1991L0674 — EN — 17.07.2003 — 001.001 — 1
This document is meant purely as a documentation tool and the institutions do not assume any liability for its contents
►B COUNCILDIRECTIVE
of19December 1991
ontheannualaccountsandconsolidatedaccountsofinsuranceundertakings
(91/674/EEC)
(OJ L 374, 31.12.1991, p. 7)
Amended by:
Official Journal
No page date
►M1Directive 2003/51/EC of the European Parliament and of the Council of
18 June 2003L 178 16 17.7.2003
NB: This consolidated version contains references to the European unit of account and/or the ecu, which from 1 January 1999
should be understood as references to the euro — Council Regulation (EEC) No 3308/80 (OJ L 345, 20.12.1980, p. 1) andCouncil Regulation (EC) No 1103/97 (OJ L 162, 19.6.1997, p. 1).
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COUNCILDIRECTIVE
of19December 1991
on the annual accounts and consolidated accounts of insurance
undertakings
(91/674/EEC)
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European Economic
Community, and in particular Article 54 thereof,
Having regard to the proposal from the Commission (1),
In cooperation with the European Parliament (2),
Having regard to the opinion of the Economic and Social
Committee (3),
WhereasArticle 54 (3) (g) of the Treaty requirescoordination to the
necessary extent of the safeguards which, for the protection of theinterests of members and others, are required by Member States ofcompaniesand firmswithin the meaning of the s econd paragraph ofArticle 58 of the Treaty, with a view to making such safeguardsequivalent throughout the Community;
WhereasCouncil Directive 78/660/EEC of 25 July 1978 bas ed on
Article 54 (3) (g) of the Treaty on the annual accountsof certain types
of companies(
4), aslas t amended by Directive 90/605/EEC (5), need
not be applied to insurance companies, hereinafter referred to as ‘insur-ance undertakings’, pending further coordination; whereas, in view ofthe major importance of insurance undertakings in the Community,such coordination cannot be delayed any longer following the imple-
mentation of Directive 78/660/EEC;
WhereasCouncil Directive 83/349/EEC of 13 June 1983 bas ed on
Article 54 (3) (g) of the Treaty on consolidated accounts (
6), aslas t
amended by Directive 90/605/EEC, providesfor derogationsfor ins ur-ance undertakingsonly until the expiry of the deadline impos ed for theapplication of thisDirective; whereasthisDirective mus t therefore als oinclude provisions specific to insurance undertakings in respect ofconsolidated accounts;
Whereas such coordination is also urgently required because insurance
undertakings operate across borders; whereas for creditors, debtors,
members, policyholders and their advisers and for the general public,
improved comparability of the annual accountsand cons olidatedaccountsof s uch undertakingsisof crucial importance;
Whereasin the Member Statesins urance undertakingsof different legal
formsare in competition with each other; whereasundertakingsengaged in the business of direct insurance customarily engage in thebusiness of reinsurance as well and are therefore in competition with
specialist reinsurance undertakings; whereas it is therefore appropriate
not to confine coordination to the legal formscovered by Directive 78/660/EEC, but to choose a scope that corresponds to that of CouncilDirective 73/239/EEC of 24 July 1973 on the coordination of laws,regulations and administrative provisions relating to the taking up andpursuit of the business of direct insurance other than life assurance (
7),
aslas t amended by Directive 90/618/EEC (8), and to that of Council
Directive 79/267/EEC of 5 March 1979 on the coordination of laws,regulations and administrative provisions relating to the taking up and1991L0674 — EN — 17.07.2003 — 001.001 — 2
(1) OJ No C 131, 18. 4. 1987, p. 1.
(2) OJ No C 96, 17. 4. 1989, p. 93; and OJ No C 326, 16. 12. 1991.
(3) OJ No C 319, 30. 11. 1987, p. 13.
(4) OJ No L 222, 14. 8. 1978, p. 11.
(5) OJ No L 317, 16. 11. 1990, p. 60.
(6) OJ No L 193, 18. 7. 1983, p. 1.
(7) OJ No L 228, 16. 8. 1973, p. 3.
(8) OJ No L 330, 29. 11. 1990, p. 44.
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pursuit of the business of direct life assurance (1), aslas t amended by
Directive 90/619/EEC (2), but which also includes certain undertakings
that are excluded from the scope of those Directives and companies
and firms which are reinsurance undertakings;
Whereas, although in view of the specific characteristics of insurance
undertakings it would appear appropriate to propose a separate Direc-tive on the annual accountsand cons olidated accountsof s uchundertakings, that does not necessarily require the establishment of aset of standards different from those of Directive 78/660/EEC and 83/349/EEC; whereas such separate standards would be neither appro-
priate nor consistent with the principles underlying the coordination of
company law since, given the important position they occupy in theCommunity economy, insurance undertakings cannot be excludedfrom a framework of rules devised for undertakings generally; whereas,for this reason, only the particular characteristics of insurance undertak-ingshave been taken into account and thisDirective dealsonly with
derogationsfrom the ruleslaid down in Directives78/660/EEC and
83/349/EEC;
Whereasthere are major differencesin the s tructure and content of the
balance sheets of insurance undertakings in different Member States;whereas this Directive must therefore lay down the same structure andthe same item designations for the balance sheets of all Communityinsurance undertakings;
Whereas, if annual accounts and consolidated accounts are to be
comparable, a number of basic questions regarding the disclosure of
certain transactions in the balance sheet must be settled;
Whereas, in the interests of greater comparability, it is also necessary
that the content of the variousbalance s heet itemsbe determined
precisely;
Whereas it may be useful to distinguish between the commitments of
the insurer and those of the reinsurer by showing in the assets the rein-surer's share of technical provisions as an asset;
Whereas the structure of the profit and loss account should also be
determined and certain itemsin it s hould be defined;
Whereas, given the specific nature of the insurance industry, it may be
useful for unrealized gains and losses to be dealt with in the profit andloss account;
Whereasthe comparability of figuresin the balance s heet and profit
and loss account also depends basically on the values at which assetsand liabilities are shown in the balance sheet; whereas for a proper
understanding of the financial situation of an insurance undertaking
the current value of inves tmentsaswell astheir value bas ed upon theprinciple of purchase price or production cost must be disclosed;whereas, however, the compulsory disclosure of the current value ofinvestments, at least in the notes on the accounts, is prescribed solelyfor purposes of comparability and transparency and is not intended to
lead to changes in the tax treatment of insurance undertakings;
Whereas in the calculation of life assurance provisions use may be
made of actuarial methodscus tomarily applied on the market or
accepted by the insurance-monitoring authorities; whereas thosemethodsmay be implemented by any actuary or expert in accordancewith the conditionswhich may be laid down in national law and withdue regard for the actuarial principlesrecognized in the framework of
the present and future coordination of the fundamental rules for the
prudential and financial monitoring of direct life assurance business;
Whereas, in the calculation of the provision for claims outstanding, on
the one hand, any implicit discounting or deduction should be prohib-ited, and, on the other hand, precise conditions for recourse to explicit1991L0674 — EN — 17.07.2003 — 001.001 — 3
(1) OJ No L 63, 13. 3. 1979, p. 1.
(2) OJ No L 330, 29. 11. 1990, p. 50.
