The procyclicality project was a joint venture between the IFoA and the Bank of England, led on our side by Ashok Gupta and Ronnie Bowie It looked at the policy issues arising from the trend to short term investment behaviour by pension funds and life companies, lower equity holdings reflecting reduced willingness to take on risk, and procyclical investing that exacerbates market cycles. The IFoA had a successful seminar on the subject in September 2015 which led to potential areas for future IFoA-sponsored research. It identified three topics: long-term investment mandates, risk measures and countercyclical capital buffers with a Board leading each one. The RM Board is overseeing the topic of “Risk Measures”.

The three strands coming out of the discussions are: 

The short-term agenda driven by regulation such as the Solvency II framework does not wholly support the economic objectives of an insurer: to provide appropriate, affordable products which meet customers’ needs and deliver value to its stakeholders, whilst positively contributing to capital formation and growth investment in the real economy. 

Chair: Belinda Hue 

Established: 2016 - 2020