1992L0096 — EN — 07.08.1995 — 001.001 — 1
This document is meant purely as a documentation tool and the institutions do not assume any liability for its contents
►B COUNCIL DIRECTIVE 92/96/EEC
of 10 November 1992
on the coordination of laws, regulations and administrative provisions relating to direct life
assurance and amending Directives 79/267/EEC and 90/619/EEC (third life assurance Directive)
(OJ L 360, 9.12.1992, p. 1)
Amended by:
Official Journal
No page date
►M1European Parliament and Council Directive 95/26/EC of 29 June 1995 L 168 7 18.7.1995
Corrected by:
►C1Corrigendum, OJ L 311, 14.11.1997, p. 34 (92/96)
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COUNCIL DIRECTIVE 92/96/EEC
of 10 November 1992
on the coordination of laws, regulations and administrative provi-
sions relating to direct life assurance and amending Directives 79/
267/EEC and 90/619/EEC (third life assurance Directive)
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Havingreg ard to the Treaty establishingthe European EconomicCommunity, and in particular Articles 57 (2) and 66 thereof,
Havingreg ard to the proposal from the Commission(
1),
In cooperation with the European Parliament(2),
Havingreg ard to the opinion of the Economic and Social Committee(3),
1.Whereas it is necessary to complete the internal market in direct
life assurance, from the point of view both of the right of estab-lishment and of the freedom to provide services, to make it easierfor assurance undertakings with head offices in the Communityto cover commitments situated within the Community;
2.Whereas the Second Council Directive 90/619/EEC of 8November 1990 on the coordination of laws, regulations andadministrative provisions relatingto direct life assurance, layingdown provisions to facilitate the effective exercise of freedom toprovide services and amendingDirective 79/267/EEC (
4) has
already contributed substantially to the achievement of theinternal market in direct life assurance by granting policy-holderswho, by virtue of the fact that they take the initiative in enteringinto a commitment with an assurance undertakingin anotherMember State, do not require special protection in the MemberState of the commitment complete freedom to avail themselves ofthe widest possible life assurance market;
3.Whereas Directive 90/619/EEC therefore represents an importantstage in the merging of national markets into an integratedmarket and that stage must be supplemented by other Communityinstruments with a view to enablingall policy-holders, irrespec-tive of whether they themselves take the initiative, to haverecourse to any assurer with a head office in the Community whocarries on business there, under the right of establishment or thefreedom to provide services, while guaranteeing them adequateprotection;
4.Whereas this Directive forms part of the body of Communitylegislation already enacted which includes the First CouncilDirective 79/267/EEC of 5 March 1979 on the coordination oflaws, regulations and administrative provisions relating to thetakingup and pursuit of the business of direct life assurance(
5)
and Council Directive 91/674/EEC of 19 December 1991 on theannual accounts and consolidated accounts of insurance undertak-ings (
6);
5.Whereas the approach adopted consists in bringing about suchharmonization as is essential, necessary and sufficient to achievethe mutual recognition of authorizations and prudential controlsystems, thereby making it possible to grant a single authoriza-
(1) OJ No C 99, 16. 4. 1991, p. 2.
(2) OJ No C 176, 13. 7. 1992, p. 93; and Decision of 28 October 1992 (not
yet published in the Official Journal).
(3) OJ No C 14, 20. 1. 1992, p. 11.
(4) OJ No L 330, 29. 11. 1990, p. 50.
(5) OJ No L 63, 13. 3. 1979, p. 1. Directive as last amended by the Second
Directive 90/619/EEC (OJ No L 330, 29. 11. 1990, p. 50).
(6) OJ No L 374, 31. 12. 1991, p. 7.
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▼B
tion valid throughout the Community and apply the principle of
supervision by the home Member State;
6.Whereas, as a result, the takingup and the pursuit of the businessof assurance are henceforth to be subject to the grant of a singleofficial authorization issued by the competent authorities of theMember State in which an assurance undertakinghas its headoffice; whereas such authorization enables an undertakingtocarry on business throughout the Community, under the right ofestablishment or the freedom to provide services; whereas theMember State of the branch or of the provision of services mayno longer require assurance undertakings which wish to carry onassurance business there and which have already been authorizedin their home Member State to seek fresh authorization; whereasDirectives 79/267/EEC and 90/619/EEC should therefore beamended alongthose lines;
7.Whereas the competent authorities of home Member States willhenceforth be responsible for monitoringthe financial health ofassurance undertakings, including their state of solvency, theestablishment of adequate technical provisions and the coveringof those provisions by matchingassets;
8.Whereas the performance of the operations referred to in Article1 (2) (c) of Directive 79/267/EEC cannot under any circum-stances affect the powers conferred on the respective authoritieswith regard to the entities holding the assets with which thatprovision is concerned;
9.Whereas certain provisions of this Directive define minimumstandards; whereas a home Member State may lay down stricterrules for assurance undertakings authorized by its own competentauthorities;
10.Whereas the competent authorities of the Member States musthave at their disposal such means of supervision as are necessaryto ensure the orderly pursuit of business by assurance undertak-ings throughout the Community whether carried on under theright of establishment or the freedom to provide services;whereas, in particular, they must be able to introduce appropriatesafeguards or impose sanctions aimed at preventing irregularitiesand infringements of the provisions on assurance supervision;
11.Whereas the provisions on transfers of portfolios must be adaptedto bring them into line with the single legal authorization systemintroduced by this Directive;
12.Whereas provision should be made for the specialization rule laiddown by Directive 79/267/EEC to be relaxed so that thoseMember States which so wish are able to grant the same under-takingauthorizations for the classes referred to in the Annex toDirective 79/267/EEC and the insurance business comingunderclasses 1 and 2 in the Annex to Directive 73/239/EEC (
1);
whereas that possibility may, however, be subject to certainconditions as regards compliance with accounting rules and ruleson winding-up;
13.Whereas it is necessary from the point of view of the protectionof lives assured that every assurance undertakingshould establishadequate technical provisions; whereas the calculation of suchprovisions is based for the most part on actuarial principles;whereas those principles should be coordinated in order to facili-tate mutual recognition of the prudential rules applicable in thevarious Member States;
(1) First Council Directive 73/239/EEC of 24 July 1973 on the coordination
of laws, regulations and administrative provisions relating to the taking-upand pursuit of the business of direct insurance other than life assurance(OJ No L 228, 16. 8. 1973, p. 3). Directive as last amended by Directive90/618/EEC (OJ No L 330, 29. 11. 1990, p. 44).
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14.Whereas it is desirable, in the interests of prudence, to establish a
minimum of coordination of rules limitingthe rate of interestused in calculatingthe technical provisions; whereas, for thepurposes of such limitation, since existingmethods are all equallycorrect, prudential and equivalent, it seems appropriate to leaveMember States a free choice as to the method to be used;
15.Whereas the rules governing the spread, localization andmatchingof the assets used to cover technical provisions must becoordinated in order to facilitate the mutual recognition ofMember States’ rules; whereas that coordination must takeaccount of the measures on the liberalization of capital move-ments provided for in Council Directive 88/361/EEC of 24 June1988 for the implementation of Article 67 of the Treaty(
1) and
the progress made by the Community towards economic andmonetary union;
16.Whereas, however, the home Member State may not requireassurance undertakings to invest the assets covering their tech-nical provisions in particular categories of assets, as such arequirement would be incompatible with the measures on theliberalization of capital movements provided for in Directive88/361/EEC;
17.Whereas, pendingthe adoption of a directive on investmentservices harmonizing inter alia the definition of the concept of a
regulated market, for the purposes of this Directive and withoutprejudice to such future harmonization that concept must bedefined provisionally, to be replaced by the definition harmon-ized at Community level, which will give the home MemberState of the market the responsibilities for these matters whichthis Directive transitionally gives to the assurance undertaking’shome Member State;
18.Whereas the list of items of which the solvency margin requiredby Directive 79/267/EEC may be made up must be supplementedto take account of new financial instruments and of the facilitiesgranted to other financial institutions for the constitution of theirown funds;
19.Whereas the harmonization of assurance contract law is not aprior condition for the achievement of the internal market inassurance; whereas, therefore, the oppportunity afforded to theMember States of imposingthe application of their law to assur-ance contracts coveringcommitments within their territories islikely to provide adequate safeguards for policy-holders;
20.Whereas within the framework of an internal market it is in thepolicy-holder’s interest that he should have access to the widestpossible range of assurance products available in the Communityso that he can choose that which is best suited to his needs;whereas it is for the Member State of the commitment to ensurethat there is nothingto prevent the marketingwithin its territoryof all the assurance products offered for sale in the Communityas longas they do not conflict with the leg al provisionsprotecting the general good in force in the Member State of thecommitment and in so far as the general good is not safeguardedby the rules of the home Member State, provided that suchprovisions must be applied without discrimination to all under-takings operating in that Member State and be objectively neces-sary and in proportion to the objective pursued;
21.Whereas the Member States must be able to ensure that theassurance products and contract documents used, under the rightof establishment or the freedom to provide services, to covercommitments within their territories comply with such specificlegal provisions protecting the general good as are applicable;whereas the systems of supervision to be employed must meet
(1) OJ No L 178, 8. 7. 1988, p. 5.
