Swiss Re AG Chief Executive Officer Michel Lies called for the creation of a special infrastructure asset class to allow insurers to invest in projects such as roads and bridges.
“If you take all the insurance industry, all the money they can invest, and if you take the infrastructure need of this planet — there is a perfect match,” Lies said in an interview in Davos, Switzerland.
Insurers and reinsurers, which help primary insurers cover the costs of damage claims, are looking for alternative opportunities as low interest rates erode earnings from fixed- income investments. At the same time European Commission President Jean-Claude Juncker is seeking private-sector support for his €315 billion ($366 billion) investment plan.
Market regulators could “define infrastructure investment as a specified class which allows a secondary market and which allows investors who can invest long term to have an investment that is liquid during the time of investment,” Lies said.
He said infrastructure investment “is on the top of the agenda” of the Obama administration in the U.S. and Juncker in Europe.
“We should make sure that the rules of the game go in the same direction as the political appetite,” Lies said. “We are very active in this area. Davos is a good opportunity to meet different people and to discuss these kinds of challenges.”
Barack Obama has pressed throughout his presidency for more spending on roads, bridges, railways and other transportation projects. Last year, he proposed a four-year, $302 billion infrastructure plan. Congress has ignored his request.
While the “low-yield environment is challenging,” Lies said there’s also a silver lining. “If you cannot count on investment results, you need to be very disciplined in underwriting.” This is the 8th time Lies is attending the World Economic Forum in Davos.
–With assistance from Rebecca Christie in Brussels, Mike Dorning and Joe Sobczyk in Washington and Jan Schwalbe in Zurich.
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