Italian insurance companies now permitted to invest (directly and indirectly) 
in corporate bonds, securitizations with corporate bonds as underlying assets and investment funds per first regulations implemented under the recently enacted
Destinazione Italia Decree1 (the “Decree”)2

IVASS3 broadens the list of investments and assets eligible to cover technical reserves

One of the primary innovations of the Decree was to permit insurance companies to invest (both directly and indirectly) in corporate bonds. On 23 January, 2014, IVASS published a letter describing the amendments it will make to the current technical reserves regime4 (the “IVASS Letter”)5:

  • add a new investment class of corporate bonds (the “New Corporate Bonds”), which may be unlisted and/or issued by companies not having their financial statements certified by a duly authorized auditing firm in the last three (3) years (the “Certified Financial Statements Requirement”), as previously required;
  • add a new investment class of securitizations, which may be unlisted and/or unrated, having as their underlying asset corporate bonds, including any New Corporate Bonds (the “New Securitizations”);
  • increase the percentage of direct investments allowed in the existing classes of investment funds6 primarily investing in corporate bonds and securitizations from 1% to 3%; and
  • clarify (i) which asset classes permitted to be used to cover technical reserves any investments will be classified under and (ii) the requirements for allowing investments in such funds, to the extent falling within the regime of insurance products linked to internal funds or UCITS7 (i.e., they are marketed in Italy, and have complied with all authorization and notification procedures required under the AIFM Directive8).

IVASS is expected to amend Regulation 36 and they have indicated that such amendments will apply to any investments made by insurance companies during the 1st quarter of 20149. However, it is not certain when such amendments will formally take effect.

Detailed Discussion of IVASS Letter

Amendments allowing investments in New Corporate Bonds

IVASS will now include, under the “Investment” category of assets eligible to cover technical reserves10, the New Corporate Bonds11, including corporate bonds with subordination and participation clauses, even if they (i) are not listed on a regulated market and (ii) do not comply with the further requirements applicable to bonds (i.e., Certified Financial Statement Requirement and residual maturity of less than one year)12.

Investments in this new class are allowed up to a maximum amount equal to 3% of the technical reserves that are being covered.

Amendments allowing investments in a newly eligible class of securitizations, having corporate bonds as underlying asset

IVASS will now include, under the “Investment” category of assets eligible to cover technical reserves13, the new investment class14 of New Securitizations, which may be unlisted and/or unrated. Such New Securitizations may have corporate bonds, including any New Corporate Bonds, as their underlying asset15.

Investments in this new asset class are allowed up to a maximum amount equal to 3% of the technical reserves that are being covered.

Increase in the percentage of direct16 investments allowed in the existing classes of investment funds primarily investing in New Corporate Bonds and New Securitizations

IVASS will introduce an increase in the percentage of the technical reserves that may be covered for the exposure limit in a single fund (from 1%17 to 3%), for funds primarily investing in New Corporate Bonds and New Securitizations.

Clarifications on investments allowed in alternative investment funds

Although regulations implementing the AIFM Directive have not yet been adopted, IVASS has clarified which asset classes permitted to be used to cover technical reserves any investments will be classified under18.

The changes introduced by the AIFM Directive and the expected amendments, inter alia, to the Italian Financial Services Act19, will require further amendments to the current regime of alternative investment fund management and to the regulations governing insurance products linked to internal funds or UCITS20.

IVASS further clarified that investments in alternative investment funds, which are covered by the regulations governing insurance products linked to internal funds or UCITS, will be permitted if such funds (i) are marketed in Italy, (ii) have complied with the authorization procedure in their home country and (iii) have given the required notification to the proper Italian regulatory authorities, pursuant to the AIFM Directive21.


The primary purpose of the new regulations is to encourage insurance companies to invest directly or indirectly (through multiple borrower structures) in corporate bonds, which we expect will benefit the Italian debt capital markets by increasing the demand for Italian corporate bonds and broadening and deepening the liquidity of the Italian corporate bond market.