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"B 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)
(OJ L 63, 13.3.1979, p. 1)
Amended by:
Official Journal
No page date
"A1 Act of Accession of Greece L 291 17 19.11.1979
"A2 Act of Accession of Spain and Portugal L 302 23 15.11.19851979L0267 — EN — 01.01.1986 — 002.001 — 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 andbeneficiaries in all Member States, the provisions relating to the financialguarantees required of life assurance undertakings should be coordinated;
Whereas a classification by class of insurance is necessary in order to
determine, in particular, the activities subject to compulsory authorization;
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 limitedby 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 thesetwo activities simultaneously; whereas Member States should be allowed topermit 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 andnon-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 aMember State to pursue life assurance in that State, it should set up asubsidiary 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 carryon life assurance and non-life insurance simultaneously to put an end to thispractice; 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 supervision 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;
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 ofinvestment 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;!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 — 01.01.1986 — 002.001 — 2
Where it is necessary that, over and above technical reserves, including
mathematical reserves, of sufficient amount to meet their underwritingliabilites, 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 therequirements imposed for such purposes are determined according toobjective 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 thenature 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 mathematicalreserves 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 inthe subsequent course of business the solvency margin in no event falls belowa 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 itsunderwriting liabilities;
Whereas the coordinated rules concerning the pursuit of the business of direct
insurance within the Community should, in principle, apply to all undertak-ings 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 tolay down special provisions for such agencies or branches, in view of the factthat 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 andbranches 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 inpursuance 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 accordinglybeen 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 Directive73/240/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 lifeassurance; whereas they should accordingly be included in this coordinationDirective;
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,!B
(1) OJ No L 228, 16. 8. 1973, p. 20.1979L0267 — EN — 01.01.1986 — 002.001 — 3
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 establishedin a Member State or wish to become established there in the form of theactivities 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, assuranceon death only, assurance on survival to a stipulated age or on earlierdeath, life assurance with return of premiums, marriage assurance,
birth assurance;
(b) annuities;(c) supplementary insurance carried on by life assurance undertakings,
that is to say, in particular, insurance against personal injuryincluding 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 insuranceare 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 authoritiesresponsible for the supervision of private insurance and are authorized inthe country concerned:
(a) tontines whereby associations of subscribers are set up with a view to
jointly capitalizing their contributions and subsequently distributingthe assets thus accumulated among the survivors or among thebeneficiaries 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 areundertaken;
(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 effectpayments on death or survival or in the event of discontinuance orcurtailment of activity;
(d) the operations referred to in (c) where they are accompanied by
insurance covering either conservation of capital or payment of aminimum 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’.
3. Operations relating to the length of human life which are prescribed by or
provided for in social insurance legislation, when they are effected ormanaged 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!B1979L0267 — EN — 01.01.1986 — 002.001 — 4
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 theirmembers 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 orself-employed persons belonging to an undertaking or group of under-takings, 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 timesby 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 averagefuneral 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 Wirts-
chaftsorganisationen’ in Germany or the ‘Caisse d’épargne de l’État’ in
Luxembourg unless their statutes are amended as regards the scope of their
activities.
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 1977applicable to the general budget of the European Communities (
2);
wherever this Directive refers to the unit of account, the conversion value
in national currency to be adopted shall as from 31 December of eachyear be that of the last day of the preceding month of October for whichEUA 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 assetsexpressed 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 asinvolving 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 debtorsshall be regarded as situated in the Member State where they arerealizable;
(d) ‘capital at risk’ means the amount payable on death less the mathematical
reserve for the main risk.!B
(1) OJ No L 228, 16. 8. 1973, p. 3.
(2) OJ No L 356, 31. 12. 1977, p. 1.1979L0267 — EN — 01.01.1986 — 002.001 — 5
TITLE II
RULES APPLICABLE TO UNDERTAKINGS WHOSE HEAD OF-
FICES ARE SITUATED WITHIN THE COMMUNITY
Section A
Conditions of admission
Article 6
1. Each Member State shall make the taking up of the activities referred to
in this Directive in its territory subject to an official authorization.
