureurs et aux fonds de pension, ainsi que leur impact sur les stratégies d’investissement à long terme de ces institutions. L’examen des données factuelles porte principalement sur l’impact des exigences de solvabilité fondées sur les risques, met en lumière les cas où ces règles ont pu se traduire par un ajustement des stratégies d’investissement, et potentiellement déboucher sur des comportements d’investissement procycliques, comme le bradage des actifs en période de baisse des marchés. Le rapport conclut en mettant en garde contre une application trop stricte des règles prudentielles basées sur les risques et du principe de la juste valeur.

Keywords: accounting; assureur; comptabilité; defined benefit; economic value; fair value; financement; fonds de pension; funding; insurer; investissement à long terme; juste valeur; long-term investing; pension fund; prestations définies; solvabilité; solvency; valeur économique (search for similar items in EconPapers)
JEL-codes: D21 E32 G01 G15 G23 G32 J33 K20 M40 M52 (search for similar items in EconPapers)
Date: 2012-12-07
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