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the requirements of an internal market but their employment may
not constitute a prior condition for carryingon assurance busi-ness; whereas, from this standpoint, systems for the priorapproval of policy conditions do not appear to be justified;whereas it is therefore necessary to provide for other systemsbetter suited to the requirements of an internal market whichenable every Member State to guarantee policy-holders adequateprotection;
22.Whereas, for the purposes of implementingactuarial principles inconformity with this Directive, the home Member State maynevertheless require systematic notification of the technical basesused for calculatingscales of premiums and technical provisions,with such notification of technical bases excludingnotification ofthe general and special policy conditions and the undertaking’scommercial rates;
23.Whereas in a single assurance market the consumer will have awider and more varied choice of contracts; whereas, if he is toprofit fully from this diversity and from increased competition, hemust be provided with whatever information is necessary toenable him to choose the contract best suited to his needs;whereas this information requirement is all the more important asthe duration of commitments can be very long; whereas theminimum provisions must therefore be coordinated in order forthe consumer to receive clear and accurate information on theessential characteristics of the products proposed to him as wellas the particulars of the bodies to which any complaints ofpolicy-holders, assured persons or beneficiaries of contracts maybe addressed;
24.Whereas publicity for assurance products is an essential means ofenablingassurance business to be carried on effectively withinthe Community; whereas it is necessary to leave open to assur-ance undertakings the use of all normal means of advertising inthe Member State of the branch or of provision of services;whereas Member States may nevertheless require compliancewith their national rules on the form and content of advertising,whether laid down pursuant to Community legislation on advert-isingor adopted by Member States for reasons of the g eneralgood;
25.Whereas, within the framework of the internal market, noMember State may continue to prohibit the simultaneous carryingon of assurance business within its territory under the right ofestablishment and the freedom to provide services; whereas theoption granted to Member States in this connection by Directive90/619/EEC should therefore be abolished;
26.Whereas provision should be made for a system of penalties to beimposed when, in the Member State in which the commitment isentered into, an assurance undertakingdoes not comply withthose provisions protecting the general good that are applicable toit;
27.Whereas some Member States do not subject assurance transac-tions to any form of indirect taxation, while the majority applyspecial taxes and other forms of contribution; whereas the struc-tures and rates of such taxes and contributions vary considerablybetween the Member States in which they are applied; whereas itis desirable to prevent existingdifferences leadingto distortionsof competition in assurance services between Member States;whereas, pendingsubsequent harmonization, application of thetax systems and other forms of contribution provided for by theMember States in which commitments entered into are likely toremedy that problem and it is for the Member States to makearrangements to ensure that such taxes and contributions arecollected;
28.Whereas it is important to introduce Community coordination onthe winding-up of assurance undertakings; whereas it is hence-forth essential to provide, in the event of the winding-up of anassurance undertaking, that the system of protection in place in
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each Member State must guarantee equality of treatment for all
assurance creditors, irrespective of nationality and of the methodof enteringinto the commitment;
29.Whereas technical adjustments to the detailed rules laid down inthis Directive may be necessary from time to time to take accountof the future development of the assurance industry; whereas theCommission will make such adjustments as and when necessary,after consultingthe Insurance Committee set up by Directive91/675/EEC (
1), in the exercise of the implementingpowers
conferred on it by the Treaty;
30.Whereas it is necessary to adopt specific provisions intended toensure smooth transition from the legal arrangements in existencewhen this Directive becomes applicable to those that it intro-duces; whereas care should be taken in such provisions not toplace an additional workload on Member States’ competentauthorities;
31.Whereas, pursuant to Article 8c of the Treaty, account should betaken of the extent of the effort which must be made by certaineconomies at different stages of development; whereas, therefore,transitional arrangements should be adopted for the gradualapplication of this Directive by certain Member States,
HAS ADOPTED THIS DIRECTIVE:
TITLE I
DEFINITIONS AND SCOPE
Article 1
For the purposes of this Directive:
(a)assurance undertaking shall mean an undertakingwhich has
received official authorization in accordance with Article 6 ofDirective 79/267/EEC;
(b)branchshall mean an agency or branch of an assurance under-
taking, having regard to Article 3 of Directive 90/619/EEC;
(c)commitment shall mean a commitment represented by one of the
kinds of insurance or operations referred to in Article 1 ofDirective 79/267/EEC;
(d)home Member State shall mean the Member State in which the
head office of the assurance undertakingcoveringthe commitmentis situated;
(e)Member State of the branch shall mean the Member State in which
the branch coveringthe commitment is situated;
(f)Member State of the provision of services shall mean the Member
State of the commitment, as defined in Article 2 (e) of Directive90/619/EEC, if the commitment is covered by an assurance under-takingor a branch situated in another Member State;
(g)controlshall mean the relationship between a parent undertaking
and a subsidiary, as defined in Article 1 of Directive 83/349/EEC (
2), or a similar relationship between any natural or legal
person and an undertaking;
(h)qualifying holding shall mean a direct or indirect holdingin an
undertakingwhich represents 10 % or more of the capital or of thevoting rights or which makes it possible to exercise a significant
(1) OJ No L 374, 31. 12. 1991, p. 32.
(2) Seventh Council Directive 83/349/EEC of 13 June 1983 based on Article
54 (3) (g) of the Treaty on consolidated accounts (OJ No L 193, 18. 7.1983, p. 1). Directive as last amended by Directive 90/605/EEC (OJ No L317, 16. 11. 1990, p. 60).
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influence over the management of the undertaking in which a
holdingsubsists.
For the purposes of this definition, in the context of Articles 7 and
14 and of the other levels of holdingreferred to in Article 14, thevotingrig hts referred to in Article 7 of Directive 88/627/EEC (
1)
shall be taken into consideration;
(i)parent undertaking shall mean a parent undertakingas defined in
Articles 1 and 2 of Directive 83/349/EEC;
(j)subsidiary shall mean a subsidiary undertakingas defined in
Articles 1 and 2 of Directive 83/349/EEC; any subsidiary of asubsidiary undertakingshall also be reg arded as a subsidiary of theundertakingwhich is those undertaking s’ ultimate parent under-taking;
(k)regulated market shall mean a financial market regarded by an
undertaking’s home Member State as a regulated market pendingthe adoption of a definition in a Directive on investment servicesand characterized by:
— regular operation, and
— the fact that regulations issued or approved by the appropriate
authorities define the conditions for the operation of the market,the conditions for access to the market and, where CouncilDirective 79/279/EEC of 5 March 1979 coordinatingthe condi-tions for the admission of securities to official stock-exchangelisting(
2) applies, the conditions for admission to listing
imposed in that Directive or, where that Directive does notapply, the conditions to be satisfied by a financial instrument inorder to be effectively dealt in on the market.
For the purposes of this Directive, a regulated market may be
situated in a Member State or in a third country. In the latter event,the market must be recognized by the undertaking’s home MemberState and meet comparable requirements. Any financial instrumentsdealt in must be of a quality comparable to that of the instrumentsdealt in on the regulated market or markets of the Member State inquestion;
(l)competent authorities shall mean the national authorities which are
empowered by law or regulation to supervise assurance undertak-ings;
▼
M1
(m) ‘close links'shall mean a situation in which two or more natural or
legal persons are linked by:
(a) ‘participation', which shall mean the ownership, direct or by
way of control, of 20 % or more of the votingrig hts or capitalof an undertakingor
(b) ‘control', which shall mean the relationship between a parent
undertakingand a subsidiary, in all the cases referred to inArticle 1 (1) and (2) of Directive 83/349/EEC (
3), or a similar
relationship between any natural or legal person and an under-taking; any subsidiary undertaking of a subsidiary undertakingshall also be considered a subsidiary of the parent undertakingwhich is at the head of those undertakings.
A situation in which two or more natural or legal persons are
permanently linked to one and the same person by a control rela-tionship shall also be regarded as constituting a close link betweensuch persons.
(1) Council Directive 88/627/EEC of 12 December 1988 on the information to
be published when a major holdingin a listed company is acquired ordisposed of (OJ No L 348, 17. 12. 1988, p. 62).
(
2) OJ No L 66, 13. 3. 1979, p. 21. Directive as last amended by Directive
82/148/EEC (OJ No L 62, 5. 3. 1982, p. 22).
(3) OJ No L 193, 18. 7. 1983, p. 1. Directive as last amended by Directive
90/605/EEC (OJ No L 317, 16. 11. 1990, p. 60).
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Article 2
1. This Directive shall apply to the commitments and undertakings
referred to in Article 1 of Directive 79/267/EEC.
2. In Article 1 (2) of Directive 79/267/EEC the words ‘and are
authorized in the country concerned' shall be deleted.
3. This Directive shall apply neither to classes of insurance or opera-
tions nor to undertakings or institutions to which Directive 79/267/EECdoes not apply, nor shall it apply to the bodies referred to in Article 4 ofthat Directive.
TITLE II
THE TAKING-UP OF THE BUSINESS OF LIFE ASSURANCE
Article 3
Article 6 of Directive 79/267/EEC shall be replaced by the following:
‘Article 6The taking-up of the activities covered by this Directive shall be
subject to prior official authorization.
Such authorization shall be sought from the authorities of the home
Member State by:
(a) any undertakingwhich establishes its head office in the territory
of that State;
(b) any undertakingwhich, havingreceived the authorization
required in the first subparagraph, extends its business to anentire class or to other classes.'
Article 4
Article 7 of Directive 79/267/EEC shall be replaced by the following:
‘Article 71. Authorization shall be valid for the entire Community. It shall
permit an undertakingto carry on business there, under either theright of establishment or freedom to provide services.
2. Authorization shall be granted for a particular class of assur-
ance as listed in the Annex. It shall cover the entire class, unless theapplicant wishes to cover only some of the risks pertainingto thatclass.
The competent authorities may restrict authorization requested for
one of the classes to the operations set out in the scheme of opera-tions referred to in Article 9.
Each Member State may grant authorization for two or more of the
classes, where its national laws permit such classes to be carried onsimultaneously.'
Article 5
Article 8 of Directive 79/267/EEC shall be replaced by the following:
‘Article 81. The home Member State shall require every assurance under-
takingfor which authorization is soug ht to:
(a) adopt one of the followingforms:
— in the case of the Kingdom of Belgium: “société anonyme/
naamloze vennootschap”, “société en commandite paractions/commanditaire vennootschap op aandelen”, “associa-tion d’assurance mutuelle/onderlinge verzekeringsvere-niging”, “société coopérative/coöperatieve vennootschap”,
— in the case of the Kingdom of Denmark: “aktieselskaber”,
“gensidige selskaber”, “pensionskasser omfattet af lov omforsikringsvirksomhed (tværgående pensionskasser)”,
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— in the case of the Federal Republic of Germany: “Aktienge-
sellschaft”, “Versicherungsverein auf Gegenseitigkeit”,“öffentlich-rechtliches Wettbewerbsversicherungsunter-nehmen”,
— in the case of the French Republic: “société anonyme”,
“société d’assurance mutuelle”, “institution de prévoyancerégie par le code de la sécurité sociale”, “institution deprévoyance régie par le code rural” and “mutuelles régies parle code de la mutualité”,
— in the case of Ireland: incorporated companies limited by
shares or by guarantee or unlimited, societies registeredunder the Industrial and Provident Societies Acts and socie-ties registered under the Friendly Societies Acts,
— in the case of the Italian Republic: “societá per azioni”,
“societá cooperativa”, “mutua di assicurazione”,
— in the case of the Grand Duchy of Luxembourg: “société
anonyme”, “société en commandite par actions”, “associationd’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, societiesregistered under the Industrial and Provident Societies Acts,societies registered or incorporated under the Friendly Socie-ties Acts, the association of underwriters known as Lloyd’s,
— in the case of the Hellenic Republic: “ ανώνυµη εταιρία ”,
— in the case of the Kingdom of Spain: “sociedad anonima”,
“sociedad mutua”, “sociedad cooperativa”,
— in the case of the Portuguese Republic: “sociedade anónima”,
“mútua de seguros”.
An assurance undertakingmay also adopt the form of a European
company when that has been established.
Furthermore, Member States may, where appropriate, set up under-
takings in any public-law form provided that such bodies have astheir object insurance operations under conditions equivalent tothose under which private-law undertakings operate;
(b) limit its objects to the business provided for in this Directive and
operations directly arisingtherefrom, to the exclusion of allother commercial business;
(c) submit a scheme of operations in accordance with Article 9;
(d) possess the minimum guarantee fund provided for in Article 20
(2);
(e) be effectively run by persons of good repute with appropriate
professional qualifications or experience.
2. An undertakingseekingauthorization to extend its business to
other classes or to extend an authorization coveringonly some of therisks pertainingto one class shall be required to submit a scheme ofoperations in accordance with Article 9.
