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"BFIRST COUNCIL DIRECTIVE
of 5 March 1979
on the coordination of laws, regulations and administrative provisions relating to the taking up and
pursuit of the business of direct life assurance
(79/267/EEC)
(OJ L 63, 13.3.1979, p. 1)
Amended by:
Official Journal
No page date
"M1 Council Directive 90/619/EEC of 8 November 1990 L 330 50 29.11.1990
"M2 Council Directive 92/96/EEC of 10 November 1992 L 360 1 9.12.1992
Amended by:
"A1 Act of Accession of Greece L 291 17 19.11.1979
"A2 Act of Accession of Spain and Portugal L 302 23 15.11.1985
"A3 Act of Accession of Austria, Finland and Sweden C 241 21 29.8.1994
(adapted by Council Decision 95/1/EC, Euratom, ECSC) L 1 1 1.1.19951979L0267 — EN — 01.01.1995 — 005.001 — 1
FIRST COUNCIL DIRECTIVE
of 5 March 1979
on the coordination of laws, regulations and administrative
provisions relating to the taking up and pursuit of the business of
direct life assurance
(79/267/EEC)
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European Economic
Community, and in particular Articles 49 and 57 thereof,
Having regard to the proposal from the Commission (1),
Having regard to the opinion of the European Parliament (2),
Having regard to the opinion of the Economic and Social Committee (3),
Whereas, in order to facilitate the taking up and pursuit of the business of
life assurance, it is essential to eliminate certain divergences which exist
between national supervisory legislation; whereas, in order to achieve
this objective and at the same time ensure adequate protection for
policy-holders and beneficiaries in all Member States, the provisions
relating to the financial guarantees required of life assurance undertak-
ings should be coordinated;
Whereas a classification by class of insurance is necessary in order to
determine, in particular, the activities subject to compulsory auth-
orization;
Whereas certain mutual associations which, by virtue of their legal
status, fulfil requirements as to security and other specific financial
guarantees should be excluded from the scope of this Directive; whereas
certain organizations whose activity covers only a very restricted sector
and is limited by their articles of association should also be excluded;
Whereas the Member States have different regulations and practices as to
the simultaneous carrying on of life assurance and non-life insurance;
whereas newly formed undertakings should no longer be authorized to
carry on these two activities simultaneously; whereas Member States
should be allowed to permit existing undertakings which carry on these
activities simultaneously to continue to do so provided that separate
management is adopted for each of their activities, in order that the
respective interests of life policy-holders and non-life policy-holders are
safeguarded and the minimum financial obligations in respect of one of
the activities are not borne by the other activity; whereas, when one of
the undertakings wishes to establish itself in a Member State to pursue
life assurance in that State, it should set up a subsidiary for that purpose,
which may be eligible on a transitional basis for certain facilities;
whereas, Member States should be given the option of requiring those
existing undertakings established in their territory which carry on life
assurance and non-life insurance simultaneously to put an end to this
practice; whereas, moreover, specialized undertakings should be subject
to special supervision where a non-life undertaking belongs to the same
financial group as a life undertaking;
Whereas life assurance is subject to official authorization and super-
vision in each Member State; whereas the conditions for the granting or
withdrawal of such authorization should be defined; whereas provision
must be made for the right to apply to the courts should an authorization
be refused or withdrawn;!B
(1) OJ No C 35, 28. 3. 1974, p. 9.
(2) OJ No C 140, 13. 11. 1974, p. 44.
(3) OJ No C 109, 19. 9. 1974, p. 1.1979L0267 — EN — 01.01.1995 — 005.001 — 2
Whereas, as regards technical reserves, including mathematical reserves,
the same rules may be adopted as in the case of non-life insurance,
namely, they must be localized in the country where activities are carried
on and the rules of that country are to govern the methods of calculation,
the determination of investment categories and the valuation of assets;
whereas, although it is desirable that these various subjects should be
coordinated, this is not essential for the purposes of this Directive and
may be carried out subsequently;
Where it is necessary that, over and above technical reserves, including
mathematical reserves, of sufficient amount to meet their underwriting
liabilites, insurance undertakings should possess a supplementary
reserve, known as the solvency margin, represented by free assets and,
with the agreement of the supervisory authority, by other implicit assets,
in order to provide against business fluctuations; whereas, in order to
ensure that the requirements imposed for such purposes are determined
according to objective criteria whereby undertakings of the same size
will be placed on an equal footing as regards competition, it is desirable
to provide that this margin shall be related to all the commitments of the
undertaking and to the nature and gravity of the risks presented by the
various activities falling within the scope of the Directive; whereas this
margin should therefore vary according to whether the risks are of
investment, death or management only; whereas it should accordingly be
determined in terms of mathematical reserves and capital at risk
underwritten by an undertaking, of premiums or contributions received,
of reserves only or of the assets of tontines;
Whereas it is necessary to require a guarantee fund, the amount and
composition of which are such as to provide an assurance that the
undertakings possess adequate resources when they are set up and that in
the subsequent course of business the solvency margin in no event falls
below a minimum of security; whereas the whole or a specified part of
this guarantee fund must consist of explicit asset items;
Whereas it is necessary to provide for measures in cases where the
financial position of the undertaking becomes such that it is difficult for
it to meet its underwriting liabilities;
Whereas the coordinated rules concerning the pursuit of the business of
direct insurance within the Community should, in principle, apply to all
undertakings operating on the market and, consequently, also to agencies
and branches where the head office of the undertaking is situated outside
the Community; whereas it is nevertheless desirable as regards the
methods of supervision to lay down special provisions for such agencies
or branches, in view of the fact that the assets of the undertakings to
which they belong are situated outside the Community;
Whereas it is desirable to provide for the conclusion of reciprocal
agreements with one or more third countries in order to permit the
relaxation of such special conditions, while observing the principle that
such agencies and branches should not obtain more favourable treatment
than Community undertakings;
Whereas certain transitional provisions are required in order, in
particular, to permit small and medium-sized undertakings already in
existence to adapt themselves to the requirements to be introduced by the
Member States in pursuance of this Directive, subject to Article 53 of the
Treaty applying;
Whereas Article 52 of the EEC Treaty has been directly applicable since
the end of the transitional period; whereas since that time there has
accordingly been no need for the adoption of Directives abolishing
restrictions on the freedom of establishment; whereas, however, the
provisions concerning proof of good repute and no previous bankruptcy
contained in Council Directive 73/240/EEC of 24 July 1973, abolishing
restrictions on freedom of establishment in the business of direct
insurance other than life assurance (1) do not strictly speaking constitute
restrictions and are also required in life assurance; whereas they should
accordingly be included in this coordination Directive;!B
(1) OJ No L 228, 16. 8. 1973, p. 20.1979L0267 — EN — 01.01.1995 — 005.001 — 3
Whereas it is important to guarantee the uniform application of the
coordinated rules and to provide accordingly for close collaboration
between the Commission and the Member States in this field,
HAS ADOPTED THIS DIRECTIVE:
TITLE I
GENERAL PROVISIONS
Article 1
This Directive concerns the taking up and pursuit of the self-employed
activity of direct insurance carried on by undertakings which are
established in a Member State or wish to become established there in the
form of the activities defined below:
1. The following kinds of insurance where they are on a contractual
basis:
(a) life assurance, that is to say, the class of insurance which
comprises, in particular, assurance on survival to a stipulated age
only, assurance on death only, assurance on survival to a
stipulated age or on earlier death, life assurance with return of
premiums, marriage assurance, birth assurance;
(b) annuities;(c) supplementary insurance carried on by life assurance undertak-
ings, that is to say, in particular, insurance against personal
injury including incapacity for employment, insurance against
death resulting from an accident and insurance against disability
resulting from an accident or sickness, where these various kinds
of insurance are underwritten in addition to life assurance;
(d) the type of insurance existing in Ireland and the United
Kingdom known as permanent health insurance not subject to
cancellation.
2. The following operations, where they are on a contractual basis, in so
far as they are subject to supervision by the administrative authorities
responsible for the supervision of private insurance
"M2
3:
(a) tontines whereby associations of subscribers are set up with a
view to jointly capitalizing their contributions and subsequently
distributing the assets thus accumulated among the survivors or
among the beneficiaries of the deceased;
(b) capital redemption operations based on actuarial calculation
whereby, in return for single or periodic payments agreed in
advance, commitments of specified duration and amount are
undertaken;
(c) management of group pension funds, i.e. operations consisting,
for the undertaking concerned, in managing the investments, and
in particular the assets representing the reserves of bodies that
effect payments on death or survival or in the event of
discontinuance or curtailment of activity;
(d) the operations referred to in (c) where they are accompanied by
insurance covering either conservation of capital or payment of a
minimum interest;
(e) the operations carried out by insurance companies such as those
referred to in Chapter 1, Title 4 of Book IV of the French ‘Code
des assurances’.!B1979L0267 — EN — 01.01.1995 — 005.001 — 4
3. Operations relating to the length of human life which are prescribed
by or provided for in social insurance legislation, when they are
effected or managed at their own risk by assurance undertakings in
accordance with the laws of a Member State.
