17 March 2015

Insurance Europe: Comments on the proposal for a European Fund for Strategic Investments

In the context of the Investment Plan, the EFSI will be important in attracting investment to particular types of projects in need of public support. But, beyond the EFSI, the insurance sector strongly supports a pipeline of viable and attractive infrastructure investments.

Comments on the EFSI proposal

Firstly, Insurance Europe believes that public support should be directed to projects that would not otherwise receive private investment. From this perspective, Insurance Europe strongly supports the provision in Recital 15, which highlights that “the EFSI should only be used where financing is not available from other sources on reasonable terms”. Insurance Europe believes that this message could be further strengthened by including an additional provision: “priority should be given to fully private financing of all projects in the pipeline, as a precondition for an assessment of EFSI support”

Secondly, Insurance Europe welcomes the condition in Recital 22, that “infrastructure and project investments supported under EFSI should be consistent with State aid rules”. However, Insurance Europe believes that the “core principles for purposes of State aid assessments” identified in this recital should be subject to a stakeholder consultation before adoption by the EC.

General comments on an infrastructure pipeline in Europe

Insurance Europe believes that the involvement of EU authorities and public funds could have a significant positive impact on the success of an infrastructure pipeline in Europe. In order to achieve this, Insurance Europe would like to highlight the following:

• Public resources are best used when they are focused on taking risks that the private sector is not willing to take. This can help to increase the volume of investable projects and to achieve the EC’s crowding-in objective.


• The role of Multilateral Development Banks (MDBs), such as the EIB, should be clearly defined:
  • Their involvement should be focused on projects that would otherwise not receive private investment.
  • The involvement of MDBs should not, however, crowd out private investment. There have been examples in the past where the involvement of sovereigns and/or MDBs has led to project yields that were no longer reflective of actual risks, making projects unattractive to the private sector.


• National governments should receive technical assistance to structure projects to a fundable status.


• Private sector investors (including insurers) should be involved in the governance bodies and expert groups.


• Infrastructure projects need to be economically viable.


• In terms of financing mechanisms, credit enhancement could be used, especially for higher-risk projects.


• The insurance industry is interested in investing in both infrastructure equity and debt. Structuring of projects should, therefore, take this into account and offer opportunities to private investors to invest in both. For example, in the case of a project that receives credit enhancement through an MDB, taking a first loss equity position, private investors should have the possibility to invest in the remaining equity portion, as well as in the debt portion of the project.


• The prudential treatment of infrastructure should be carefully reviewed and infrastructure should be defined as an asset class.

Full position paper

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