It shall, furthermore, be required to show proof that it possesses the
solvency margin provided for in Article 19 and the guarantee fundreferred to in Article 20 (1) and (2).
3. Member States shall not adopt provisions requiringthe prior
approval or systematic notification of general and special policyconditions, of scales of premiums, of the technical bases, used inparticular for calculatingscales of premiums and technical provi-sions or of forms and other printed documents which an assuranceundertakingintends to use in its dealing s with policy-holders.
Notwithstandingthe first subparag raph, for the sole purpose of veri-
fyingcompliance with national provisions concerningactuarial prin-ciples, the home Member State may require systematic notificationof the technical bases used for calculatingscales of premiums andtechnical provisions, without that requirement constitutinga priorcondition for an undertakingto carry on its business.
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Nothingin this Directive shall prevent Member States from main-
tainingin force or introducinglaws, reg ulations or administrativeprovisions requiringapproval of the memorandum and articles ofassociation and the communication of any other documents neces-sary for the normal exercise of supervision.
Not later than five years after the date of entry into force of
Directive 92/96/EEC (*), the Commission shall submit a report tothe Council on the implementation of this paragraph.
4. The abovementioned provisions may not require that any
application for authorization be considered in the light of theeconomic requirements of the market.'
Article 6
Article 9 of Directive 79/267/EEC shall be replaced by the following:
‘Article 9The scheme of operations referred to in Article 8 (1) (c) and (2) shall
include particulars or proof concerning:
(a) the nature of the commitments which the undertakingproposes
to cover;
(b) the guiding principles as to reassurance;
(c) the items constitutingthe minimum g uarantee fund;
(d) estimates relatingto the costs of settingup the administrative
services and the organization for securing business and thefinancial resources intended to meet those costs;
in addition, for the first three financial years:
(e) a plan settingout detailed estimates of income and expenditure
in respect of direct business, reassurance acceptances and reas-surance cessions;
(f) a forecast balance sheet;
(g) estimates relating to the financial resources intended to cover
underwritingliabilities and the solvency marg in.'
Article 7
The competent authorities of the home Member State shall not grant an
undertakingauthorization to take up the business of assurance beforethey have been informed of the identities of the shareholders ormembers, direct or indirect, whether natural or legal persons, who havequalifyingholding s in that undertakingand of the amounts of thoseholdings.
The same authorities shall refuse authorization if, takinginto account
the need to ensure the sound and prudent management of an assuranceundertaking, they are not satisfied as to the qualifications of the share-holders or members.
TITLE III
HARMONIZATION OF CONDITIONS GOVERNING PURSUIT OF
BUSINESS
Chapter 1
Article 8
Article 15 of Directive 79/267/EEC shall be replaced by the following:
‘Article 151. The financial supervision of an assurance undertaking,
includingthat of the business it carries on either throug h branches orunder the freedom to provide services, shall be the sole responsi-
(*) OJ No L 360, 9. 12. 1992, p. 1.
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bility of the home Member State. If the competent authorities of theMember State of the commitment have reason to consider that theactivities of an assurance undertakingmig ht affect its financialsoundness, they shall inform the competent authorities of the under-taking’s home Member State. The latter authorities shall determinewhether the undertakingis complyingwith the prudential principleslaid down in this Directive.
2. That financial supervision shall include verification, with
respect to the assurance undertaking’s entire business, of its state ofsolvency, the establishment of technical provisions, includingmathe-matical provisions, and of the assets coveringthem, in accordancewith the rules laid down or practices followed in the home MemberState pursuant to the provisions adopted at Community level.
3. The competent authorities of the home Member State shall
require every assurance undertakingto have sound administrativeand accountingprocedures and adequate internal control mecha-nisms.'
Article 9
Article 16 of Directive 79/267/EEC shall be replaced by the following:
‘Article 16The Member State of the branch shall provide that, where an assur-
ance undertakingauthorized in another Member State carries onbusiness through a branch, the competent authorities of the homeMember State may, after havingfirst informed the competent author-ities of the Member State of the branch, carry out themselves, orthrough the intermediary of persons they appoint for that purpose,on-the-spot verification of the information necessary to ensure thefinancial supervision of the undertaking. The authorities of theMember State of the branch may participate in that verification'.
Article 10
Article 23 (2) and (3) of Directive 79/267/EEC shall be replaced by the
following:
‘2. Member States shall require assurance undertakings with head
offices within their territories to render periodically the returns,together with statistical documents, which are necessary for thepurposes of supervision. The competent authorities shall provideeach other with any documents and information that are useful forthe purposes of supervision.
3. Every Member State shall take all steps necessary to ensure
that the competent authorities have the powers and means necessaryfor the supervision of the business of assurance undertakings withhead offices within their territories, includingbusiness carried onoutside those territories, in accordance with the Council directivesgoverning those activities and for the purpose of seeing that they areimplemented.
These powers and means must, in particular, enable the competent
authorities to:
(a) make detailed enquiries regarding the undertaking’s situation
and the whole of its business, inter alia by:
— g atheringinformation or requiringthe submission of docu-
ments concerningits assurance business,
— carrying out on-the-spot investigations at the undertaking’s
premises;
(b) take any measures, with regard to the undertaking, its directors
or managers or the persons who control it, that are appropriateand necessary to ensure that the undertaking’s businesscontinues to comply with the laws, regulations and adminis-trative provisions with which the undertakingmust comply ineach Member State and in particular with the scheme of opera-tions in so far as it remains mandatory, and to prevent or remedy
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any irregularities prejudicial to the interests of the assuredpersons;
(c) ensure that those measures are carried out, if need be by enforce-
ment, where appropriate through judicial channels.
Member States may also make provision for the competent authori-
ties to obtain any information regarding contracts which are held byintermediaries.'
Article 11
1. Article 6 (2) to (7) of Directive 90/619/EEC shall be deleted.2. Under the conditions laid down by national law, each Member
State shall authorize assurance undertakings with head offices within itsterritory to transfer all or part of their portfolios of contracts, concludedunder either the right of establishment or the freedom to provideservices, to an acceptingoffice established within the Community, if thecompetent authorities of the home Member State of the acceptingofficecertify that after takingthe transfer into account the latter possesses thenecessary solvency margin.
3. Where a branch proposes to transfer all or part of its portfolio of
contracts, concluded under either the right of establishment or thefreedom to provide services, the Member State of the branch shall beconsulted.
4. In the circumstances referred to in paragraph 2 and 3, the authori-
ties of the home Member State of the transferringundertakingshallauthorize the transfer after obtainingthe ag reement of the competentauthorities of the Member States of the commitment.
5. The competent authorities of the Member States consulted shall
give their opinion or consent to the competent authorities of the homeMember State of the transferringassurance undertakingwithin threemonths of receivinga request; the absence of any response within thatperiod from the authorities consulted shall be considered equivalent to afavourable opinion or tacit consent.
6. A transfer authorized in accordance with this Article shall be
published as laid down by national law in the Member State of thecommitment. Such transfers shall automatically be valid against policy-holders, the assured persons and any other person havingrig hts orobligations arising out of the contracts transferred.
This provision shall not affect the Member States’ rights to give policy-
holders the option of cancellingcontracts within a fixed period after atransfer.
Article 12
1. Article 24 of Directive 79/267/EEC shall be replaced by the
following:
‘Article 24
1. If an undertakingdoes not comply with Article 17, the
competent authority of its home Member State may prohibit the freedisposal of its assets after havingcommunicated its intention to thecompetent authorities of the Member States of commitment.
2. For the purposes of restoringthe financial situation of an
undertakingthe solvency marg in of which has fallen below theminimum required under Article 19, the competent authority of thehome Member State shall require that a plan for the restoration of asound financial position be submitted for its approval.
In exceptional circumstances, if the competent authority is of the
opinion that the financial situation of the undertakingwill furtherdeteriorate, it may also restrict or prohibit the free disposal of theundertaking’s assets. It shall inform the authorities of other MemberStates within the territories of which the undertakingcarries onbusiness of any measures it has taken and the latter shall, at therequest of the former, take the same measures.
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3. If the solvency margin falls below the guarantee fund as
defined in Article 20, the competent authority of the home MemberState shall require the undertakingto submit a short-term financescheme for its approval.
It may also restrict or prohibit the free disposal of the undertaking’s
assets. It shall inform the authorities of other Member States withinthe territories of which the undertakingcarries on business accord-ingly and the latter shall, at the request of the former, take the samemeasures.
4. The competent authorities may further take all measures neces-
sary to safeguard the interests of the assured persons in the casesprovided for in paragraphs 1, 2 and 3.
5. Each Member State shall take the measures necessary to be
able in accordance with its national law to prohibit the free disposalof assets located within its territory at the request, in the casesprovided for in paragraphs 1, 2 and 3, of the undertaking’s homeMember State, which shall designate the assets to be covered bysuch measures.'
Article 13
Article 26 of Directive 79/267/EEC shall be replaced by the following:
‘Article 261. Authorization granted to an assurance undertaking by the
competent authority of its home Member State may be withdrawn bythat authority if that undertaking:
(a) does not make use of the authorization within 12 months,
expressly renounces it or ceases to carry on business for morethan six months, unless the Member State concerned has madeprovision for authorization to lapse in such cases;
(b) no longer fulfils the conditions for admission;
(c) has been unable, within the time allowed, to take the measures
specified in the restoration plan or finance scheme referred to inArticle 24;
(d) fails seriously in its obligations under the regulations to which it
is subject.
In the event of the withdrawal or lapse of the authorization, the
competent authority of the home Member State shall notify thecompetent authorities of the other Member States accordingly andthey shall take appropriate measures to prevent the undertakingfromcommencingnew operations within their territories, under either thefreedom of establishment or the freedom to provide services. Thehome Member State’s competent authority shall, in conjunction withthose authorities, take all necessary measures to safeguard the inter-ests of the assured persons and shall restrict, in particular, the freedisposal of the assets of the undertakingin accordance with Article24 (1), (2), second subparagraph, or (3), second subparagraph.
2. Any decision to withdraw an authorization shall be supported
by precise reasons and notified to the undertakingin question.'
Article 14
1. Member States shall require any natural or legal person
►
C1who proposes to hold, ◄directly or indirectly, a qualifying
holdingin an assurance undertakingfirst to inform the competentauthorities of the home Member State, indicatingthe size of theintended holding. Such a person must likewise inform the competentauthorities of the home Member State if he proposes to increase hisqualifyingholdingso that the proportion of the votingrig hts or of thecapital held by him would reach or exceed 20, 33 or 50 % or so that theassurance undertakingwould become his subsidiary.
The competent authorities of the home Member State shall have a
maximum of three months from the date of the notification provided forin the first subparagraph to oppose such a plan if, in view of the need toensure sound and prudent management of the assurance undertaking,
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they are not satisfied as to the qualifications of the person referred to inthe first subparagraph. If they do not oppose the plan in question theymay fix a maximum period for its implementation.