Article 2
This Directive shall not concern:
1. subject to the application of Article 1 (1) (c) of this Directive, the
classes designated in the Annex to First Council Directive
73/239/EEC of 24 July 1973 on the coordination of laws, regulations
and administrative provisions relating to the taking-up and pursuit of
the business of direct insurance other than life assurance (1),
hereinafter referred to as ‘the first coordination Directive (non-life
insurance)’;
2. operations of provident and mutual-benefit institutions whose
benefits vary according to the resources available and which require
each of their members to contribute at the appropriate flat rate;
3. operations carried out by organizations other than undertakings
referred to in Article 1, whose object is to provide benefits for
employed or self-employed persons belonging to an undertaking or
group of undertakings, or a trade or group of trades, in the event of
death or survival or of discontinuance or curtailment of activity,
whether or not the commitments arising from such operations are
fully covered at all times by mathematical reserves;
4. subject to the application of Article 1 (3), insurance forming part of a
statutory system of social security.
Article 3
This Directive shall not concern:
1. organizations which undertake to provide benefits solely in the event
of death, where the amount of such benefits does not exceed the
average funeral costs for a single death or where the benefits are
provided in kind;
2. mutual associations, where:
— the articles of association contain provisions for calling up
additional contributions or reducing their benefits or claiming
assistance from other persons who have undertaken to provide it,
and
— the annual contribution income for the activities covered by this
Directive does not exceed 500 000 units of account for three
consecutive years. If this amount is exceeded for three
consecutive years this Directive shall apply with effect from
the fourth year.
Article 4
This Directive shall not concern the ‘Versorgungsverband deutscher
Wirtschaftsorganisationen’ in Germany or the ‘Caisse d’épargne de
l’État’ in Luxembourg unless their statutes are amended as regards the
scope of their activities.
This Directive shall not concern the pension activities of pension
insurance undertakings prescribed in the Employees Pensions Act (TEL)
and other related Finnish legislation provided that:
(a) pension insurance companies which already under Finnish law are
obliged to have separate accounting and management systems for!B
(1) OJ No L 228, 16. 8. 1973, p. 3.!A31979L0267 — EN — 01.01.1995 — 005.001 — 5
their pension activities will furthermore, as from the date of
accession, set up separate legal entities for carrying out these
activities;
(b) the Finnish authorities shall allow in a non-discriminatory manner all
nationals and companies of Member States to perform according to
Finnish legislation the activities specified in Article 1 related to this
exemption whether by means of:
— ownership or participation in an existing insurance company or
group;
— creation or participation of new insurance companies or groups,
including pensioninsurance companies;
(c) the Finnish authorities will submit to the Commission for approval a
report within three months from the date of accession, stating which
measures have been taken to split up TEL-activities from normal
insurance activities carried out by Finnish insurance companies in
order to conform to all the requirements of the third life assurance
Directive.
Article 5
For the purposes of this Directive:
(a) ‘unit of account’ means the European unit of account (EUA) as
defined by Article 10 of the Financial Regulation of 21 December
1977 applicable to the general budget of the European Commu-
nities (1); wherever this Directive refers to the unit of account, the
conversion value in national currency to be adopted shall as from 31
December of each year be that of the last day of the preceding month
of October for which EUA conversion values are available in all the
Community currencies;
(b) ‘matching assets’ means the representation of underwriting liabilities
which can be required to be met in a particular currency by assets
expressed or realisable in the same currency;
(c) ‘localization of assets’ means the existence of assets, whether
movable or immovable, within a Member State but shall not be
construed as involving a requirement that movable assets be
deposited or that immovable assets be subjected to restrictive
measures such as the registration of mortgages; assets represented by
claims against debtors shall be regarded as situated in the Member
State where they are realizable;
(d) ‘capital at risk’ means the amount payable on death less the
mathematical reserve for the main risk.
TITLE II
RULES APPLICABLE TO UNDERTAKINGS WHOSE HEAD
OFFICES ARE SITUATED WITHIN THE COMMUNITY
Section A
Conditions of admission
Article 6
The taking-up of the activities covered by this Directive shall be subject
to prior official authorization.!A3
(1) OJ No L 356, 31. 12. 1977, p. 1.!B
!M21979L0267 — EN — 01.01.1995 — 005.001 — 6
Such authorization shall be sought from the authorities of the home
Member State by:
(a) any undertaking which establishes its head office in the territory of
that State;
(b) any undertaking which, having received the authorization required in
the first subparagraph, extends its business to an entire class or to
other classes.
Article 7
1. Authorization shall be valid for the entire Community. It shall permit
an undertaking to carry on business there, under either the right of
establishment or freedom to provide services.
2. Authorization shall be granted for a particular class of assurance as
listed in the Annex. It shall cover the entire class, unless the applicant
wishes to cover only some of the risks pertaining to that class.
The competent authorities may restrict authorization requested for one of
the classes to the operations set out in the scheme of operations referred
to in Article 9.
Each Member State may grant authorization for two or more of the
classes, where its national laws permit such classes to be carried on
simultaneously.
Article 8
1. The home Member State shall require every assurance undertaking
for which authorization is sought to:
(a) adopt one of the following forms:
— in the case of the Kingdom of Belgium: ‘société anonyme/
naamloze vennootschap’, ‘société en commandite par actions/
commanditaire vennootschap op aandelen’, ‘association d’assur-
ance mutuelle/onderlinge verzekeringsvereniging’, ‘société co-
opérative/coöperatieve vennootschap’,
— in the case of the Kingdom of Denmark: ‘aktieselskaber’,
‘gensidige selskaber’, ‘pensionskasser omfattet af lov om
forsikringsvirksomhed (tværgående pensionskasser)’,
— in the case of the Federal Republic of Germany: ‘Aktiengesells-
chaft’, ‘Versicherungsverein auf Gegenseitigkeit’, ‘öffentlich-
rechtliches Wettbewerbsversicherungsunternehmen’,
— in the case of the French Republic: ‘société anonyme’, ‘société
d’assurance mutuelle’, ‘institution de prévoyance régie par le
code de la sécurité sociale’, ‘institution de prévoyance régie par
le code rural’ and ‘mutuelles régies par le code de la mutualité’,
— in the case of Ireland: incorporated companies limited by shares
or by guarantee or unlimited, societies registered under the
Industrial and Provident Societies Acts and societies registered
under the Friendly Societies Acts,
— in the case of the Italian Republic: ‘societá per azioni’, ‘societá
cooperativa’, ‘mutua di assicurazione’,
— in the case of the Grand Duchy of Luxembourg: ‘société
anonyme’, ‘société en commandite par actions’, ‘association
d’assurances mutuelles’, ‘société coopérative’,
— in the case of the Kingdom of the Netherlands: ‘naamloze
vennootschap’, ‘onderlinge waarborgmaatschappij’,
— in the case of the United Kingdom: incorporated companies
limited by shares or by guarantee or unlimited, societies
registered under the Industrial and Provident Societies Acts,
societies registered or incorporated under the Friendly Societies
Acts, the association of underwriters known as Lloyd’ s,!M21979L0267 — EN — 01.01.1995 — 005.001 — 7
— in the case of the Hellenic Republic: ‘ ανώνυµη εταιρία»,
—in the case of the Kingdom of Spain: ‘sociedad anonima’,
‘sociedad mutua’, ‘sociedad cooperativa’,
— in the case of the Portuguese Republic: ‘sociedade anónima’,
‘mútua de seguros’,
— in the case of the Republic of Austria: ‘Aktiengesellschaft’,
‘Versicherungsverein auf Gegenseitigkeit’,
— in the case of the Republic of Finland: ‘keskinäinen vakuu-
tusyhtiö’ / ‘ömsesidigt försäkringsbolag’, ‘vakuutusosakeyhtiö’ /
‘försäkringsaktiebolag’, ‘vakuutusyhdistys’ / ‘försäkringsföre-
ning’,
— in the case of the Kingdom of Sweden: ‘försäkringsaktiebolag’,
‘ömsesidiga försäkringsbolag’,‘understödsföreningar’.
An assurance undertaking may also adopt the form of a European
company when that has been established.
Furthermore, Member States may, where appropriate, set up undertak-
ings in any public-law form provided that such bodies have as their
object insurance operations under conditions equivalent to those under
which private-law undertakings operate;
(b) limit its objects to the business provided for in this Directive and
operations directly arising therefrom, to the exclusion of all other
commercial business;
(c) submit a scheme of operations in accordance with Article 9;(d) possess the minimum guarantee fund provided for in Article 20 (2);
(e) be effectively run by persons of good repute with appropriate
professional qualifications or experience.
2. An undertaking seeking authorization to extend its business to other
classes or to extend an authorization covering only some of the risks
pertaining to one class shall be required to submit a scheme of operations
in accordance with Article 9.
It shall, furthermore, be required to show proof that it possesses the
solvency margin provided for in Article 19 and the guarantee fund
referred to in Article 20 (1) and (2).
