Private equity firms seeking to acquire European insurance companies must show they can support policyholders over the long term rather than chasing quick profits, Europe’s insurance regulator said.
Petra Hielkema, president of the European Insurance and Occupational Pensions Authority (EIOPA), said private equity (PE) ownership can bring capital, expertise and competition.
“If you say you are long-term, you should be long-term, and long-term is not five years,” she told Reuters.
Alternative asset managers have been expanding into insurance, attracted by predictable revenue streams and the large volumes of assets that insurers manage on behalf of their clients.
Such transactions have attracted the attention of regulators and investors, a situation exacerbated by some recent pressures in private, or unlisted, investment markets.
Hilkema said regulators want to make sure the new owners don’t put policyholder money into riskier ancillary investments or leave the insurer’s financial position more vulnerable in the event of an exit.
“Then the question you need to ask is: What is your post-acquisition strategy?” She added: “You need to have a compelling answer to that that also meets the needs of prudence, consumer protection and stability.”
EIOPA, which coordinates the EU’s 27 national insurance regulators, will finalize a “supervisory statement” to help them evaluate takeovers by private equity firms, which typically target sales after around five years.
Potential buyers will be asked how long they expect to invest, as insurers’ obligations to customers span decades.
Regulators will also review ownership structures, intra-group transactions and investment strategies that could expose policyholders to new risks.
They are also paying close attention to insurers’ increasing private credit exposure and increasingly complex reinsurance arrangements that transfer risk to affiliated entities, sometimes in offshore jurisdictions such as the Cayman Islands.
In the UK, regulators plan to tighten capital treatment for so-called funded reinsurance.
‘Too many’ in some countries
While private equity ownership in the EU remains relatively low, the average masks higher concentration levels in some countries. About 20% of the insurance market in Greece is related to PE, Portugal and Luxembourg account for about 16%, and the Netherlands accounts for about 13%.
EIOPA said private equity investors took control of 37 EU insurance companies between 2014 and 2024 and exited 11, leaving 26 private equity-owned insurance groups with around 260 billion euros ($303 billion) of assets under management and a 2.4% market share.
The US regulatory agency NAIC stated that the number of US insurance companies held by PE increased from 90 in 2018 to 137 in 2024, with cash and investment assets reaching US$704 billion, accounting for 7.8% of the total industry.
“There are individual cases where regulators will say: this goes too far,” Silkema said, adding that regulators can take action when an insurer is overly reliant on one investor or on transactions with affiliated companies, creating concentration risks.
Silkma said some investors may have overestimated how easy it would be for a business model that proved successful in the United States and Britain to be transplanted to continental Europe, where insurance products, customer behavior and regulation vary.
She highlighted Italian insurance company Eurovita, owned by private equity group Cinven, which must be bailed out in 2023.
(Reporting by Francesco Canepa; Editing by Tommy Reggiore Wilkes and Alexander Smith)