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discounting or deduction should be defined, for the sake of prudence
and transparency;
Whereas, in view of the special nature of insurance undertakings,
certain changes are necessary with regard to the notes on annualaccounts and on consolidated accounts;
Whereas, in line with the intention of covering all insurance undertak-
ingsthat come within the s cope of Directive 73/239/EEC and 79/267/EEC as well as certain others, derogations such as those for small and
medium-sized insurance undertakings in Directive 78/660/EEC are not
provided for, but certain small mutual associations which are excludedfrom the scope of Directives 73/239/EEC and 79/267/EEC should notbe covered;
Whereas for the same reasons the scope allowed Member States
pursuant to Directive 83/349/EEC to exempt parent undertakings of
groups from compulsory consolidation if the undertakings to be conso-
lidated do not together exceed a certain size has not been extended toinsurance undertakings;
Whereas in view of its particular nature special provisions are needed
for the association of underwriters known as Lloyd's;
Whereas the provisions of this Directive also apply to the consolidated
accountsdrawn up by a parent undertaking which isa financial holdingcompany where its subsidiary undertakings are eiher exclusively ormainly insurance undertakings;
Whereasthe examination of problemswhich aris e in connection with
thisDirective, in particular regarding itsapplication, requirescoopera-
tion by representatives of the Member States and the Commission in a
contact committee; whereas, in order to avoid the proliferation of suchcommittees, it is desirable that such cooperation take place in thecommittee provided for in Article 52 of Directive 78/660/EEC;whereas, however, when examining problems concerning insurance
undertakings, the committee must be appropriately constituted;
Whereas, in view of the complexity of the matter, the insurance under-
takingscovered by thisDirective mus t be allowed an appropriateperiod to implement its provisions; whereas that period must beextended to allow the necessary adjustments to be made concerning,on the one hand, the association of underwriters known as Lloyd's
and, on the other, those undertakings which, when this Directive
becomes applicable, show their investments at historical cost;
Whereas provision should be made for the review of certain provisions
of thisDirective after five years ' experience of itsapplication, in thelight of the aimsof greater trans parency and harmonization.
HAS ADOPTED THIS DIRECTIVE:
SECTION 1
Preliminary provisionsandscope
Article 1
1. Articles2, 3, 4(1), (3) to (6), 6, 7, 13, 14, 15(3) and (4), 16 to 21,
29 to 35, 37 to 41, 42, 42a to 42f, 43(1), points1 to 7 and 9 to 14,45(1), 46(1) and (2), 48 to 50, 50a, 51(1), 51a, 56 to 59, 61 and 61aof Directive 78/660/EEC shall apply to the undertakings mentioned inArticle 2 of thisDirective, except where thisDirective providesother-
wise. Articles 46, 47, 48, 51 and 53 of this Directive shall not apply in
respect of assets and liabilities that are valued in accordance withSection 7a of Directive 78/660/EEC.
2. Where reference ismade in Directives78/660/EEC and 83/349/
EEC to Articles9, 10 and 10a (balance s heet) or to Articles22 to 26(profit and loss account) of Directive 78/660/EEC, such references1991L0674 — EN — 17.07.2003 — 001.001 — 4
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shall be deemed to be references to Article 6 (balance sheet) or to
Article 34 (profit and loss account) of this Directive as appropriate.
3. Referencesin Directives78/660/EEC and 83/349/EEC to Articles
31 to 42 of Directive 78/660/EEC shall be deemed to be references tothose Articles, taking account of Articles 45 to 62 of this Directive.
4. Where the aforementioned provisions of Directive 78/660/EEC
relate to balance-sheet items for which this Directive lays down noequivalent, they shall be deemed to be references to the items in
Article 6 of this Directive where the corresponding assets and liabilities
itemsare lis ted.
Article 2
1. The coordination measures prescribed by this Directive shall
apply to companiesand firmswithin the meaning of the s econd para-
graph of Article 58 of the Treaty which are:
(a) undertakingswithin the meaning of Article 1 of Directive 73/239/
EEC, excluding those mutual associations which are excluded from
the scope of that Directive by virtue of Article 3 thereof but
including those bodies referred to in Article 4 (a), (b), (c) and (e)thereof except where their activity does not consist wholly ormainly in carrying on insurance business;
(b) undertakingswithin the meaning of Article 1 of Directive 79/267/
EEC, excluding those bodies and mutual associations referred to in
Articles2 (2) and (3) and 3 of that Directive; or
(c) undertakings carrying on reinsurance business.
In this Directive, such undertakings shall be referred to as insurance
undertakings.
2. Fundsof a group pens ion fund within the meaning of Article 1
(2) (c) and (d) of Directive 79/267/EEC which an insurance under-taking administers in its own name but on behalf of third parties mustbe shown in the balance sheet if the undertaking acquires legal title tothe assets concerned. The total amount of such assets and liabilitiesshall be shown separately or in the notes on the accounts, broken
down according to the various assets and liabilities items. However,
the Member States may permit the disclosure of such funds as off-balance-sheet items provided there are special rules whereby suchfunds can be excluded from the assets available for distribution in theevent of the winding up of an insurance undertaking (or similar
proceedings).
Assets acquired in the name of and on behalf of third parties must not
be shown in the balance sheet.
Article 3
Those provisions of this Directive which relate to life assurance shall
apply mutatis mutandis to insurance undertakings which underwrite
only health insurance and which do so exclusively or principallyaccording to the technical principles of life assurance.
Member States may apply the first paragraph to health insurance under-
written by joint undertakingsaccording to the technical principlesof
life assurance where such activity is significant.
Article 4
1. This Directive shall apply to the association of underwriters
known as Lloyd's. For the purpose of this Directive both Lloyd's andLloyd's syndicates shall be deemed to be insurance undertakings.
2. By way of derogation from Article 65(1), Lloyd'ss hall prepare
aggregate accounts instead of consolidated accounts required by Direc-tive 83/349/EEC. Aggregate accountss hall be prepared by cumulationof all syndicate accounts.1991L0674 — EN — 17.07.2003 — 001.001 — 5
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SECTION 2
Generalprovisionsconcerningthebalancesheetandtheprofitand
lossaccount
Article 5
The combination of itemsunder the conditionslaid down in Article 4
(3) (a) or (b) of Directive 78/660/EEC shall be restricted in the case ofinsurance undertakings,
— as regards the balance sheet, to items preceded by arabic numerals,
except for items concerning technical provisions, and
— asregardsthe profit and los saccount, to itemspreceded by one or
more lower-case letters, except for items I (1) and (4) and II (1), (5)and (6).
Combination shall be authorized only under the rules laid down by the
Member States.
SECTION 3
Layoutofthebalancesheet
Article 6
The Member States shall prescribe the following layout for balance
sheets:
Assets
A.Subscribed capital unpaid
showing separately called-up capital (unless national law requires
called-up capital to be included under liabilities, in which case
capital called but not yet paid must be included as an asset eitherunder A or under E (IV)).
B.Intangible assets
asdes cribed unter itemsB and C (I) of Article 9 of Directive 78/
660/EEC, showing separately:
— formation expenses, as defined by national law and in so far as
national law permits their being shown as an asset (unless
national law requires their disclosure in the notes on theaccounts),
— goodwill, to the extent that it wasacquired for valuable cons id-
eration (unless national law requires its disclosure in the noteson the accounts).
C.Investments
I. Land and buildings:
showing separately land and buildings occupied by an insur-
ance undertaking for itsown activities(unles snational lawrequires their disclosure in the notes on the accounts).
II. Investments in affiliated undertakings and participating inter-
ests:
1. Sharesin affiliated undertakings .
2. Debt securities issued by, and loans to, affiliated undertak-
ings.
3. Participating interests.
4. Debt securities issued by, and loans to, undertakings with
which an insurance undertaking is linked by virtue of aparticipating interest.
III. Other financial investments:
1. Sharesand other variable-yield s ecuritiesand unitsin unit
trusts.
2. Debt securities and other fixed-income securities.1991L0674 — EN — 17.07.2003 — 001.001 — 6
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3. Participation in investment pools.
4. Loansguaranteed by mortgages .5. Other loans.6. Deposits with credit institutions.7. Other.
IV. Deposits with ceding undertakings.
D.Investments for the benefit of life-assurance policyholders who bear
the investment risk
E.Debtors
(Amountsowed by:
— affiliated undertakings, and
— undertakingswith which an ins urance undertaking islinked by
virtue of participating interests
shall be shown separately, as sub-items of items I, II and III).
I. Debtors arising out of direct insurance operations
1. policyholders;
2. intermediaries.
II. Debtors arising out of reinsurance operations.
III. Other debtors.
IV. Subscribed capital called but not paid
(unless national law requires that capital called but not paid be
shown as an asset under A).
F.Other assets
I. Tangible assets and stocks as listed under C (II) and D (I) in
Article 9 of Directive 78/660/EEC, other than land and build-
ings, buildings under construction and deposits paid on land
and buildings.