3. Member States shall not adopt provisions requiring the prior
approval or systematic notification of general and special policy
conditions, of scales of premiums, of the technical bases, used in
particular for calculating scales of premiums and technical provisions or
of forms and other printed documents which an assurance undertaking
intends to use in its dealings with policy-holders.
Notwithstanding the first subparagraph, for the sole purpose of verifying
compliance with national provisions concerning actuarial principles, the
home Member State may require systematic notification of the technical
bases used for calculating scales of premiums and technical provisions,
without that requirement constituting a prior condition for an undertak-
ing to carry on its business.
Nothing in this Directive shall prevent Member States from maintaining
in force or introducing laws, regulations or administrative provisions
requiring approval of the memorandum and articles of association and
the communication of any other documents necessary for the normal
exercise of supervision.
Not later than five years after the date of entry into force of Directive
92/96/EEC (
1), the Commission shall submit a report to the Council on
the implementation of this paragraph.!M2
(1) OJ No L 360, 9. 12. 1992, p. 1.!A3
!M21979L0267 — EN — 01.01.1995 — 005.001 — 8
4. The abovementioned provisions may not require that any application
for authorization be considered in the light of the economic requirements
of the market.
Article 9
The scheme of operations referred to in Article 8 (1) (c) and (2) shall
include particulars or proof concerning:
(a) the nature of the commitments which the undertaking proposes to
cover;
(b) the guiding principles as to reassurance;
(c) the items constituting the minimum guarantee fund;(d) estimates relating to the costs of setting up the administrative
services and the organization for securing business and the financial
resources intended to meet those costs;
in addition, for the first three financial years:(e) a plan setting out detailed estimates of income and expenditure in
respect of direct business, reassurance acceptances and reassurance
cessions;
(f) a forecast balance sheet;(g) estimates relating to the financial resources intended to cover
underwriting liabilities and the solvency margin.
Article 10
1. An assurance undertaking that proposes to establish a branch within
the territory of another Member State shall notify the competent
authorities of its home Member State.
2. The Member States shall require every assurance undertaking that
proposes to establish a branch within the territory of another Member
State to provide the following information when effecting the
notification provided for in paragraph 1:
(a) the Member State within the territory of which it proposes to
establish a branch;
(b) a scheme of operations setting out inter alia the types of business
envisaged and the structural organization of the branch;
(c) the address in the Member State of the branch from which
documents may be obtained and to which they may be delivered, it
being understood that that address shall be the one to which all
communications to the authorized agent are sent;
(d) the name of the branch’ s authorized agent, who must possess
sufficient powers to bind the undertaking in relation to third parties
and to represent it in relations with the authorities and courts of the
Member State of the branch. With regard to Lloyd’ s, in the event of
any litigation in the Member State of the branch arising out of
underwritten commitments, the assured persons must not be treated
less favourably than if the litigation had been brought against
businesses of a conventional type. The authorized agent must,
therefore, possess sufficient powers for proceedings to be taken
against him and must in that capacity be able to bind the Lloyd’ s
underwriters concerned.
3. Unless the competent authorities of the home Member State have
reason to doubt the adequacy of the administrative structure or the
financial situation of the assurance undertaking or the good repute and
professional qualification or experience of the directors or managers or
the authorized agent, taking into account the business planned, they shall
within three months of receiving all the information referred to in
paragraph 2 communicate that information to the competent authorities
of the Member State of the branch and shall inform the undertaking
concerned accordingly.!M21979L0267 — EN — 01.01.1995 — 005.001 — 9
The competent authorities of the home Member State shall also attest
that the assurance undertaking has the minimum solvency margin
calculated in accordance with Articles 19 and 20.
Where the competent authorities of the home Member State refuse to
communicate the information referred to in paragraph 2 to the competent
authorities of the Member State of the branch they shall give the reasons
for their refusal to the undertaking concerned within three months of
receiving all the information in question. That refusal or failure to act
shall be subject to a right to apply to the courts in the home Member
State.
4. Before the branch of an assurance undertaking starts business, the
competent authorities of the Member State of the branch shall, within
two months of receiving the information referred to in paragraph 3,
inform the competent authority of the home Member State, if appropri-
ate, of the conditions under which, in the interest of the general good,
that business must be carried on in the Member State of the branch.
5. On receiving a communication from the competent authorities of the
Member State of the branch or, if no communication is received from
them, on expiry of the period provided for in paragraph 4, the branch
may be established and start business.
6. In the event of a change in any of the particulars communicated
under paragraph 2 (b), (c) or (d), an assurance undertaking shall give
written notice of the change to the competent authorities of the home
Member State and of the Member State of the branch at least one month
before making the change so that the competent authorities of the home
Member State and the competent authorities of the Member State of the
branch may fulfil their respective roles under paragraphs 3 and 4.
Article 12
Any decision to refuse an authorization shall be accompanied by the
precise grounds for doing so and notified to the undertaking in question.
Each Member State shall make provision for a right to apply to the courts
should there be any refusal.
Such provision shall also be made with regard to cases where the
competent authorities have not dealt with an application for an
authorization upon the expiry of a period of six months from the date
of its receipt.
Article 13
1. Without prejudice to paragraphs 3 and 7, no undertaking may be
authorized both pursuant to this Directive and pursuant to Directive
73/239/EEC.
2. However, Member States may provide that:— undertakings authorized pursuant to this Directive may also obtain
authorization, in accordance with Article 6 of Directive 73/239/EEC
for the risks listed in classes 1 and 2 in the Annex to that Directive,
— undertakings authorized pursuant to Article 6 of Directive
73/239/EEC solely for the risks listed in classes 1 and 2 in the
Annex to that Directive may obtain authorization pursuant to this
Directive.!M2
!B
!M21979L0267 — EN — 01.01.1995 — 005.001 — 10
3. Subject to paragraph 6, undertakings referred to in paragraph 2 and
those which at the time of notification of this Directive carry on
simultaneously both of the activities covered by this Directive and by
Directive 73/239/EEC may continue to do so, provided that each activity
is separately managed in accordance with Article 14.
4. Member States may provide that the undertakings referred to in
paragraph 2 shall comply with the accounting rules governing under-
takings authorized pursuant to this Directive for all of their activities.
Pending coordination in this respect, Member States may also provide
that, with regard to rules on winding-up, activities relating to the risks
listed in classes 1 and 2 in the Annex to Directive 73/239/EEC carried on
by the undertakings referred to in paragraph 2 shall be governed by the
rules applicable to life assurance activities.
5. Where an undertaking carrying on the activities referred to in the
Annex to Directive 73/239/EEC has financial, commercial or adminis-
trative links with an undertaking carrying on the activities covered by
this Directive, the supervisory authorities of the Member States within
whose territories the head offices of those undertakings are situated shall
ensure that the accounts of the undertakings in question are not distorted
by agreements between these undertakings or by any arrangement which
could affect the apportionment of expenses and income.
6. Any Member State may require undertakings whose head offices are
situated in its territory to cease, within a period to be determined by the
Member State concerned, the simultaneous pursuit of activities in which
they were engaged at the time of notification of this Directive.
7. The provisions of this Article shall be reviewed on the basis of a
report from the Commission to the Council in the light of future
harmonization of the rules on winding-up, and in any case before 31
December 1999.
Article 14
1. The separate management referred to in Article 13 (3) must be
organized in such a way that the activities covered by this Directive are
distinct from the activities covered by the first coordination Directive
(non-life insurance) in order that:
— the respective interests of life policy-holders and non-life policy-
holders are not prejudiced and, in particular, that profits from life
assurance benefit life policy-holders as if the undertaking only
carried on the activity of life assurance,
— the minimum financial obligations, in particular solvency margins,
in respect of one or other of the two activities, namely an activity
under this Directive and an activity under the first coordination
Directive (non-life insurance) are not borne by the other activity.
However, as long as the minimum financial obligations are fulfilled
under the conditions laid down in the second indent of the first
subparagraph and, provided the competent authority is informed, the
undertaking may use those explicit items of the solvency margin which
are still available for one or other activity.
The supervisory authorities shall analyze the results in both activities so
as to ensure that the provisions of this paragraph are complied with.
2. (a) Accounts shall be drawn up in such a manner as to show the
sources of the results for each of the two activities, life assurance
and non-life insurance. To this end all income (in particular
premiums, payments by re-insurers and investment income) and
expenditure (in particular insurance settlements, additions to
technical reserves, reinsurance premiums, operating expenses in
respect of insurance business) shall be broken down according to
origin. Items common to both activities shall be entered in
accordance with methods of apportionment to be accepted by the
competent supervisory authority.!M2
!B1979L0267 — EN — 01.01.1995 — 005.001 — 11
(b) Undertakings must, on the basis of the accounts, prepare a
statement clearly identifying the items making up each solvency
margin, in accordance with Article 18 of this Directive and
Article 16 (1) of the first coordination Directive (non-life
insurance).
3. If one of the solvency margins is insufficient, the supervisory
authorities shall apply to the deficient activity the measures provided for
in the relevant Directive, whatever the results in the other activity. By
way of derogation from the second indent of the first subparagraph of
paragraph 1, these measures may involve the authorization of a transfer
from one activity to the other.