2. Member States shall require any natural or legal person who
proposes to dispose, directly or indirectly, of a qualifyingholdingin anassurance undertakingfirst to inform the competent authorities of thehome Member State, indicatingthe size of his intended holding . Such aperson must likewise inform the competent authorities if he proposes toreduce his qualifyingholdingso that the proportion of the votingrig htsor of the capital held by him would fall below 20, 33 or 50 % or so thatthe assurance undertakingwould cease to be his subsidiary.
3. On becomingaware of them, assurance undertaking s shall inform
the competent authorities of their home Member States of any acquisi-tions or disposals of holdings in their capital that cause holdings toexceed or fall below one of the thresholds referred to in paragraphs 1and 2.
They shall also, at least once a year, inform them of the names of
shareholders and members possessingqualifyingholding s and the sizesof such holdings as shown, for example, by the information received atthe annual general meetings of shareholders and members or as a resultof compliance with the regulations relating to companies listed on stockexchanges.
4. Member States shall require that, if the influence exercised by the
persons referred to in paragraph 1 is likely to operate to the detriment ofthe prudent and sound management of the assurance undertaking, thecompetent authorities of the home Member State shall take appropriatemeasures to put an end to that situation. Such measures may consist, forexample, in injunctions, sanctions against directors and managers, or thesuspension of the exercise of the votingrig hts attachingto the sharesheld by the shareholders or members in question.
Similar measures shall apply to natural or legal persons failing to
comply with the obligation to provide prior information, as laid down inparagraph 1. If a holding is acquired despite the opposition of thecompetent authorities, the Member States shall, regardless of any othersanctions to be adopted, provide either for exercise of the correspondingvotingrig hts to be suspended, or for the nullity of votes cast or for thepossibility of their annulment.
Article 15
1. The Member States shall provide that all persons workingor who
have worked for the competent authorities, as well as auditors or expertsactingon behalf of the competent authorities, shall be bound by theobligation of professional secrecy. This means that no confidentialinformation which they may receive in the course of their duties may bedivulged to any person or authority whatsoever, except in summary oraggregate form, such that individual assurance undertakings cannot beidentified, without prejudice to cases covered by criminal law.
Nevertheless, where an assurance undertakinghas been declared bank-
rupt or is beingcompulsorily wound up, confidential information whichdoes not concern third parties involved in attempts to rescue that under-taking may be divulged in civil or commercial proceedings.
2. Paragraph 1 shall not prevent the competent authorities of the
different Member States from exchanging information in accordancewith the directives applicable to assurance undertakings. That informa-tion shall be subject to the conditions of professional secrecy indicatedin paragraph 1.
3. Member States may conclude cooperation agreements, providing
for exchanges of information, with the competent authorities of thirdcountries only if the information disclosed is subject to guarantees ofprofessional secrecy at least equivalent to those referred to in thisArticle.
4. Competent authorities receivingconfidential information under
paragraphs 1 or 2 may use it only in the course of their duties:
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— to check that the conditions governing the taking-up of the business
of assurance are met and to facilitate monitoringof the conduct ofsuch business, especially with regard to the monitoring of technicalprovisions, solvency margins, administrative and accounting proced-ures and internal control mechanisms, or
— to impose sanctions, or— in administrative appeals against decisions of the competent
authority, or
— in court proceedings initiated pursuant to Article 50 or under special
provisions provided for in the directives adopted in the field ofassurance undertakings.
5. Paragraphs 1 and 4 shall not preclude the exchange of information
within a Member State, where there are two or more competent authori-ties in the same Member State, or, between Member States, betweencompetent authorities and:
— authorities responsible for the official supervision of credit institu-
tions and other financial organizations and the authorities respon-sible for the supervision of financial markets,
— bodies involved in the liquidation and bankruptcy of assurance
undertakings and in other similar procedures, and
— persons responsible for carryingout statutory audits of the accounts
of assurance undertakings and other financial institutions, in thedischarge of their supervisory functions, and the disclosure, tobodies which administer (compulsory) winding-up proceedings orguarantee funds, of information necessary to the performance oftheir duties. The information received by these authorities, bodiesand persons shall be subject to the obligation of professional secrecylaid down in paragraph 1.
in the discharge of their supervisory functions, and the disclosure, to
bodies which administer (compulsory) winding-up proceedings or guar-antee funds, of information necessary to the performance of their duties.The information received by these authorities, bodies and persons shallbe subject to the obligation of professional secrecy laid down in para-graph 1.
▼
M1
5a. Notwithstandingparag raphs 1 to 4, Member States may authorizeexchanges of information between the competent authorities and:
— the authorities responsible for overseeingthe bodies involved in the
liquidation and bankruptcy of insurance undertakings and othersimilar procedures, or
— the authorities responsible for overseeingthe persons charg ed with
carryingout statutory audits of the accounts of insurance undertak-ings, credit institutions, investment firms and other financial institu-tions, or
— independent actuaries of insurance undertakings carrying out legal
supervision of those undertakings and the bodies responsible foroverseeingsuch actuaries.
Notwithstandingparag raphs 1 to 4, Member States may authorize
exchanges of information between the competent authorities and:
— this information shall be for the purpose of carryingout the over-
seeing or legal supervision referred to in the first subparagraph,
— information received in this context will be subject to the conditions
of professional secrecy imposed in paragraph 1,
— where the information originates in another Member State, it may
not be disclosed without the express agreement of the competentauthorities which have disclosed it and, where appropriate, solelyfor the purposes for which those authorities gave their agreement.
Member States shall communicate to the Commission and to the other
Member States the names of the authorities, person and bodies whichmay receive information pursuant to this paragraph.
5b. Notwithstandingparag raphs 1 to 4, Member States may, with the
aim of strengthening the stability, including integrity, of the financial
1992L0096 — EN — 07.08.1995 — 001.001 — 16
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system, authorize the exchange of information between the competent
authorities and the authorities or bodies responsible under the law forthe detection and investigation of breaches of company law.
Member States which have recourse to the option provided for in the
first subparagraph shall require at least that the following conditons aremet:
— the information shall be for the purpose of performingthe task
referred to in the first subparagraph,
— information received in this context shall be subject to the condi-
tions of professional secrecy imposed in paragraph 1,
— where the information originates in another Member State, it may
not be disclosed without the express agreement of the competentauthorities which have disclosed it and, where appropriate, solelyfor the purposes for which those authorities gave their agreement.
Where, in a Member State, the authorities or bodies referred to in the
first subparagraph perform their task of detection or investigation withthe aid, in view of their specific competence, of persons appointed forthat purpose and not employed in the public sector, the possibility ofexchanging information provided for in the first subparagraph may beextended to such persons under the conditions stipulated in the secondsubparagraph.
In order to implement the final indent of the second subparagraph, the
authorities or bodies referred to in the first subparagraph shall commu-nicate to the competent authorities which have disclosed the informa-tion, the names and precise responsibilities of the persons to whom it isto be sent.
Member States shall communicate to the Commission and to the other
Member States the names of the authorities or bodies which mayreceive information pursuant to this paragraph.
Before 31 December 2000, the Commission shall draw up a report on
the application of the provisions of this paragraph.
5c. Member States may authorize the competent authorities to
transmit:
— to central banks and other bodies with a similar function in their
capacity as monetary authorities,
— where appropriate, to other public authorities responsible for over-
seeingpayment systems,
information intended for the performance of their task and may
authorize such authorities or bodies to communicate to the competentauthorities such information as they may need for the purposes ofparagraph 4. Information received in this context shall be subject to theconditions of professonial secrecy imposed in this Article.
▼
B
6. In addition, notwithstandingparag raphs 1 and 4, Member Statesmay, under provisions laid down by law, authorize the disclosure ofcertain information to other departments of their central governmentadministrations responsible for legislation on the supervision of creditinstitutions, financial institutions, investment services and assuranceundertakings and to inspectors acting on behalf of those departments.
However, such disclosures may be made only where necessary for
reasons of prudential control.
However, Member States shall provide that information received under
paragraphs 2 and 5 and that obtained by means of the on-the-spotverification referred to in Article 16 of Directive 79/267/EEC maynever be disclosed in the cases referred to in this paragraph except withthe express consent of the competent authorities which disclosed theinformation or of the competent authorities of the Member State inwhich on-the-spot verification was carried out.
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Article 15a
1. Member States shall provide at least that:
(a) any person authorized within the meaningof Directive 84/
253/EEC (1), performingin a insurance undertakingthe task
described in Article 51 of Directive 78/660/EEC (2), Article 37 of
Directive 83/349/EEC or Article 31 of Directive 85/611/EEC or anyother statutory task, shall have a duty to report promptly to thecompetent authorities any fact or decision concerningthat under-takingof which he has become aware while carryingout that taskwhich is liable to:
— constitute a material breach of the laws, regulations or adminis-
trative provisions which lay down the conditions governingauthorization or which specifically govern pursuit of the activi-ties of insurance undertakings, or
— affect the continuous functioningof the insurance undertaking ,
or
— lead to refusal to certify the accounts or to the expression of
reservations;
(b) that person shall likewise have a duty to report any facts and
decisions of which he becomes aware in the course of carryingouta task as described in (a) in an undertakinghavingclose linksresultingfrom a control relationship with the insurance undertakingwithin which he is carryingout the abovementioned task.
2. The disclosure in good faith to the competent authorities, by
persons authorized within the meaningof Directive 84/253/EEC, of anyfact or decision referred to in paragraph 1 shall not constitute a breachof any restriction on disclosure of information imposed by contract ofby any legislative, regulatory or administrative provision and shall notinvolce such persons in liability of any kind.
▼
B
Article 16
Article 13 of Directive 79/267/EEC shall be replaced by the following:
‘Article 131. Without prejudice to paragraphs 3 and 7, no undertaking may
be authorized both pursuant to this Directive and pursuant toDirective 73/239/EEC.
2. However, Member States may provide that:— undertakings authorized pursuant to this Directive may also
obtain authorization, in accordance with Article 6 of Directive73/239/EEC for the risks listed in classes 1 and 2 in the Annex tothat Directive,
— undertakings authorized pursuant to Article 6 of Directive 73/
239/EEC solely for the risks listed in classes 1 and 2 in theAnnex to that Directive may obtain authorization pursuant to thisDirective.
3. Subject to paragraph 6, undertakings referred to in paragraph 2
and those which at the time of notification of this Directive carry onsimultaneously both of the activities covered by this Directive andby Directive 73/239/EEC may continue to do so, provided that eachactivity is separately managed in accordance with Article 14.
4. Member States may provide that the undertakings referred to in
paragraph 2 shall comply with the accounting rules governing under-takings authorized pursuant to this Directive for all of their activities.Pendingcoordination in this respect, Member States may alsoprovide that, with regard to rules on winding-up, activities relating tothe risks listed in classes 1 and 2 in the Annex to Directive 73/
(1) OJ No L 126, 12. 5. 1984, p. 20.
(2) OJ No L 222, 14. 8. 1978, p. 11. Directive as last amended by Directive
90/605/EEC (OJ No L 317, 16. 11. 1990, p. 60).
