EIOPA sets clear expectations on the authorisation and ongoing supervision of PE backed (re)insurers
Following the trend in the US and UK, PE interest in EU insurers is increasing. This has not gone unnoticed by insurance regulators. Most recently, pan-European insurance regulator EIOPA (European Insurance and Occupational Pensions Authority) set out its expectations how national regulators should scrutinise insurers owned by private equity (PE) firms.
EIOPA’s publication follows the UK Financial Conduct Authority (FCA) remarks on potential risks with ownership arrangements that influence customer outcomes and the UK’s Prudential Regulation Authority (PRA)’s enhanced scrutiny of funded reinsurance deals.
EIOPA highlighted the following issues it believes warrant heightened supervisory scrutiny:
- Reliance on reinsurance. Reinsurance reduces capital requirements but can increase other risks, and the risk may not be effectively transferred. It said additional concerns may arise if risks are transferred to a re-insurer owned by the same PE firm. EIOPA dedicated a specific supervisory statement on reinsurance contracts with non-EU reinsurers and some regulators set out additional expectations that reinsurance contracts must meet before a statement of no-objection can be obtained.
- High leverage. If debt is held at parent level outside the EU and could affect the financial soundness, solvency position or operational independence, supervisors will consider whether additional capital assessments and requirements are appropriate. High levels of debt servicing should not result in price increases that would interfere with the requirement to offer “fair value” to policyholders.
- Investments in illiquid assets and private credit. PE-backed insurers often increase allocations to private credit and other illiquida ssets after acquisition. EIOPA draws attention to affiliated investments, concentration risk and whether investment decisions remain consistent with principles of prudent management. Similarly, the US National Association of Insurance Commissioners (NAIC) in April 2026 announced, amongst other things, that it would closely monitor the growing exposure of private credit within insurers.
- Balance sheet optimisation. EIOPA points to the risk of over-optimisation and/or change of assumptions which may be overly optimistic and not reflective of the actual risk – resulting in lower capital requirements than otherwise required.
- Dividends. Depending on structure, PE investment horizons can be shorter than insurers’ obligations to policyholders. Supervisors will increasingly scrutinise high dividends or other short-term distributions where they could weaken the insurer’s long-term financial position or put policyholders at risk.
- Governance risks. Affiliated asset managers, transactions with other group companies and significant shareholder influence can create conflicts of interest.
- Complex ownership structures. Supervisors will scrutinise the full financing structure, challenge the rationale for different ownership layers and test business plans under adverse scenarios.
This blog was written by Sebastiaan Bierens, Partner in Global Markets and Investor Advisory, and Margherita Borla Magnetto, Senior Consultant. We offer buy- and sell-side services: regulatory, policy and political DD, advice on trade, on change of control, competition policy and national security clearance, and value creation. We advise investors across the globe on investments into the UK, Europe and APAC.
Enjoyed this blog? Sign up for our EU Monthly newsletter for analysis of the most important policy and political developments across the European Union.
