Regulatory assessment of private equity acquisitions in the (re)insurance sector: New EIOPA consultation clarifying expectations on national supervisory authorities
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In recent years, private equity firms ("PE Firms") have become important purchasers of insurance undertakings. Particular features and objectives of these purchasers have created the need for greater supervisory convergence across the EU, prompting EIOPA1 to issue a consultation on a Supervisory Statement in relation to acquisition assessment and post-acquisition ongoing supervision of (re-)insurance undertakings related to private equity (the "Consultation").2 While EIOPA recognizes that PE Firms strategy might bring benefits to (re)insurance undertakings (by diversifying investment strategies, producing higher yields or reducing costs), it aims at ensuring high-quality and convergent supervision of (re)insurance undertakings related to PE Firms across the EEA3.
Overview of the Existing Regulatory Framework
Alike any M&A transaction involving financial industry entities in the EU, the planned acquisition of a qualifying holding in an insurance or reinsurance undertaking requires a pre-closing non-objection decision of the competent supervisor, based on a suitability assessment of the proposed acquirer under the Solvency II Directive.4
To date, Solvency II only sets out general suitability criteria that supervisory authorities shall take into consideration when conducting their assessment of the reputation of the proposed acquirer; its financial soundness; the reputation and experience of those proposed to direct the (re)insurance undertaking; where applicable, the ability to maintain prudential compliance post-acquisition, including effective group supervision and clear supervisory coordination; and the risk of money laundering or terrorist financing related to the proposed acquisition.5
These general principles are supplemented by joint guidelines of the three European supervisory authorities6 (the "Joint Guidelines"). Pursuant to the Joint Guidelines, a PE Firm is required to provide additional information, including: (i) a detailed description of the performance of previous acquisitions in financial institutions, (ii) details on its investment policy and any restrictions on investment (including details on investment monitoring, factors serving the acquirer as a basis for investment decisions and factors that would trigger changes to the acquirer's exit strategy), (iii) the decision-making framework for investment decisions (including the name and position of the individuals responsible for making such decisions), and (iv) a detailed description of the anti-money laundering ("AML") procedures and of the applicable AML framework. Also pursuant to the Joint Guidelines, and as reiterated by the Consultation, competent authorities might set-up conditions in their Declaration of non-objection (DNO) in relation to material aspects of the change of control.
Besides the Joint Guidelines, EIOPA had not yet issued (re)insurance-specific guidance as to the acquisition of qualifying holdings, except for run-off undertakings, which briefly addresses the situation of PE Firms.7
With the Consultation on the Supervisory Statement EIOPA is now paving the way for a PE tailored assessment framework of qualifying holding acquisitions in (re)insurers and associated ongoing supervision taking into account the specificities of this sector.8 While EIOPA's Supervisory Statement will not be legally binding on the national supervisory authorities and market participants, it will have a factually binding effect.
Although the criteria laid down in the Consultation might lead to increased disclosure requirements, greater regulatory clarity on supervisory expectations will make it easier for PE Firms to anticipate and prepare for supervisory requests and conditions and, therefore, ensure a successful outcome of a qualifying holding procedure.
The Consultation is open to stakeholders for comments and answers until Monday, 30th April 2026.
Structure of PE acquisitions
EIOPA's Consultation places particular emphasis on the transparency and comprehensibility of the acquiring PE Firm structure. Supervisory authorities are expected to specifically scrutinize the ownership chain, especially as PE Firms are generally structured around multiple intermediary entities, various legal forms, and involve third-country entities which should not undermine effective supervision.
EIOPA expects supervisory authorities to carefully assess the partnership agreement of the PE fund. The Consultation thus introduces an obligation to review the acquiring fund's partnership agreement, which should detail governance mechanisms, decision-making processes, and the roles of general and limited partners. In practice, the submission of documentation governing the partnership is already frequently but not systematically requested by EU supervisory authorities. This requirement goes beyond the current applicable framework. In cases of complex or opaque structures, EIOPA recommends that the acquirer provide additional information on governance, third-party interests, and the rationale for each structural layer.
Furthermore, EIOPA encourages PE firms to avoid allegedly unnecessary complexity in their acquisition structures. The Consultation does not however explain this concept nor sets objective limits and criteria to the maximum number and nature of layers that should be involved in the relevant structures.
The Consultation introduces the idea that supervisors may require post-acquisition reporting on changes in group structure and financial information regarding the main holdings of the PE group. This goes far beyond current usual practices of national competent authorities.
