UPDATE 2-Brexit won't mean lower capital for insurers, says Bank of England

* Woods: wary of lower capital for green investments

* Woods: competitiveness objective not a good idea

* Woods: tailored, rather than radical review of rules

*
(Adds comments on competitiveness objective)

By Huw Jones

LONDON, March 16 (Reuters) - A review of rules will not lead
to any "radical departure" or a reduction in capital
requirements, but it will take time to complete, Bank of England
Deputy Governor Sam Woods said on Tuesday.

Britain's exit from European Union has prompted the
government to review insurance capital rules inherited from the
bloc, raising industry hopes of less burdensome requirements.

Woods, who also heads the BoE's Prudential Regulation
Authority, which regulates Britain's top banks and insurers,
played down any such expectations.

"Now that we have left the EU we have no interest whatsoever
in lowering levels of resilience or policyholder protection, but
we can and should make changes to tailor regulation so it fits
our market better and is more efficient and coherent," Woods
told the Association of British Insurers (ABI).

The ABI said last month that 35 billion pounds ($48.4
billion) of capital locked in by the risk margin element in
capital rules known as Solvency II, could be used to increase
investment in the UK economy and tackle climate change.

The risk margin is an extra layer of capital insurers must
hold as a safety buffer in case they get into trouble.

However, Woods said he had doubts "about a reform package
which materially decapitalises the insurance sector," adding:
"While it's natural for the private sector to focus on private
interests, it’s part of our job to keep an eye on the potential
public costs of significant insurance failures."

He was "wary" of cutting capital requirements on 'green' or
climate-friendly investments.

Regulators face calls to have a remit to keep the City
globally competitive. It is "not normal" for prudential
regulators to have an actual competitiveness objective, which
could be seen internationally as an intention to weaken UK
regulation, Woods said.

"Loading something up with ever more objects is an excellent
way to decorate your Christmas tree, but it's not the best way
to create an effective regulator," Woods said.

($1 = 0.7231 pounds)
(Reporting by Huw Jones; editing by John Stonestreet and Ed
Osmond)