A third French insurance entity has moved pension assets out from under Solvency II and into a new occupational pensions vehicle.
ACPR, the French prudential regulator, last month granted Sacra permission to operate as a “fonds de retraite professionelle supplementaire” (FRPS), the vehicle ushered in by a 2016 law known as “loi Sapin”.
Stève Baumann, chairman of Sacra’s board, said that by creating the FRPS the insurance sector remained “cutting-edge”, having already been a pioneer when it set up a funded pension scheme in 1995.
Sacra had “innovated by transforming itself entirely into an FRPS”, he added, indicating this was possible because Sacra only had a single contract, with FFA, the French insurance federation.
Baumann told IPE that Sacra’s FRPS would have an investment portfolio of around €3bn, which would benefit from prudential treatment more compatible with the long-term character of its liabilities than that under Solvency II.
The new occupational pension vehicles are subject to a regulatory framework combining elements of the first IORP directive and Solvency II. Most notably, the new pension funds are exempt from the latter’s capital charges and other financial requirements.
Baumann said the FRPS framework “kept the best of both prudential regimes”.
The government has previously said a shift to the FRPS regime could unlock “several dozen billion euros” to invest in companies, mainly through equities.
A regular complaint about the Solvency II framework is that it discourages long-term investments.
The European Commission is currently working on amendments to a Solvency II rule and yesterday the chairman of the European Parliament’s economic and monetary affairs committee reiterated its support “for a reduction of the current risk margin in order to boost the financing of the real economy and to encourage the insurers to invest in long-term projects”.
The other two insurance entities that have turned to the FRPS framework have, or are planning to, set up an FRPS as a separate entity.
Aviva France has been given approval to set up will be a €4bn fund, while healthcare provider Malakoff-Médéric has also sought authorisation to create an FRPS, which it has named MM Retraite Supplémentaire.
Sacra was established in 1995 to act as the provider for the closed occupational pension plan for the insurance sector, set up in 1962.