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Insurers’ Investment in Infrastructure: Overview and Treatment under Solvency II

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  • Nadine Gatzert

    (Department of Insurance Economics and Risk Management, Friedrich-Alexander-University Erlangen-Nuremberg, Lange Gasse 20, Nuremberg 90403, Germany. E-mails: nadine.gatzert@fau.de; thomas.kosub@fau.de)

  • Thomas Kosub

    (Department of Insurance Economics and Risk Management, Friedrich-Alexander-University Erlangen-Nuremberg, Lange Gasse 20, Nuremberg 90403, Germany. E-mails: nadine.gatzert@fau.de; thomas.kosub@fau.de)

Abstract

The financial market environment poses serious challenges for insurance companies to provide stable returns on a long-term basis, as particular traditional asset classes are currently characterised by generally low interest rates and high volatility. Against this background, the aim of this paper is to study infrastructure investments from an insurer’s perspective. In particular, based on a categorisation of different types of infrastructure investments, we provide an overview of main characteristics along with risks and chances. In addition, the treatment of different infrastructure investments under Solvency II regulations is studied, which can have a considerable impact on an insurer’s asset management decisions. The study shows that the attractiveness of infrastructure investments strongly depends on the type of investment and its treatment under Solvency II and that considerable risks can be involved.

Suggested Citation

  • Nadine Gatzert & Thomas Kosub, 2014. "Insurers’ Investment in Infrastructure: Overview and Treatment under Solvency II," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 39(2), pages 351-372, April.
    • Handle: RePEc:pal:gpprii:v:39:y:2014:i:2:p:351-372
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    References listed on IDEAS

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    Cited by:

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    2. Thomas Url, 2014. "Schwaches Wirtschaftswachstum dämpft 2013 Privatversicherungsgeschäft," WIFO Monatsberichte (monthly reports), WIFO, vol. 87(9), pages 609-618, September.
    3. Sanan Mukhtarov & Martijn Schoute & Jacco L. Wielhouwer, 2022. "The information content of the Solvency II ratio relative to earnings," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 89(1), pages 237-266, March.
    4. Gatzert, Nadine & Kosub, Thomas, 2016. "Risks and risk management of renewable energy projects: The case of onshore and offshore wind parks," Renewable and Sustainable Energy Reviews, Elsevier, vol. 60(C), pages 982-998.
    5. Gatzert, Nadine & Martin, Alexander & Schmidt, Martin & Seith, Benjamin & Vogl, Nikolai, 2021. "Portfolio optimization with irreversible long-term investments in renewable energy under policy risk: A mixed-integer multistage stochastic model and a moving-horizon approach," European Journal of Operational Research, Elsevier, vol. 290(2), pages 734-748.
    6. Wouter Thierie & Lieven Moor, 2016. "The characteristics of infrastructure as an investment class," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 30(3), pages 277-297, August.

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