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Italian Insurance Companies Now Permitted to Invest (Directly and Indirectly) in Corporate Bonds, Securitizations with Corporate Bonds as Underlying Assets and Investment Funds per First Regulations Implemented Under Destinazione Italia

One of the primary innovations of the Decree was to permit insurance companies to invest (both directly and indirectly) in corporate bonds. On 23 January, 2014, IVASS published a letter describing the amendments it will make to the current technical reserves regime (the "IVASS Letter"): add a new investment class of corporate bonds (the "New Corporate Bonds"), which may be unlisted and/or issued by companies not having their financial statements certified by a duly authorized auditing firm in the last three (3) years (the "Certified Financial Statements Requirement"), as previously required; add a new investment class of securitizations, which may be unlisted and/or unrated, having as their underlying asset corporate bonds, including any New Corporate Bonds (the "New Securitizations"); increase the percentage of direct investments allowed in the existing classes of investment funds primarily investing in corporate bonds and securitizations from 1% to 3%; and clarify (i) which asset classes permitted to be used to cover technical reserves any investments will be classified under and (ii) the requirements for allowing investments in such funds, to the extent falling within the regime of insurance products linked to internal funds or UCITS (i.e., they are marketed in Italy, and have complied with all authorization and notification procedures required under the AIFM Directive).

IVASS is expected to amend Regulation 36 and they have indicated that such amendments will apply to any investments made by insurance companies during the 1st quarter of 2014. However, it is not certain when such amendments will formally take effect.

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