Agefi Luxembourg - mars 2026

Mars 2026 17 AGEFI Luxembourg Banques / Assurances O n 28 January 2026, the Commissariat aux Assu- rances (CAA) published two new circular letters that modernise the regulatory frame- work for life insurance products linked to investment funds and structured products in Luxembourg. This article will focus on Circular Letter 26/1, as it represents themost significant update of Luxembourg’s fund-linked life insurance investment rules frame- work in over a decade. The reformaims to adapt the existing regulatory toolbox tomeet current investor needs, evolving market practices, and recent regulatory developments, while still maintaining robust investor protection standards. Background and rationale Circular Letter 15/3, in force since 1May 2015, established the core framework for investment rules governing life insur- ance products linked to investment funds. At the time, key innovations, most notably the specialised insurance fundand the refinement of policyholder categories, supported the growth of the Luxembourg life insurance sector. Over time,market participants identified limitations in the existing framework, particularly in relation to (i) direct invest- ments in structuredproducts and (ii) cer- tainobligations applicable to internal col- lective funds used for sophisticated investor segments. Following exchanges between the CAA and industry stake- holders, Circular Letter 26/1 addresses these topics through targeted updates designed to enhance the Luxembourg life insurance offering while preserving its regulatory integrity. Key regulatory developments (i) Greater flexibility for internal col- lective funds . Internal collective funds, as a form of collective management of insurance contracts, are traditionally subject to a stricter supervisory frame- work that is aimed at protecting the var- ious policyholders who may access them. Circular Letter 26/1 introduces certain simplifications for internal col- lective funds intended for sophisticated investors. Inparticular, ClassA, B, Cand D internal collective funds are no longer subject to the CAA notification regime applicableprior to launch, upon changes to the investment policy, or upon termi- nation; only Class N funds remain sub- ject to this regime. (1) (ii) Dedicated rules for direct invest- ment in structured products . Circular Letter 26/1 introduces a dedicated set of rules for direct investments in structured products. (2) The Circular distinguishes eligible structured products depending onwhether they are structuredproducts “with enhanced guarantees” ( produits structurés à garanties renforcées ) or “with- out enhanced guarantees” ( produits structurés sans garanties renforcées ). (3) Eligible structured products must be issued as negotiable securities andmust meet issuer/guarantor requirements applicable to the relevant category. For products “with enhanced guaran- tees”, additional conditions apply, including limitations on certain issuer- driven early redemption features and requirements regarding the link of the product’s value/yield to eligible assets as listed in the Circular’s annex. (4) Products “without enhanced guaran- tees” benefit from more flexible link- ing provisions, subject to the condi- tions set out in the Circular Letter for that category. (5) In addition, Circular Letter 26/1 rein- forces the policyholder protection mechanics for direct and indirect expo- sures to certain higher-risk underlying assets (including, notably, alternative funds, or funds of alternative funds), by requiring explicit prior policyholder consent on the basis of a dedicated risk information notice to be provided and countersigned. (6) (iii) Product governance and advisory framework . Circular Letter 26/1 reiter- ates that the marketing of contracts linked to investment funds requires spe- cific expertise, both for client advice and for asset selectionandmonitoring. These functionsmay remain delegable, subject to the insurance undertaking’s overall responsibility. (7) (iv) Target market framework . Circular Letter 26/1 specifies the target market framework applicable across life insur- ance products. (8) Manufacturers must conduct a formal, documented evalua- tion of product complexity using objec- tive criteria (including options/guaran- tees, underlying investments, and cost/charge structures). (9) Structured products are treated as a relevant factor in the product’s complexity assessment and will typically drive a higher com- plexity outcome. Manufacturers must also implement a documented process to identify the target market on the basis of minimum criteria covering, among other items, policyholder profile, knowl- edge andunderstanding capacity, needs and objectives (including risk tolerance and investment horizon), and financial capacity. Thedefinitionof anegative tar- get market is required for structured products and recommended for other investment types. (10) (v) Enhanced policyholder information requirements . Circular Letter 26/1 con- tains additional expectations regarding policyholder information, including on the presentation of “reductions in yield” in key information documents for insur- anceproducts,consistentwithRegulation (EU) 1286/2014. (11) Where reductions in yield arematerially impacted by perfor- mance fees at the level of certain under- lying assets, the insurance undertaking is expected to perform an explicit “value formoney” analysis. Inaddition, for dedicated funds, the con- tractual annex must include, among other items, a description of the fund’s investment architecture (including whether the fund invests only via exter- nal funds/structured products or may also invest (at least partly) directly in financial instruments without passing through external funds), alongside appropriatelydescribed investment pol- icy and objectives. (12) Other regulatory adjustments Circular Letter 26/1 also implements a number of additional