The revised Swiss Insurance Supervision Ordinance (Aufsichtsverordnung - AVO) has applied since 1 January 2024, replacing the rules that had sat in FINMA Circular 2016/5 - a shift we set out at the time in Tied assets: transition from FINMA Circular 2016/5 to AVO and FINMA-AVO. For assets already held in tied assets (gebundenes Vermögen) under the previous regime, the transitional relief runs out on 4 January 2027. From that date, every asset in a Swiss private insurer's tied assets has to sit within the standard list in Article 79(2) AVO, or within an insurer-specific list approved by FINMA under Article 79(1).
Most insurers would rather not need the second route, since an Article 79(1) list means an application, a supervisory dialogue and a permission to maintain, turning a portfolio decision into an administrative process. For most balance sheets the practical goal is to stay inside the standard list.
For an insurer invested largely in conventional funds, that looks like a small exercise. A careful look-through tends to show otherwise, and the conversations we are now seeing between insurers and FINMA about what the end of the transition means in practice suggest we are not alone in thinking so.
What the transitional phase allows
Article 216c paragraph 3 AVO governs the transitional phase. It lets an insurer continue allocating to tied assets, for three years from the revision taking effect, values that were eligible under the old rules but do not fall within the new Article 79(2) list. Three conditions attach: the values meet the requirements of Article 76; the insurer had already invested lawfully and to a comparable extent in that kind of value before the revision; and where such values were added after the revision took effect, an Article 79(1) application covering them has been filed and has been neither withdrawn nor refused.
Paragraph 4 lets FINMA extend the transitional periods, but only where that is needed to protect insurers' reliance on investment decisions taken before the revision, which makes it a good deal narrower than a general discretion to postpone.
Why a fund is not assessed as a fund
Article 79(2)(f) admits units in collective investment schemes whose assets can be separated out in a bankruptcy of the fund provider (as a Sondervermögen), and then imposes three conditions: the units can be sold at any time, the fund management company is subject to adequate regulation and supervision at home or abroad, and the scheme invests, directly or indirectly, only in the assets listed in the preceding letters.
Those preceding letters are a short list:
(a) cash, bank deposits maturing within a year and money-market investments at sufficiently creditworthy banks;
(b) bonds from sufficiently creditworthy debtors, taking rank into account, where they trade on a regulated market and are quickly saleable;
(c) listed shares and similar equity securities, on the same market and liquidity conditions;
(d) Swiss residential and commercial property owned directly by the insurer;
(e) derivatives, where they serve to hedge assets of the relevant tied assets.
Everything turns on that word "only", and the ordinance says nothing about how much latitude there is at the margin: whether an immaterial position in something outside (a) to (e) is tolerated, and how to treat instruments whose classification is genuinely arguable. That is unresolved, and it is the subject of active interpretation and discussion in the Swiss market at the moment.
Bond funds: it depends what the fund tracks
A Swiss corporate bond fund holding a few hundred positions can be walked through in an afternoon, whereas broad global mandates are a different exercise altogether. A tracker on the Bloomberg Global Aggregate index family held almost 20,000 positions in mid-2026, and that index spans treasury, government-related, corporate and securitised fixed-rate debt, the securitised part bringing in asset-backed and mortgage-backed securities and covered bonds.
None of that reflects unusual decisions by the asset manager; it is what passive replication of an established global investment-grade universe produces. It does raise a question of interpretation: how far the ordinance's category of bonds reaches across that range, and whether positions whose classification is less obvious affect the treatment of the fund as a whole.
The regulatory question is identical in both cases, and what differs is the amount of work required to answer it, which is driven by how many positions the fund holds and how varied they are.
Foreign real estate: outside letter (d), possibly inside letter (c)
The list is written with direct holdings in mind: letter (d) reaches Swiss residential and commercial property owned directly by the insurer, and says nothing about property abroad.
That does not necessarily put foreign real estate exposure out of reach. Where it is held through listed vehicles - REITs and comparable listed property companies - the natural home is letter (c), which admits listed shares and similar securities traded on a regulated market and quickly saleable, and turns on the characteristics of the security rather than on where the underlying building stands.
In our view that reading is available on the text. It is also among the questions being put to FINMA, and an insurer relying on it should not assume the point is settled, or that an Article 79(1) approval will not be needed.
Derivatives: FINMA has answered part of this
Article 79(2)(e) admits derivatives where they serve to hedge assets of the relevant tied assets. Read alone, that sits awkwardly against normal fund practice, where derivatives are also used for liquidity and exposure management and for efficient index replication, without changing the economic character of the fund.
FINMA addressed this directly in guidance published on 23 February 2026. It first notes that the revision tightened the treatment of derivatives, and of the leverage they create, in tied assets, citing Article 79(2)(e) together with Article 100(2) AVO.
