NAIC and EIOPA Target Private Equity Risks in Insurance Deals
NAIC and EIOPA issue guidance addressing private equity ownership risks in insurance.
Why it matters: Understanding these focused regulatory updates helps legal professionals anticipate compliance challenges and better structure private equity transactions involving insurance companies.
- NAIC issued principles in June 2022 addressing private equity ownership risks in insurance companies.
- EIOPA opened a consultation in February 2024 on supervisory expectations for private equity-owned insurers.
- Private equity insurance deals fell 27.6% to 165 in 2023, but total deal value rose 7.7% to $12.49 billion.
- NAIC enhanced disclosure requirements for related-party transactions within insurance investments to improve transparency.
In June 2022, the National Association of Insurance Commissioners (NAIC) released principles focused on risks associated with private equity (PE) ownership in insurers. These guidelines emphasize enhanced disclosure for related-party transactions and stricter investment transparency to address potential conflicts and financial risks.
Meanwhile, the European Insurance and Occupational Pensions Authority (EIOPA) launched a consultation in February 2024 (corrected date) on supervisory expectations for PE-owned insurance entities. This reflects growing regulatory scrutiny across Europe, particularly concerning transactions that could significantly alter insurers' risk profiles or business strategies.
Market activity mirrors these developments. According to S&P Global Market Intelligence, private equity and venture capital deals in insurance declined by 27.6% in 2023 to 165 transactions, while total deal value increased 7.7% to $12.49 billion, indicating a shift toward fewer but larger investments.
These evolving regulations mean legal professionals working on private equity insurance deals must closely monitor enhanced disclosure requirements and heightened regulatory expectations. This will be critical to structuring compliant transactions and managing risks effectively in a tightening regulatory environment.
By the numbers:
- 27.6% — decline in private equity insurance deals in 2023
- 165 — number of private equity transactions in insurance in 2023
- 7.7% — increase in total deal value to $12.49 billion in 2023
Yes, but: While the NAIC and EIOPA guidance provides clearer regulatory signals, the practical implications for deal structuring may vary across jurisdictions and require careful case-by-case analysis.
What's next: EIOPA's consultation closes mid-2024, after which updated supervisory guidelines are expected, potentially increasing regulatory scrutiny in insurance-related private equity deals.