Germany: New Insurance Ordinance Adopted

Last Updated: 2 March 2015
Article by Patricia Volhard, LL.M. and Jin-Hyuk Jang

On 25 February 2015, the German Federal Cabinet adopted a regulation to amend the Insurance Ordinance ("AnlV-E") and the Pension Fund Capital Ordinance. We informed about the initial draft published on 23 May 2014 in our client information of 27 May 2014. The regulation will enter into force on the day after its promulgation in the Federal Law Gazette (Bundesgesetzblatt).

The final version contains some of the hoped for improvements compared to the problematic draft of May 2014. The new regulation includes necessary adjustments due to the replacement of the German Investment Act (Investmentgesetz) by the German Capital Investment Code (Kapitalanlagegesetzbuch, "KAGB"), but in general is oriented to a large extent on the status quo of the current Insurance Ordinance and the administrative practice of the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, "BaFin"). In addition, it also contains pleasant amendments regarding investments in loan funds and in loans in general.

As before, the new regulation also explicitly grants BaFin the power to supplement and interpret the rules of the Insurance Ordinance by way of administrative practice (for instance in the form of a new capital investment circular). It is currently however not foreseeable when such a new capital investment circular will be published.

For certain insurance companies the Insurance Ordinance applies only until the end of 2015, as then Solvency II will come into force (this applies in particular to insurance companies whose annual gross written premium income exceeds EUR 5 mio or whose gross technical provisions calculated under Solvency II exceed EUR 25 mio). For all other insurance companies, pension schemes, pension funds and also indirectly for professional pension schemes, the Insurance Ordinance will remain important.

In the following we summarize some of the relevant provisions of the new Insurance Ordinance:

  • Investments in Private Equity ("PE") funds may in the future be allocated to the PE-quota, if

    • the EEA fund manager is in possession of an AIFM authorisation or is registered as a "sub-threshold" manager. Funds which are managed by non-EEA managers are eligible if the manager has its seat in an OECD state and is in possession of a comparable authorisation or registration; and
    • the PE-fund invests in equity, quasi-equity instruments or other forms of corporate financing. Funds which invest in loans but follow a PE-investment strategy will therefore be eligible to qualify, under continuance of the current administrative practice, for the PE-quota.
    • There will be no look-through approach with regard to PE-fund of funds; it is hence generally sufficient if the requirements are fulfilled at the level of the fund of funds.
  • Investments in real estate funds can be allocated to the real estate quota, if the fund qualifies as a so called "special fund" (i.e. only professional and semi-professional investors may subscribe by virtue of its statutes) and if the fund invests in assets which are permissible for German real estate funds. If the fund is a retail fund, it needs to be structured as a closed-ended fund. It is possible that BaFin will introduce further restrictions (e.g. limitation of leverage), particularly in the latter case.
  • Special funds remain eligible, possibly subject to further yet to be specified restrictions by BaFin (similar to the current administrative practice).
  • A new asset class will be introduced for alternative investment funds, under which all funds can be allocated which are seated in the EEA and are managed by a fully authorised EEA-manager. These funds are even eligible if they are invested up to 100% in loans. These loans must however at least have a Speculative-Grade-Rating.
  • The final version of the AnlV-E also foresees the possibility to directly invest in High-Yield-Corporate Loans.

The provisions in detail:

I. Private Equity funds (Section 2 para. 1 no. 13 lit. b) AnlV-E)

It will remain possible to invest up to 15% of the restricted assets into this asset class.

The following further requirements also need to be taken into consideration:

1. Requirements regarding the fund manager

PE-funds are eligible for the investment of restricted assets and fall under the PE-quota under Section 2 para. 1 no. 13 lit. b) AnlV-E, if the respective fund manager with seat in an EEA member state is at least in possession of an AIFM registration (this also entails fund managers registered as EuVECA or EuSEF managers). Fund managers with seat in a full-membership OECD state must be subject to public supervision with a view to protecting investors and must be in possession of a comparable registration.

For fund managers with seat in a full-membership OECD state, the assessment whether or not comparability exists needs to be conducted by the insurance companies on their own responsibility prior to acquiring interests or shares.