Investment Strategy, Post-Acquisition Business Plan and Financial Soundness
As for any acquirer in the financial sector, EIOPA expects PE Firms to provide details on their strategy and business plan around the proposed acquisition.
Investment Horizon
EIOPA highlights the risk that the typically shorter investment horizon of PE Firms may conflict with the long-term commitments to policyholders. Competent authorities should ensure that PE strategies do not encourage short-term value extraction at the expense of policyholder protection. Where the business plan information is insufficient to evaluate this issue, EIOPA suggests that competent authorities may request the minutes of the PE investment committee or the Board that has decided on the acquisition to verify that decisions align with prudential standards and policyholder interests, going beyond current Joint Guidelines.
Also to safeguard against over-optimization, competent authorities should pay particular attention to the stability of investment programs in operational capabilities (among others IT infrastructure) by the relevant PE investors.
With respect to dividends and strategy assessment, competent authorities may identify an interest mismatch if high initial distributions to shareholders are planned.
Regarding financial commitments sometimes requested from acquirers, EIOPA specifically requires an assessment of whether these commitments are limited to the targeted (re-)insurance undertaking or if they also extend to the PE fund as a whole. More broadly, competent authorities should ensure that capital policies support the long-term self-financing of the reinsurance undertaking. EIOPA further requests that competent authorities closely monitor the financial soundness of (re)insurance undertakings as the investment approaches maturity or if attempts to sell the undertaking have failed.
Asset Allocation and Management
The acquisition of a controlling stake triggers the requirement to submit a comprehensive business plan covering at least three years post-acquisition (including associated prudential forecasts). To consider PE specificities, EIOPA requires prudential forecasts submitted by proposed acquirers to include detailed information especially where the PE modus operandi involves shifting asset allocations toward private credit, illiquid assets, or increased use of reinsurance9 to enhance the balance sheet. In this respect, EIOPA underlines the need for competent authorities to pay close attention to potential over-optimization and change of assumptions in assessing the business plan.
Competent authorities frequently expect to receive draft asset management agreements to ensure that the target (re)insurer has proper control mechanisms and contractual powers to monitor the relevant arrangements, oversight rights and that it is in charge of setting the asset management strategy. For the cases where asset management is outsourced to an intragroup entity, EIOPA expects competent authorities to monitor intragroup transactions ("IGT") to ensure application of the arm's length principle, a fair value of commissions and adequate IGT policy. Competent authorities should also verify the independence of asset management decisions and the related existence of countervailing powers in case of potential conflicts of interests with the intragroup asset manager.
EIOPA emphasizes the need for competent authorities to assess the adequacy of control structures and compliance with Solvency II requirements in terms of asset management (staff knowledge to ensure understanding of the used models and associated limits, market-consistent valuation methods, independence of valuation, proper governance by relevant internal executive and non-executive committees) and generally with the prudent person principle. Competent authorities are also expected to scrutinize the robustness of the target's ALM.10
Leveraged M&A
Also, EIOPA underlines the necessity for competent authorities to take into account the frequent use of leverage via collateralized debt secured by the target's operations or a specialized vehicle. While requiring acquirers to detail the context on the acquisition financing is standard practice in line with the Joint Guidelines, EIOPA insists that competent authorities should closely scrutinize the target's ability to generate both capital and debt, while granting adequate levels of solvency, liquidity and policyholder protection. In particular, the submitted business plan should not involve systematic transfer of all available cash from the target (re)insurance undertaking.
To that end, the Consultation introduces formal recommendations to, where needed, request shareholders to report periodic updates on the status of debt. It should also be noted that where the debt is placed at the holding company level outside of the EEA, EIOPA recommends competent authorities to calculate a group SCR11 at the level of the ultimate parent even if a subgroup exists in the EU. Both the latter supervisory expectations could prove burdensome and should be anticipated by PE Firms acquiring qualifying holdings in the insurance sector.
Post-Acquisition Risk and Governance systems of the Target Company
With respect to risk management, the Consultation expects competent authorities to assess the adequacy of risk management and the compatibility of these strategies with the prudent person principle. While post-acquisition ORSA12 is required by the competent authorities as a standard practice including several scenarios of stress tests, to consider PE specificities, EIOPA recommends that, whenever necessary (e.g. recurrent low or negative revenues, or a significant decline in the solvency position), the forecast ORSA incorporates the PE Firm exit strategies, including scenario analyses for potential exits and their impact on the risk profile.