II. Cash at bank and in hand.
III. Own shares (with an indication of their nominal value or, in the
absence of a nominal value, their accounting par value) to the
extent that national law permitstheir being s hown in thebalance sheet.
IV. Other.
G.Prepayments and accrued income
I. Accrued interest and rent.
II. Deferred acquisition costs (distinguishing those arising in non-
life insurance and life-assurance business).
III. Other prepaymentsand accrued income.
H.Loss for the financial year
(unless national law requires it to be shown as a liability under A
(VI)).1991L0674 — EN — 17.07.2003 — 001.001 — 7
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Liabilities
A.Capital and reserves
I. Subscribed capital or equivalent funds
(unless national law requires called-up capital to be shown
under this item. In that case, the amounts of subscribed
capital and paid-up capital must be shown separately).
II. Share premium account.
III. Revaluation reserve.
IV. Reserve.
V. Profit or loss brought forward.
VI. Profit or loss for the financial year
(unless national law requires it to be shown as an asset under
H or asa liability under I).
B.Subordinated liabilities
C.Technical provisions
1. Provision for unearned premiums:
(a) gross amount …(b) reinsurance amount (−) …
…
2. Life assurance provision:
(a) gross amount (−) …(b) reinsurance amount (−) …
…
3. Claimsouts tanding:
(a) gross amount …(b) reinsurance amount (−) …
…
4. Provision for bonuses and rebates
(unless shown under 2):
(a) gross amount …
(b) reinsurance amount (−) …
…
5. Equalization provision6. Other technical provisions:
(a) gross amount …(b) reinsurance amount (−) …
…
D.Technical provisions for life-assurance policies
where the investment risk is borne by the policy-
holders:
(a) gross amount …(b) reinsurance amount (−) …
…
E.►
M1Other provisions ◄
1. Provisions for pensions and similar obligations.1991L0674 — EN — 17.07.2003 — 001.001 — 8
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2. Provisions for taxation.
3. Other provisions.
F.Deposits received from reinsurers
G.Creditors
(Amountsowed to:
— affiliated undertakings, and
— undertakingswith which an ins urance undertaking islinked by
virtue of a participating interest
shall be shown separately, as sub-items.)
I. Creditors arising out of direct insurance operations.
II. Creditors arising out of reinsurance operations.
III. Debenture loans, showing convertible loans separately.
IV. Amounts owed to credit institutions.
V. Other creditors, including tax and social security.
H.Accruals and deferred income
I.Profit for the financial year
(unless national law requires it to be shown as a liability under A
(VI)).
Article 7
Article 14 of Directive 78/660/EEC shall not apply to commitments
linked to insurance activities.
SECTION 4
Specialprovisionsrelatingtocertainbalance-sheetitems
Article 8
Article 15 (3) of Directive 78/660/EEC shall apply only to assets items
B and C (I) and (II) asdefined in Article 6 of thisDirective. Any
movements in these items shall be shown on the basis of the balance-sheet value at the beginning of the financial year.
Article 9
Assets: item C (III) (2)
Debt securities and other fixed-income securities
1. This item shall comprise negotiable debt securities and other
fixed-income securities issued by credit institutions, by other undertak-ings or by public bodies, in so far as they are not covered by item C(II) (2) or (4).
2. Securitiesbearing interes t the rate of which variesin line with
specific factors, for example the interest rate on the inter-bank marketor on the Euromarket, shall also be regarded as debt securities andother fixed-income securities.
Article 10
Assets: item C (III) (3)
Participation in investment pools
This item shall comprise shares held by an undertaking in joint invest-
ments constituted by several undertakings or pension funds, themanagement of which has been entrusted to one of those undertakingsor to one of those pension funds.1991L0674 — EN — 17.07.2003 — 001.001 — 9
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Article 11
Assets: itemsC (III) (4) and (5)
Loans guaranteed by mortgages and other loansLoans to policyholders for which the policy is the main security shall
be included under ‘Other loans’ and their amount shall be disclosed inthe notes on the accounts. Loans guaranteed by mortgage shall beshown as such even where they are also secured by insurance policies.
Where the amount of ‘Other loans’ not secured by policies is material,
an appropriate breakdown shall be given in the notes on the accounts.
Article 12
Assets: item C (III) (6)
Deposits with credit institutionsThis item shall comprise sums the withdrawal of which is subject to a
time restriction. Sums deposited with no such restriction shall be shown
under F (II) even if they bear interest.
Article 13
Assets: item C (III) (7)
OtherThis item shall comprise those investments which are not covered by
items C (III) (1) to (6). Where the amount of such investments is
significant, they must be disclosed in the notes on the accounts.
Article 14
Assets: item C (IV)
Deposits with ceding undertakingsIn the balance sheet of an undertaking which accepts reinsurance this
item shall comprise amounts, owed by the ceding undertakings andcorresponding to guarantees, which are deposited with those ceding
undertakingsor with third partiesor which are retained by thos e under-
takings.
Thes e amountsmay not be combined with other amountsowed by the
ceding insurer to the reinsurer or set off against amounts owed by thereinsurer to the ceding insurer.
Securitiesdepos ited with ceding undertakingsor third partieswhich
remain the property of the undertaking accepting reinsurance shall beentered in the latter'saccountsasan inves tment, under the appropriate
item.
Article 15
Assets: item D
Investments for the benefit of life assurance policyholders who bear the
investment risk.
In respect of life assurance this item shall comprise, on the one hand,
investments the value of which is used to determine the value of or the
return on policiesrelating to an inves tment fund and, on the otherhand, investments serving as cover for liabilities which are determinedby reference to an index. This item shall also comprise investmentswhich are held on behalf of the membersof a tontine and are intendedfor distribution among them.1991L0674 — EN — 17.07.2003 — 001.001 — 10
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Article 16
Assets: item F (IV)
Other
This item shall comprise those assets which are not covered by items F
(I), (II) and (III). Where such assets are material, they must bedisclosed in the notes on the accounts.
Article 17
Assets: item G (I)
Accrued interest and rentThis item shall comprise those items that represent interest and rent
that have been earned up to the balance-sheet date but have not yetbecome receivable.
Article 18
Assets: item G (II)
Deferred acquisition costs
1. The costs of acquiring insurance policies shall be deferred in
accordance with Article 18 of Directive 78/660/EEC in so far as such
deferral isnot prohibited by Member States .
2. Member Statesmay, however, permit the deduction of acquis ition
costs from unearned premiums in non-life-insurance business and their
deduction by an actuarial method from mathematical reserves in life-assurance business. Where this method is used, the amounts deductedfrom the provisions must be indicated in the notes on the accounts.
Article 19
Liabilities: item A (I)
Subscribed capital or equivalent fundsThis item shall comprise all amounts, irrespective of their actual desig-
nations, which, in accordance with the legal structure of an insuranceundertaking, are regarded under the national law of the Member Stateconcerned as equity capital subscribed by the shareholders or otherpersons.
Article 20
Liabilities: item A (IV)
ReservesThis item shall comprise all the types of reserves listed in Article 9 of
Directive 78/660/EEC under liabilitiesitem A (IV), asdefined therein.The Member States may also require other types of reserves if neces-sary for insurance undertakings the legal structures of which are notcovered by Directive 78/660/EEC.
Reserves shall be shown separately, as sub-items of liabilities item A
(IV), in the balance sheets of the insurance undertakings concerned,except for the revaluation reserve, which shall be shown as a liabilityunder A (III).
Article 21
Liabilities: item B
Subordinated liabilities
Where it hasbeen contractually agreed that, in the event of winding up
or of bankruptcy, liabilities, whether or not represented by certificates,are to be repaid only after the claimsof all other creditorshave beenmet, the liabilities in question shall be shown under this item.1991L0674 — EN — 17.07.2003 — 001.001 — 11
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Article 22
Where a Member Statespermitsan undertaking'sbalance s heet to
include fundsthe allocation of which either to policyholdersor toshareholders has not been determined by the close of the financial
year, those amounts shall be shown as liabilities under an item Ba
(Fund for future appropriations).