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239/EEC carried on by the undertakings referred to in paragraph 2shall be governed by the rules applicable to life assurance activities.
5. Where an undertakingcarryingon the activities referred to in
the Annex to Directive 73/239/EEC has financial, commercial oradministrative links with an undertakingcarryingon the activitiescovered by this Directive, the supervisory authorities of the MemberStates within whose territories the head offices of those undertakingsare situated shall ensure that the accounts of the undertakings inquestion are not distorted by agreements between these undertakingsor by any arrangement which could affect the apportionment ofexpenses and income.
6. Any Member State may require undertakings whose head
offices are situated in its territory to cease, within a period to bedetermined by the Member State concerned, the simultaneous pursuitof activities in which they were engaged at the time of notificationof this Directive.
7. The provisions of this Article shall be reviewed on the basis of
a report from the Commission to the Council in the light of futureharmonization of the rules on winding-up, and in any case before 31December 1999.'
Article 17
Article 35 of Directive 79/267/EEC and Article 18 of Directive 90/
619/EEC shall be deleted.
Chapter 2
Article 18
Article 17 of Directive 79/267/EEC shall be replaced by the following:
‘Article 171. The home Member State shall require every assurance under-
takingto establish sufficient technical provisions, includingmathe-matical provisions, in respect of its entire business.
The amount of such technical provisions shall be determined
accordingto the followingprinciples:
A. (i) The amount of the technical life-assurance provisions shall
be calculated by a sufficiently prudent prospective actuarialvaluation, takingaccount of all future liabilities as deter-mined by the policy conditions for each existingcontract,including:
— all guaranteed benefits, including guaranteed surrender
values,
— bonuses to which policy-holders are already either
collectively or individually entitled, however thosebonuses are described — vested, declared or allotted,
— all options available to the policy-holder under the terms
of the contract,
— expenses, includingcommissions;
takingcredit for future premiums due;
(ii) the use of a retrospective method is allowed, if it can be
shown that the resultingtechnical provisions are not lowerthan would be required under a sufficiently prudent prospec-tive calculation or if a prospective method cannot be usedfor the type of contract involved;
(iii) a prudent valuation is not a “best estimate” valuation, but
shall include an appropriate margin for adverse deviation ofthe relevant factors;
(iv) the method of valuation for the technical provisions must
not only be prudent in itself, but must also be so havingregard to the method of valuation for the assets coveringthose provisions;
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(v) technical provisions shall be calculated separately for each
contract. The use of appropriate approximations or generali-zations is allowed, however, where they are likely to giveapproximately the same result as individual calculations.The principle of separate calculation shall in no way preventthe establishment of additional provisions for general riskswhich are not individualized;
vi) where the surrender value of a contract is guaranteed, the
amount of the mathematical provisions for the contract atany time shall be at least as great as the value guaranteed atthat time.
B. The rate of interest used shall be chosen prudently. It shall be
determined in accordance with the rules of the competentauthority in the home Member State, applyingthe followingprinciples:
(a) for all contracts, the competent authority of the undertaking’s
home Member State shall fix one or more maximum rates ofinterest, in particular in accordance with the followingrules:
(i) when contracts contain an interest rate guarantee, the
competent authority in the home Member State shall seta single maximum rate of interest. It may differaccordingto the currency in which the contract isdenominated, provided that it is not more than 60 % ofthe rate on bond issues by the State in whose currencythe contract is denominated. In the case of a contractdenominated in ecus, this limit shall be set by referenceto ecu-denominated issues by the Community institu-tions.
If a Member State decides, pursuant to the second
sentence of the precedingparag raph, to set a maximumrate of interest for contracts denominated in anotherMember State’s currency, it shall first consult thecompetent authority of the Member State in whosecurrency the contract is denominated;
(ii) however, when the assets of the undertakingare not
valued at their purchase price, a Member State maystipulate that one or more maximum rates may be calcu-lated takinginto account the yield on the correspondingassets currently held, minus a prudential margin and, inparticular for contracts with periodic premiums, further-more takinginto account the anticipated yield on futureassets. The prudential margin and the maximum rate orrates of interest applied to the anticipated yield on futureassets shall be fixed by the competent authority of thehome Member State;
(b) the establishment of a maximum rate of interest shall not
imply that the undertakingis bound to use a rate as hig h asthat;
(c) the home Member State may decide not to apply (a) to the
followingcateg ories of contracts:
— unit-linked contracts,
— single-premium contracts for a period of up to eight
years, — without-profits contracts, and annuity contractswith no surrender value.
— without-profits contracts, and annuity contracts with no
surrender value.
In the cases referred to in the last two indents of the first
subparagraph, in choosing a prudent rate of interest, accountmay be taken of the currency in which the contract is denomi-nated and correspondingassets currently held and where theundertaking’s assets are valued at their current value, theanticipated yield on future assets.
Under no circumstances may the rate of interest used be
higher than the yield on assets as calculated in accordance
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with the accountingrules in the home Member State, less anappropriate deduction;
(d) the Member State shall require an undertakingto set aside in
its accounts a provision to meet interest-rate commitmentsvis-à-vispolicy-holders if the present or foreseeable yield on
the undertaking’s assets is insufficient to cover thosecommitments;
(e) the Commission and the competent authorities of the
Member States which so request shall be notified of themaximum rates of interest set under (a).
C. The statistical elements of the valuation and the allowance for
expenses used shall be chosen prudently, havingreg ard to theState of the commitment, the type of policy and the adminis-trative costs and commissions expected to be incurred.
D. In the case of participatingcontracts, the method of calculation
for technical provisions may take into account, either implicitlyor explicitly, future bonuses of all kinds, in a manner consistentwith the other assumptions on future experience and with thecurrent method of distribution of bonuses.
E. Allowance for future expenses may be made implicitly, for
instance by the use of future premiums net of managementcharges. However, the overall allowance, implicit or explicit,shall be not less than a prudent estimate of the relevant futureexpenses.
F. The method of calculation of technical provisions shall not be
subject to discontinuities from year to year arisingfrom arbitrarychanges to the method or the bases of calculation and shall besuch as to recognize the distribution of profits in an appropriateway over the duration of each policy.
2. Assurance undertakings shall make available to the public the
bases and methods used in the calculation of the technical provi-sions, includingprovisions for bonuses.
3. The home Member State shall require every assurance under-
takingto cover the technical provisions in respect of its entirebusiness by matchingassets, in accordance with Article 24 ofDirective 92/96/EEC. In respect of business written in theCommunity, these assets must be localized within the Community.Member States shall not require assurance undertakings to localizetheir assets in a particular Member State. The home Member Statemay, however, permit relaxations in the rules on the localization ofassets.
4. If the home Member State allows any technical provisions to
be covered by claims against reassurers, it shall fix the percentage soallowed. In such case, it may not require the localization of theassets representingsuch claims.'
Article 19
Premiums for new business shall be sufficient, on reasonable actuarial
assumptions, to enable assurance undertakings to meet all their commit-ments and, in particular, to establish adequate technical provisions.
For this purpose, all aspects of the financial situation of an assurance
undertakingmay be taken into account, without the input fromresources other than premiums and income earned thereon beingsystematic and permanent in such a way that it may jeopardize theundertaking’s solvency in the long term.
Article 20
The assets coveringthe technical provisions shall take account of the
type of business carried on by an undertakingin such a way as to securethe safety, yield and marketability of its investments, which the under-takingshall ensure are diversified and adequately spread.
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Article 21
1. The home Member State may not authorize assurance undertak-
ings to cover their technical provisions with any but the followingcategories of assets:
A.Investments
(a) debt securities, bonds and other money- and capital-market instru-
ments;
(b) loans;
(c) shares and other variable-yield participations;
(d) units in undertakings for collective investment in transferable secur-
ities and other investment funds;
(e) land, buildings and immovable property rights;
B.Debts and claims
(f) debts owed by reassurers, includingreassurers’ shares of technical
provisions;
(g) deposits with and debts owed by ceding undertakings;(h) debts owed by policy-holders and intermediaries arisingout of
direct and reassurance operations;
(i) advances against policies;(j) tax recoveries;
(k) claims against guarantee funds;
C.Others
(l) tangible fixed assets, other than land and buildings, valued on the
basis of prudent amortization;
(m) cash at bank and in hand, deposits with credit institutions and any
other body authorized to receive deposits;
(n) deferred acquisition costs;(o) accrued interest and rent, other accrued income and prepayments;(p) reversionary interests.
In the case of the association of underwriters known as Lloyd’s, asset
categories shall also include guarantees and letters of credit issued bycredit institutions within the meaningof Directive 77/780/EEC (
1)o rb y
assurance undertakings, together with verifiable sums arising out of lifeassurance policies, to the extent that they represent funds belonging tomembers.
The inclusion of any asset or category of assets listed in the first
subparagraph shall not mean that all these assets should automaticallybe accepted as cover for technical provisions. The home Member Stateshall lay down more detailed rules fixingthe conditions for the use ofacceptable assets; in this connection, it may require valuable security orguarantees, particularly in the case of debts owed by reassurers.
In determiningand applyingthe rules which it lays down, the home
Member State shall, in particular, ensure that the followingprinciplesare complied with:
(i) assets coveringtechnical provisions shall be valued net of any
debts arisingout of their acquisition;
(ii) all assets must be valued on a prudent basis, allowingfor the risk
of any amounts not beingrealizable. In particular, tang ible fixedassets other than land and buildings may be accepted as cover for
(1) First Council Directive 77/780/EEC of 12 December 1977 on the coordi-
nation of the laws, regulations and administrative provisions relating to thetakingup and pursuit of the business of credit institutions (OJ No L 322,17. 12. 1977, p. 30). Directive as last amended by Directive 89/646/EEC(OJ No L 386, 30. 12. 1989, p. 1).
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technical provisions only if they are valued on the basis ofprudent amortization;
(iii) loans, whether to undertakings, to a State or international organ-
ization, to local or regional authorities or to natural persons, maybe accepted as cover for technical provisions only if there aresufficient guarantees as to their security, whether these are basedon the status of the borrower, mortgages, bank guarantees orguarantees granted by assurance undertakings or other forms ofsecurity;
(iv) derivative instruments such as options, futures and swaps in
connection with assets coveringtechnical provisions may be usedin so far as they contribute to a reduction of investment risks orfacilitate efficient portfolio management. They must be valued ona prudent basis and may be taken into account in the valuation ofthe underlyingassets;
(v) transferrable securities which are not dealt in on a regulated
market may be accepted as cover for technical provisions only ifthey can be realized in the short term or if they are holdings incredits institutions, in assurance undertakings, within the limitspermitted by Article 8 of Directive 79/267/EEC, or in investmentundertakings established in a Member State;
(vi) Forderungen an einen Dritten können zur Bedeckung der versi-
cherungstechnischen Rückstellungen nur nach Abzug aller aufre-chenbaren Gegenforderungen an diesen Dritten zugelassenwerden.