Section B
Conditions for carrying on activities
Article 15
1. The financial supervision of an assurance undertaking, including that
of the business it carries on either through branches or under the freedom
to provide services, shall be the sole responsibility of the home Member
State. If the competent authorities of the Member State of the
commitment have reason to consider that the activities of an assurance
undertaking might affect its financial soundness, they shall inform the
competent authorities of the undertaking’s home Member State. The
latter authorities shall determine whether the undertaking is complying
with the prudential principles laid down in this Directive.
2. That financial supervision shall include verification, with respect to
the assurance undertaking’s entire business, of its state of solvency, the
establishment of technical provisions, including mathematical provi-
sions, and of the assets covering them, in accordance with the rules laid
down or practices followed in the home Member State pursuant to the
provisions adopted at Community level.
3. The competent authorities of the home Member State shall require
every assurance undertaking to have sound administrative and account-
ing procedures and adequate internal control mechanisms.
Article 16
The Member State of the branch shall provide that, where an assurance
undertaking authorized in another Member State carries on business
through a branch, the competent authorities of the home Member State
may, after having first informed the competent authorities of the Member
State of the branch, carry out themselves, or through the intermediary of
persons they appoint for that purpose, on-the-spot verification of the
information necessary to ensure the financial supervision of the
undertaking. The authorities of the Member State of the branch may
participate in that verification.
Article 17
1. The home Member State shall require every assurance undertaking
to establish sufficient technical provisions, including mathematical
provisions, in respect of its entire business.
The amount of such technical provisions shall be determined according
to the following principles:
A. (i) The amount of the technical life-assurance provisions shall be
calculated by a sufficiently prudent prospective actuarial valu-
ation, taking account of all future liabilities as determined by the
policy conditions for each existing contract, including:
— all guaranteed benefits, including guaranteed surrender
values,!B
!M21979L0267 — EN — 01.01.1995 — 005.001 — 12
— bonuses to which policy-holders are already either collec-
tively or individually entitled, however those bonuses are
described — vested, declared or allotted,
— all options available to the policy-holder under the terms of
the contract,
— expenses, including commissions;taking credit for future premiums due;
(ii) the use of a retrospective method is allowed, if it can be shown
that the resulting technical provisions are not lower than would
be required under a sufficiently prudent prospective calculation
or if a prospective method cannot be used for the type of contract
involved;
(iii) a prudent valuation is not a ‘best estimate’ valuation, but shall
include an appropriate margin for adverse deviation of the
relevant factors;
(iv) the method of valuation for the technical provisions must not
only be prudent in itself, but must also be so having regard to the
method of valuation for the assets covering those provisions;
(v) technical provisions shall be calculated separately for each
contract. The use of appropriate approximations or generaliz-
ations is allowed, however, where they are likely to give
approximately the same result as individual calculations. The
principle of separate calculation shall in no way prevent the
establishment of additional provisions for general risks which
are not individualized;
vi) where the surrender value of a contract is guaranteed, the
amount of the mathematical provisions for the contract at any
time shall be at least as great as the value guaranteed at that time.
B. The rate of interest used shall be chosen prudently. It shall be
determined in accordance with the rules of the competent authority
in the home Member State, applying the following principles:
(a) for all contracts, the competent authority of the undertaking’s
home Member State shall fix one or more maximum rates of
interest, in particular in accordance with the following rules:
(i) when contracts contain an interest rate guarantee, the
competent authority in the home Member State shall set a
single maximum rate of interest. It may differ according to
the currency in which the contract is denominated, provided
that it is not more than 60 % of the rate on bond issues by the
State in whose currency the contract is denominated. In the
case of a contract denominated in ecus, this limit shall be set
by reference to ecu-denominated issues by the Community
institutions.
If a Member State decides, pursuant to the second sentence
of the preceding paragraph, to set a maximum rate of
interest for contracts denominated in another Member
State’s currency, it shall first consult the competent authority
of the Member State in whose currency the contract is
denominated;
(ii) however, when the assets of the undertaking are not valued
at their purchase price, a Member State may stipulate that
one or more maximum rates may be calculated taking into
account the yield on the corresponding assets currently held,
minus a prudential margin and, in particular for contracts
with periodic premiums, furthermore taking into account the
anticipated yield on future assets. The prudential margin and
the maximum rate or rates of interest applied to the
anticipated yield on future assets shall be fixed by the
competent authority of the home Member State;!M21979L0267 — EN — 01.01.1995 — 005.001 — 13
(b) the establishment of a maximum rate of interest shall not imply
that the undertaking is bound to use a rate as high as that;
(c) the home Member State may decide not to apply (a) to the
following categories of contracts:
— unit-linked contracts,— single-premium contracts for a period of up to eight years,
— without-profits contracts, and annuity contracts with no
surrender value.
— without-profits contracts, and annuity contracts with no
surrender value.
In the cases referred to in the last two indents of the first
subparagraph, in choosing a prudent rate of interest, account
may be taken of the currency in which the contract is
denominated and corresponding assets currently held and where
the undertaking’s assets are valued at their current value, the
anticipated yield on future assets.
Under no circumstances may the rate of interest used be higher
than the yield on assets as calculated in accordance with the
accounting rules in the home Member State, less an appropriate
deduction;
(d) the Member State shall require an undertaking to set aside in its
accounts a provision to meet interest-rate commitments vis-à-vis
policy-holders if the present or foreseeable yield on the
undertaking’s assets is insufficient to cover those commitments;
(e) the Commission and the competent authorities of the Member
States which so request shall be notified of the maximum rates
of interest set under (a).
C. The statistical elements of the valuation and the allowance for
expenses used shall be chosen prudently, having regard to the State
of the commitment, the type of policy and the administrative costs
and commissions expected to be incurred.
D. In the case of participating contracts, the method of calculation for
technical provisions may take into account, either implicitly or
explicitly, future bonuses of all kinds, in a manner consistent with the
other assumptions on future experience and with the current method
of distribution of bonuses.
E. Allowance for future expenses may be made implicitly, for instance
by the use of future premiums net of management charges. However,
the overall allowance, implicit or explicit, shall be not less than a
prudent estimate of the relevant future expenses.
F. The method of calculation of technical provisions shall not be
subject to discontinuities from year to year arising from arbitrary
changes to the method or the bases of calculation and shall be such
as to recognize the distribution of profits in an appropriate way over
the duration of each policy.
2. Assurance undertakings shall make available to the public the bases
and methods used in the calculation of the technical provisions, including
provisions for bonuses.
3. The home Member State shall require every assurance undertaking
to cover the technical provisions in respect of its entire business by
matching assets, in accordance with Article 24 of Directive 92/96/EEC.
In respect of business written in the Community, these assets must be
localized within the Community. Member States shall not require
assurance undertakings to localize their assets in a particular Member
State. The home Member State may, however, permit relaxations in the
rules on the localization of assets.!M21979L0267 — EN — 01.01.1995 — 005.001 — 14
4. If the home Member State allows any technical provisions to be
covered by claims against reassurers, it shall fix the percentage so
allowed. In such case, it may not require the localization of the assets
representing such claims.
Article 18
Each Member State shall require of every undertaking whose head office
is situated in its territory an adequate solvency margin in respect of its
entire business.
The solvency margin shall consist of:
1. the assets of the undertaking free of any foreseeable liabilities, less
any intangible items. In particular the following shall be included:
— the paid-up share capital or, in the case of a mutual assurance
undertaking, the effective initial fund plus any members’
accounts which meet all the following criteria:
(a) the memorandum and articles of association must stipulate
that payments may be made from these accounts to members
only in so far as this does not cause the solvency margin to
fall below the required level, or, after the dissolution of the
undertaking, if all the undertaking’s other debts have been
settled;
(b) the memorandum and articles of association must stipulate,
with respect to any such payments for reasons other than the
individual termination of membership, that the competent
authorities must be notified at least one month in advance
and can prohibit the payment within that period;
(c) the relevant provisions of the memorandum and articles of
association may be amended only after the competent
authorities have declared that they have no objection to the
amendment, without prejudice to the criteria stated in (a)
and (b),
— one half of the unpaid share capital or initial fund, once the
paid-up part amounts to 25 % of that share capital or fund,
— reserves (statutory reserves and free reserves) not corresponding
to underwriting liabilities,
— any profits brought forward,— cumulative preferential share capital and subordinated loan
capital may be included but, if so, only up to 50 % of the margin,
no more than 25 % of which shall consist of subordinated loans
with a fixed maturity, or fixed-term cumulative preferential
share capital, if the following minimum criteria are met:
(a) in the event of the bankruptcy or liquidation of the assurance
undertaking, binding agreements must exist under which the
subordinated loan capital or preferential share capital ranks
after the claims of all other creditors and is not to be repaid
until all other debts outstanding at the time have been
settled.