Variations in this item shall derive from an item II (12a) (Transfers to
or from the fund for future appropriations) in the profit and lossaccount.
Article 23
Liabilities: item C
Technical provisionsArticle 20 of Directive 78/660/EEC shall apply to technical provisions,
subject to Articles 24 to 30 of this Directive.
Article 24
Liabilities: itemsC (1) (b), (2) (b), (3) (b), (4) (b) and (6) (b) and D
(b)
Reinsurance amounts1. The reinsurance amounts shall comprise the actual or estimated
amounts which, under contractual reinsurance arrangements, arededucted from the gross amounts of technical provisions.
2. As regards the provision for unearned premiums, the reinsurance
amountss hall be calculated according to the methodsreferred to in
Article 57 or in accordance with the termsof the reins urance policy.
3. Member Statesmay require or permit the reins urance amountsto
be shown as assets. Where this option is exercised, those amounts shallbe shown as assets under an item Da (Reinsurers' share of technicalprovisions), subdivided as follows:
1. Provision for unearned premiums
2. Life assurance provision
3. Claimsouts tanding
4. Provisions for bonuses and rebates (unless shown under 2)
5. Other technical provisions
6. Technical provisions for life-assurance policies where the invest-
ment risk is borne by the policyholders.
Notwithstanding Article 5, these items shall not be combined.
Article 25
Liabilities: item C (1)
Provision for unearned premiumsThe provision for unearned premiums shall comprise the amount repre-
senting that part of gross premiums written which is to be allocated tothe following financial year or to subsequent financial years. In thecase of life assurance Member States may, pending further harmoniza-
tion, require or permit the provision for unearned premiums to be
included in item C (2).
If, pursuant to Article 26, item C (1) also includes the amount of the
provision for unexpired risks, the description of the item shall be‘Provision for unearned premiums and unexpired risks’. Where theamount for unexpired risks is material, it shall be disclosed separatelyeither in the balance sheet or in the notes on the accounts.1991L0674 — EN — 17.07.2003 — 001.001 — 12
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Article 26
Liabilities: item C (6)
Other technical provisions
This item shall comprise, inter alia, the provision for unexpired risks,
i.e. the amount set aside in addition to unearned premiums in respect ofrisks to be borne by the insurance undertaking after the end of thefinancial year, in order to provide for all claimsand expens esinconnection with insurance contracts in force in excess of the relatedunearned premiums and any premiums receivable on those contracts.
However, if national legislation so provides, the provision for unex-
pired risks may be added to the provision for unearned premiums, asdefined in Article 25, and included in the amount shown under item C(1).
Where the amount of unexpired risks is significant, it shall be disclosed
separately either in the balance sheet or in the notes on the accounts.
Where the option provided for in the second paragraph of Article 3 is
not exercised, this item shall also include the ageing reserves.
Article 27
Liabilities: item C (2)
Life assurance provision
The life assurance provision shall comprise the actuarially estimated
value of an insurance undertaking's liabilities including bonuses alreadydeclared and after deducting the actuarial value of future premiums.
Article 28
Liabilities: item C (3)
Claims outstanding
The provision for claims outstanding shall be the total estimated ulti-
mate cost to an insurance undertaking of settling all claims arisingfrom eventswhich have occured up to the end of the financial year,
whether reported or not, less amounts already paid in respect of such
claims.
Article 29
Liabilities: item C (4)
Provision for bonuses and rebates
The provision for bonuses and rebates shall comprise amounts intended
for policyholdersor contract beneficiariesby way of bonus esandrebatesasdefined in Article 39 to the extent that s uch amountshavenot been credited to policyholdersor contract beneficiariesor includedin an item Ba (Fund for future appropriations), as provided for inArticle 22, first paragraph, or in item C (2).
Article 30
Liabilities: item C (5)
Equalization provision
1. The equalization provision shall comprise any amounts set aside
in compliance with legal or administrative requirements to equalizefluctuations in loss ratios in future years or to provide for special risks.
2. Where, in the absence of any such legislative or administrative
requirements, reserves within the meaning of Article 20 have beenconstituted for the same purpose, this shall be disclosed in the noteson the accounts.1991L0674 — EN — 17.07.2003 — 001.001 — 13
▼B
Article 31
Liabilities: item D
Technical provisions for life-assurance policies where the investment
risk is borne by the policyholders.
This item shall comprise technical provisions constituted to cover
liabilities relating to investment in the context of life assurance policiesthe value of or the return on which isdetermined by reference toinvestments for which the policyholder bears the risk, or by referenceto an index.
Any additional technical provisions constituted to cover death risks,
operating expenses or other risks (such as benefits payable at thematurity date or guaranteed surrender values) shall be shown underitem C (2).
Item D shall also comprise technical provisions representing the obliga-
tionsof a tontine'sorganizer vis-à-vis itsmembers .
Article 32
Liabilities: item F
Deposits received from reinsurers
In the balance sheet of an undertaking ceding reinsurance this item
shall comprise amounts deposited by or withheld from other insurance
undertakings under reinsurance contracts. These amounts may not be
merged with other amountsowed to or by the other undertakingsinquestion.
Where an undertaking ceding reinsurance has received as a deposit
securities which have been transferred to its ownership, this item shall
comprise the amount owed by the ceding undertaking by virtue of thedeposit.
SECTION 5
Layoutoftheprofitandlossaccount
Article 33
1. The Member States shall prescribe the layout shown in Article 34
for profit and loss accounts.
2. The technical account for non-life-insurance business shall be
used for those classes of direct insurance which are within the scope
of Directive 73/239/EEC and for the corresponding classes of reinsur-
ance business.
3. The technical account for life-assurance business shall be used for
those classes of direct insurance which are within the scope of Direc-tive 79/267/EEC and for the corresponding classes of reinsurance
business.
4. Member Statesmay require or permit undertakingsthe activities
of which consist wholly of reinsurance to use the technical accountfor non-life-insurance business for all their business. This shall also
apply to undertakings underwriting direct non-life-insurance and also
reinsurance.
