Legislation in Luxembourg offers insurance companies the option of creating a collective internal insurance fund. The collective internal insurance fund, whose management is delegated by the company to a specialised manager, is the exclusive property of the company. The fund's assets are deposited in a separate account with a depositary bank which provides administrative management of the latter.
The strategy of the funds, the management objectives, total investment and the choice of manager are therefore determined by the company in compliance with the provisions in force.
The collective internal fund is subject to strict prudential rules established by Luxembourg's insurance industry watchdog organisation, the Commissariat Aux Assurances (C.A.A.) and, in particular, it must be invested only in the categories of assets defined in Appendix 1 of Circular 04/8 and comply with the investment limits stipulated in the latter.
In particular, this fund can be set up for a particular partner which then disposes of a bespoke, labelled fund whose characteristics are entirely in keeping with the expectations of its clientele or its network. This investment fund may therefore be proposed exclusively to its network via a Euresa-life contract.
The internal collective insurance fund operates in the same way as a conventional collective investment fund.
The total investment as determined by the C.A.A. is sufficiently large to allow the implementation of proper differentiated management. In particular, the internal collective fund can foresee the investment of up to 40% of its portfolio in alternative funds of funds.
There is no legal minimum for the creation of an internal collective fund. However, given the structure to be put in place and the relative costs of same, launching this type of product can only be envisaged for a sufficient volume of business to make it possible to cover the fixed costs with which the fund is burdened as a minimum requirement.