To what extent does the growing use of alternative investments by European insurance companies constitute a search-for-yield and/or an adaptation to imposed regulations?

Abstract

European insurers have steadily increased their use of alternative investments over the past decade. This shift is usually explained in one of two ways: as a search for yield, encouraged by the long period of low interest rates, or as an adaptation to the Solvency II capital framework. These explanations are normally studied separately. This thesis asks to what extent the growing use of alternatives reflects a search-for-yield strategy, a regulatory adaptation, or both, and it tests the two motives jointly on a single European dataset.