Article 34
Profitandlossaccount
I.Technical account — Non-life-insurance busi-
ness
1. Earned premiums, net of reinsurance:
(a) gross premiums written …(b) outward reinsurance premiums (−) … …1991L0674 — EN — 17.07.2003 — 001.001 — 14
▼B
(c) change in the gross provision for
unearned premiumsand, in s o far asnational legislation authorizes the
inclusion of this provision in liabilities
item C (1), in the provision for unex-pired risks (+ / −) …
(d) change in the provision for unearned
premiums, reinsurers' share (+ / −) … … …
2. Allocated investment return transferred
from the non-technical account (item III
(6)) …
3. Other technical income, net of reinsurance …4. Claimsincurred, net of reins urance:
(a) claimspaid
(aa) gross amount …(bb) reinsurers' share (−) … …
(b) change in the provision for claims,
(aa) gross amount …(bb) reinsurers' share (−) … … …
5. Changes in other technical provisions, net
of reinsurance, not shown under otherheadings(+ / −) …
6. Bonuses and rebates, net of reinsurance …7. Net operating expenses:
(a) acquisition costs …(b) change in deferred acquisition costs (+
/− ) …
(c) administrative expenses …(d) reinsurance commissions
and profit participation (−) … …
8. Other technical charges, net of reinsurance …9. Change in the equalization provision (+ /
−) …
10. Sub-total (balance on the technical
account for non-life-insurance business
(item III 1)). …
II.Technical account — Life-assurance business
1. Earned premiums, net of reinsurance:
(a) gross premiums written …(b) outward reinsurance premiums (−) …(c) change in the provision for unearned
premiums, net of reinsurance (+ / −) … …
2. Investment income:
(a) income from participating interests,
with a separate indication of that
derived from affiliated undertakings……1991L0674 — EN — 17.07.2003 — 001.001 — 15
▼B
(b) income from other investments,
with a separate indication of that
derived from affiliated undertakings…
(aa) income from land and buildings…
(bb) income from other investments … …
(c) value re-adjustments on investments …
(d) gainson the realization of inves tments … …
3. Unrealized gainson inves tments …
4. Other technical income, net of reinsurance …
5. Claimsincurred, net of reins urance:
(a) claimspaid
(aa) gross amount …
(bb) reinsurers' share (−) … …
(b) change in the provision for claims
(aa) gross amount …
(bb) reinsurers' share (−) … … …
6. Change in other technical provisions, net
of reinsurance, not shown under otherheadings(+ / −):
(a) life assurance provision, net of rein-
surance
(aa) gross amount …
(bb) reinsurers' share (−) … …
(b) other technical provisions, net of rein-
surance … …
7. Bonuses and rebates, net of reinsurance …
8. Net operating expenses:
(a) acquisition costs, …
(b) change in deferred acquisition costs (+
/− ) …
(c) administrative expenses …
(d) reinsurance commissions
and profit participation (−) … …
9. Investment charges:
(a) investment management charges,
including interest …
(b) value adjustments on investments …
(c) losses on the realization of invest-
ments… …
10. Unrealized losses on investments …
11. Other technical charges, net of reinsur-
ance …
12. Allocated investment return transferred
to the non-technical account (−) (itemIII 4)) …1991L0674 — EN — 17.07.2003 — 001.001 — 16
▼B
13. Sub-total: (balance on the technical
account — life assurance business) (itemIII 2)) …
III.Non-technical account
1. Balance on the technical account — non-
life-insurance business (item I (10)) …
2. Balance on the technical account — life-
assurance business (item II (13)) …
3. Investment income
(a) income from participating interests,
with a separate indication of that
derived from affiliated undertakings……
(b) income from other investments,
with a separate indication of that
derived from affiliated undertakings
…
(aa) income from land and buildings…(bb) income from other investments … …
(c) value re-adjustments on investments …(d) gainson the realization of inves tments … …
4. Allocated investment return transferred
from the life-assurance technical account(item II (12)) …
5. Investment charges:
(a) investment management charges,
including interest …
(b) value adjustments on investments …(c) losses on the realization of invest-
ments… …
6. Allocated investment return transferred to
the non-life-insurance technical account
(item I 2)) …
7. Other income …8. Other charges, including value adjust-
ments…
9. Tax on profit or loss on ordinary activities …10. Profit or loss on ordinary activities after
tax …
11. Extraordinary income …12. Extraordinary charges…13. Extraordinary profit or loss …14. Tax on extraordinary profit or loss …15. Other taxesnot s hown under the
preceding items…
16. Profit or loss for the financial year …1991L0674 — EN — 17.07.2003 — 001.001 — 17
▼B
SECTION 6
Specialprovisionsrelating tocertain profit-and-loss-accountitems
Article 35
Non-life-insurance technical account: item I (1) (a)Life-assurance technical account: item II (1) (a)Gross premiums written
Gross premiums written shall comprise all amounts due during the
financial year in respect of insurance contracts regardless of the fact
that such amounts may relate in whole or in part to a later financialyear, and shall include inter alia:
(i) premiumsyet to be written, where the premium calculation can be
done only at the end of the year:
(ii) — single premiums, including annuity premiums,
— in life assurance, single premiums resulting from bonus and
rebate provisions in so far as they must be considered aspremiums on the basis of contracts and where national legisla-tion requires or permits their being shown under premiums;
(iii) additional premiumsin the cas e of half-yearly, quarterly or
monthly paymentsand additional paymentsfrom policyholdersfor expenses borne by the insurance undertaking;
(iv) in the case of co-insurance, the undertaking's portion of total
premiums;
(v) reinsurance premiums due from ceding and retroceding insurance
undertakings, including portfolio entries,
after deduction of:
— portfolio withdrawalscredited to ceding and retroceding ins urance
undertakings, and
— cancellations.
The above amountss hall not include the amountsof taxesor charges
levied with premiums.
Article 36
Non-life-insurance technical account: item I (1) (b)
Life-assurance technical account: item II (1) (b)
Outward reinsurance premiumsOutward reinsurance premiums shall comprise all premiums paid or
payable in respect of outward reinsurance contracts entered into by aninsurance undertaking. Portfolio entries payable on the conclusion oramendment of outward reinsurance contracts shall be added; portfoliowithdrawalsreceivable mus t be deducted.
Article 37
Non-life-insurance technical account: items I (1) (c) and (d)Life-assurance technical account: item II (1) (c)
Change in the provision for unearned premiums, net of reinsurance
Pending further coordination, Member Statesmay, in the cas e of life
assurance, require or permit the change in unearned premiums to beincluded in the change in the life assurance provision.1991L0674 — EN — 17.07.2003 — 001.001 — 18
▼B
Article 38
Non-life-insurance technical account: item I (4)Life-assurance technical account: item II (5)
Claimsincurred, net of reins urance
1. Claims incurred shall comprise all payments made in respect of
the financial year plus the provision for claims but minus the provisionfor claimsfor the preceding financial year.
These amounts shall include annuities, surrenders, entries and withdra-
wals of loss provisions to and from ceding insurance undertakings and
reinsurers, external and internal claims management costs and charges
for claimsincurred but not reported s uch asreferred to in Article 60 (1)(b) and (2) (a).
Sums recoverable on the basis of subrogation and salvage within the
meaning of Article 60 (1) (d) shall be deducted.
2. Where the difference between:
— the loss provision made at the beginning of the year for outstanding
claimsincurred in previousyears , and
— the paymentsmade during the year on account of claimsincurred in
previous years and the loss provision shown at the end of the yearfor such outstanding claims is material,
it shall be disclosed in the notes on the accounts, broken down by cate-
gory and amount.
Article 39
Non-life-insurance technical account: item I (6)Life-assurance technical account: item II (7)Bonuses and rebates, net of reinsuranceBonuses shall comprise all amounts chargeable for the financial year
which are paid or payable to policyholdersand other ins ured partiesor provided for their benefit, including amounts used to increase tech-nical provisions or applied to the reduction of future premiums, to theextent that such amounts represent an allocation of surplus or profitarising on business as a whole or a section of business, after deduction
of amountsprovided in previousyearswhich are no longer required.
Rebates shall comprise such amounts to the extent that they represent a
partial refund of premiumsres ulting from the experience of individual
contracts.
Where material, the amount charged for bonuses and that charged for
rebates shall be disclosed separately in the notes on the accounts.
Article 40
Non-life-insurance technical account: item I (7) (a)Life-assurance technical account: item II (8) (a)Acquisition costsAcquisition costs shall comprise the costs arising from the conclusion
of insurance contracts. They shall cover both direct costs, such asacquisition commissions or the cost of drawing up the insurance docu-ment or including the insurance contract in the portfolio, and indirectcosts, such as advertising costs or the administrative expensesconnected with the processing of proposals and the issuing of policies.
Member States may require policy renewal commissions to be entered
in item I (7) (c) or II (8) (c).1991L0674 — EN — 17.07.2003 — 001.001 — 19
▼B
Article 41
Non-life-insurance technical account: item I (7) (c)Life-assurance technical account: item II (8) (c)
Administrative expenses
Administrative expenses shall include the costs arising from premium
collection, portfolio administration, handling of bonuses and rebates,and inward and outward reinsurance. They shall in particular includestaff costs and depreciation provisions in respect of office furniture
and equipment in so far as these need not be shown under acquisition
costs, claims incurred or investment charges.
Article 42
Life-insurance technical account: items II (2) and (9)Non-technical account: itemsIII (3) and (5)Investment income and charges
1. All investment income and charges relating to non-life insurance
shall be disclosed in the non-technical account.
2. In the case of an undertaking carrying on life-assurance business
only, investment income and charges shall be disclosed in the life-assurance technical account.
3. In the case of an undertaking carrying on both life-assurance and
non-life-insurance business, investment income and charges shall, tothe extent that they are directly connected with the carrying on of thelife-assurance business, be disclosed in the life-assurance technicalaccount.
