Swiss Insurer Youplus Halts New Business, Seeks Fresh Capital
(Bloomberg) — Youplus Group is seeking new backers after one of its key measures of financial strength plunged below a self-imposed target.
The company, which manages insurance portfolios formerly owned by financial institutions including UBS Group AG and American International Group Inc., is seeking fresh capital after its solvency ratio dropped below an “internally defined range,” Youplus said in an emailed statement. Falling below that threshold generally triggers regulatory intervention, the company said.
As a result, Youplus said it has halted all new business in Germany, Norway, Czech Republic, and Slovakia in recent days.
“The liquidity and solvency of Youplus is not at risk — all liabilities are covered,” the company said in response to a Bloomberg News inquiry. “In order to strengthen the capital base, the existing shareholders are looking for new, qualified investors, among other things.”
The company’s woes are the latest sign of stress in Europe’s life insurance market, where buyout giants and other private markets firms have increasingly taken stakes in order to use the industry’s vast balance sheet to their liking. Regulators have begun to raise concerns over these ownership structures after the recent high-profile collapses of several major players.
In 2023, the Italian life insurer Eurovita collapsed into administration after bond market volatility hurt the firm’s investment portfolios. The company’s roughly 350,000 clients were ultimately rescued by a group of insurance companies and banks. A year later, Luxembourg-based FWU, which had more than 200,000 clients, filed for insolvency after falling short of regulatory capital requirements.
“In addition to strengthening the capital base, further de-risking activities are underway to restructure the Youplus Group,” the company said in the statement. For example, the firm said it’s pursuing “partial sales of individual portfolios, optimization of internal processes, and the introduction of additional controls.”
Years of Issues
Youplus’s latest issues can be traced back to 2023, when it made an ambitious push to amass more policyholders in its home market. At first, the effort was going better than executives had hoped. Within months, though, Youplus realized it had fallen victim to what it called “fraudulent” intermediaries.
“In the initial months, new business volumes exceeded expectations,” Youplus said at the time. “However, over time the company had to gradually recognize that a significant portion of the submitted new business did not meet the requirements for sustainable value creation. The company became the victim of fraudulent business models involving upfront commission payments.”
The firm ultimately decided it needed to pivot to a pure run-off strategy — meaning it would manage and settle existing claims but it wouldn’t pursue new business.
In life insurance — where players rely on fresh sales or acquisitions to offset shrinking books in order to grow — such a strategy is painful. At Youplus, no new business meant the cost of servicing all existing policies went up as it lost the benefit of greater scale.
The company was also dealing with the effects of falling interest rates. That’s typically bad news for life insurers because they increase the present value of future liabilities while also reducing the future income from investments — setting them up for a potential capital shortfall.
For Youplus, it was a perfect storm: the company’s solvency ratio plunged to 107% at the end of 2024 from 286% in the previous year.
Founding Story
Founded in 2012, Youplus was part of a cadre of private capital-backed firms that have sought to gobble up portfolios of so-called back books from larger insurers. The thinking tended to be they could generate returns through greater scale, extensive use of reinsurance contracts and leverage.
While Youplus is majority owned by an affiliate of a Swiss family office controlled by entrepreneur Klaus Mutschler, the German reinsurer Hannover Re also has a stake in the company. A representative for Hannover Re declined to comment.
Life insurers have been a crucial component of the boom in private markets in recent years. Private equity heavyweights like Apollo Global Management Inc. and Blackstone Inc. have been acquiring or taking stakes in insurers in different markets around the world as a way of gathering more capital they can plow into alternative assets.
But in the wake of the collapse of Eurovita — which was owned by the UK buyout firm Cinven — European regulators have become increasingly vocal about their concerns over private equity ownership of life insurers in a bid to protect the savings of pensioners.
The European Insurance and Occupational Pensions Authority warned in 2023 of a “potential misalignment” between private equity funds’ shorter-term objectives and the “long-term commitment necessary for fulfilling annuity/life insurance policyholder claims.” The Bank of England said last year that private equity’s advance into the insurance sector exacerbates the risk of “fire sales” that disrupt the functioning of financial markets.
In the coming months, the UK’s Prudential Regulation Authority is expected to publish how individual insurers fared in a stress test for the first time.
The Bank for International Settlements was the latest to sound the alarm in a new report this week.
“Because they have an incentive to allocate insurers’ funds to the assets they originate, PE-linked firms can face conflicts of interest,” the BIS said in the report. “These changes have added to the complexity and opaqueness of life insurance balance sheets as well as of their governance.”
–With assistance from Jeff Black.
©2025 Bloomberg L.P.