technical changes. The regulatory basis of the Circular is now grounded in CAA Regulation No. 15/03 of 7 December 2015, as referenced throughout the Circular (including in relationtotheinvestmentrulesapplicable to internal funds). Insurance undertakings applying higher investment limits based on EEA country rules must now be able to evidence that themorepermissiblelimitsareeffectively applicable under the relevant local law (e.g. by providing the applicable legal/ regulatory texts or a local legal opinion fromareputablefirm). (13) Inaddition,par- tial redemptions reducing dedicated insurance contract values below EUR 125,000triggermandatoryreclassification and client notification, whilst market- driven decreases require no action. (14) Entry into force and transitional regime CircularLetter26/1enteredintoforceon1 February 2026 and applies to contracts issued fromthat date. Internal fundsnoti- fied or authorised before the entry into forcemaycontinuetooperateonthebasis of the previously notified or authorised rules. Existing contracts and dedicated fundsremaingovernedbytheinvestment rules under the previous circular letters, subject to the possibility of amending the contractualannextoreflectthenewframe- work, where applicable. (15) Conclusion Circular Letter 26/1 represents a signifi- cant step in the modernisation of Luxembourg’s life insurance investment rule framework. By introducing greater flexibility for certain internal collective funds, a dedicated rule set for structured products, a broadened target market framework, and enhanced policyholder information requirements, the CAA has sought to align the regime with current market realities while also reinforcing investor protection. The reform should support Luxembourg’s positioning for thestructuringanddistributionofsophis- ticated insurance solutions. Emmanuelle M OUSEL , Partner - Arendt & Medernach Pierre-Michaël DE W AERSEGGER , Partner – Arendt & Medernach Enric C OMABASOSA - I -E SQUÉ , Senior Associate – Arendt & Medernach 1) Sections 7.1.2 and 7.1.4 of Circular Letter 26/1. 2) Section 6 of Circular Letter 26/1. 3) Sections 6.1 and 6.2 of Circular Letter 26/1. 4) Section 6.1 andAnnex 1 of Circular Letter 26/1. 5) Section 6.2 of Circular Letter 26/1. 6) Sections 5.4.2.1, 6.4, 7.1.3.2 and 7.3.4 of Circular Letter 26/1. 7) Section 3 of Circular Letter 26/1. 8) Section 4 of Circular Letter 26/1. 9) Section 4.1 of Circular Letter 26/1. 10) Section 4.2 of Circular Letter 26/1. 11) Section 9 of Circular Letter 26/1. 12) Section 7.3.4 of Circular Letter 26/1. 13) Section 5.2 of Circular Letter 26/1. 14) Section 7.3.1 of Circular Letter 26/1. 15) Section 10 of Circular Letter 26/1. Circular Letter 26/1 Modernising Luxembourg’s framework for fund-linked life insurance products L e ministre des Finances, Gilles Roth, s'est rendu en Inde du 23 au 28 février 2026 pour une mission fi- nancière avec Luxembourg for Finance (LFF). Cette mission a eu pour objectif de renforcer les liens entre les places finan- cières luxembourgeoise et indienne. L'Inde affiche l'une des croissances économiques les plus rapides au monde. La délégation luxem- bourgeoise a rencontré des acteurs politiques ainsi que des représentants d'institutions finan- cières et des autorités de supervision. À New Delhi, le ministre a eu un échange constructif avec la ministre des Finances de l'Inde, Nirmala Sitharaman. Cette rencontre s'inscrit dans la volonté d'approfondir les rela- tions financières entre nos deux pays. Les dis- cussions ont porté sur de nouvelles pistes de coopération bilatérale ainsi que sur des syner- gies concrètes à développer entre les deux éco- systèmes financiers. Le ministre a également rencontré le Chief Minister du Gujarat pour explorer les opportu- nités de collaboration entre l'État du Gujarat, y compris GIFT City, et la place financière luxem- bourgeoise. GIFT City est un centre financier international situé dans l'État du Gujarat, conçu pour attirer des acteurs financiers mondiaux grâce à un cadre réglementaire innovant, qui ambitionne de se positionner aux côtés de places établies en offrant un environnement compétitif pour les services financiers internationaux. Dans le cadre du Global Securities Markets Conclave 2.0, Gilles Roth a prononcé un discours souli- gnant le rôle du Luxembourg en tant que place financière ouverte dans le monde. Il a réaffirmé sa volonté d'approfondir les partenariats avec l'Inde et de développer des relations solides et durables entre les deux centres financiers. À Mumbai, le ministre des Finances a poursuivi ses échanges avec des acteurs clés du secteur financier indien, notamment la Banque de réserve de l'Inde, la Bourse de Bombay (BSE) et la Securities and Exchange Board of India. Ces ren- contres ont permis d'intensifier le dialogue avec les institutions jouant un rôle central dans l'évo- lution des marchés financiers indiens. Les discus- sions ont porté tant sur le développement des marchés de capitaux que sur les perspectives éco- nomiques de l'Inde. Cette mission financière a montré que le Luxembourg et l'Inde partagent l'objectif com- mun de promouvoir des marchés ouverts, inno- vants et résilients. Le renforcement de la compré- hension mutuelle est essentiel pour encourager les investissements transfrontaliers et identifier de nouvelles pistes de collaboration, notamment dans les domaines de la digitalisation et de la finance durable. Gilles Roth a déclaré : « Cette mission est le sym- bole du fort potentiel dont disposent le Luxembourg et l'Inde pour approfondir leur coo- pération dans le domaine financier. Mes échanges avec des représentants d'institutions financières, des régulateurs et des acteurs publics ont montré que le Luxembourg peut être un partenaire stra- tégique et une porte d'entrée vers les marchés financiers européens. » Source : ministère des Finances Le Luxembourg renforce ses liens financiers avec l’Inde ©ministèredesFinances