2. Such authorization shall be sought from the competent authority of the
Member State in question by:
(a) any undertaking which establishes its head office in the territory of such
State;
(b) any undertaking whose head office is situated in another Member State
and which opens an agency or branch in the territory of the Member State
in question;
(c) any undertaking which, having received the authorization required under
(a) or (b) above, extends its business in the territory of such State to other
classes;
(d) any undertaking which, having obtained, in accordance with Article 7 (1),
an authorization for a part of the national territory, extends its activity
beyond such part.
3. Member States shall not make authorization subject to the lodging of a
deposit or the provision of security.
Article 7
1. An authorization shall be valid for the entire national territory unless, and
in so far as national laws permit, the applicant seeks permission to carry onhis business only in a part of the national territory.
2. Authorization shall be given for a particular class of insurance. The
classification by class appears in the Annex. Authorization shall cover theentire class unless the applicant wishes to cover only part of the risks
pertaining to such class.
The supervisory authorities may restrict an authorization requested for one of
the classes to the operations set out in the scheme of operations referred to in
Articles 9 and 11.
3. Each Member State may grant an authorization for two or more of the
classes, where its national laws permit such classes to be carried on
simultaneously.
Article 8
1. Each Member State shall require any undertaking setting up in its
territory for which an 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 com-
mandite par actions’ — ‘vennootschap bij wijze van geldschieting op
aandelen’,‘association d’assurance mutuelle’ — ‘onderlinge verze-
keringsmaatschappij’, ‘société coopérative’ — ‘coöperatieve ven-nootschap’,
— in the case of the Kingdom of Denmark:
‘aktieselskaber’,‘gensidige selskaber’,
— in the case of the Federal Republic of Germany:
‘Aktiengesellschaft’, ‘Versicherungsverein auf Gegenseitigkeit’,‘öffentlich-rechtliches Wettbewerbs-Versicherungsunternehmen’,!B1979L0267 — EN — 01.01.1986 — 002.001 — 6
!A1
— in the case of the Hellenic Republic:
‘ανώνυµη εταιρία»,
—in the case of the French Republic:
‘société anonyme’, ‘société à forme mutuelle à cotisations fixes’,‘société à forme tontinière’,
— in the case of Ireland:
incorporated companies limited by shares or by guarantee or
unlimited, societies registered under the Industrial and ProvidentSocieties Acts and societies registered under the Friendly SocietiesActs,
— in the case of the Italian Republic:
‘società per azioni’, ‘società cooperativa’, ‘mutua di assicurazione’
and public-law institutions within the meaning of Article 1883 of theCivil Code.
— 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 ProvidentSocieties Acts, societies registered under the Friendly Societies Acts,
the association of underwriters known as Lloyd’ s;
— in the case of the Kingdom of Spain:
‘sociedad anónima’, ‘sociedad mutua’,
— in the case of the Portuguese Republic:
‘sociedade anónima’.
Furthermore, Member States may set up, where appropriate, undertakings
under any form of known public law or its equivalent provided that such
institutions have as their object to carry on insurance operations under
conditions equivalent to those of undertakings under private law;
(b) limit its business activities to the activities referred to in this Directive
and operations directly arising therefrom, to the exclusion of all othercommercial business;
(c) submit a scheme of operations in accordance with Article 9;(d) possess the minimum of the guarantee fund provided for in Article 20 (2).2. An undertaking seeking an authorization to extend its business to other
classes or, in the case referred to in Article 6 (2) (d), to another part of theterritory, shall be required to submit a scheme of operations in accordance
with the provisions of Article 9 as regards such other classes or other part of
the territory.
It shall, in addition, be required to show proof that it possesses the minimum
solvency margin provided for in Article 19 and the guarantee fund referred toin Article 20 (1) and (2).
3. The present coordinating measures shall not prevent Member States from
applying provisions requiring directors and managers to have technical
qualifications or from requiring the memorandum and articles of association,
the general and special policy conditions, the technical bases for calculatingin particular premium rates and reserves referred to in Article 17 and anyother document necessary for the normal exercise of supervision to be
approved.
