EU watchdog backs easier infrastructure investment

FRANKFURT (Reuters) - EU insurance watchdog EIOPA has come out in favour of rules that will make it easier for insurance companies to invest in infrastructure, provided their risk management is up to the task.

The European Insurance and Occupational Pensions Authority (EIOPA) made its views known to EU rule-setters, just a day before they are due to unveil plans for a "capital markets union" to help finance jobs and growth in Europe's sluggish economy.

European politicians desperately want insurers to invest more of their 10 trillion euros (£7.3 trillion) in assets in roads, rail, bridges and renewable energy. Documents seen by Reuters last week revealed the EU Commission was already planning to trim safety buffers insurers must hold in case such investments turned sour.

EIOPA on Tuesday proposed creating a separate asset class for high quality infrastructure projects under new insurer risk capital rules known as Solvency II that take effect on Jan. 1.

"The proposed approach meaningfully reduces risk charges for qualifying infrastructure project investments in equity and debt," EIOPA said in a statement.

However, the watchdog said it would also require

"robust" risk management from insurers, including active monitoring of exposures to infrastructure projects as well as sound stress testing of project cash flows.

"Under such conditions, I believe that the proposed calibrations reflect the risk profile of high-quality infrastructure projects," EIOPA Chairman Gabriel Bernardino said.

(Reporting by Jonathan Gould; Editing by Ludwig Burger and Maria Sheahan)