Question ID: 1571
Regulation Reference: (EU) No 2015/35 - supplementing Dir 2009/138/EC - taking up & pursuit of the business of Insurance and Reinsurance (SII)
Status: Final
Date of submission: 26 Jun 2018
Question
We are about to invest in a mutual fund which invest on life insurance policies. This fund make its yield from buying policies from third parties in the US at a discount and they get the right from the policy holder to recieve the payment in the future.
EIOPA answer
The question does not provide enough information to provide a conclusive answer. The treatment for this type of product has to be decided on a case by case basis.
Relevant aspects to consider in this decision include but are not necessarily limited to:
· What is the exposure to biometrical risks?
· Has the look-through approach to be applied to the investment?
· What is the degree of certainty regarding level and timing of payments?
A possible result of the assessment could be that the investment has to be included in the calculation of the capital requirement for type 2 equities which include
· Alternative investments.
· All assets other not covered in the interest rate risk, property risk or spread risk sub-module
· Assets and indirect exposures referred to in Article 84(1) and (2) of Commission Delegated Regulation (EU) 2015/35 where a look-through approach is not possible and the insurance or reinsurance undertaking does not make use of the provisions in Article 84(3).