4. The abovementioned provisions may not require that any application for
an authorization shall be dealt with in the light of the economic requirementsof the market.!B
!A2
!B1979L0267 — EN — 01.01.1986 — 002.001 — 7
Article 9
The scheme of operations referred to in Article 8 (1) (c) and (2) shall contain
the following particulars or evidence of cover:
(a) the nature of the commitments which the undertaking proposes to cover;
the general and special policy conditions which it proposes to use;
(b) the technical bases that the undertaking proposes to employ for each class
of business, including the data needed to calculate premium rates andreserves referred to in Article 17;
(c) the guiding principles as to reinsurance;
(d) the items constituting the minimum of the guarantee fund;
(e) estimates relating to the expenses of installing the administrative services
and the organization for securing business and the financial resources
intended to cover them;
and, in addition, shall include for the first three financial years:
(f) a forecast balance sheet;
(g) a plan setting out detailed estimates of income and expenditure in respect
of direct business, reinsurance acceptances and reinsurance cessions;
(h) estimates relating to the financial resources intended to cover underwrit-
ing liabilities and the solvency margin.
Article 10
1. Each Member State shall require that an undertaking having its head
office in the territory of another Member State and seeking an authorization to
open an agency or branch shall:
(a) submit its memorandum and articles of association and a list of its
directors and managers;
(b) produce a certificate issued by the competent authorities of the head
office Member State, attesting the classes of insurance which the
undertaking is entitled to cover and that it possesses the minimum of the
guarantee fund or if higher, the minimum solvency margin calculated inaccordance with Article 19 and stating the classes of insurance which itactually underwrites and the financial resources referred to in Article 11
(1) (e);
(c) submit a scheme of operations in accordance with Article 11;
(d) designate a general representative having his permanent residence and
abode in the host country and possessing sufficient powers to bind theundertaking in relation to third parties and to represent it in relations with
the authorities and courts of the host country; if the representative has a
legal personality, it must have its head office in the host country and itmust in its turn designate an individual to represent it who complies withthe above conditions. The designated representative shall not be objected
to by the Member State except on grounds relating to repute or technical
qualifications such as apply to directors or managers of undertakingswhose head offices are situated in the territory of the State in question.
2. Each Member State shall require that for the purpose of extending the
business of the agency or branch, either to other classes or to other parts of thenational territory in the case provided for in Article 6 (2) (d), the applicant for
the authorization shall submit a scheme of operations in accordance with
Article 11 and comply with the conditions contained in paragraph 1 (b) of thisArticle.
3. The present coordinating measures shall not prevent Member States from
enforcing provisions requiring, for all insurance undertakings, approval of thegeneral and special policy conditions, of the technical bases for calculating in
particular premium rates and reserves referred to in Article 17 and of any
other document necessary for the normal exercise of supervision.
4. The abovementioned provisions may not require that any application for
authorization shall be examined in the light of the economic requirements ofthe market.!B1979L0267 — EN — 01.01.1986 — 002.001 — 8
Article 11
1. The scheme of operations of the agency or branch referred to in Article
10 (1) (c) and (2) shall contain the following particulars or evidence of:
(a) the nature of the commitments which the undertaking proposes to take on
in the host country; the general and special policy conditions which it
proposes to use;
(b) the technical bases which the undertaking proposes to employ for each
class of business, including the data needed to calculate premium ratesand reserves referred to in Article 17;
(c) the guiding principles as to reinsurance;
(d) the state of the undertaking’ s solvency margin and guarantee fund
referred to in Articles 18, 19 and 20;
(e) estimates relating to the expenses of installing the administrative services
and the organization for securing business and the financial resources
intended to cover them;
and, in addition shall include, for the first three financial years:(f) a forecast balance sheet for the agency or branch;
(g) a plan setting out detailed estimates of income and expenditure in respect
of direct business, reinsurance acceptances and reinsurance cessions.
2. The scheme of operations shall be accompanied by the balance sheet and
profit and loss account of the undertaking for each of the past three financial
years. If, however, it has not yet been in business for three financial years it
shall be required to furnish them only for the financial years completed.