Leverage is the heart of it. Article 100(2) AVO requires insurers to rule out any danger to the tied assets from derivative use, and states that derivatives may produce neither leverage on the tied assets nor any uncovered obligation, so that read together with the hedging wording in Article 79(2)(e) the concern extends beyond what a derivative is for to whether it gears the portfolio.
That is why FINMA draws its line by reference to how a fund measures derivative risk. Units in Swiss collective investments that use derivatives and apply the Commitment Approach I can in principle be allocated to tied assets, and no Article 79(1) application is required on that account. The choice of that category is not arbitrary: under Article 34 KKV-FINMA the Commitment Approach I permits only basic derivative forms, and only where their use creates no leverage on the fund's assets and does not amount to a short sale, which is the same prohibition Article 100(2) AVO imposes at the level of the tied assets. FINMA is explicit that this covers the derivatives point alone, and that the insurer must still test every other Article 79(2) requirement. Where a fund uses a different risk-measurement method and employs derivatives that go beyond hedging or create leverage, an application for an insurer-specific list is required.
That is a workable test, and more specific than the ordinance alone suggests, though it leaves an open question for most portfolios: FINMA's wording addresses Swiss collective investments, while much of Swiss insurers' fund exposure sits in Luxembourg and Irish vehicles. The guidance is written around Swiss funds, and the Commitment Approach I is itself a Swiss fund-law concept, so the silence on foreign vehicles may reflect either a deliberate limit or simply the frame in which it was written. Insurers holding foreign funds should ask rather than assume, and the months before January are the time to do it.
Look-through gives you the data, not the classification
The Solvency II Tripartite Template (TPT) is the natural starting point, being a well established market standard that most asset managers already produce for regulatory purposes. It looks through a collective investment to the individual securities, issuers and derivative exposures inside it, which is the granularity Article 79(2)(f) demands.
What it does not do is answer the Swiss question, because the CIC codes carried in a TPT are Solvency II classifications that exist to classify assets for European reporting. There is no authoritative mapping from them to the Swiss tied-asset categories: none has been published by FINMA, by the Swiss Insurance Association or by FinDatEx, and none should be expected, because the two frameworks were written for different regimes and different purposes.
A TPT therefore tells an insurer what is in a fund, but translating that into an Article 79 assessment is a separate exercise, and for a large passive portfolio it is where the regulatory judgement sits rather than something further data will resolve.
The work does not stop at the classification either, since FINMA's Datenerhebung template, required since 1 January 2025 and covered in our article on it, already brings investment reporting for the SST and for tied-asset monitoring into one collection. The categories an insurer settles on now are the ones it will be reporting against.
The paradox in all of this is that the better the look-through, the more classification questions surface, so that the underlying investment may be entirely conventional while the regulatory assessment becomes harder the deeper the insurer looks.
What asset managers should expect to be asked
The January deadline is not only an insurer's problem.
This applies to managers outside Switzerland as much as to Swiss ones. Since FINMA's derivatives guidance addresses Swiss collective investments, a Luxembourg or Irish fund with Swiss insurance investors sits where the questions will be sharpest, and its manager should have this on the radar now rather than in December.
Managers whose funds are held by Swiss insurers should expect more detailed questions over the coming months, and should be able to answer them without opening a project: what the fixed-income portfolio actually contains beyond plain government and corporate bonds; the purpose and extent of derivative usage; whether the fund measures derivative exposure under the commitment approach or a value-at-risk model; and any holdings whose classification is not immediately obvious.
It is also worth understanding the parts of the AVO that shape how a fund is used, not only whether it qualifies. The quantitative limits largely carried over from the old circular, as we noted when the framework changed, and Article 83 sets them for both routes: values exposed to a single counterparty may be counted towards covering the target amount (Sollbetrag) only up to 5 per cent of it, and indirect exposures inside funds count towards that figure. The Confederation, cantons, cantonal banks carrying a full state guarantee, Swiss Pfandbrief institutions and top-rated sovereigns fall outside the limit. A single collective investment scheme is likewise creditable only up to 5 per cent, unless it is a single-investor fund or one where it is contractually assured that it does not invest in higher-risk assets and respects the basic principles of tied assets, and property and mortgages carry their own limits alongside these. In none of these cases is the insurer forbidden from holding more; what is limited is how much of it counts.
Those numbers explain why an insurer may ask for look-through data even where a fund's eligibility is not in doubt: the counterparty figure cannot be calculated without seeing through the wrapper. Knowing why the request is made tends to make the exchange quicker for both sides.
A high-quality TPT is the foundation of these discussions, and supplying the data is no longer the whole job. Managers who want to stay on top of this, and to serve their Swiss clients well, will also be ready to explain what their data means in the context of Article 79.
For insurers, the work between now and January is to find the genuine areas of uncertainty early enough to resolve them, whether by clarification, by reallocation, or by an Article 79(1) application, open to file since the revised ordinance took effect.
To discuss your regulatory reporting requirements, please reach out to our team.