Private equity in insurance: EIOPA signals a new era of scrutiny

Private equity has become an increasingly important part of the European insurance market, particularly in life, run‑off and capital‑intensive lines. Against that backdrop, EIOPA has published for consultation a draft supervisory statement on the authorisation and ongoing supervision of (re)insurance undertakings related to private equity. Although many of the themes will be familiar to firms that have already navigated PE‑backed insurance deals, this is the first time EIOPA has set out in a single, detailed document how it expects EU regulators to approach these structures.

If adopted broadly as drafted, the statement is likely to raise the bar for regulatory engagement on PE‑backed acquisitions and increase the supervisory expectations on PE‑owned (re)insurers throughout the investment lifecycle.

Why is EIOPA acting now?

The consultation paper explains that EIOPA and national authorities have reviewed recent transactions involving PE ownership of (re)insurers and have seen recurring patterns and challenges rather than isolated issues. EIOPA highlights four areas in particular:

• the risk that PE funds’ typically shorter investment horizons are not well aligned with the long‑term promises made to policyholders;
• changes in business models, including a greater use of private credit, illiquid assets and balance‑sheet optimisation strategies;
• a growing dependence on reinsurance, sometimes to reinsurers in the same group and in third countries; and
• complex ownership structures that can impede clear supervision, especially where key risks or leverage sit higher up the chain.

None of these concerns is new in itself. But EIOPA’s decision to pull them together into a dedicated PE‑focused supervisory statement underlines the view that PE ownership of insurers raises a distinct cluster of prudential and supervisory questions that need a consistent response across the EU.

What does EIOPA expect regulators to look at?

The supervisory statement addresses both the initial acquisition assessment under the Solvency II “qualified holdings” regime and ongoing supervision once a PE sponsor is in place. Much of the document reads as a checklist of areas where EIOPA expects national regulators to probe more deeply.

One of the central themes is the alignment between the PE sponsor’s investment horizon and the (re)insurer’s long‑term obligations. EIOPA encourages regulators to look closely at the bidder’s business plan, including whether it provides for sustained investment in operational capabilities, such as IT infrastructure, data, risk and compliance, rather than placing excessive emphasis on short‑term value extraction through dividends, fees or rapid cost‑cutting. PE buyers should expect supervisors to want a clear narrative about their long‑term stewardship of the undertaking, not just capital strength and solvency ratios at closing.

Another focus is group structure and governance. The paper raises concerns about “overly complex” acquisition structures with multiple layers of holding companies, funds and co‑investment vehicles, including in third countries. EIOPA’s starting point is that such complexity can make it harder for supervisors to understand where decisions are really taken, how risks are distributed and how financial support might flow in stress. Regulators are therefore encouraged to press PE buyers to simplify structures where possible and, in any event, to provide a clear map of the chain of ownership and influence.  It is likely to be challenging to simplify structures as the complexity results, in part, from PE structures which typically involve multiple funds and will be difficult to simplify for a specific transaction.

For more involved structures, EIOPA suggests that regulators should ask for a detailed description of the PE group’s governance arrangements: which entities or committees ultimately make strategic decisions about the (re)insurer; how general partners, advisory boards and other investors are involved; what agreements or side arrangements may affect control; and why each level of the ownership chain is needed. The aim is for supervisors to have a direct line of sight from the regulated entity to the people and bodies that can influence its strategy, capital and risk profile. This has the potential to be a burdensome obligation, and much will depend on what supervisors actually require in practice.

The statement also considers shareholder rights and the composition and independence of the (re)insurer’s administrative, management or supervisory body. EIOPA invites regulators to scrutinise affirmative voting rights and vetoes granted to the PE sponsor, for example in relation to capital distributions, changes in risk appetite, reinsurance strategy or asset allocation, and to consider whether those rights could unduly constrain the board’s ability to act in the interests of the undertaking and its policyholders. Special rights to appoint or remove board members will fall under the same lens. In practice, PE sponsors should anticipate more intensive discussions with regulators around governance, reserved matters and the balance of powers between shareholder and board.

Management incentives are another area where EIOPA sees a potential misalignment of interests. The paper notes that PE‑style equity plans and leveraged share schemes can create strong incentives to increase short‑term value or distributions. Regulators are therefore encouraged to examine remuneration structures, including arrangements put in place at shareholder level, to ensure they are consistent with the (re)insurer’s own remuneration policies and with sound and prudent management. Sponsors and management teams should be ready to explain how their incentive models take account of long‑term solvency, risk appetite and policyholder outcomes.