Subordinated loan capital must also fulfil the following
conditions:
(b) only fully paid-up funds may be taken into account;(c) for loans with a fixed maturity, the original maturity must be
at least five years. No later than one year before the
repayment date the assurance undertaking must submit to
the competent authorities for their approval a plan showing
how the solvency margin will be kept at or brought to the
required level at maturity, unless the extent to which the loan
may rank as a component of the solvency margin is!M2
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!M21979L0267 — EN — 01.01.1995 — 005.001 — 15
gradually reduced during at least the last five years before
the repayment date. The competent authorities may auth-
orize the early repayment of such loans provided application
is made by the issuing assurance undertaking and its
solvency margin will not fall below the required level;
(d) loans the maturity of which is not fixed must be repayable
only subject to five years’ notice unless the loans are no
longer considered as a component of the solvency margin or
unless the prior consent of the competent authorities is
specifically required for early repayment. In the latter event
the assurance undertaking must notify the competent
authorities at least six months before the date of the
proposed repayment, specifying the actual and required
solvency margin both before and after that repayment. The
competent authorities shall authorize repayment only if the
assurance undertaking’s solvency margin will not fall below
the required level; (e) the loan agreement must not include
any clause providing that in specified circumstances, other
than the winding-up of the assurance undertaking, the debt
will become repayable before the agreed repayment dates;
(e) the loan agreement must not include any clause providing
that in specified circumstances, other than the winding-up of
the assurance undertaking, the debt will become repayable
before the agreed repayment dates;
(f) the loan agreement may be amended only after the
competent authorities have declared that they have no
objection to the amendment,
— securities with no specified maturity date and other instruments
that fulfil the following conditions, including cumulative
preferential shares other than those mentioned in the preceding
indent, up to 50 % of the margin for the total of such securities
and the subordinated loan capital referred to in the preceding
indent:
(a) they may not be repaid on the initiative of the bearer or
without the prior consent of the competent authority;
(b) the contract of issue must enable the assurance undertaking
to defer the payment of interest on the loan;
(c) the lender’s claims on the assurance undertaking must rank
entirely after those of all non-subordinated creditors;
(d) the documents governing the issue of the securities must
provide for the loss-absorption capacity of the debt and
unpaid interest, while enabling the assurance undertaking to
continue its business;
(e) only fully paid-up amounts may be taken into account;
2. in so far as authorized under national law, profit reserves appearing
in the balance sheet where they may be used to cover any losses
which may arise and where they have not been made available for
distribution to policy-holders;
3. upon application, with supporting evidence, by the undertaking to
the supervisory authority of the Member State in the territory of
which its head office is situated and with the agreement of that
authority:
(a) an amount equal to 50 % of the undertaking’s future profits; the
amount of the future profits shall be obtained by multiplying the
estimated annual profit by a factor which represents the average
period left to run on policies; the factor used may not exceed 10;
the estimated annual profit shall be the arithmetical average of
the profits made over the last five years in the activities listed in
Article 1.!M2
!B1979L0267 — EN — 01.01.1995 — 005.001 — 16
The bases for calculating the factor by which the estimated
annual profit is to be multiplied and the items comprising the
profits made shall be defined by common agreement by the
competent authorities of the Member States in collaboration
with the Commission. Pending such agreement, those items shall
be determined in accordance with the laws of the Member State
in the territory of which the undertaking (head office, agency or
branch) carries on its activities.
When the competent authorities have defined the concept of
profits made, the Commission shall submit proposals for the
harmonization of this concept by means of a Directive on the
harmonization of the annual accounts of insurance undertakings
and providing for the coordination set out in Article 1 (2) of
Directive 78/660/EEC (1);
(b) where Zillmerizing is not practised or where, if practised, it is
less than the loading for acquisition costs included in the
premium, the difference between a non-Zillmerized or partially
Zillmerized mathematical reserve and a mathematical reserve
Zillmerized at a rate equal to the loading for acquisition costs
included in the premium; this figure may not, however, exceed
3.5% of the sum of the differences between the relevant capital
sums of life assurance activities and the mathematical reserves
for all policies for which Zillmerizing is possible; the difference
shall be reduced by the amount of any undepreciated acquisition
costs entered as an asset;
(c) where approval is given by the supervisory authorities of the
Member States concerned in which the undertaking is carrying
on its activities any hidden reserves resulting from the
under-estimation of assets and over-estimation of liabilities
other than mathematical reserves in so far as such hidden
reserves are not of an exceptional nature.
Article 19
Subject to Article 20, the minimum solvency margin shall be determined
as shown below according to the classes of insurance underwritten:
(a) For the kinds of insurance referred to in Article 1 (1) (a) and (b)
other than assurances linked to investment funds and for the
operations referred to in Article 1 (3), it must be equal to the sum of
the following two results:
— first result:
a 4 % fraction of the mathematical reserves, relating to direct
business gross of re-insurance cessions and to re-insurance
acceptances shall be multiplied by the ratio, for the last financial
year, of the total mathematical reserves net of re-insurance
cessions to the gross total mathematical reserves as specified
above; that ratio may in no case be less than 85 %;
— second result:
for policies on which the capital at risk is not a negative figure, a
0.3% fraction of such capital underwritten by the undertaking
shall be multiplied by the ratio, for the last financial year, of the
total capital at risk retained as the undertaking’s liability after
re-insurance cessions and retrocessions to the total capital at risk
gross of re-insurance; that ratio may in no case be less than
50 %.
For temporary assurance on death of a maximum term of three years
the above fraction shall be 0.1% ; for such assurance of a term of
more than three years but not more than five years the above fraction
shall be 0.15 %.!B
(1) OJ No L 222, 14. 8. 1978, p. 11.1979L0267 — EN — 01.01.1995 — 005.001 — 17
(b) For the supplementary insurance referred to in Article 1 (1) (c), it
shall be equal to the result of the following calculation:
— the premiums or contributions (inclusive of charges ancillary to
premiums or contributions) due in respect of direct business in
the last financial year in respect of all financial years shall be
aggregated;
— to this aggregate there shall be added the amount of premiums
accepted for all reinsurance in the last financial year;
— from this sum shall then be deducted the total amount of
premiums or contributions cancelled in the last financial year as
well as the total amount of taxes and levies pertaining to the
premiums or contributions entering into the aggregate.
The amount so obtained shall be divided into two portions, the first
extending up to 10 million units of account and the second
comprising the excess; 18 % and 16 % of these portions respectively
shall be calculated and added together.
The result shall be obtained by multiplying the sum so calculated by
the ratio existing in respect of the last financial year between the
amount of claims remaining to be borne by the undertaking after
deduction of transfers for reinsurance and the gross amount of
claims; this ratio may in no case be less than 50 %.
In the case of the assocation of underwriters known as Lloyd’ s, the
calculation of the solvency margin shall be made on the basis of net
premiums, which shall be multiplied by flat-rate percentage fixed
annually by the supervisory authority of the head-office Member
State. This flat-rate percentage must be calculated on the basis of the
most recent statistical data on commissions paid. The details together
with the relevant calculations shall be sent to the supervisory
authorities of the countries in whose territory Lloyd’ s is established.
(c) For permanent health insurance not subject to cancellation referred
to in Article 1 (1) (d), and for capital redemption operations referred
to in Article 1 (2) (b), it shall be equal to a 4 % fraction of the
mathematical reserves calculated in compliance with the conditions
set out in the first result in (a) of this Article.
(d) For tontines, referred to in Article 1 (2) (a), it shall be equal to 1 % of
their assets.
(e) For assurances covered by Article 1 (1) (a) and (b) linked to
investment funds and for the operations referred to in Article 1 (2)
(c), (d) and (e) it shall be equal to:
— a 4 % fraction of the mathematical reserves, calculated in
compliance with the conditions set out in the first result in (a) of
this Article in so far as the undertaking bears an investment risk,
and a 1 % fraction of the reserves calculated in the fashion, in so
far as the undertaking bears no investment risk provided that the
term of the contract exceeds five years and the allocation to
cover management expenses set out in the contract is fixed for a
period exceeding five years
plus
—a 0.3% fraction of the capital at risk calculated in compliance
with the conditions set out in the first subparagraph of the
second result of (a) of this Article in so far as the undertaking
covers a death risk.
Article 20
1. One third of the minimum solvency margin as specified in Article 19
shall constitute the guarantee fund. Subject to paragraph 2, at least 50 %
of this fund shall consist of the items listed in Article 18 (1) and (2).
2. (a) The guarantee fund may not, however, be less than a minimum
of 800 000 units of account.!B1979L0267 — EN — 01.01.1995 — 005.001 — 18
(b) Any Member State may provide for the minimum of the
guarantee fund to be reduced to 600 000 units of account in the
case of mutual associations and mutual-type associations and
tontines.
(c) For mutual associations referred to in the second sentence of the
second indent of Article 3 (2), as soon as they come within the
scope of this Directive, and for tontines, any Member State may
permit the establishment of a minimum of the guarantee fund of
100 000 units of account to be increased progressively to the
amount fixed in (b) by successive tranches of 100 000 units of
account whenever the contributions increase by 500 000 units of
account.
(d) The minimum of the guarantee fund referred to in (a), (b) and (c)
must consist of the items listed in Article 18 (1) and (2).
