Italy, with its economy intrinsically linked to its ability to finance itself and grow, could draw enormous benefits from a currently untapped potential: long-term investments in two fundamental categories, insurance and pension funds. These investors, who operate with a time horizon that exceeds five years, could play a crucial role since revival and in growth of the real economy, but at the moment their impact it's still too much marginalA study by revealed this Ambromobiliare, which highlights a huge opportunity that has been overlooked until now.
Italian insurance savings: few investments in the real economy
To fully understand the potential impact, it helps to look at the numbers. In 2023, theItalian insurance industry has managed a financial portfolio of 962,3 billion euros, with an increase of 3,6% compared to the previous year. Of these, approximately 701,8 billion are linked to traditional life insurance policies, excluding unit-linked ones. Despite the mountain of capital, only a very small part of these funds ends up in Italian stock market: just 4% of the total. A figure that gives pause for thought, especially considering that the capitalization overall of the Italian Stock Exchange amounts to approximately 680 billion euros. If only a very small increase in this share were to be allocated to the real economy, our economic landscape could change significantly.
Equity Investment Figures
Le Italian insurance companies They mainly focus on investments in debt securities. About 67% of the portfolio is invested in bonds, especially Italian government bonds. When it comes to stocks, the figure drops to about 30,2 billion euros, equal to 3,6% of the total. Even more worrying is the fact that only 1% of the total assets are invested directly in listed capital instruments. A picture that, compared to other European companies, highlights a significant gap.
At European level, the insurance sector saw premium collections of 2023 billion euros in 677,6. 23,6% of these premiums were invested in shares and strategic participations, a figure significantly higher than the 19% of Italy. This equity investment gap between Italian market and that eclecticism it is reflected in a lack of growth of Italian companies, which are unable to fully capitalize the available funds.
Pension funds and professional funds
Also pension funds and professional cash registers follow the same trend of conservatism. Italian pension funds, at the end of December 2023, recorded total assets of 189 billion euros, with an increase of 11,1% compared to the previous year. However, although the share of equity investments has grown (from 20% in 2022 to 21,4% in 2023, for a total of 40,5 billion euros), the domestic investments remain marginal. Only 1,7 billion euros were allocated to Italian stocks, while the rest was directed towards foreign markets. This trend saw an increase of +18,6% in 2023, confirming the preference for investments outside national borders. If this trend were reversed, with greater attention to domestic equity investments, pension funds could generate an inflow of around 8 billion euros towards Italian companies, thus contributing to a greater development of the Italian stock market.
Likewise, the analysis of professional funds, which manage assets of 114,3 billion euros, offers a similar overview. The orientation towards Investment in debt securities is dominant, with growth in investments in shares (+1,5% in 2023) reaching only 18,9% of the total. Although the share of investments in the domestic economy recorded an increase of 2,9%, direct investments in Italian companies are still too low.
The Solvency II Directive and the opportunities
One of the keys to incentivizing equity investments in Italy could lie in European policies. Solvency II Directive, which regulates insurance companies, provides tax breaks for long-term investments in equity instruments. Current regulations allow, in fact, to reduce reserve capital requirements for long-term equity investments, an advantage that could push Italian insurers to further diversify their portfolios.
Similarly, pension funds enjoy significant benefits tax benefits if they invest in the so-called "PIR” (Individual Savings Plans). However, despite these tax opportunities, investments in Italian stocks remain limited. Increasing the equity exposure of Italian pension funds could, therefore, lead to a significant inflow of domestic capital.
How to unlock 56 billion for the real economy
The Ambromobiliare study proposes a concrete solution: with adequate incentives has always been regulatory review, institutional investors could increase their equity stakes to at least 10%. This would free up 40 billion euros from insurance alone and another 16 billion from pension funds, for a total of 56 billion destined for Italian companies.
Furthermore, Euronext Growth Milan (formerly AIM) represents a great opportunity: it is the market dedicated to small and medium-sized enterprises growing, but to date, long-term Italian investors are almost entirely absent. A change of direction could transform the country’s economic landscape, giving companies the capital they need to expand and innovate.
Italy has extraordinary financial leverage to support its economy, but so far it has chosen not to use it. With the right policies and a change of mentality, insurance companies and pension funds could finally become protagonists of Italian development, reducing companies' dependence on debt and relaunching the national stock market. The question is: will the Italian financial system have the courage to invest in the country's future?