2. Fund of funds

PE-target funds do not need to meet the requirements of Section 2 para. 1 no. 13 lit. b) AnlV-E. A look-through approach (as was foreseen in the draft of May 2014) will not apply.

The explanatory comments of the AnlV-E however refer to specific insurance supervisory provisions, which in particular address a possible circumvention in connection with investing in PE-funds through a fund of funds (for instance, requirements could be introduced with respect to risk diversification).

3. Equity, quasi-equity instruments and other forms of corporate financing

In accordance with the current administrative insurance supervisory practice of BaFin, funds which invest in loans and follow an investment strategy similar to that of a PE fund may be allocated to the equity quota. This shall be the case if the activity is not only restricted to monitoring the loans, but rather each granting of a loan is assessed and monitored on an individual basis.

For this, the eligible assets for a PE-fund were broadened to also include "other instruments of corporate financing". These can be acquired in addition to the assets falling under Section 261 para. 1 no. 4 KAGB (interests in non-listed companies) and "other quasi-equity instruments".

To what extent additional requirements currently stipulated by BaFin (restrictions on leverage, free transferability, etc.) will need to be abided by remains to be seen. We expect that, in accordance with BaFin's current administrative practice, the requirements of free transferability and of a trustee inhibition notice (Treuhändersperrvermerk) will remain to be applicable.

II. Real Estate funds (Section 2 para. 1 no. 14 lit. c) AnlV-E)

The final version has expanded the eligible real estate funds to now also include closed-ended Special-AIF. Open- as well as closed-ended real estate Special-AIF and closed-ended real estate retail-AIF can now be allocated under Section 2 para. 1 no. 14 lit. c) AnlV-E, provided that they are managed by a manager possessing an authorisation under Section 20 KAGB or with seat in an EEA-member state and in possession of a comparable authorisation. In case of a fund of funds structure, the real estate target funds must also meet the above criteria. The real estate quota of 25% of the restricted assets will remain applicable for real estate funds.

In addition, free transferability must be provided for (as is applicable to PE funds).

III. Open-ended Special-AIF with non-variable investment conditions (Section 2 para. 1 no. 16 AnlV-E)

Open-ended Special-AIF with non-variable investment conditions pursuant to Section 284 KAGB will remain eligible, in accordance with the current administrative practice, pursuant to Section 2 para. 1 no. 16 AnlV-E, provided they do not already fall under Section 2 para. 1 no. 14 lit. c) AnlV-E (open-ended real estate Special-AIF). The limitation, which was included in the draft of May 2014, to Special-AIF with a UCITS-strategy has been omitted. It remains to be seen if BaFin will uphold its practice in applying the stricter insurance supervisory requirements with regard to an investment in an open-ended Special-AIF (for example not more than 30% of the asset value may be invested in non-securitized loan obligations).

IV. Alternative Special-AIF (Section 2 para. 1 no. 17 AnlV-E)

As already foreseen in the draft of May 2014, a new asset class will be introduced in the AnlV-E. Alternative Special-investment funds, which do not fall under one of the aforementioned asset categories, may be acquired under the new quota for alternative strategies (max. 7.5% of the restricted assets). Precondition is that the funds are German or EU-investment funds and are managed by a fully authorised German or EEA-manager.

V. Investment in loans

Investments in loans to undertakings with seat in an EEA- or OECD member state, who are not in possession of an Investment-Grade-Rating (so called High-Yield-Corporate Loans), are permissible provided sufficient collateral exists. These undertakings must however at least be in possession of a Speculative-Grade-Rating. This expansion of the possibility to invest in corporate loans is in particular intended to ease the granting of loans to infrastructure companies. The investment in High-Yield-Corporate Loans may not exceed 5% of the restricted assets.

VI. Transitional provisions (Section 6 AnlV-E)

Like the draft of May 2014, the final version also foresees a grandfathering for investments in PE-funds which have been made prior to the AnlV-E taking effect. Due to the pleasant changes in the final version, the significance of this grandfathering provision is slightly diminished.

The transitional provision for investments in open Special-AIF has been omitted due to it becoming redundant, as the final version – opposed to the draft of May 2014 – in essence adheres to the status quo.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
P+P Pollath + Partners
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
P+P Pollath + Partners
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions