The European Commission has launched a major regulatory reform to revitalise Europe’s securitisation market and better channel insurer capital into the real economy. With over €10 trillion in assets under management, insurers represent a vast but underutilised source of long-term funding.

Historically, insurer participation has been limited by Solvency II capital charges and rigid prudential rules, which made securitisations economically unattractive compared to other fixed-income assets. The 2025 reforms directly address these barriers by:

• Recalibrating Solvency II capital requirements, aligning high-quality securitisations with the treatment of covered bonds.
• Recognising unfunded credit protection from insurers as eligible under the STS framework, making insurance-backed Significant Risk Transfer (SRT) transactions more efficient.

Together, these changes create a dual catalyst for insurer participation — reducing capital costs for funded investments and opening new opportunities for unfunded risk-sharing. This marks a decisive policy shift, positioning insurers as strategic partners to European banks in transferring credit risk and expanding lending capacity.

Looking ahead, these reforms are expected to unlock significant new insurer capacity, increase market liquidity, enhance pricing efficiency, and strengthen credit provision to the real economy. The result is a more dynamic and integrated European securitisation market, fully aligned with the ambitions of the EU’s Savings and Investments Union.

Read the full article here: Insurer participation in European securitisations