D. Liebmann (Lombard International Assurance): “Non-listed assets are a complex asset class that is difficult to understand.”

Decision makers. What criteria are important when choosing asset allocation in Luxembourg life insurance?

Estelle Dolla. In my opinion, this is a combination of three factors: the desired degree of diversification, the requirements for the quality of the underlying assets, and the client’s needs for advice and asset engineering. On this basis, the financial adviser will determine whether Luxembourg Life Insurance is a suitable asset solution.

David Liebmann. We could add a fourth point: adequacy. In terms of asset allocation through Luxembourg life insurance, it is certainly interesting to highlight the quality of the underlying assets, but it is still necessary to have an offer that suits the different needs and profiles of clients. In this sense, in addition to the affordable offer, the service is essential.

What are the benefits for a person to choose Luxembourg life insurance for private equity investment?

Ed The huge selection of different types of basic tools available gives some flexibility and, in the end, the possibility of constructing a truly diversified distribution. The tax deferral offered by Luxembourg life insurance gives it an advantage over direct investment, as capital gains from disposals can be capitalized as part of an insurance package with the possibility of reinvesting them with tax deferral.

A wide choice of different types of underlying allows you to build a truly diversified placement.”

DL The Luxembourg life insurance regulatory framework offers the widest range of investments in Europe, including in non-traditional asset classes such as private equity. Today, 14% of our assets under management in Europe are invested in these asset classes, and this figure is constantly growing. Through our 1,000 asset management partners, we provide access to a very wide range of assets. Thus, the consultant has the opportunity to build with his client a truly individual and diversified asset allocation based on the various units of account available, such as the Specialized Internal Fund (FID) or the Specialized Insurance Fund (FAS). Private equity is gaining momentum in distribution, facilitated by new market intermediaries such as Private Corner, who themselves bring added value to these products. The ecosystem is becoming much more orderly and open.

What types of clients do we address?

DL Although private equity has been widely democratized over the past fifteen years, it remains an asset class reserved for well-informed investors or those who already have a solid and diversified financial legacy. Luxembourgish insurers have also worked hard to democratize this access by facilitating contractual and administrative aspects. At Lombard International Assurance, we do not offer funds in euros and our Luxembourg contracts are 100% unit-linked. We are now seeing that the market context is increasing client demand for private capital to be included in their allocation in order to generate greater returns. The return/risk slider has clearly shifted towards more risk in the distribution. What was only an exploratory asset class ten years ago is now becoming the norm for any diversified asset allocation, alongside more traditional asset classes such as stocks or bonds.

How exactly to invest through Luxembourg life insurance? Who decides? Are there any special conditions that must be met to access certain asset classes?

DL Under a Luxembourg life insurance contract, the investment decision maker may be one or more management companies selected by the client and then authorized by the insurer under discretionary control, always according to the risk profile of the subscriber. This can also be done by an investment advisor or even by the subscriber himself as part of a free or advisory management. We have maximum flexibility and our role is more like a “qualifier” than a selector, where the role of Private Corner is to look for the best opportunities in the market and structure them in a way that makes it easier to access.

Our goal was to provide easy access to funds that typically have an entry ticket of several million euros.”

Ed Our goal was to provide easy access to funds that typically have an entry ticket of several million euros and are therefore out of reach for most private investors. Thus, we combine the subscriptions of several private investors within one vehicle. ad hoc (feeder fund), which itself will invest in the main fund (funds). In addition to expertise in due diligence In order to select the best management teams and rationalize the minimum investment ticket, we have developed a digital platform to offer our customers and partners a streamlined subscription experience, full transparency in terms of reporting, as well as simplified access to our offer. Anytime.

How to solve the issues of need for funds and liquidity inherent in private capital in the framework of the Luxembourg life insurance?

DL Investments, management, administration and sale of unregistered assets require special knowledge. We are the only insurer in Europe with a dedicated team of fourteen people who invest and monitor positions and sell them if necessary. Applications for financing are inherent in private capital and require special knowledge and control. As an investor on behalf of our clients, we take on this responsibility. To do this, we work, in particular, with custodian banks in which positions are registered, as well as with investment teams with whom we have established long-term relationships.

What trends do you observe as a Luxembourgish insurer? And how is the investment platform?

DL Today we talk a lot about direct investments, real assets… as if it becomes proof. But keep in mind that this remains a complex and sometimes hard to understand asset class. Due to the large number of players and available strategies, it is very difficult for an investor to choose, make and control his investments on his own. This requires the assistance of specialists with the necessary knowledge to carry out due diligence and take responsibility for gatekeeper.

Ed Growing interest in unregistered shares continues, but some investment proposals still remain opaque. Therefore, we emphasized transparency, quality and efficiency of service, as well as long-term support. This allows us to be partners in a three-way logic with the insurer and consultant to act in the best possible way for the benefit of the end customer and distributor.

Interview with Marine Fleury