3. The scheme of operations, together with the observations of the
authorities competent to issue authorization, shall be forwarded to the
competent authorities of the head-office Member State. The latter authorities
shall communicate their opinion to the former within three months from thereceipt of the documents; if their opinion has not been communicated upon
the expiry of this time, it shall be deemed to be favourable.
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. Subject to paragraph 3, no undertaking may simultaneously carry on in a
Member State the activities referred to in the Annex to the first coordinationDirective (non-life insurance) and those listed in Article 1 of this Directive.
2. Where an undertaking carrying on the activities referred to in the Annex
to the first coordination Directive (non-life insurance) has financial,
commercial or administrative links with an undertaking carrying on theactivities covered by this Directive, the supervisory authorities of the MemberStates in whose territory 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 whichcould affect the apportionment of expenses and income.
3. Subject to paragraph 6, undertakings which at the time of notification of
this Directive carry on simultaneously in a Member State both of the activities
referred to in paragraph 1 may continue to do so there provided that eachactivity is separately managed in accordance with Article 14.
4. The undertakings referred to in paragraph 3 may set up agencies or
branches in the other Member States only for the classes listed in the Annex tothe first coordination Directive (non-life insurance).!B1979L0267 — EN — 01.01.1986 — 002.001 — 9
5. The undertakings referred to in paragraph 3 may, by setting up
subsidiaries in other Member States to carry on the activities referred to inthis Directive, avail themselves of the conditions and facilities laid down inArticle 35 for a transitional period of 10 years from the date of notification of
this Directive, provided they do not already have an agency or branch carrying
on in such Member States any activities other than those covered by thisDirective.
6. (a) Any Member State may require undertakings whose head offices are
established 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 ofthis Directive.
(b) After consulting the supervisory authority of the head office Member
State, particularly in regard to the period within which such action
must take place, any Member State may also impose this requirement
on agencies or branches established in its territory which simulta-neously carry on both activities there.
(c) Agencies and branches of the undertakings referred to in paragraph 3
which, at the time of notification of this Directive, are engaged in the
territory of a Member State solely in the activities covered by this
Directive may continue their activities there. If the undertakingwishes to carry on the activities covered by the first coordination
Directive (non-life insurance) in that territory it may only carry on
the activities mentioned in this Directive through a subsidiary.
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 assurancebenefit 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 thisDirective and an activity under the first coordination Directive (non-lifeinsurance) 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 thoseexplicit items of the solvency margin which are still available for one or otheractivity.
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 andnon-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 insurancebusiness) shall be broken down according to origin. Items commonto both activities shall be entered in accordance with methods of
apportionment to be accepted by the competent supervisory
authority.
(b) Undertakings must, on the basis of the accounts, prepare a statement
clearly identifying the items making up each solvency margin, inaccordance 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 relevantDirective, 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 theother.!B1979L0267 — EN — 01.01.1986 — 002.001 — 10
Section B
Conditions for carrying on activities
Article 15
Member States shall collaborate closely with one another in supervising the
financial position of authorized undertakings.
Article 16
The supervisory authority of the Member State in whose territory the head
office of the undertaking is situated must verify the state of solvency of the
undertaking with respect to its entire business. The supervisory authorities ofthe other Member States shall provide the former with all the informationnecessary to enable such verification to be effected.
Article 17
1. Each Member State in whose territory activities are carried on by an
undertaking shall require the undertaking to establish sufficient technicalreserves, including mathematical reserves.
The amount of the technical reserves, including mathematical reserves, shall
be determined according to the rules fixed by the Member State, or, in the
absence of such rules, according to the established practices in such State.
2. Technical reserves, including mathematical reserves, shall be required to
be covered by equivalent and matching assets localized in each country where
activities are carried on. Member States may, however, permit relaxations inthe rules as to matching assets and the localization of assets. Relaxations ofthe rule on matching assets shall take account of the characteristics of life
assurance which is primarily a form of capital and long-term insurance.
