ABIR & Insurance Ireland call on EU to tweak securitisation framework
The Association of Bermuda Insurers and Reinsurers (ABIR) and Insurance Ireland have called on EU policymakers to make the necessary regulatory adjustments to the securitisation framework to would allow proven, well-regulated insurers from Solvency II-equivalent jurisdictions to fully participate in the EU market, unlocking vital capital for European banks, consumers, and businesses.
In a joint industry position paper just published, ABIR and Insurance Ireland highlighted how the ongoing review of its securitisation framework is central to strengthening the EU’s financial competitiveness.
Moyagh Murdock, chief executive of Insurance Ireland, welcomed the progress made to date. She said: “The European Commission’s 2025 proposal of opening synthetic STS to (re)insurers as protection providers, was an important and welcome step toward advancing the Savings & Investments Union. However, further progress is needed to support real market scale, as the current safeguards remain too narrow to enable a deeper, more scalable market.”
John Huff, president & chief executive, ABIR said, “A well-functioning securitisation market will enable banks to manage risk efficiently, free up regulatory capital, and expand lending to households, Small and Medium-sized Enterprises (SME), and long-term investment projects — often without transferring customer relationships or relying exclusively on funded capital market investors.”
Huff continued, “Within this framework, unfunded credit protection provided by non-life re/insurers is a straightforward and well-established risk-transfer tool. By purchasing insurance against credit losses, banks can achieve significant risk transfer while retaining the underlying loan portfolios.”
The paper states insurers have been active participants in the non-simple, transparent and standardised (STS) EU synthetic securitisation market since 2018 and operate under robust prudential, governance, and risk-management regimes, notably Solvency II and equivalent third-country supervisory frameworks.
And while the European Commission’s proposal recognises, for the first time, the role insurers can play in STS synthetic securitisations, its current proposed design fails to open the market to support European banks. In particular, the interaction of size thresholds, group recognition, and safeguard requirements risk excluding many EU-authorised insurers that are part of groups headquartered in Solvency II-equivalent jurisdictions outside the EU, such as Bermuda and Switzerland, despite those groups being subject to comparable and comprehensive prudential supervision and already being active providers of credit risk transfer capacity to EU banks.
“This unnecessary exclusion risks a severely limited pool of eligible insurers, increasing counterparty concentration risk, and weakening the crucial STS unfunded credit protection market. Mr. Huff said. “this is more than mere financial technicalities, because rather than mobilising additional private capital, the proposal as currently drafted risks excluding credible insurance capacity, reducing banks’ risk-management options, and constraining lending, especially for core asset classes such as residential mortgages, SME loans, and long-tenor infrastructure finance - precisely what Europe needs for the development of its Savings and Investments Union(SIU).”
Insurance Ireland and ABIR members are long-standing contributors to the European market. Irish insurers paid out €74 billion in claims and safeguarded €300 billion in life and pension assets in 2023. In Europe specifically, Bermuda re/insures paid approximately €24.8 billion to EU policyholders and cedants for property and casualty losses and life insurance claims over the five-year period from 2016 to 2020.
Huff added, “Insurance Ireland and ABIR jointly support targeted, proportionate clarifications to the securitisation regulatory package that preserve strong prudential safeguards while ensuring that the framework is workable in practice, reflects how insurance groups are actually supervised, and allows a sufficiently broad and competitive pool of insurers to support the EU’s real economy.”
Huff highlighted this position when he spoke at a recent event held at Insurance Ireland’s Brussels office. This important event was attended by representatives from the European Parliament, European Commission, and the global re/insurance market.
The joint industry paper is now available to view under the Resources tab of the ABIR website, www.abir.bm.
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