4. Member States may require or permit the disclosure of investment
income and chargesaccording to the origin or attribution of the inves t-
ments, if necessary by providing for further items in the non-life-insurance technical account, by analogy with the corresponding itemsin the life-assurance technical account.
Article 43
Non-life-insurance technical account: item I (2)
Life-assurance technical account: item II (2)
Non-technical account: itemsIII (4) and (6)Allocated investment return
1. Where part of the investment return is transferred to the non-life-
insurance technical account, the transfer from the non-technical account
shall be deducted from item III (6) and added to item I (2).
2. Where part of the investment return disclosed in the life-assur-
ance technical account istrans ferred to the non-technical account, theamount transferred shall be deducted from item II (12) and added toitem III (4).
3. Member Statesmay lay down the proceduresfor and the amounts
of transfers of allocated return from one part of the profit and lossaccount to another. The reasons for such transfers and the bases onwhich they are made shall be disclosed in the notes on the accountsin either event; where appropriate, a reference to the text of the rele-vant regulation shall suffice.1991L0674 — EN — 17.07.2003 — 001.001 — 20
▼B
Article 44
Life-assurance technical account: items II (3) and (10)
Unrealized gains and losses on investments
1. In life-assurance business Member States may permit the disclo-
sure in full or in part in items II (3) and (10) in the profit and loss
account of variationsin the difference between:
— the valuation of investments at their current value or by means of
one of the methodsreferred to in Article 33 (1) of Directive 78/660/EEC, and
— their valuation at purchase price.
In any event, Member Statess hall require that the amountsreferred to
in the first paragraph be disclosed in the aforementioned items wherethey relate to investments shown as assets under D.
2. Member Stateswhich require or permit the valuation of the
investments shown as assets under C at their current value may, inrespect of non-life-insurance, permit the disclosure in full or in part inan item III (3a) and in an item III (5a) in the profit and loss account of
the variation in the difference between the valuation of those invest-
mentsat their current value and their valuation at purchas e price.
SECTION 7
Valuationrules
Article 45
Article 32 of Directive 78/660/EEC, under which the valuation of items
shown in the annual accounts must be based on the principle ofpurchase price or production cost, shall apply to investment subject to
Articles46 to 49 of thisDirective.
Article 46
1. Member Statesmay require or permit the valuation of inves t-
ments shown as assets under C on the basis of their current valuecalculated in accordance with Articles48 and 49.
2. The investments shown as assets under D shall be shown at their
current value.
3. Where investments are shown at their purchase price, their
current value shall be disclosed in the notes on the accounts.
However, Member Statesin which, on the date of the notification of
this Directive, investments are shown at their purchase price may giveundertakings the option of initially disclosing in the notes on the
account the current value of investment shown as assets under C (I)
no later than five yearsafter the date referred to in Article 70 (1) andthe current value of other investments no later than three years after thesame date.
4. Where investments are shown at their current value, their
purchase price shall be disclosed in the notes on the accounts.
5. The same valuation method shall be applied to all investments
included in any item denoted by an arabic numeral or shown as assets
under C (I). ►
M1Member Statesmay permit derogationsfrom this
requirement. ◄
6. The method(s) applied to each investment item shall be stated in
the notes on the accounts, together with the amounts so determined.1991L0674 — EN — 17.07.2003 — 001.001 — 21
▼M1
▼M1
Article 46a
1. Where assets and liabilities are valued in accordance with Section
7a of Directive 78/660/EEC, paragraphs2 to 6 of thisArticle s hall
apply.
2. The investments shown as assets under D shall be shown at their
fair value.
3. Where investments are shown at their purchase price, their fair
value shall be disclosed in the notes on the accounts.
4. Where investments are shown at their fair value, their purchase
price shall be disclosed in the notes on the accounts.
5. The same valuation method shall be applied to all investments
included in any item denoted by an arabic numeral or shown as assetsunder C(I). Member Statesmay permit derogationsfrom thisrequire-ment.
6. The method(s) applied to each investment item shall be stated in
the notes on the accounts, together with the amounts so determined.
Article 47
Where current value is applied to investments, Article 33 (2) and (3) of
Directive 78/660/EEC shall apply, except as provided in Articles 37and 44 of thisDirective.
Article 48
1. In the case of investments other than land and buildings, current
value shall mean market value, save as provided in paragraph 5.
2. Where investments are officially listed on an official stock
exchange, market value shall mean the value on the balance-sheetdate or, when the balance-sheet date is not a stock-exchange tradingday, on the last stock-exchange trading day before that date.
3. Where a market exists for investments other than those referred to
in paragraph 2, market value shall mean the average price at whichsuch investments were traded on the balance-sheet date or, when thebalance-sheet date is not a trading day, on the last trading day beforethat date.
4. Where on the date on which the accountsare drawn up inves t-
ments such as referred to in paragraphs 2 or 3 have been sold or areto be sold within the short term, the market value shall be reduced bythe actual or estimated realization costs.
5. Except where the equity method isapplied in accordance with
Article 59 of Directive 78/660/EEC, all other investments shall bevalued on a basis which has prudent regard to the likely realizablevalue.
6. In all cases the method of valuation shall be precisely described
and the reason for adopting it stated in the notes on the accounts.
Article 49
1. In the case of land and buildings current value shall mean the
market value on the date of valuation, where relevant reduced as
provided in paragraphs4 and 5.
2. Market value shall mean the price at which land and buildings
could be sold under private contract between a willing seller and anarm's length buyer on the date of valuation, it being assumed that theproperty ispublicly expos ed to the market, that market conditions
permit orderly disposal and that a normal period, having regard to the
nature of the property, isavailable for the negotiation of the s ale.
3. The market value shall be determined through the separate valua-
tion of each land and buildingsitem, carried out at leas t every fiveyearsaccording to methodsgenerally recognized or recognized by the1991L0674 — EN — 17.07.2003 — 001.001 — 22
▼B
▼B
insurance supervisory authorities. Article 35 (1) (b) of Directive 78/
660/EEC shall not apply.
4. Where the value of any land and buildingsitem hasdiminis hed
since the preceding valuation under paragraph 3, an appropriate value
adjustment shall be made. The lower value thus arrived at shall not beincreased in subsequent balance sheets unless such increase resultsfrom a new determination of market value arrived at in accordancewith paragraphs2 and 3.
5. Where on the date on which the accountsare drawn up land and
buildings have been sold or are to be sold within the short term, the
value arrived at in accordance with paragraphs2 and 4 s hall be reduced
by the actual or estimated realization costs.
6. Where it is impossible to determine the market value of a land
and buildingsitem, the value arrived at on the bas isof the principleof purchase price or production cost shall be deemed to be the currentvalue.
7. The method by which the current value of land and buildingshas
been arrived at and their breakdown by financial year of valuation shall
be disclosed in the notes on the accounts.
Article 50
Where Article 33 of Directive 78/660/EEC isapplied to ins urance
undertakings, it shall be so in the following manner:
(a) paragraph 1 (a) shall apply to assets shown under F (I) as defined
in Article 6 of thisDirective;
(b) paragraph 1 (c) shall apply to assets shown under C (I), (II), (III)
and (IV) and F (I) (except for stocks) and (III) as defined in Article
6 of thisDirective.
Article 51
Article 35 of Directive 78/660/EEC shall apply to insurance undertak-
ings subject to the following provisions:
(a) it shall apply to assets shown under B and C and to fixed assets
shown under F (I) as defined in Article 6 of this Directive;
(b) paragraph 1 (c) (aa) shall apply to assets shown under C (II), (III)
and (IV) and F (III) asdefined in Article 6 of thisDirective.
Member States may require that value adjustments be made in respect
of transferable securities shown as investments, so that they are shown
at the lower value to be attributed to them at the balance-sheet date.
Article 52
Article 38 of Directive 78/660/EEC shall apply to assets shown under F
(I) asdefined in Article 6 of thisDirective.
Article 53
Article 39 of Directive 78/660/EEC shall apply to assets shown under
E (I), (II) and (III) and F (II) asdefined in Article 6 of thisDirective.
Article 54
In non-life insurance the amount of any deferred acquisition costs shall
be established on a basis compatible with that used for unearnedpremiums.