Having regard to its special position, Luxembourg may, pending coordination
of legislation on the winding-up of undertakings, retain its system of
guarantees for technical reserves, including mathematical reserves, existing at
the date of notification of this Directive.
The regulations of the country where activities are carried on shall determine
the nature of such assets and, where appropriate, the extent to which they maybe used for the purpose of covering the technical reserves, includingmathematical reserves, and shall also determine the rules for valuing such
assets.
Compliance with these regulations may be ensured by the intervention of a
person or institution from outside the undertaking with responsibility for
verifying on the spot whether the assets representing technical reserves,including mathematical reserves, comply with the regulations. This shall bethe function of, in particular, the ‘Treuhänder’ in Germany and of the
‘tillidsmand’ in Denmark.
3. If a Member State allows any technical reserves, including mathematical
reserves, to be covered by claims against re-insurers, it shall fix the
percentage so allowed. In such case, it may not require the assets representingsuch claims to be localized in its territory, notwithstanding the provisions ofparagraph 2.
4. The supervisory authority of the Member State in whose territory the
head office of an undertaking is situated shall verify that its balance sheet
shows in respect of the technical reserves, including mathematical reserves,
assets equivalent to the underwriting liabilities assumed in all the countrieswhere it carries on activities.
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 entirebusiness.!B1979L0267 — EN — 01.01.1986 — 002.001 — 11
The solvency margin shall consist of:
1. the assets of the undertaking, free of all 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 concern, the
paid-up amount of its fund,
— one half of the unpaid-up share capital or fund once 25 % of such
capital or fund are paid up,
— statutory reserves and free reserves not corresponding to underwrit-
ing liabilities,
— any carry-forward of profits;
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 mayarise 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 theestimated 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 theprofits made over the last five years in the activities listed in Article1.
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. Pendingsuch agreement, those items shall be determined in accordance withthe 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 theannual accounts of insurance undertakings and providing for thecoordination 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 arate 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 assuranceactivities and the mathematical reserves for all policies for whichZillmerizing 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 andover-estimation of liabilities other than mathematical reserves in sofar 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:!B
(1) OJ No L 222, 14. 8. 1978, p. 11.1979L0267 — EN — 01.01.1986 — 002.001 — 12
a 4 % fraction of the mathematical reserves, relating to direct
business gross of re-insurance cessions and to re-insurance accept-ances shall be multiplied by the ratio, for the last financial year, ofthe 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 capitalat 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) 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 beaggregated;
— 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 orcontributions 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 becalculated 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 oftransfers for reinsurance and the gross amount of claims; this ratio may inno 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 fixedannually 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 therelevant calculations shall be sent to the supervisory authorities of thecountries 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 mathematicalreserves calculated in compliance with the conditions set out in the firstresult 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) itshall be equal to:
— a 4 % fraction of the mathematical reserves, calculated in
compliance with the conditions set out in the first result in (a) ofthis Article in so far as the undertaking bears an investment risk, anda 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 covermanagement expenses set out in the contract is fixed for a periodexceeding five yearsplus!B1979L0267 — EN — 01.01.1986 — 002.001 — 13
—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.
(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 unitsof account to be increased progressively to the amount fixed in (b) bysuccessive 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
in excess of those representing the reserves referred to in Article 17.
2. Subject to Article 17 (2), Article 24 (1) and (3) and the last subparagraph
of Article 26 (1), Member States shall not restrain the free disposal of assets,
whether movable or immovable, forming part of the assets of authorized
undertakings.
3. This Article shall not preclude any measures which Member States, while
observing the rules prevailing in countries where activities are carried on as
required under Article 17 (2) and while safeguarding the interests of
policy-holders, are entitled to take as owners or members or associates of theundertakings 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 ororganizations designated by national regulations.
2. (a) The Italian Republic may, as an exception, continue to require
undertakings established in its territory to cede part of their
underwriting to the Istituto Nazionale di Assicurazioni, on condition
that:
— the extent of that requirement as at the time of notification of
this Directive is in no way enlarged,
— where account is taken, in determining the compulsory cession
percentage, of the period during which the agency or branch has
been established in Italy, account shall also be taken of the totalnumber of financial years during which the undertaking hascarried on the kinds of insurance referred to in Article 1 in the
territory of the Member State in which its head office is situated.
