18/01/2012 Author: Will Wainewright

Aima sets up working group for Solvency II

The Alternative Investment Management Association (Aima) has approached insurance firms to discuss how the hedge fund industry will be affected by Solvency II regulation.

The hedge fund body confirmed the existence of a working party concentrating specifically on the legislation, which will overhaul the European insurance market upon its full introduction in 2014.

Insurance firms with investments in hedge funds will require them to disclose more information, while new capital charges – forcing insurers to hold significant capital in reserve to invest in a hedge fund – could put them off doing so. Willis, the global insurance broker, is among the firms that have been invited to give guidance to Aima as the organisation considers how it should advise members on Solvency II.

It is the biggest sign yet that the industry is bracing itself for the introduction of the regulation. Theo Brennand, a senior manager at Deloitte, who is advising funds on Solvency II, told HFMWeek last week that the impact on the hedge fund sector “really could be quite profound”.

One participant said Aima was looking for feedback from the insurance industry on how they expect hedge funds to be affected.