Private Equity Enters the Life Insurance and PER Markets

With the enactment of the Green Industry Act, insurance companies will soon be required to include a minimum percentage of investments in unlisted assets in the investment portfolios offered under their policies, a move that has sparked strong reactions.

The legislation, known as the “green industry” law, was published in the Official Gazette on October 24, 2023. This new law is primarily intended to encourage the mobilization of savings to finance the ecological transition and the greening of industries. 

It includes provisions designed to encourage savers to invest in unlisted assets through life insurance and retirement savings products. Under this law, insurers will be required to include a minimum allocation to unlisted assets—also known as private equity—in the investment profiles of their policies.

This requirement will apply to managed/profiled life insurance contracts (except for conservative profiles), which must include a minimum proportion of unlisted assets based on the investment horizon. 

For example, a “Balanced” profile (which may include up to 70% in risky assets) must include at least 4% in private equity, while a “Dynamic” profile must include at least 8%. With regard to the Retirement Savings Plan (PER), the Balanced profile must include a minimum allocation to unlisted investments ranging from 3% to 8%, depending on the retirement horizon.

For the record, discretionary management involves delegating the allocation and management of savings to the insurer, which selects investment vehicles in accordance with the saver’s profile and adjusts the portfolio based on fluctuations in the financial markets.