In such cases, the competent authority in that State shall issue acertificate in conformity with that referred to in Article 10 (1)(b) in respect of the entire period during which the undertaking
has carried on business in those kinds of insurance.
(b) This matter shall be re-examined in connection with a second
Directive relating to the coordination of laws on life assurance and!B1979L0267 — EN — 01.01.1986 — 002.001 — 14
laying down provisions intended to facilitate the effective exercise of
freedom to provide services.
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 ofoperation, of its financial situation and solvency.
2. Member States shall require undertakings carrying on activities in their
territory to render periodically the returns, together with statistical documents,which are necessary for the purposes of supervision. The competent
supervisory authorities shall furnish each other with the documents and
information necessary for exercising supervision.
Article 24
1. If an undertaking does not comply with the provisions envisaged in
Article 17, the supervisory authority of the Member State in whose territory itcarries on its activity may prohibit the free disposal of assets localized in that
Member State after having informed the supervisory authorities of the
head-office Member State of its intention.
2. For the purposes of restorting the financial situation of an undertaking
whose solvency margin has fallen below the minimum required under Article
19, the supervisory authority of the head-office Member State shall require aplan for the restoration of a sound financial position to be submitted for itsapproval.
3. If the solvency margin falls below the guarantee fund as defined in
Article 20, or if the latter is no longer constituted as laid down in that Article,the supervisory authority of the head-office 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 assets of the
undertaking. It shall inform the authorities of other Member States in whoseterritories the undertaking is authorized of any measures and the latter shall, at
the request of the former, take the same measures.
4. The competent supervisory authorities may further take all measures
necessary to safeguard the policy-holders’ interests in the cases provided for
in paragraphs 1 and 3.
5. The supervisory authorities of other Member States in whose territory the
undertaking in question has also been authorized shall collaborate for the
purpose of implementing the provisions referred to in paragraphs 1 to 4.
Article 25
1. Each Member State shall make it possible for an authorized undertaking
to assign all or part of its portfolio of policies if the assignees possess thenecessary solvency margin, due account being taken of the assignment.
The supervisory authorities concerned shall consult each other before
approving such assignment.
2. Once approved by the competent national authority, such assignment
shall affect directly the policy-holders concerned.
Section C
Withdrawal of authorization
Article 26
1. The authorization granted by the competent authority of the Member
State in whose territory the head office is situated may be withdrawn by such
authority if the undertaking:
(a) no longer fulfils the conditions of admission;(b) has been unable, within the time allowed, to take the measures contained
in the restoration plan or finance scheme referred to in Article 24;
(c) fails seriously in its obligations under the national regulations.!B1979L0267 — EN — 01.01.1986 — 002.001 — 15
In the event of the withdrawal of the authorization, the supervisory authority
of the head-office Member State shall notify such withdrawal to thesupervisory authorities of other Member States which have authorized theundertaking; they shall, thereupon, also withdraw their authorization. The
supervisory authority of the head-office Member State shall, in conjunction
with such other authorities, take all necessary measures to safeguardpolicy-holders’ interests and, in particular, shall restrict the free disposal ofthe assets of the undertaking if such restriction has not been already imposed
in accordance with the provisions of the second subparagraph of Article 24 (1)
and (3).
2. An authorization granted to an agency or branch of an undertaking whose
head office is situated in another Member State may be withdrawn if the
agency or branch:
(a) no longer fulfils the conditions for admission;(b) fails seriously in its obligations under the regulations of the Member State
where it carries on its activity, with respect in particular to the
establishment of reserves referred to in Article 17.
Before withdrawing authorization the supervisory authorities of the Member
State where the activity is carried on shall consult the supervisory authority of
the Member State where the head office is situated. If they deem it necessary
to suspend the business of such agency or branch before consultation isconcluded, they shall immediately advise the supervisory authority of thecountry where the head office is situated.