In life assurance the calculation of the amount of any acquisition costs
to be deferred may be taken into the actuarial calculation referred to inArticle 59.1991L0674 — EN — 17.07.2003 — 001.001 — 23
▼B
Article 55
1. (a) If they have not been valued at market value, debt securities and
other fixed-income securities shown as assets under C (II) and(III) shall be shown in the balance sheet at purchase price.Member States may, however, require or permit such debt secu-
rities to be shown in the balance sheet at the amount repayable
at maturity.
(b) Where the purchase price of the securities referred to in point
(a) exceedsthe amount repayable at maturity, the amount ofthe difference shall be charged to the profit and loss account.Member Statesmay, however, require or permit the amount ofthe difference to be written off in instalments so that it is
completely written off when the securities are repaid. That
difference must be shown separately in the balance sheet or inthe noteson the accounts .
(c) Where the purchase price of the securities referred to in point
(a) isles sthan the amount repayable at maturity, Member Statesmay require or permit the amount of the difference to be
released to income in instalments over the period remaining
until repayment. That difference must be shown separately inthe balance sheet or in the notes on the accounts.
2. Where debt securities or other fixed-income securities that are not
valued at market value are sold before maturity and the proceeds areused to purchase other debt securities or fixed-income securities,Member Statesmay permit the difference between the proceedsofsale and their book value to be spread uniformly over the periodremaining until the maturity of the original investment.
Article 56
Technical provisions
The amount of technical provisions must at all times be such that an
undertaking can meet any liabilities arising out of insurance contracts
asfar ascan reas onably be fores een.
Article 57
Provision for unearned premiums
1. The provision for unearned premiums shall in principle be
computed separately for each insurance contract. Member States may,
however, permit the use of statistical methods, and in particular propor-tional and flat-rate methods, where they may be expected to giveapproximately the same results as individual calculations.
2. In classes of insurance where the assumption of a temporal corre-
lation between risk experience and premium is not appropriate,calculation methodss hall be applied that take account of the differingpattern of risk over time.
Article 58
Provision for unexpired risks
The provision for unexpired risks referred to in Article 26 shall be
computed on the basis of claims and administrative expenses likely to
arise after the end of the financial year from contracts concluded before
that date, in so far as their estimated value exceeds the provision forunearned premiumsand any premiumsreceivable under thos econtracts.
Article 59
Life assurance provision
1. The life assurance provision shall in principle be computed sepa-
rately for each life assurance contract. Member States may, however,permit the use of statistical or mathematical methods where they maybe expected to give approximately the same results as individual calcu-1991L0674 — EN — 17.07.2003 — 001.001 — 24
▼B
lations. A summary of the principal assumptions made shall be given in
the noteson the accounts .
2. The computation shall be made annually by an actuary or other
specialist in this field on the basis of recognized actuarial methods.
Article 60
Provisions for claims outstanding
1. Non-life insurance
(a) A provision shall in principle be computed separately for each case
on the basis of the costs still expected to arise. Statistical methodsmay be used if they result in an adequate provision having regard
to the nature of the risks; Member States may, however, make the
application of such methods subject to prior approval.
(b) This provision shall also allow for claims incurred but not reported
by the balance-sheet date; its amount shall be determined havingregard to past experience as to the number and magnitude of claimsreported after the balance-sheet date.
(c) Claims settlement costs shall be included in the calculation of the
provision irrespective of their origin.
(d) Recoverable amounts arising out of the acquisition of the rights of
policyholders with respect to third parties (subrogation) or of the
legal ownership of insured property (salvage) shall be deductedfrom the provision for claims outstanding; they shall be estimatedon a prudent basis. Where such amounts are material, they shall bedisclosed in the notes on the accounts.
(e) By way of derogation from subparagraph (d), Member States may
require or permit the disclosure of recoverable amounts as assets.
(f) Where benefits resulting from a claim must be paid in the form of
annuity, the amounts to be set aside for that purpose shall be calcu-lated by recognized actuarial methods.
(g) Implicit discounting or deductions, whether resulting from the
placing of a present value on a provision for an outstanding claimwhich is expected to be settled later at a higher figure or otherwiseeffected, shall be prohibited.
Member Statesmay permit explicit dis counting or deductionsto
take account of investment income. No such discounting or deduc-
tions shall be permissible unless:
(i) the expected average date for the settlement of claims is at
least four years after the accounting date;
(ii) the discounting or deduction is effected on a recognized
prudential basis; the competent authority must be given
advance notification of any change in method;
(iii) when calculating the total cost of settling claims, an under-
taking takes account of all factors that could cause increasesin that cost;
(iv) an undertaking has adequate data at its disposal to construct a
reliable model of the rate of claims settlements;
(v) the rate of interest used for the calculation of present values
does not exceed a prudent estimate of the investment income
from assets invested as a provision for claims during theperiod necessary for the payment of such claims. Moreover, itmust not exceed either of the following:
— the investment income from such assets over the preceding
five years,
— the investment income from such assets during the year
preceding the balance-sheet date.
When discounting or effecting deductions, an undertaking shall, in
the notes on its accounts, disclose the total amount of provisionsbefore discounting or deduction, the categories of claims whichare discounted or from which deductions have been made and, for1991L0674 — EN — 17.07.2003 — 001.001 — 25
▼B
each category of claims, the methods used, in particular the rates
used for the estimates referred to in the preceding subparagraph,points(iii) and (v), and the criteria adopted for es timating the
period that will elapse before the claims are settled.
2. Life insurance
(a) The amount of the provision for claims shall be equal to the sums
due to beneficiaries, plus the costs of settling claims. It shallinclude the provision for claims incurred but not reported.
(b) Member States may require the disclosure in liabilities item C (2)
of the amountsreferred to in (a).
Article 61
1. Pending further coordination, Member Statesmay require or
permit the application of the following methodswhere, becaus e of the
nature of the class or type of insurance in question, information aboutpremiumsreceivable, claimspayable or both for the underwriting yearsis insufficient when the annual accounts are drawn up for accurate esti-matesto be made.
Method1
The excess of the premiums written over the claims and expenses paid
in respect of contracts commencing in the underwriting year shall forma technical provision which is included in the technical provision forclaims outstanding shown in the balance sheet in liabilities item C (3).
The provision may also be computed on the basis of a given percentage
of the premiumswritten where s uch a method isappropriate for thetype of risk insured. Should the need arise, the amount of this technicalprovision shall be increased to make it sufficient to meet present andfuture obligations. The technical provision constituted by this method
shall be replaced by a provision for claims outstanding estimated in
the usual manner as soon as sufficient information has been gatheredand not later than the end of the third year following the underwritingyear.
Method2
The figuress hown in the technical account or in certain itemswithin it
shall relate to a year which wholly or partly precedes the financialyear. It must not do so by more than 12 months. The amounts of thetechnical provisions shown in the annual accounts shall if necessarybe increased to make them sufficient to meet present and future obliga-
tions.
2. Where one of the methodsdes cribed in paragraph 1 isadopted, it
shall be applied systematically in successive years unless circumstancesjustify a change. The use of either method shall be disclosed in thenoteson the accountsand the reas onsgiven; in the event of a change
in the method applied, the effect on the assets, liabilities, financial
position and profit or loss shall be indicated in the notes on theaccounts. Where Method 1 is used, the length of time that elapsesbefore a provision for claims outstanding is constituted on the usualbasis shall be disclosed in the notes on the accounts. Where Method 2
isus ed, the length of time by which the earlier year to which the
figuresrelate precedesthe financial year and the magnitude of thetransactions concerned shall be disclosed in the notes on the accounts.
3. For the purposes of this Article, ‘underwriting year’ shall mean
the financial year in which the insurance contracts in the class or type
of insurance in question commenced.
