PDF also available with case studies for Portugese nationals in English - Portuguese.
PDF also available with case studies for Swedish nationals in English.

The need to protect investors from losing their money has always been a key consideration for private clients and their advisers. The policyholders of unit-linked life insurance contracts issued by Luxembourg insurers benefit from a unique investor protection mechanism.


The keystone of this protection regime is the Luxembourg legal requirement that all assets linked to life insurance policies, i.e. the technical provisions, are recorded on a permanent inventory and have to be entirely separated from the insurance company’s own corporate assets and liabilities . They will also need to be held in custody with an independent custodian bank approved by the Luxembourg regulator, the Commissariat aux Assurances (“CAA”). All technical provisions are held off the bank’s and the insurer’s balance sheets.
The regime, underpinned by a tripartite agreement signed by the life insurance company, the custodian bank and the CAA, is commonly referred to as the “Triangle of Security” and protects policyholders in the case of bankruptcy of either the insurance company and/or the custodian bank.

This separation made at inception of the policies could become utterly relevant later, either at the beginning of a bankruptcy proceeding or when a conflict with a creditor occurs. Should the insurer or the custodian bank fail, the technical provisions would be fully protected and reserved for the policyholders and beneficiaries of the life policies. The CAA would freeze the accounts where these are held in custody and policyholders or beneficiaries would have an absolute preferential right, which overrides any other right without any exclusion.
This Luxembourg policyholder protection regime has proven to work. In October 2008, as the global financial crisis intensified, the Icelandic banking system collapsed claiming, amongst others, Kaupthing Bank and Glitnir Bank as its victims (both banks were established in Luxembourg and were custodian banks for some Lombard International Assurance’s policyholders). The CAA used its powers to freeze the segregated accounts at these banks. Following the appointment of an administrator by the Luxembourg district court, Lombard International Assurance was able to recover the assets linked to its policies – in these cases both securities and cash – and transfer them to another of its appointed custodian banks. The securities of the first policies were transferred within 5 weeks, the bulk of them within 4 months and the balance within 12 months.
This specific legal protection adds up to the fact that Lombard International Assurance exclusively issues unit-linked (i.e. not-guaranteed) life insurance policies, which entails that its clients should not be exposed to situations where adverse investment markets impair the insurer’s capacity to meet its liabilities vis-à-vis policyholders. This is key to private clients as other insurers offering other types of insurance products may carry on this potential risk.
In short, the Luxembourg “Triangle of Security” together with Lombard International Assurance’s business model, provides investors with a unique protection. This ensures to its maximum extent that the assets held through a life insurance policy with Lombard International Assurance are protected to any financial contingency, in a jurisdiction, Luxembourg, with well-proven and demonstrated track record in the global financial industry and with a stable AAA credit rating.


Pablo Peciña - Associate Director, Wealth Planning

Pablo Peciña
Associate Director, Wealth Planning
Lombard International Assurance S.A


Case Study

Case Study

Asset protection for Portuguese nationals residing in Portugal

Case Study

Case Study

Asset protection for Swedish nationals residing in Portugal