Asset strategy, reinsurance and conflicts of interest

A large part of EIOPA’s analysis is directed at asset strategy and the way in which PE ownership can reshape a (re)insurer’s investment profile. The consultation paper mentions, in particular, a move towards private credit, non‑rated and other alternative or illiquid assets as an important feature of many PE‑backed deals. EIOPA does not say such assets are inappropriate, but it repeatedly questions whether (re)insurers always have the governance, expertise, data and valuation capabilities to manage them safely and in line with Solvency II.

Regulators are encouraged to challenge proposed shifts in asset allocation, especially where the new strategy materially increases exposure to complex or illiquid instruments. They are also asked to consider whether the undertaking’s risk management framework, internal controls and staffing are adequate for the revised strategy, and whether the asset mix remains consistent with the nature of the liabilities and the firm’s liquidity needs.

The supervisory statement also addresses conflicts of interest where asset management is carried out by an affiliated asset manager or other related entity in the PE group. EIOPA’s expectation is that investment decisions should remain subject to robust, insurer‑level governance, even where investment management is delegated or outsourced. Supervisors are therefore likely to look closely at intra‑group asset management agreements, fee structures, performance benchmarks and oversight arrangements to ensure that decisions are not driven primarily by the interests of the wider PE group.

Reinsurance is treated in a similar way. The paper is particularly concerned about arrangements where risks – and the associated investment upside – are ceded to a reinsurer within the PE group, including in third countries, and where that reinsurer is then free to invest in alternative or less liquid assets without strong constraints. EIOPA urges regulators to assess whether there is genuine risk transfer in these arrangements, to examine the terms of any commission or profit‑sharing, and to consider the overall capitalisation and risk profile of the full chain (cedant, reinsurer and any retrocession). This reflects a broader concern that reinsurance should not be used simply as a vehicle to move risk and returns into less transparent parts of the group.

Acquisition financing, leverage and group supervision

EIOPA also turns the spotlight on acquisition financing. The paper recommends that regulators look at the entire financing structure of a transaction, including any debt raised at holding company level, the terms of that debt, and the extent to which the (re)insurer is expected to upstream cash to service it. The consultation highlights risks where acquisition debt is secured on assets of the (re)insurer or where the group’s leverage levels could, in stress, undermine the resilience of the regulated entity.

Where material debt is located at an ultimate holding company outside the EEA, EIOPA suggests that regulators should consider whether it is appropriate to calculate a group capital requirement at that top‑level holding company, even if there is already an EEA sub‑group in scope of Solvency II group supervision. That would represent a significant extension of supervisory reach in some countries, and a clear signal that EIOPA expects the prudential framework to take account of risks sitting at unregulated holding company level.

The supervisory statement further encourages regulators to require tailored financing reporting so they can monitor changes in funding arrangements and the status of acquisition debt over time. That includes updates on maturities, refinancing and any changes in security or guarantees.

How might this affect deals and ongoing supervision?

For PE sponsors and sellers, the draft supervisory statement points to a more demanding regulatory environment for PE‑backed insurance transactions in the EU.

On deals, bidders should expect:

• earlier and more intensive engagement with regulators, with EIOPA explicitly encouraging potential acquirers to approach supervisors at an early stage before formal notifications are filed;
• more searching questions on business plans, operational investment and governance, not just on solvency and capital at completion; and
• heightened scrutiny of structures that rely heavily on intra‑group reinsurance, complex ownership or significant leverage.

In competitive sale processes, a bidder’s ability to present a credible, regulator‑ready story on governance, asset strategy, reinsurance and financing may become increasingly important alongside price and execution risk.

For PE‑owned platforms, the implications go beyond the acquisition phase. The draft statement clearly envisages ongoing bespoke reporting on the PE group, changes in ownership or financing, and key aspects of asset allocation and reinsurance. Supervisors are also encouraged to keep under review the alignment between the PE fund’s evolving strategy and the long‑term interests of the undertaking and its policyholders, including in the run‑up to exit.

Next steps

The consultation runs until 30 April 2026. Stakeholders are invited to respond via EIOPA’s online survey to the specific questions in the consultation paper. PE sponsors, (re)insurers and asset managers who are active in, or considering, PE‑backed insurance strategies in Europe may wish to take this opportunity to comment on:

• how the expectations should be applied in a proportionate way across different types of PE structures and asset strategies;
• the practicality of the proposed governance, reporting and financing disclosures; and
• how the new supervisory statement should sit alongside existing Solvency II and group supervision rules.

Whatever the final shape of the document, it is clear that EIOPA sees the PE‑insurance nexus as an area requiring sustained attention. PE investors in the sector can expect their structures and strategies to remain under a close supervisory microscope in the years ahead.

For further information, please contact the authors of this blog post or your usual Freshfields contact.