Post Solvency II, cash will no longer be either simple or regulated as risk free
It is likely that upcoming legislation will change the way insurers structure their investment portfolios. It may also increase the proportion of cash investments held and will require insurance companies to develop a capital assessment of cash as an asset class. Investors will need to take a more active role in reviewing their cash holdings to meet their liquidity requirements. BNY Mellon’s Insurance team reviews the three facilities for examining cash: bank deposits, triple-A rated money market funds, and separate accounts. Market events in the past decade demonstrate that investors need to take a more active role in reviewing and structuring their cash holdings to meet their liquidity needs. There may be more instruments and possibilities available than investors have originally considered to ensure their pool of cash works hard for them.