Manuel Kalbreier | Institutional Private Markets Investments Specialist
Gilles Drukier | Head of EMEA Insurance Solutions
Janice Zhong | Solutions Strategist, Insurance Investments
Private equity has accumulated a significant structural problem. Buyout NAV has grown roughly fourteen-fold over two decades, yet cash distributions to limited partners remain below 15% of NAV for the fourth consecutive year—around half the long-run average. The industry is sitting on an estimated 32,000 unsold companies worth $3.8 trillion, and the backlog is proving difficult to clear. For sponsors, prized portfolio companies are trapped inside aging funds approaching the end of their life cycle, creating urgent demand for creative liquidity solutions.
In this paper, we explore how this dislocation has created an attractive entry point for European insurers—and why we believe structured capital solutions can be well suited to the insurance mandate. We examine the mechanics of preferred equity, convertible notes and structured equity, and assess how the anticipated Solvency II LTE reforms could improve the capital-weighted return profile for qualifying allocations:
- Contractual return floor with equity-like upside through conversion rights
- Shorter duration—typical realisation within two to four years
- 50%+ equity cushion from point of entry, sitting senior to common equity
- Reduced SCR charge—potentially 22% under the reformed Solvency II LTE framework versus 49%+ for standard private equity
- Natural liquidity triggers aligned to refinancing and exit events