3. Mutual associations wishing to extend their business within the
meaning of Article 8 (2) or Article 10 may not do so unless they comply
immediately with the requirements of paragraph 2 (a) and (b) of this
Article.
Article 21
1. Member States shall not prescribe any rules as to the choice of the
assets that need not be used as cover for the technical provisions referred
to in Article 17.
2. Subject to Article 17 (3), Article 24 (1), (2), (3) and (5) and the
second subparagraph of Article 26 (1), Member States shall not restrain
the free disposal of those assets, whether movable or immovable, that
form part of the assets of authorized assurance undertakings.
3. Paragraphs 1 and 2 shall not preclude any measures which Member
States, while safeguarding the interests of the lives assured, are entitled
to take as owners or members of or partners in the undertakings in
question.
Article 22
1. Member States may not require undertakings to cede part of their
underwriting of activities listed in Article 1 to an organization or
organizations designated by national regulations.
2. The Italian Republic shall take all steps to ensure that the
requirement that undertakings established in its territory cede part of
their underwriting to the ‘Istituto Nazionale di Assicurazioni’ is
abolished no later than 20 November 1994.
Article 23
1. Each Member State shall require every undertaking whose head
office is situated in its territory to produce an annual account, covering
all types of operation, of its financial situation and solvency.
2. Member States shall require assurance undertakings with head
offices within their territories to render periodically the returns, together
with statistical documents, which are necessary for the purposes of
supervision. The competent authorities shall provide each other with any
documents and information that are useful for the purposes of
supervision.!B
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!M21979L0267 — EN — 01.01.1995 — 005.001 — 19
3. Every Member State shall take all steps necessary to ensure that the
competent authorities have the powers and means necessary for the
supervision of the business of assurance undertakings with head offices
within their territories, including business carried on outside those
territories, in accordance with the Council directives governing those
activities and for the purpose of seeing that they are implemented.
These powers and means must, in particular, enable the competent
authorities to:
(a) make detailed enquiries regarding the undertaking’s situation and the
whole of its business, inter alia by:
— gathering information or requiring the submission of documents
concerning its assurance business,
— carrying out on-the-spot investigations at the undertaking’s
premises;
(b) take any measures, with regard to the undertaking, its directors or
managers or the persons who control it, that are appropriate and
necessary to ensure that the undertaking’s business continues to
comply with the laws, regulations and administrative provisions with
which the undertaking must comply in each Member State and in
particular with the scheme of operations in so far as it remains
mandatory, and to prevent or remedy any irregularities prejudicial to
the interests of the assured persons;
(c) ensure that those measures are carried out, if need be by enforce-
ment, where appropriate through judicial channels.
Member States may also make provision for the competent authorities to
obtain any information regarding contracts which are held by intermedi-
aries.
Article 24
1. If an undertaking does not comply with Article 17, the competent
authority of its home Member State may prohibit the free disposal of its
assets after having communicated its intention to the competent
authorities of the Member States of commitment.
2. For the purposes of restoring the financial situation of an undertak-
ing the solvency margin of which has fallen below the minimum required
under Article 19, the competent authority of the home Member State
shall require that a plan for the restoration of a sound financial position
be submitted for its approval.
In exceptional circumstances, if the competent authority is of the opinion
that the financial situation of the undertaking will further deteriorate, it
may also restrict or prohibit the free disposal of the undertaking’s assets.
It shall inform the authorities of other Member States within the
territories of which the undertaking carries on business of any measures
it has taken and the latter shall, at the request of the former, take the same
measures.
3. If the solvency margin falls below the guarantee fund as defined in
Article 20, the competent authority of the home Member State shall
require the undertaking to submit a short-term finance scheme for its
approval.
It may also restrict or prohibit the free disposal of the undertaking’s
assets. It shall inform the authorities of other Member States within the
territories of which the undertaking carries on business accordingly and
the latter shall, at the request of the former, take the same measures.
4. The competent authorities may further take all measures necessary to
safeguard the interests of the assured persons in the cases provided for in
paragraphs 1, 2 and 3.!M21979L0267 — EN — 01.01.1995 — 005.001 — 20
5. Each Member State shall take the measures necessary to be able in
accordance with its national law to prohibit the free disposal of assets
located within its territory at the request, in the cases provided for in
paragraphs 1, 2 and 3, of the undertaking’s home Member State, which
shall designate the assets to be covered by such measures.
Section C
Withdrawal of authorization
Article 26
1. Authorization granted to an assurance undertaking by the competent
authority of its home Member State may be withdrawn by that authority
if that undertaking:
(a) does not make use of the authorization within 12 months, expressly
renounces it or ceases to carry on business for more than six months,
unless the Member State concerned has made provision for
authorization to lapse in such cases;
(b) no longer fulfils the conditions for admission;(c) has been unable, within the time allowed, to take the measures
specified in the restoration plan or finance scheme referred to in
Article 24;
(d) fails seriously in its obligations under the regulations to which it is
subject.
In the event of the withdrawal or lapse of the authorization, the
competent authority of the home Member State shall notify the
competent authorities of the other Member States accordingly and they
shall take appropriate measures to prevent the undertaking from
commencing new operations within their territories, under either the
freedom of establishment or the freedom to provide services. The home
Member State’s competent authority shall, in conjunction with those
authorities, take all necessary measures to safeguard the interests of the
assured persons and shall restrict, in particular, the free disposal of the
assets of the undertaking in accordance with Article 24 (1), (2), second
subparagraph, or (3), second subparagraph.
2. Any decision to withdraw an authorization shall be supported by
precise reasons and notified to the undertaking in question.
TITLE III A
RULES APPLICABLE TO AGENCIES OR BRANCHES ESTAB-
LISHED WITHIN THE COMMUNITY AND BELONGING TO
UNDERTAKINGS WHOSE HEAD OFFICES ARE OUTSIDE THE
COMMUNITY
Article 27
1. Each Member State shall make access to the activities referred to in
Article 1 by any undertaking whose head office is outside the
Community subject to an official authorization.
2. A Member State may grant an authorization if the undertaking fulfils
at least the following conditions:
(a) it is entitled to undertake insurance activities covered by Article 1
under its national law;!M2
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!B1979L0267 — EN — 01.01.1995 — 005.001 — 21
(b) it establishes an agency or branch in the territory of such Member
State;
(c) it undertakes to establish at the place of management of the agency
or branch accounts specific to the activity which it carries on there
and to keep there all the records relating to the business transacted;
(d) it designates a general representative, to be approved by the
competent authorities;
(e) it possesses in the Member State where it carries on an activity assets
of an amount equal in value to at least one half of the minimum
amount prescribed in Article 20 (2) (a) in respect of the guarantee
fund and deposits one fourth of the minimum amount as security;
(f) it undertakes to keep a solvency margin complying with Article 29;
(g) it submits a scheme of operations in accordance with Article 11 (1)
and (2).
Article 28
Member States shall require undertakings to establish reserves, referred
to in Article 17, adequate to cover the underwriting liabilities assumed in
their territories. Member States shall see that the agency or branch covers
such reserves by means of assets which are equivalent to such reserves
and, to the extent fixed by the Member State in question, matching
assets.
The law of the Member States shall be applicable to the calculation of
such reserves, the determination of categories of investment and the
valuation of assets, and, where appropriate, the determination of the
extent to which these assets may be used for the purpose of covering such
reserves.
The Member State in question shall require that the assets covering these
reserves, shall be localized in its territory. Article 17 (3) shall, however,
apply.
Article 29
1. Each Member State shall require of agencies or branches set up in its
territory a solvency margin consisting of the items listed in Article 18.
The minimum solvency margin shall be calculated in accordance with
Article 19. However, for the purpose of calculating this margin, account
shall be taken only of the operations effected by the agency or branch
concerned.
2. One third of the minimum solvency margin shall constitute the
guarantee fund.
However, the amount of this fund may not be less than one half of the
minimum required under Article 20 (2) (a). The initial deposit lodged in
accordance with Article 27 (2) (e) shall be counted towards such
guarantee fund.
The guarantee fund and the minimum of such fund shall be constituted in
accordance with Article 20.
3. The assets representing the minimum solvency margin must be kept
within the Member State where activities are carried on up to the amount
of the guarantee fund and the excess within the Community.
Article 30
1. Any undertaking which has requested or obtained authorization from
more than one Member State may apply for the following advantages
which may be granted only jointly:
(a) the solvency margin referred to in Article 29 shall be calculated in
relation to the entire business which it carries on within the
Community; in such case, account shall be taken only of the!B1979L0267 — EN — 01.01.1995 — 005.001 — 22
operations effected by all the agencies or branches established within
the Community for the purposes of this calculation;
(b) the deposit required under Article 27 (2) (e) shall be lodged in only
one of those Member States;
(c) the assets representing the guarantee fund shall be localized in any
one of the Member States in which it carries on its activities.
2. Application to benefit from the advantages provided for in paragraph
1 shall be made to the competent authorities of the Member States
concerned. The application must state the authority of the Member State
which in future is to supervise the solvency of the entire business of the
agencies or branches established within the Community. Reasons must
be given for the choice of authority made by the undertaking. The deposit
shall be lodged with that Member State.