(vii) the value of any debts and claims accepted as cover for technical
provisions must be calculated on a prudent basis, with due allow-ance for the risk of any amounts not beingrealizable. In partic-ular, debts owed by policy-holders and intermediaries arisingoutof assurance and reassurance operations may be accepted only inso far as they have been outstandingfor not more than threemonths;
(viii) where the assets held include an investment in a subsidiary under-
taking which manages all or part of the assurance undertaking’sinvestments on its behalf, the home Member State must, whenapplyingthe rules and principles laid down in this Article, takeinto account the underlyingassets held by the subsidiary under-taking; the home Member State may treat the assets of othersubsidiaries in the same way;
(ix) deferred acquisition costs may be accepted as cover for technical
provisions only to the extent that this is consistent with thecalculation of the mathematical provisions.
2. Notwithstandingparag raph 1, in exceptional circumstances and at
an assurance undertaking’s request, the home Member State may,temporarily and under a properly reasoned decision, accept other cate-gories of assets as cover for technical provisions, subject to Article 20.
Article 22
1. As regards the assets covering technical provisions, the home
Member State shall require every assurance undertakingto invest nomore than:
(a) 10 % of its total gross technical provisions in any one piece of land
or building, or a number of pieces of land or buildings close enoughto each other to be considered effectively as one investment;
(b) 5 % of its total gross technical provisions in shares and other
negotiable securities treated as shares, bonds, debt securities andother money- and capital-market instruments from the same under-taking, or in loans granted to the same borrower, taken together, theloans being loans other than those granted to a State, regional orlocal authority or to an international organization of which one ormore Member States are members. This limit may be raised to 10 %if an undertakinginvests not more than 40 % of its g ross technicalprovisions in the loans or securities of issuingbodies and borrowersin each of which it invests more than 5 % of its assets;
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(c) 5 % of its total gross technical provisions in unsecured loans,
including1 % for any sing le unsecured loan, other than loansgranted to credit institutions, assurance undertakings — in so far asArticle 8 of Directive 79/267/EEC allows it — and investmentundertakings established in a Member State. The limits may beraised to 8 and 2 % respectively by a decision taken on a case-by-case basis by the competent authority of the home Member State;
(d) 3 % of its total gross technical provisions in the form of cash in
hand;
(e) 10 % of its total gross technical provisions in shares, other securi-
ties treated as shares and debt securities which are not dealt in on aregulated market.
2. The absence of a limit in paragraph 1 on investment in any
particular category does not imply that assets in that category should beaccepted as cover for technical provisions without limit. The homeMember State shall lay down more detailed rules fixingthe conditionsfor the use of acceptable assets. In particular it shall ensure, in thedetermination and the application of those rules, that the followingprinciples are complied with:
(i) assets coveringtechnical provisions must be diversified and spread
in such a way as to ensure that there is no excessive reliance onany particular category of asset, investment market or investment;
(ii) investment in particular types of asset which show high levels of
risk, whether because of the nature of the asset or the quality of theissuer, must be restricted to prudent levels;
(iii) limitations on particular categories of asset must take account of
the treatment of reassurance in the calculation of technical provi-sions;
(iv) where the assets held include an investment in a subsidiary under-
taking which manages all or part of the assurance undertaking’sinvestments on its behalf, the home Member State must, whenapplyingthe rules and principles laid down in this Article, take intoaccount the underlyingassets held by the subsidiary undertaking ;the home Member State may treat the assets of other subsidiariesin the same way;
(v) the percentage of assets covering technical provisions which are
the subject of non-liquid investments must be kept to a prudentlevel;
(vi) where the assets held include loans to or debt securities issued by
certain credit institutions, the home Member State may, whenapplyingthe rules and principles contained in this Article, take intoaccount the underlyingassets held by such credit institutions. Thistreatment may be applied only where the credit institution has itshead office in a Member State, is entirely owned by that MemberState and/or that State’s local authorities and its business,accordingto its memorandum and articles of association, consistsof extending, through its intermediaries, loans to, or guaranteed by,States or local authorities or of loans to bodies closely linked to theState or to local authorities.
3. In the context of the detailed rules layingdown the conditions for
the use of acceptable assets, the Member State shall give more limita-tive treatment to:
— any loan unaccompanied by a bank guarantee, a guarantee issued by
an assurance undertaking, a mortgage or any other form of security,as compared with loans accompanied by such collateral,
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— UCITS not coordinated within the meaningof Directive 85/
611/EEC (1) and other investment funds, as compared with UCITS
coordinated within the meaningof that Directive,
— securities which are not dealt in on a regulated market, as compared
with those which are,
— bonds, debt securities and other money- and capital-market instru-
ments not issued by States, local or regional authorities or undertak-ings belonging to Zone A as defined in Directive 89/647/EEC (
2),
or the issuers of which are international organizations notnumberingat least one Community Member State amongtheirmembers, as compared with the same financial instruments issuedby such bodies.
4. Member States may raise the limit laid down in paragraph 1 (b) to
40 % in the case of certain debt securities when these are issued by acredit institution which has its head office in a Member State and issubject by law to special official supervision designed to protect theholders of those debt securities. In particular, sums derivingfrom theissue of such debt securities must be invested in accordance with thelaw in assets which, duringthe whole period of validity of the debtsecurities, are capable of coveringclaims attachingto debt securitiesand which, in the event of failure of the issuer, would be used on apriority basis for the reimbursement of the principal and payment of theaccrued interest.
5. Member States shall not require assurance undertakings to invest
in particular categories of assets.
6. Notwithstandingparag raph 1, in exceptional circumstances and at
the assurance undertaking’s request, the home Member State may,temporarily and under a properly reasoned decision, allow exceptions tothe rules laid down in paragraph 1 (a) to (e), subject to Article 20.
Article 23
1. Where the benefits provided by a contract are directly linked to
the value of units in an UCITS or to the value of assets contained in aninternal fund held by the insurance undertaking, usually divided intounits, the technical provisions in respect of those benefits must berepresented as closely as possible by those units or, in the case whereunits are not established, by those assets.
2. Where the benefits provided by a contract are directly linked to a
share index or some other reference value other than those referred to inparagraph 1, the technical provisions in respect of those benefits mustbe represented as closely as possible either by the units deemed torepresent the reference value or, in the case where units are not estab-lished, by assets of appropriate security and marketability which corre-spond as closely as possible with those on which the particular refer-ence value is based.
3. Articles 20 and 22 shall not apply to assets held to match liabili-
ties which are directly linked to the benefits referred to in paragraphs 1and 2. References to the technical provisions in Article 22 shall be tothe technical provisions excludingthose in respect of such liabilities.
4. Where the benefits referred to in paragraph 1 and 2 include a
guarantee of investment performance or some other guaranteed benefit,the correspondingadditional technical provisions shall be subject toArticles 20, 21 and 22.
(1) Council Directive 85/611/EEC of 20 December 1985 on the coordination
of laws, regulations and administrative provisions relating to undertakingsfor collective investment in transferable securities (UCITS) (OJ No L 375,31. 12. 1985, p. 3). Directive as amended by Directive 88/220/EEC (OJNo L 100, 19. 4. 1988, p. 31).
(
2) Council Directive 89/647/EEC of 18 December 1989 on a solvency ratio
for credit institutions (OJ No L 386, 30. 12. 1989, p. 14).
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Article 24
1. For the purposes of Articles 17 (3) and 28 of Directive 79/
267/EEC, Member States shall comply with Annex I to this Directive asregards the matching rules.
2. This Article shall not apply to the commitments referred to in
Article 23 of this Directive.
Article 25
Article 18, second subparagraph, point 1 of Directive 79/267/EEC shall
be replaced by the following:
‘1. the assets of the undertakingfree of any foreseeable liabilities,
less any intangible items. In particular the following shall beincluded:
— the paid-up share capital or, in the case of a mutual assurance
undertaking, the effective initial fund plus any members’accounts which meet all the followingcriteria:
(a) the memorandum and articles of association must stipu-
late that payments may be made from these accounts tomembers only in so far as this does not cause thesolvency margin to fall below the required level, or, afterthe dissolution of the undertaking, if all the underta-king’s other debts have been settled;
(b) the memorandum and articles of association must stipu-
late, with respect to any such payments for reasons otherthan the individual termination of membership, that thecompetent authorities must be notified at least one monthin advance and can prohibit the payment within thatperiod;
(c) the relevant provisions of the memorandum and articles
of association may be amended only after the competentauthorities have declared that they have no objection tothe amendment, without prejudice to the criteria stated in(a) and (b),
— one half of the unpaid share capital or initial fund, once the
paid-up part amounts to 25 % of that share capital or fund,
— reserves (statutory reserves and free reserves) not corre-
spondingto underwritingliabilities,
— any profits brought forward,— cumulative preferential share capital and subordinated loan
capital may be included but, if so, only up to 50 % of themargin, no more than 25 % of which shall consist of subordi-nated loans with a fixed maturity, or fixed-term cumulativepreferential share capital, if the followingminimum criteriaare met:
(a) in the event of the bankruptcy or liquidation of the
assurance undertaking, binding agreements must existunder which the subordinated loan capital or preferentialshare capital ranks after the claims of all other creditorsand is not to be repaid until all other debts outstandingatthe time have been settled.
Subordinated loan capital must also fulfil the following
conditions:
(b) only fully paid-up funds may be taken into account;
(c) for loans with a fixed maturity, the original maturity
must be at least five years. No later than one year beforethe repayment date the assurance undertakingmustsubmit to the competent authorities for their approval aplan showinghow the solvency marg in will be kept at orbrought to the required level at maturity, unless theextent to which the loan may rank as a component of thesolvency margin is gradually reduced during at least thelast five years before the repayment date. The competentauthorities may authorize the early repayment of suchloans provided application is made by the issuingassur-
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ance undertakingand its solvency marg in will not fallbelow the required level;
(d) loans the maturity of which is not fixed must be repay-
able only subject to five years’ notice unless the loansare no longer considered as a component of the solvencymargin or unless the prior consent of the competentauthorities is specifically required for early repayment.In the latter event the assurance undertakingmust notifythe competent authorities at least six months before thedate of the proposed repayment, specifyingthe actualand required solvency margin both before and after thatrepayment. The competent authorities shall authorizerepayment only if the assurance undertaking’s solvencymargin will not fall below the required level; (e) the loanagreement must not include any clause providing that inspecified circumstances, other than the winding-up of theassurance undertaking, the debt will become repayablebefore the agreed repayment dates;
(e) the loan agreement must not include any clause
providingthat in specified circumstances, other than thewinding-up of the assurance undertaking, the debt willbecome repayable before the agreed repayment dates;
(f) the loan agreement may be amended only after the
competent authorities have declared that they have noobjection to the amendment,
— securities with no specified maturity date and other instru-
ments that fulfil the followingconditions, includingcumula-tive preferential shares other than those mentioned in theprecedingindent, up to 50 % of the marg in for the total ofsuch securities and the subordinated loan capital referred toin the precedingindent:
(a) they may not be repaid on the initiative of the bearer or
without the prior consent of the competent authority;
(b) the contract of issue must enable the assurance under-
takingto defer the payment of interest on the loan;
(c) the lender’s claims on the assurance undertakingmust
rank entirely after those of all non-subordinated cred-itors;
(d) the documents governing the issue of the securities must
provide for the loss-absorption capacity of the debt andunpaid interest, while enablingthe assurance undertakingto continue its business;
(e) only fully paid-up amounts may be taken into account.'
