EIOPA seeks input on supervisory statement on the authorisation and supervision of undertakings owned by private equity firms

The European Insurance and Occupational Pensions Authority (EIOPA) launched today a public consultation on the supervisory statement on the authorisation and ongoing supervision of (re)insurance undertakings related to private equity firms aimed at promoting consistent, high-quality and risk-based supervision across the EU.

Over the past decade, private equity firms have shown a growing interest in acquiring European insurance and reinsurance undertakings, bringing along changes in the strategy, governance, risk management and asset allocation of the undertakings they acquire.

After analysing recent cases, EIOPA and national supervisory authorities have identified a series of risks and supervisory challenges associated with these acquisitions, including:

• short or misaligned investment horizons that may be conflicting with long-term policyholder commitments;
• significant changes in business models, such as use of private credit, illiquid assets and balance-sheet optimisation;
• increased reliance on reinsurance, especially from reinsurers (in some case belonging to the same private equity group) located in third-countries;
• complex ownership structures that may hinder effective supervision.

EIOPA's supervisory statement open for consultation is seeking to address the risks and ensure high-quality and convergent supervision of (re-)insurance undertakings related to private equity firms, considering their specific nature and risks.

It sets out supervisory expectations for acquisitions of qualifying holdings, portfolio transfers and mergers, as well as for ongoing supervision. The supervisory statement is meant to be applied by European supervisory authorities in line with the principles of risk-based and proportionate supervision.

Consultation process

EIOPA invites stakeholders to provide their feedback on the Consultation Paper by responding to the questions via the online survey no later than [include date]. All responses will be published on EIOPA's website unless otherwise requested.

Go to the Consultation