3. The advantages provided for in paragraph 1 may only be granted if
the competent authorities of all Member States in which an application
has been made agree to them. They shall take effect from the time when
the selected supervisory authority informs the other supervisory
authorities that it will supervise the state of solvency of the entire
business of the agencies or branches within the Community.
The supervisory authority selected shall obtain from the other Member
States the information necessary for the supervision of the overall
solvency of the agencies and branches established in their territory.
4. At the request of one or more of the Member States concerned, the
advantages granted under this Article shall be withdrawn simultaneously
by all Member States concerned.
Article 31
1. (a) Subject to point (b), agencies and branches referred to in this
Title may not simultaneously carry on in a Member State the
activities referred to in the Annex to the first coordination
Directive (non-life insurance) and those covered by this
Directive.
(b) Subject to point (c), Member States may provide that agencies
and branches referred to in this Title which at the time of
notification of this Directive carry on both activities simulta-
neously in a Member State may continue to do so there provided
that each activity is separately managed in accordance with
Article 14.
(c) Any Member State which under Article 13 (6) (a) and (b)
requires undertakings established in its territory to cease the
simultaneous pursuit of the activities in which they are engaged
at the time of notification of this Directive must also impose this
requirement on agencies and branches referred to in this Title
which are established in its territory and simultaneously carry on
both activities there.
(d) Member States may provide that agencies and branches referred
to in this Title whose head office simultaneously carries on both
activities and which at the time of notification of this Directive
carry on in the territory of a Member State solely the activity
covered by this Directive may continue their activity there. If the
undertaking wishes to carry on the activity referred to in the first
coordination Directive (non-life insurance) in that territory it
may only carry on the activity covered by this Directive through
a subsidiary.
2. Articles 23 and 24 shall apply mutatis mutandis to agencies and
branches referred to in this Title.
For the purposes of applying Article 24, the supervisory authority which
supervises the overall solvency of agencies or branches shall be treated in
the same way as the supervisory authority of the head-office Member
State.!B1979L0267 — EN — 01.01.1995 — 005.001 — 23
3. In the case of a withdrawal of authorization by the authority referred
to in Article 30 (2), this authority shall notify the supervisory authorities
of the other Member States where the undertaking operates and the latter
authorities shall take the appropriate measures. If the reason for the
withdrawal of authorization is the inadequacy of the solvency margin
calculated in accordance with Article 30 (1) (a), the supervisory
authorities of the other Member States concerned shall also withdraw
their authorizations.
Article 31a
1. Under the conditions laid down by national law, each Member State
shall authorize agencies and branches set up within its territory and
covered by this Title to transfer all or part of their portfolios of contracts
to an accepting office established in the same Member State if the
competent authorities of that Member State or, if appropriate, those of
the Member State referred to in Article 30 certify that after taking the
transfer into account the accepting office possesses the necessary
solvency margin.
2. Under the conditions laid down by national law, each Member State
shall authorize agencies and branches set up within its territory and
covered by this Title to transfer all or part of their portfolios of contracts
to an assurance undertaking with a head office in another Member State
if the competent authorities of that Member State certify that after taking
the transfer into account the accepting office possesses the necessary
solvency margin.
3. If under the conditions laid down by national law a Member State
authorizes agencies and branches set up within its territory and covered
by this Title to transfer all or part of their portfolios of contracts to an
agency or branch covered by this Title and set up within the territory of
another Member State it shall ensure that the competent authorities of the
Member State of the accepting office or, if appropriate, of the Member
State referred to in Article 30 certify that after taking the transfer into
account the accepting office possesses the necessary solvency margin,
that the law of the Member State of the accepting office permits such a
transfer and that the State has agreed to the transfer.
4. In the circumstances referred to in paragraphs 1, 2 and 3 the Member
State in which the transferring agency or branch is situated shall
authorize the transfer after obtaining the agreement of the competent
authorities of the Member State of the commitment, where different from
the Member State in which the transferring agency or branch is situated.
5. The competent authorities of the Member States consulted shall give
their opinion or consent to the competent authorities of the home
Member State of the transferring assurance undertaking within three
months of receiving a request; the absence of any response from the
authorities consulted within that period shall be considered equivalent to
a favourable opinion or tacit consent.
6. A transfer authorized in accordance with this Article shall be
published as laid down by national law in the Member State of the
commitment. Such transfers shall automatically be valid against
policy-holders, assured persons and any other persons having rights or
obligations arising out of the contracts transferred.
This provision shall not affect the Member States’ right to give
policy-holders the opinion of cancelling contracts within a fixed period
after a transfer.
Article 32
The Community may, by means of agreements concluded pursuant to the
Treaty with one or more third countries, agree to the application of
provisions different from those provided for in this Title, for the purpose
ensuring, under conditions of reciprocity, adequate protection for
policy-holders in the Member States.!B
!M2
!B1979L0267 — EN — 01.01.1995 — 005.001 — 24
!M1
TITLE III B
RULES APPLICABLE TO SUBSIDIARIES OF PARENT
UNDERTAKINGS GOVERNED BY THE LA WS OF A THIRD
COUNTRY AND TO ACQUISITIONS OF HOLDINGS BY SUCH
P ARENT UNDERTAKINGS
Article 32a
The competent authorities of the Member States shall inform the
Commission:
(a) of any authorization of a direct of indirect subsidiary one or more
parent undertakings of which are governed by the laws of a third
country. The Commission shall inform the Committee referred to in
Article 32b (6) accordingly;
(b) whenever such a parent undertaking acquires a holding in a
Community insurance undertaking which would turn the latter into
its subsidiary. The Commission shall inform the Committee referred
to in Article 32b (6) accordingly.
When authorization is granted to the direct or indirect subsidiary of one
or more parent undertakings governed by the law of third countries, the
structure of the groupe shall be specified in the notification which the
competent authorities shall address to the Commission.
Article 32b
1. The Member States shall inform the Commission of any general
difficulties encountered by their insurance undertakings in establishing
themselves or carrying on their activities in a third country.
2. Initially no later than six months before the date referred to in the
second paragraph of Article 30 of Directive 90/619/EEC (1), and
thereafter periodically, the Commission shall draw up a report examining
the treatment accorded to Community insurance undertakings in third
countries, in the terms referred to in paragraphs 3 and 4, as regards
establishment and the carrying on of insurance activities, and the
acquisition of holdings in third-country insurance undertakings. The
Commission shall submit those reports to the Council, together with any
appropriate proposals.
3. Whenever it appears to the Commission, either on the basis of the
reports referred to in paragraph 2 or on the basis of other information,
that a third country is not granting Community insurance undertakings
effective market access comparable to that granting Community to
insurance undertakings effective market access comparable to that
granted by the Community to insurance undertakings from that third
country, the Commission may submit proposals to the Council for the
appropriate mandate for negotiation with a view to obtaining comparable
competitive opportunities for Community insurance undertakings. The
Council shall decide by a qualified majority.
4. Whenever it appears to the Commission, either on the basis of the
reports referred to in paragraph 2 or on the basis of other information,
that Community insurance undertakings in a third country are not
receiving national treatment offering the same competitive opportunities
as are available to domestic insurance undertakings and that the
conditions of effective market access are not being fulfilled, the
Commission may initiate negotiations in order to remedy the situation.
In the circumstances described in the first subparagraph, it may also be
decided at any time, and in addition to initiating negociations, in
accordance with the procedure laid down in Article 32b (6), that the
competent authorities of the Member States must limit or suspend their
decisions:
— regarding requests pending at the moment of the decision or future
requests for authorizations, and
(1) OJ No L 330, 29. 11. 1990, p. 50.1979L0267 — EN — 01.01.1995 — 005.001 — 25
— regarding the acquisition of holdings by direct or indirect parent
undertakings governed by the laws of the third country in question.
The duration of the measures referred to may not exceed three months.Before the end of that three-month period, and in the light of the results
of the negotiations, the Council may, acting on a proposal from the
Commission, decide by a qualified majority whether the measures shall
be continued.
Such limitations or suspension may not apply to the setting up of
subsidiaries by insurance undertakings or their subsidiaries duly
authorized in the Community, or to the acquisition of holdings in
Community insurance undertakings by such undertakings or subsidiaries.
5. Whenever it appears to the Commission that one of the situations
described in paragraphs 3 and 4 has arisen, the Member States shall
inform it at its request:
(a) of any request for the authorization of a direct or indirect subsidiary
one or more parent undertakings of which are governed by the laws
of the third country in question;
(b) of any plans for such an undertaking to acquire a holding in a
Community insurance undertaking such that the latter would become
the subsidiary of the former.
This obligation to provide information shall lapse whenever an
agreement is reached with the third country referred to in paragraph 3
or 4 when the measures referred to in the second and third subparagraphs
of paragraph 4 cease to apply.
6. The Commission shall be assisted by a committee composed of the
representatives of the Member States and chaired by the representative of
the Commission.