In order to maintain a sound and effective system of governance, ensuring prudent management and robust risk controls of the (re)insurance undertaking and to address PE specific investment strategies on target governance, EIOPA sets the following PE specific points of attention:13
- Ensure that decisions are made in the best interests of policyholders and beneficiaries.
- Receive sufficient explanation of ownership and voting rights from the beneficial owner down to the targeted (re)insurance undertaking and take into account the significant influence of general partners, considering that such investors do not generally possess sufficient local experience in the insurance sector.
- Ensure appropriateness of affirmative vote within the administrative, management or supervisory body, special shareholder rights (such as the capacity to appoint executive board members or veto significant changes). When shareholder representatives participate in company committees, competent authorities are recommended to check the purpose of those committees and their responsibilities, and their interaction with the persons effectively running the target undertaking or key functions holders.
- Examining management remuneration and potential leveraged shares schemes (including multipliers if specific targets are met) to ensure they align with the best interests of the target undertaking and its policyholders.
1 European Insurance and Occupational Pensions Authority
2 EIOPA, Consultation Paper on Supervisory Statement on the authorisation and ongoing supervision of (re-)insurance undertakings related to private equity, EIOPA-BoS-25/683, 27 January 2026
3 European Economic Area (EEA), which includes the 27 Member States of the European Union plus Iceland, Liechtenstein and Norway
4 entity, see Articles 13(21) and 57 of Directive 2009/138/EC on the taking-up and pursuit of the business of Insurance and Reinsurance ("Solvency II")
5 Article 59(1) of Solvency II
6 Joint Guidelines on the prudential assessment of acquisitions and increases of qualifying holdings in the financial sector (JC/GL/2016/01) of 20 December 2016 issued by the European Banking Authority ("EBA"), the European Securities Markets Authority ("ESMA") and EIOPA
7 In case of run-off acquisitions by PE funds, supervisory authorities are expected to comply with the Supervisory Statement on Supervision of Run-off Undertakings, as they should pay particular attention to: (i) whether the transaction leads to an unbalanced distribution of risk and reward, in case policies with profit-sharing are affected; (ii) the fixed costs structure, that is, consider whether the PE fund has estimated a minimum amount of fixed costs that are needed to run the undertaking, and in case of outsourcing, whether the PE fund has demonstrated that it can manage and oversee the activity of the service provider, and (iii) with regard to dividend and coupon payments, examine the funding structures in order to improve the predicted return on equity ("RoE") of the run-off undertaking/portfolio and the time-horizon related to it, see: EIOPA, Supervisory statement on supervision of run-off undertakings, 7 April 2022, paragraphs 5.14, 5.16 and 5.19
8 Other sectorial legislations foresee assessment criteria for the acquisition of qualifying holdings in the financial sector, see: ECB, Guide on qualifying holding procedures, March 2023; EBA, Consultation Paper on Draft Regulatory Technical Standards specifying the minimum list of information to be provided to the competent authorities at the time of the notification under Article 23(6) of Directive 2013/36/EU, EBA/CP/2025/08, 18 June 2025; Joint EBA and ESMA Guidelines on the suitability assessment of shareholders and members with qualifying holdings in issuers of ARTs and in CASPs, EBA/GL/2024/09 and ESMA75-453128700-10, 27 June 2024; Joint Guidelines on the system established by the European Supervisory Authorities for the exchange of information relevant to the assessment of the fitness and propriety of holders of qualifying holdings, directors and key function holders of financial institutions and financial market participants by competent authorities, JC/GL 2024 88, 4 November 2024
9 It should be noted that EIOPA issued guidance on reinsurance arrangements entered into by (re)insurers with third-country reinsurers: EIOPA, Supervisory statement on supervision of reinsurance concluded with third country insurance and reinsurance undertakings, EIOPA-BoS-24-075, 4 April 2024
10 Asset-liability management
11 Solvency Capital Ratio
12 Own Risk and Solvency Assessment
13 In any case, the target company post-acquisition by the PE Firm is expected to fully comply with the governance rules laid out by EIOPA in its guidelines on system of governance (i.e., remuneration, fit and proper, risk management, internal audit, etc.) (EIOPA, Guidelines on system of governance, EIOPA-BoS-14/253, 1 January 2014)
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