Article 26
No more than three years after the date of application of this Directive,
the Commission shall submit a report to the Insurance Committee onthe need for further harmonization of the solvency margin.
Article 27
Article 21 of Directive 79/267/EEC shall be replaced by the following:
‘Article 211. Member States shall not prescribe any rules as to the choice of
the assets that need not be used as cover for the technical provisionsreferred to in Article 17.
2. Subject to Article 17 (3), Article 24 (1), (2), (3) and (5) and the
second subparagraph of Article 26 (1), Member States shall notrestrain the free disposal of those assets, whether movable orimmovable, that form part of the assets of authorized assuranceundertakings.
3. Paragraphs 1 and 2 shall not preclude any measures which
Member States, while safeguarding the interests of the lives assured,
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are entitled to take as owners or members of or partners in theundertakings in question.'
Chapter 3
Article 28
The Member State of the commitment shall not prevent a policy-holder
from concludinga contract with an assurance undertakingauthorizedunder the conditions of Article 6 of Directive 79/267/EEC, as longasthat does not conflict with legal provisions protecting the general goodin the Member State of the commitment.
Article 29
Member States shall not adopt provisions requiringthe prior approval or
systematic notification of general and special policy conditions, scalesof premiums, technical bases used in particular for calculatingscales ofpremiums and technical provisions or forms and other printed docu-ments which an assurance undertakingintends to use in its dealing swith policy-holders.
Notwithstandingthe first subparag raph, for the sole purpose of verifying
compliance with national provisions concerningactuarial principles, theMember State of origin may require systematic communication of thetechnical Bases used in particular for calculatingscales of premiumsand technical provisions, without that requirement constitutinga priorcondition for an undertakingto carry on its business.
Not later than five years after the date of application of this Directive,
the Commission shall submit a report to the Council on the implementa-tion of those provisions.
Article 30
1. In the first subparagraph of Article 15 (1) of Directive 90/
619/EEC the words ‘in one of the cases referred to in Title III'’shall bedeleted.
2. Article 15 (2) of Directive 90/619/EEC shall be replaced by the
following: ‘2. The Member States need not apply paragraph 1 tocontracts of six months’ duration or less, nor where, because of thestatus of the policy-holder or the circumstances in which the contract isconcluded, the policy-holder does not need this special protection.Member States shall specify in their rules where paragraph 1 is notapplied.'
Article 31
1. Before the assurance contract is concluded, at least the informa-
tion listed in point A of Annex II shall be communicated to thepolicy-holder.
2. The policy-holder shall be kept informed throughout the term of
the contract of any change concerning the information listed in point Bof Annex II.
3. The Member State of the commitment may require assurance
undertakings to furnish information in addition to that listed in Annex IIonly if it is necessary for a proper understandingby the policy-holder ofthe essential elements of the commitment.
4. The detailed rules for implementingthis Article and Annex II shall
be laid down by the Member State of the commitment.
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TITLE IV
PROVISIONS RELATING TO RIGHT OF ESTABLISHMENT AND
FREEDOM TO PROVIDE SERVICES
Article 32
Article 10 of Directive 79/267/EEC shall be replaced by the following:
‘Article 101. An assurance undertakingthat proposes to establish a branch
within the territory of another Member State shall notify thecompetent authorities of its home Member State.
2. The Member States shall require every assurance undertaking
that proposes to establish a branch within the territory of anotherMember State to provide the followinginformation when effectingthe notification provided for in paragraph 1:
(a) the Member State within the territory of which it proposes to
establish a branch;
(b) a scheme of operations settingout inter alia the types of busi-
ness envisaged and the structural organization of the branch;
(c) the address in the Member State of the branch from which
documents may be obtained and to which they may be delivered,it beingunderstood that that address shall be the one to which allcommunications to the authorized agent are sent;
(d) the name of the branch’s authorized agent, who must possess
sufficient powers to bind the undertakingin relation to thirdparties and to represent it in relations with the authorities andcourts of the Member State of the branch. With regard toLloyd’s, in the event of any litigation in the Member State of thebranch arisingout of underwritten commitments, the assuredpersons must not be treated less favourably than if the litigationhad been brought against businesses of a conventional type. Theauthorized agent must, therefore, possess sufficient powers forproceedings to be taken against him and must in that capacity beable to bind the Lloyd’s underwriters concerned.
3. Unless the competent authorities of the home Member State
have reason to doubt the adequacy of the administrative structure orthe financial situation of the assurance undertakingor the g oodrepute and professional qualification or experience of the directors ormanagers or the authorized agent, taking into account the businessplanned, they shall within three months of receivingall the informa-tion referred to in paragraph 2 communicate that information to thecompetent authorities of the Member State of the branch and shallinform the undertakingconcerned according ly.
The competent authorities of the home Member State shall also
attest that the assurance undertakinghas the minimum solvencymargin calculated in accordance with Articles 19 and 20.
Where the competent authorities of the home Member State refuse to
communicate the information referred to in paragraph 2 to thecompetent authorities of the Member State of the branch they shallgive the reasons for their refusal to the undertaking concerned withinthree months of receivingall the information in question. Thatrefusal or failure to act shall be subject to a right to apply to thecourts in the home Member State.
4. Before the branch of an assurance undertakingstarts business,
the competent authorities of the Member State of the branch shall,within two months of receivingthe information referred to in para-graph 3, inform the competent authority of the home Member State,if appropriate, of the conditions under which, in the interest of thegeneral good, that business must be carried on in the Member Stateof the branch.
5. On receivinga communication from the competent authorities
of the Member State of the branch or, if no communication isreceived from them, on expiry of the period provided for in para-graph 4, the branch may be established and start business.
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6. In the event of a change in any of the particulars communi-
cated under paragraph 2 (b), (c) or (d), an assurance undertakingshall give written notice of the change to the competent authoritiesof the home Member State and of the Member State of the branch atleast one month before makingthe chang e so that the competentauthorities of the home Member State and the competent authoritiesof the Member State of the branch may fulfil their respective rolesunder paragraphs 3 and 4.'
Article 33
Article 11 of Directive 79/267/EEC shall be deleted.
Article 34
Article 11 of Directive 90/619/EEC shall be replaced by the following:
‘Article 11Any undertakingthat intends to carry on business for the first time
in one or more Member States under the freedom to provide servicesshall first inform the competent authorities of the home MemberState, indicatingthe nature of the commitments it proposes to cover.'
Article 35
Article 14 of Directive 90/619/EEC shall be replaced by the following:
‘Article 141. Within one month of the notification provided for in Article
11, the competent authorities of the home Member State shallcommunicate to the Member State or Member States within theterritory of which the undertakingintends to carry on business byway of the freedom to provide services:
(a) a certificate attestingthat the undertakinghas the minimum
solvency margin calculated in accordance with Articles 19 and20 of Directive 79/267/EEC;
(b) the classes which the undertakinghas been authorized to offer;
(c) the nature of the commitments which the undertakingproposes
to cover in the Member State of the provision of services.
At the same time, they shall inform the undertakingconcerned
accordingly.
2. Where the competent authorities of the home Member State do
not communicate the information referred to in paragraph 1 withinthe period laid down, they shall give the reasons for their refusal tothe undertakingwithin that same period. The refusal shall be subjectto a right to apply to the courts in the home Member State.
3. The undertakingmay start business on the certified date on
which it is informed of the communication provided for in the firstsubparagraph of paragraph 1.'
Article 36
Article 17 of Directive 90/619/EEC shall be replaced by the following:
‘Article 17Any change which an undertaking intends to make to the informa-
tion referred to in Article 11 shall be subject to the procedureprovided for in Articles 11 and 14.'
Article 37
Articles 10, 12, 13, 16, 22 and 24 of Directive 90/619/EEC shall be
deleted.
Article 38
The competent authorities of the Member State of the branch or the
Member State of the provision of services may require that the informa-tion which they are authorized under this Directive to request with
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regard to the business of assurance undertakings operating in the terri-tory of that State shall be supplied to them in the official language orlanguages of that State.
Article 39
1. Article 19 of Directive 90/619/EEC shall be deleted.2. The Member State of the branch or of provision of services shall
not lay down provisions requiringthe prior approval or systematicnotification of general and special policy conditions, scales ofpremiums, technical bases used in particular for calculatingscales ofpremiums and technical provisions, forms and other printed documentswhich an undertakingintends to use in its dealing s with policy-holders.For the purpose of verifyingcompliance with national provisionsconcerningassurance contracts, it may require an undertakingthatproposes to carry on assurance business within its territory, under theright of establishment or the freedom to provide services, to effect onlynon-systematic notification of those policy conditions and other printeddocuments without that requirement constitutinga prior condition for anundertakingto carry on its business.
Article 40
1. Article 20 of Directive 90/619/EEC shall be deleted.2. Any undertakingcarryingon business under the rig ht of establish-
ment or the freedom to provide services shall submit to the competentauthorities of the Member State of the branch and/or of the MemberState of the provision of services all documents requested of it for thepurposes of this Article in so far as undertakings the head office ofwhich is in those Member States are also obliged to do so.
3. If the competent authorities of a Member State establish that an
undertakingwith a branch or carryingon business under the freedom toprovide services in its territory is not complyingwith the leg al provi-sions applicable to it in that State, they shall require the undertakingconcerned to remedy that irregular situation.
4. If the undertakingin question fails to take the necessary action,
the competent authorities of the Member State concerned shall informthe competent authorities of the home Member State accordingly. Thelatter authorities shall, at the earliest opportunity, take all appropriatemeasures to ensure that the undertakingconcerned remedies that irreg -ular situation. The nature of those measures shall be communicated tothe competent authorities of the Member State concerned.
5. If, despite the measures taken by the home Member State or
because those measures prove inadequate or are lackingin that State,the undertakingpersists in violatingthe leg al provisions in force in theMember State concerned, the latter may, after informingthe competentauthorities of the home Member State, take appropriate measures toprevent or penalize further irregularities, including, in so far as isstrictly necessary, preventingthat undertakingfrom continuingtoconclude new assurance contracts within its territory. Member Statesshall ensure that in their territories it is possible to serve the legaldocuments necessary for such measures on assurance undertakings.
6. Paragraphs 3, 4 and 5 shall not affect the emergency power of the
Member States concerned to take appropriate measures to prevent orpenalize irregularities committed within their territories. This shallinclude the possibility of preventingassurance undertaking s fromcontinuingto conclude new assurance contracts within their territories.
7. Paragraph 3, 4 and 5 shall not affect the power of the Member
States to penalize infringements within their territories.