3. Any decision to withdraw authorization or suspend business shall be
supported by precise reasons and notified to the undertaking in question.
Each Member State shall make provision for a right to apply to the courts
against such a decision.
TITLE III
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;
(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 anddeposits 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).!B1979L0267 — EN — 01.01.1986 — 002.001 — 16
Article 28
Member States shall require undertakings to establish reserves, referred to in
Article 17, adequate to cover the underwriting liabilities assumed in theirterritories. 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 theseassets 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. Theminimum 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 whichmay 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 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 futureis 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 thatMember 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 beenmade 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 orbranches 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.!B1979L0267 — EN — 01.01.1986 — 002.001 — 17
4. At the request of one or more of the Member States concerned, the
advantages granted under this Article shall be withdrawn simultaneously byall 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 simultaneously in a MemberState may continue to do so there provided that each activity isseparately 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 simultaneouspursuit 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 establishedin 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 activitiesand which at the time of notification of this Directive carry on in theterritory 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 activitycovered 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.
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 authoritiesshall take the appropriate measures. If the reason for the withdrawal ofauthorization 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 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 theMember States.
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 theAnnex, a period of five years from the date of notification of this Directive inorder 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 thatsuch undertakings have, in accordance with Article 24, submitted for the!B1979L0267 — EN — 01.01.1986 — 002.001 — 18
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 inparagraph 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 theguarantee fund referred to in Article 20 (2) (a) and (b), from therequirement 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 therules 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 theUnited Kingdom by Royal Charter or by private Act or by special Public Actmay 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 onsuch 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)’/ ‘AlgemeneSpoor- en Lifrentekas (ASLK)’ in Belgium, the societies registered under theFriendly 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 accord-
ance with the terms of Article 13 shall have a period of five years from thedate 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 measuressuch as those relating to mortgages, deposits or securities established under
their present regulations.
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, arecarrying 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 complywith the conditions in Article 29.
Article 35
Where subsidiaries are set up in accordance with Article 13 (5), half the
minimum of the guarantee fund may take the form of an irrevocable financial
guarantee from the parent company, subject to the following requirements:
(a) at least 95 % of the subsidiary’ s share capital must be held by the parent
company;
(b) unpaid-up share capital may not be used to constitute that half of the
minimum of the guarantee fund which is not covered by the irrevocable
financial guarantee; and
(c) the financial requirements of both the first coordination Directive
(non-life insurance) and this Directive must be met by the parent!B1979L0267 — EN — 01.01.1986 — 002.001 — 19
company, the funds corresponding to the amount of the guarantee not
being considered as part of its free assets.
Subsidiaries may benefit from this arrangement for a period of seven years as
from the date when it is granted. During this period, and from the third yearonwards at the latest, subsidiaries must progressively replace the parent
company’ s guarantee by free assets; subsidiaries shall submit a plan to this
effect to the competent supervisory authority for its agreement together withtheir request for authorization.
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 thisDirective, each Member State may retain for undertakings of that countryestablished 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 otherMember States and the Commission and that the limits of relaxations grantedpursuant 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 Stateshall 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 administrativeauthority in the Member State of origin or the Member State whence theforeign 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 wherethere is no provision for declaration on oath by a solemn declaration — madeby 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 issuea 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 competentto 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 thedocuments referred to in this Article are to be submitted in support of anapplication to carry on in the territory of this Member State the activities
referred to in Article 1.
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 whichmight arise in the application of this Directive.!B1979L0267 — EN — 01.01.1986 — 002.001 — 20
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 shallsubmit interim reports to the Council before the end of the transitional periodprovided 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 simultaneously the activity covered by the firstcoordination 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 unitsof account in this Directive, in the light of how the Community’s economicand 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 communicate
the texts of the main provisions of a legislative, regulatory or administrativenature which they adopt in the field covered by this Directive to theCommission.
Article 42
This Directive is addressed to the Member States.!B
(1) OJ No L 189, 13. 7. 1976, p. 13.1979L0267 — EN — 01.01.1986 — 002.001 — 21
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 — 01.01.1986 — 002.001 — 22