LONDON, Nov 22 (Reuters) - Legal & General will be much more cautious on the levels of leverage, or borrowing, in its liability-driven investment (LDI) strategies in future, its chief executive Nigel Wilson told lawmakers on Tuesday.
L&G is one of the largest players in Britain in the LDI market, in which high leverage has been blamed for causing a crisis in the pensions sector and in UK government bond markets in late September.
LDI fund managers have, with the backing of regulators, reduced their levels of leverage since the September crisis - which forced the Bank of England to step in to buy UK government bonds, or gilts.
In answer to a question from the House of Lords Industry and Regulators Committee about whether L&G would remain much more cautious over leverage, Wilson said: "the answer is yes, going forward".
The LDI funds, pensions consultants and regulators have also been criticised for failing to predict and be prepared for the market crisis.
Gilt yields, which move inversely to prices, soared after Britain announced a package of unfunded tax cuts.
"Given what's happened and the volatility and variability around the world, we should be looking for more black swan events, that will result in different stress testing," Wilson said. (Reporting by Carolyn Cohn; Editing by Kirsten Donovan)