Article 62
Pending further coordination, those Member States which require the
constitution of equalization provisions shall prescribe the valuationrulesto be applied to them.1991L0674 — EN — 17.07.2003 — 001.001 — 26
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SECTION 8
Contentsofthenotesontheaccounts
Article 63
In place of the information provided for in Article 43 (1) (8) of Direc-
tive 78/660/EEC, insurance undertakings shall provide the following
particulars:
I. As regards non-life insurance, the notes on the accounts shall
disclose:
1. gross premiums written;
2. gross premiums earned;3. gross claims charges;
4. gross operating expenses;
5. the reinsurance balance.
These amounts shall be shown broken down between direct insur-
ance and reinsurance acceptances, if reinsurance acceptances
amount to 10 % or more of gross premiums written, and thenwithin direct insurance into the following groups of classes:
— accident and health,
— motor, third-party liability,— motor, other classes,— marine, aviation and transport,
— fire and other damage to property,
— third-party liability,— credit and suretyship,— legal expenses,— assistance,— miscellaneous.
The breakdown into groups of classes within direct insurance shall
not be required where the amount of the gross premiums written indirect insurance for the group in question does not exceed ECU 10million. However, undertakings shall in any case disclose theamounts relating to the three largest groups of classes in their busi-
ness.
II. As regards life assurance, the notes on the accounts shall disclose:
1. gross premiums written, broken down between direct insurance
and reinsurance acceptances, if reinsurance acceptances amount
to 10 % or more of gross premiums written, and then within
direct insurance to indicate:
(a) (i) individual premiums;
(ii) premiumsunder group contracts ;
(b) (i) periodic premiums;
(ii) single premiums;
(c) (i) premiumsfrom non-bonuscontracts ;
(ii) premiumsfrom bonuscontracts ;
(iii) premiumsfrom contractswhere the inves tment ris k is
borne by policyholders.
Disclosure of the figure relating to (a), (b) or (c) shall not be
required where it doesnot exceed 10 % of the gros spremiums
written in direct insurance;
2. the reinsurance balance;
III. In the case covered by Article 33 (4), gross premiums broken
down between life assurance and non-life insurance.
IV. In all cases, the total gross direct insurance premiums resulting
from contractsconcluded by the ins urance undertaking
— in the Member State of itshead office,
— in the other Member States, and1991L0674 — EN — 17.07.2003 — 001.001 — 27
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— in other countries,
except that disclosure of the figure relating to the above shall not
be required if they do not exceed 5 % of total gross premiums.
Article 64
In the notes on their accounts insurance undertakings shall disclose the
total amount of commissions for direct insurance business taken intothe accountsfor the financial year. Thisrequirement s hall covercommissions of any kind, and in particular acquisition, renewal, collec-tion and portfolio management commissions.
SECTION 9
Provisionsrelatingtoconsolidatedaccounts
Article 65
1. Insurance undertakings shall draw up consolidated accounts and
consolidated annual reports in accordance with Directive 83/349/EEC,save as otherwise provided in this section.
2. In so far as a Member State does not have recourse to Article 5 of
Directive 83/349/EEC, paragraph 1 shall also apply to parent undertak-ings, the sole or essential object of which is to acquire holdings insubsidiary undertakings and turn them to profit, where those subsidiaryundertakings are either exclusively or mainly insurance undertakings.
Article 66
Directive 83/349/EEC shall apply subject to the following provisions:
1. Articles4, 6, and 40 s hall not apply;
2. the information referred to in the first and second indents of Article
9 (2), namely:
— the amount of the fixed assets, and
— the net turnover,
shall be replaced by particulars of the gross premiums written as
defined in Article 35 of thisDirective;
3. a Member State may also apply Article 12 of Directive 83/349/EEC
to two or more insurance undertakings which are not connected asdescribed in Article 1 (1) or (2) of the same Directive but aremanaged on a unified basis other than pursuant to a contract or
provisions of their memoranda or articles of association. Unified
management may also consist of important and durable reinsurancelinks;
4. Member Statesmay permit derogationsfrom Article 26 (1) (c) of
Directive 83/349/EEC where a transaction has been concluded
according to normal market conditions and has established policy-holder rights. Any such derogation shall be disclosed and wherethey have a material effect on the assets, liabilities, financial posi-tion and profit or loss of all the undertakings included in the
consolidation that fact shall be disclosed in the notes on the conso-
lidated accounts;
5. Article 27 (3) of Directive 83/349/EEC shall apply provided that the
balance-sheet date of an undertaking included in a consolidation
does not precede the consolidated balance-sheet date by more than
six months;
6. Article 29 of Directive 83/349/EEC shall not apply to those liabil-
itiesitems , the valuation of which by the undertakingsincluded in
a consolidation is based on the application of provisions specific toinsurance undertakings or to those assets items changes in the valuesof which also affect or establish policyholders' rights. Whererecourse is had to this derogation, the fact shall be disclosed in thenotes on the consolidated accounts.1991L0674 — EN — 17.07.2003 — 001.001 — 28
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Article 67
In consolidated accounts alone Member States may require or permit
all investment income and charges to be disclosed in the non-technical
account, even when such income and charges are connected with life-assurance business.
Furthermore, Member States may in such cases require or permit the
allocation of part of the investment return to the life-assurance tech-nical account.
SECTION 10
Publication
Article 68
1. The duly approved annual accounts of insurance undertakings,
together with the annual reports and the reports by the persons respon-sible for auditing the accounts, shall be published as laid down by the
lawsof each Member State in accordance with Article 3 of Directive
68/151/EEC (
1).
The lawsof a Member State may, however, provide that annual reports
need not be published as provided in the first subparagraph. In thatevent, they shall be made available to the public at the undertakings'
head offices in the Member State concerned. It must be possible to
obtain a copy of all or part of any such report upon request. The priceof such a copy shall not exceed its administrative cost.
2. Paragraph 1 shall also apply to the duly approved consolidated
accounts, the consolidated annual report and the reports by the personsresponsible for auditing the accounts.
3. Where an insurance undertaking which has drawn up annual
accounts or consolidated accounts is not established as one of the typesof company listed in Article 1 (1) of Directive 78/660/EEC and is notrequired by itsnational law to publis h the documentsreferred to inparagraph 1 and 2 of thisArticle aspres cribed in Article 3 of Directive
68/151/EEC, it shall at least make them available to the public at its
head office. It must be possible to obtain copies of such documentson request. The price of such copies shall not exceed their administra-tive cost.
4. Member States shall provide for appropriate sanctions for failure
to comply with the publication ruleslaid down in thisArticle.
SECTION 11
Finalprovisions
Article 69
The contact committee set up pursuant to Article 52 of Directive 78/
660/EEC shall also, when constituted appropriately, have the following
functions:
(a) to facilitate, without prejudice to Articles169 and 170 of the
Treaty, harmonized application of thisDirective through regularmeetingsdealing in particular with practical problemsaris ing inconnection with itsapplication;
(b) to advise the Commission, if the need arises, on additions or
amendmentsto thisDirective.
Article 70
1. Member States shall adopt the laws, regulations and administra-
tive provisions necessary for them to comply with this Directive1991L0674 — EN — 17.07.2003 — 001.001 — 29
(1) OJ No L 65, 14. 3. 1968, p. 8.
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before 1 January 1994. They shall forthwith inform the Commission
thereof.
When Member States adopt these measures, they shall include a refer-
ence to thisDirective or be accompanied by s uch reference on the
occasion of their official publication. The methods of making such areference shall be laid down by the Member States.
2. Member Statesmay provide that the provis ionsreferred to in
paragraph 1 shall first apply to annual accounts and consolidatedaccountsfor financial yearsbeginning on 1 January 1995 or duringthe calendar year 1995.
3. Member States shall communicate to the Commission the texts of
the main provisoins of national law which they adopt in the field
governed by thisDirective.
Article 71
Five yearsafter the date referred to in Article 70 (2) the Council,
acting on a proposal from the Commission, shall examine and if needbe revise all those provisions of this Directive which provide forMember State optionsin the light of the experience acquired inapplying thisDirective and in particular of the aimsof greater trans par-
ency and harmonization of the provisions referred to by this Directive.
Article 72
This Directive is addressed to the Member States.1991L0674 — EN — 17.07.2003 — 001.001 — 30
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