The representative of the Commission shall submit to the committee a
draft of the measures to be taken. The committee shall deliver its opinion
on the draft within a time limit which the chairman may lay down
according to the urgency of the matter. The opinion shall be delivered by
the majority laid down in Article 148 (2) of the Treaty in the case of
decisions which the Council is required to adopt on a proposal from the
Commission. The votes of the representatives of the Member States
within the committee shall be weighted in the manner set out in that
Article. The chairman shall not vote.
The Commission shall adopt the measures envisaged if they are in
accordance with the opinion of the committee.
If the measures envisaged are not in accordance with the opinion of the
committee, or if no opinion is delivered, the Commission shall, without
delay, submit to the Council a proposal relating to the measures to be
taken. The Council shall act by a qualified majority.
If, on the expiry of a period to be laid down in each act to be adopted by
the Council under this paragraph but which may in no case exceed three
months from the date of referral to the Council, the Council has not
acted, the proposed measures shall be adopted by the Commission, save
where the Council has decided against the said measures by a simple
majority.
7. Measures taken under this Article shall comply with the Commu-
nity’ s obligations under any international agreements, bilateral or
multilateral, governing the taking-up and pursuit of the business of
insurance undertakings.!M11979L0267 — EN — 01.01.1995 — 005.001 — 26
TITLE IV
TRANSITIONAL AND OTHER PROVISIONS
Article 33
1. Member States shall allow undertakings referred to in Title II which
at the entry into force of the implementing measures to this Directive
provide insurance in their territories in one or more of the classes
referred to in the Annex, a period of five years from the date of
notification of this Directive in order to comply with Articles 18, 19 and
20.
2. Furthermore, Member States may:
(a) allow any undertakings referred to in paragraph 1, which upon the
expiry of the five-year period have not fully established the solvency
margin, a further period not exceeding two years in which to do so
provided that such undertakings have, in accordance with Article 24,
submitted for the approval of the supervisory authority the measures
which they propose to take for such purpose;
(b) except for the mutual associations referred to in the second sentence
of the second indent of Article 3 (2), exempt undertakings referred to
in paragraph 1 of this Article, for which upon the expiry of the
five-year period the solvency margin to be established pursuant to
Article 19 without deduction for re-insurance does not reach the
minimum of the guarantee fund referred to in Article 20 (2) (a) and
(b), from the requirement to establish this fund before the end of the
financial year in respect of which the solvency margin referred to
reaches this minimum amount.
The maximum period thus granted to these undertakings to establish
this minimum amount shall in no case exceed 10 years from the date
of notification of this Directive.
3. Undertakings desiring to extend their business within the meaning of
Article 8 (2) or 10 may not do so unless they comply immediately with
the rules of this Directive.
4. Undertakings having a structure different from any of those listed in
Article 8 may continue, for a period of three years from the notification
of this Directive, to carry on their present business in the legal form in
which they are constituted at the time of such notification. Undertakings
set up in the United Kingdom by Royal Charter or by private Act or by
special Public Act may carry on their activity in their present form for an
unlimited period.
The Member States in question shall draw up a list of such undertakings
and communicate it to the other Member States and the Commission.
5. Undertakings which, in accordance with their objects, carry on the
activities of life assurance and savings operations may continue to carry
on such activities, with the exception of savings operations, which must
cease within three years from the date of notification of this Directive.
As an exception, the ‘Caisse générale d’épargne et de retraite (CGER)’/
‘Algemene Spoor- en Lifrentekas (ASLK)’ in Belgium, the societies
registered under the Friendly Societies Acts in the United Kingdom and
the ‘Banca nazionale delle communicazioni’ in Italy may continue the
activities they were carrying on when the Directive was notified.
6. Undertakings which carry on simultaneously both activities in
accordance with the terms of Article 13 shall have a period of five years
from the date of notification of this Directive to comply with the
provisions of Article 14.
7. At the request of undertakings which comply with the requirements
of Articles 17 to 20, Member States shall cease to apply any restrictive
measures such as those relating to mortgages, deposits or securities
established under their present regulations.!B1979L0267 — EN — 01.01.1995 — 005.001 — 27
Article 34
Member States shall allow agencies or branches referred to in Title III
which, at the entry into force of the implementing measures to this
Directive, are carrying on one or more classes referred to in Annex I and
which do not extend their business within the meaning of Article 10 (2),
a maximum period of five years from the date of notification of this
Directive in order to comply with the conditions in Article 29.
Article 36
During a period which terminates at the time of the entry into force of an
agreement concluded with a third country pursuant to Article 32, and at
the latest upon the expiry of a period of four years after the notification
of this Directive, each Member State may retain for undertakings of that
country established in its territory the rules applied to them on 1 January
1979 in respect of matching assets and the localization of technical
reserves, including mathematical reserves, provided that notification is
given to the other Member States and the Commission and that the limits
of relaxations granted pursuant to Article 17 (2) in favour of the
undertakings of Member States established in its territory are not
exceeded.
Article 37
1. Where a Member State requires of its own nationals proof of good
repute and proof of no previous bankruptcy, or proof of either of these,
that State shall accept as sufficient evidence in respect of nationals of
other Member States the production of an extract from the ‘judicial
record’ or, failing this, of an equivalent document issued by a competent
judicial or administrative authority in the Member State of origin or the
Member State whence the foreign national comes showing that these
requirements have been met.
2. Where the Member State of origin or the Member State whence the
foreign national concerned comes does not issue the document referred
to in paragraph 1, it may be replaced by a declaration on oath — or in
States where there is no provision for declaration on oath by a solemn
declaration — made by the person concerned before a competent judicial
or administrative authority or, where appropriate, a notary in the Member
State of origin or the Member State whence that person comes; such
authority or notary shall issue a certificate attesting the authenticity of
the declaration on oath or solemn declaration. The declaration in respect
of no previous bankruptcy may also be made before a competent
professional or trade body in the said country.
3. Documents issued in accordance with paragraphs 1 and 2 must not
be produced more than three months after their date of issue.
4. Member States shall, within the time limit of 18 months from the
date of notification of this Directive, designate the authorities and bodies
competent to issue the documents referred to in paragraphs 1 and 2 shall
forthwith inform the other Member States and the Commission thereof.
Within the same time limit, each Member State shall also inform the
other Member States and the Commission of the authorities or bodies to
which the documents referred to in this Article are to be submitted in
support of an application to carry on in the territory of this Member State
the activities referred to in Article 1.!B
!M2
!B1979L0267 — EN — 01.01.1995 — 005.001 — 28
TITLE V
FINAL PROVISIONS
Article 38
The Commission and the competent authorities of the Member States
shall collaborate closely for the purpose of facilitating supervision of
direct insurance within the Community and of examining any difficulties
which might arise in the application of this Directive.
Article 39
1. The Commission shall submit to the Council, within six years from
the date of notification of this Directive, a report dealing with the effects
of the financial requirements imposed by this Directive on the situation
in the insurance markets of the Member States. If necessary, the
Commission shall submit interim reports to the Council before the end of
the transitional period provided for in Article 33 (1).
2. Following a period of 10 years from the notification of this
Directive, the Commission shall submit to the Council a report dealing
with the operations of the two types of undertakings covered by this
Directive: that is to say, those undertakings which carry on simulta-
neously the activity covered by the first coordination Directive (non-life
insurance) in addition to the activity covered by this Directive and those
undertakings which carry on only the activity covered by this Directive.
3. The Council, acting on a proposal from the Commission, shall every
two years examine and, where appropriate, review the amounts expressed
in units of account in this Directive, in the light of how the Community’s
economic and monetary situation has evolved. The Commission shall
submit its first proposal in this connection to the Council at the time as a
proposal concerning non-life insurance, as laid down in Article 3 of
Directive 76/580/EEC (1), and not later than four years after the date of
notification of this Directive.
Article 40
Member States shall amend their national provisions to comply with this
Directive within 18 months of its notification and shall forthwith inform
the Commission thereof. The provisions thus amended shall, subject to
Articles 33 to 36, be applied within 30 months from the date of
notification.
Article 41
Following notification of this Directive, Member States shall communi-
cate the texts of the main provisions of a legislative, regulatory or
administrative nature which they adopt in the field covered by this
Directive to the Commission.
Article 42
This Directive is addressed to the Member States.!B
(1) OJ No L 189, 13. 7. 1976, p. 13.1979L0267 — EN — 01.01.1995 — 005.001 — 29
ANNEX
Classes of insurance
I. The assurance referred to in Article 1 (1) (a), (b) and (c) excluding those referred
to in II and III
II. Marriage assurance, birth assurance
III. The assurance referred to in Article 1 (1) (a) and (b), which are linked to
investment funds
IV . Permanent health insurance, referred to in Article 1 (1) (d)V . Tontines, referred to in Article 1 (2) (a)
VI. Capital redemption operations, referred to in Article 1 (2) (b)
VII. Management of group pension funds, referred to in Article 1 (2) (c) and (d)VIII.The operations referred to in Article 1 (2) (e)
IX. The operations referred to in Article 1 (3)!B1979L0267 — EN — 01.01.1995 — 005.001 — 30