A report from Bloomberg said the largest insurance companies in the UK will collectively be investing GBP 25 billion or USD 41 billion in the next five years on UK infrastructure. Prudential, Legal and general Group, Aviva, Friends Life, Standard Life and Scottish Widows will be working together with the Association of British Insurers and help the government update the country's aging infrastructure.
In an emailed statement to Bloomberg, Treasury Secretary Danny Alexander said the investment of the insurers is a huge vote of confidence in the economy of the UK. He said, "After years of neglect, the U.K.'s energy, road, rail, flood defense, communications and water infrastructure needs renewal. It will boost the U.K. economy, creating jobs and making it easier to do business."
The Treasury said a refreshed version of UK's National Infrastructure Plan will be published today. It will provide detailed information on the government's projects in both the public and private sectors to 2030 and beyond which is estimated to cost around GBP 275 billion.
According to the report, the infrastructure investment will help insurers and pension funds preserve returns in their bond holdings which had been dented by low interest rates. It will also enable them to match their long-term liabilities to their policyholders.
In a statement, Legal & General Chief Executive Officer Nigel Wilson said about their investment, "We can now accelerate our plans in this asset class. The U.K. needs modern infrastructure to drive growth forward, and investing in the right infrastructure projects delivers for our customers and U.K. Plc."
Legal & General, the largest manager of pension assets in the UK, has already invested GBP 3 billion for infrastructure so far. However, in a June interview with Bloomberg, Wilson said it could pour up to GBP 15 billion in infrastructure for as long the government would modify its planning and energy policies.
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