8. If an undertakingwhich has committed an infring ement has an
establishment or possesses property in the Member State concerned, thecompetent authorities of the latter may, in accordance with national law,apply the administrative penalties prescribed for that infringement byway of enforcement against that establishment or property.
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9. Any measure adopted under paragraphs 4 to 8 involving penalties
or restrictions on the conduct of assurance business must be properlyreasoned and communicated to the undertakingconcerned.
10. Every two years, the Commission shall submit to the Insurance
Committee a report summarizingthe number and type of cases inwhich, in each Member State, authorization has been refused pursuantto Article 10 of Directive 79/267/EEC or Article 14 of Directive 90/619/EEC as amended by this Directive or measures have been takenunder paragraph 5. Member States shall cooperate with the Commissionby providingit with the information required for that report.
Article 41
Nothingin this Directive shall prevent assurance undertaking s with
head offices in other Member States from advertisingtheir servicesthrough all available means of communication in the Member State ofthe branch or Member State of the provision of services, subject to anyrules governing the form and content of such advertising adopted in theinterest of the general good.
Article 42
1. Article 21 of Directive 90/619/EEC shall be deleted.2. Should an assurance undertakingbe wound up, commitments
arisingout of contracts underwritten throug h a branch or under thefreedom to provide services shall be met in the same way as thosearisingout of that undertaking ’s other assurance contracts, withoutdistinction as to nationality as far as the lives assured and the beneficia-ries are concerned.
Article 43
1. Article 23 of Directive 90/619/EEC shall be deleted.2. Every assurance undertakingshall inform the competent authority
of its home Member State, separately in respect of transactions carriedout under the right of establishment and those carried out under thefreedom to provide services, of the amount of the premiums, withoutdeduction of reassurance, by Member State and by each of classes I toIX, as defined in the Annex to Directive 79/267/EEC.
The competent authority of the home Member State shall, within a
reasonable time and on an aggregate basis forward this information tothe competent authorities of each of the Member States concernedwhich so request.
Article 44
1. Article 25 of Directive 90/619/EEC shall be deleted.2. Without prejudice to any subsequent harmonization, every assur-
ance contract shall be subject exclusively to the indirect taxes andparafiscal charges on assurance premiums in the Member State of thecommitment within the meaningof Article 2 (e) of Directive 90/619/EEC and also, with regard to Spain, to the surcharges legallyestablished in favour of the Spanish ‘Consorcio de compensación deseguros'for the performance of its functions relating to the compensa-tion of losses arisingfrom extraordinary events occurringin thatMember State.
The law applicable to the contract pursuant to Article 4 of Directive
90/619/EEC shall not affect the fiscal arrangements applicable.
Pendingfuture harmonization, each Member State shall apply to those
undertakings which cover commitments situated within its territory itsown national provisions for measures to ensure the collection of indirecttaxes and parafiscal charges due under the first subparagraph.
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TITLE V
TRANSITIONAL PROVISIONS
Article 45
Member States may allow assurance undertakings with head offices in
their territories, and whose buildings and land covering their technicalprovisions exceed, at the time of the notification of this Directive, thepercentage laid down in Article 22 (1) (a) a period expiring no laterthan 31 December 1998 within which to comply with that provision.
Article 46
1. Article 26 of Directive 90/619/EEC shall be deleted.2. Spain and Portugal, until 31 December 1995, and Greece, until 31
December 1998, may operate the followingtransitional arrang ementsfor contracts in respect of which one of those Member States is theMember State of the commitment:
(a) by way of derogation from Article 8 (3) of Directive 79/267/EEC
and from Articles 29 and 39 of this Directive, the competent author-ities of the Member States in question may require the communi-cation, before use, of general and special insurance policy condi-tions;
(b) the amount of the technical provisions relatingto such contracts
shall be determined under the supervision of the Member Stateconcerned in accordance with its own rules or, failingthat, inaccordance with the procedures established in that State in accord-ance with this Directive. Cover of those technical provisions byequivalent and matchingassets and the localization of those assetsshall be effected under the supervision of that Member State inaccordance with its rules and practices adopted in accordance withthis Directive.
TITLE VI
FINAL PROVISIONS
Article 47
The followingtechnical adjustments to be made to Directives 79/
267/EEC and 90/619/EEC and to this Directive shall be adopted inaccordance with the procedure laid down in Directive 91/675/EEC:
— extension of the legal forms provided for in Article 8 (1) (a) of
Directive 79/267/EEC,
— amendments to the list set out in the Annex to Directive 79/
267/EEC, or adaptation of the terminology used in that list to takeaccount of the development of assurance markets,
— clarification of the items constitutingthe solvency marg in listed in
Article 18 of Directive 79/267/EEC to take account of the creationof new financial instruments,
— alteration of the minimum guarantee fund provided for in Article 20
(2) of Directive 79/267/EEC to take account of economic and finan-cial developments,
— amendments, to take account of the creation of new financial instru-
ments, to the list of assets acceptable as cover for technical provi-sions set out in Article 21 of this Directive and to the rules on thespreadingof investments laid down in Article 22 of this Directive,
— changes in the relaxations in the matching rules laid down in Annex
I to this Directive, to take account of the development of newcurrency-hedging instruments or progress made in economic andmonetary union,
— clarification of the definitions in order to ensure uniform application
of Directives 79/267/EEC and 90/619/EEC and of this Directivethroughout the Community,
— the technical adjustments necessary to the rules for settingthe
maxima applicable to interest rates, pursuant to Article 17 of
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Directive 79/267/EEC, as amended by this Directive, in particular to
take account of progress made in economic and monetary union.
Article 48
1. Branches which have started business, in accordance with the
provisions in force in their Member State of establishment, before theentry into force of the provisions adopted in implementation of thisDirective shall be presumed to have been subject to the procedure laiddown in Article 10 (1) to (5) of Directive 79/267/EEC. They shall begoverned, from the date of that entry into force, by Articles 17, 23, 24and 26 of Directive 79/267/EEC and by Article 40 of this Directive.
2. Articles 11 and 14 of Directive 90/619/EEC, as amended by this
Directive, shall not affect rights acquired by assurance undertakingscarryingon business under the freedom to provide services before theentry into force of the provisions adopted in implementation of thisDirective.
Article 49
The followingArticle 31a shall be inserted in Directive 79/267/EEC:
‘Article 31a1. Under the conditions laid down by national law, each Member
State shall authorize agencies and branches set up within its territoryand covered by this Title to transfer all or part of their portfolios ofcontracts to an acceptingoffice established in the same MemberState if the competent authorities of that Member State or, if appro-priate, those of the Member State referred to in Article 30 certifythat after takingthe transfer into account the acceptingofficepossesses the necessary solvency margin.
2. Under the conditions laid down by national law, each Member
State shall authorize agencies and branches set up within its territoryand covered by this Title to transfer all or part of their portfolios ofcontracts to an assurance undertakingwith a head office in anotherMember State if the competent authorities of that Member Statecertify that after takingthe transfer into account the acceptingofficepossesses the necessary solvency margin.
3. If under the conditions laid down by national law a Member
State authorizes agencies and branches set up within its territory andcovered by this Title to transfer all or part of their portfolios ofcontracts to an agency or branch covered by this Title and set upwithin the territory of another Member State it shall ensure that thecompetent authorities of the Member State of the acceptingoffice or,if appropriate, of the Member State referred to in Article 30 certifythat after takingthe transfer into account the acceptingofficepossesses the necessary solvency margin, that the law of the MemberState of the acceptingoffice permits such a transfer and that theState has agreed to the transfer.
4. In the circumstances referred to in paragraphs 1, 2 and 3 the
Member State in which the transferringag ency or branch is situatedshall authorize the transfer after obtainingthe ag reement of thecompetent authorities of the Member State of the commitment,where different from the Member State in which the transferringagency or branch is situated.
5. The competent authorities of the Member States consulted shall
give their opinion or consent to the competent authorities of thehome Member State of the transferringassurance undertakingwithinthree months of receivinga request; the absence of any responsefrom the authorities consulted within that period shall be consideredequivalent to a favourable opinion or tacit consent.
6. A transfer authorized in accordance with this Article shall be
published as laid down by national law in the Member State of thecommitment. Such transfers shall automatically be valid againstpolicy-holders, assured persons and any other persons havingrig htsor obligations arising out of the contracts transferred.
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This provision shall not affect the Member States’ right to givepolicy-holders the opinion of cancellingcontracts within a fixedperiod after a transfer.'
Article 50
Member States shall ensure that decisions taken in respect of an assur-
ance undertakingunder laws, reg ulations and administrative provisionsadopted in accordance with this Directive may be subject to the right toapply to the courts.
Article 51
1. Member States shall adopt the laws, regulations and administrative
provisions necessary for their compliance with this Directive no laterthan 31 December 1993 and bringthem into force no later than 1 July1994. They shall forthwith inform the Commission thereof.
When they adopt such measures, the Member States shall include
references to this Directive or shall make such references when theyeffect official publication. The manner in which such references are tobe made shall be laid down by the Member States.
2. The Member States shall communicate to the Commission the
texts of the main provisions of national law which they adopt in thefield covered by this Directive.
Article 52
This Directive is addressed to the Member States.
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ANNEX I
MATCHING RULES
The currency in which the assurer’s commitments are payable shall be deter-
mined in accordance with the followingrules:
1. Where the cover provided by a contract is expressed in terms of a particular
currency, the assurer’s commitments are considered to be payable in thatcurrency.
2. Member States may authorize undertakings not to cover their technical provi-
sions, includingtheir mathematical provisions, by matchingassets if applica-tion of the above procedures would result in the undertakingbeingoblig ed, inorder to comply with the matchingprinciple, to hold assets in a currencyamountingto not more than 7 % of the assets existingin other currencies.
3. Member States may choose not to require undertakings to apply the matching
principle where commitments are payable in a currency other than thecurrency of one of the Community Member States, if investments in thatcurrency are regulated, if the currency is subject to transfer restrictions or if,for similar reasons, it is not suitable for coveringtechnical provisions.
4. Undertakings are authorized not to hold matching assets to cover an amount
not exceeding20 % of their commitments in a particular currency.
However, total assets in all currencies combined must be at least equal to total
commitments in all currencies combined.
5. Each Member State may provide that, whenever under the precedingproced-
ures a commitment has to be covered by assets expressed in the currency of aMember State, this requirement shall also be considered to be satisfied whenthe assets are expressed in ecus.
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Information about the assurance undertaking Information about the commitment
Information about the assurance undertaking Information about the commitmentANNEX II
INFORMATION FOR POLICY-HOLDERS
The followinginformation, which is to be communicated to the policy-holder before the contract is
concluded (A) or duringthe term of the contract (B), must be provided in a clear and accurate manner,in writing, in an official language of the Member State of the commitment.
However, such information may be in another language if the policy-holder so requests and the law of
the Member State so permits or the policy-holder is free to choose the law applicable.
A.Before concluding the contract
(a) 1. The name of the undertakingand its
legal form
(a) 2. The name of the Member State in
which the head office and, whereappropriate, the agency or branchconcludingthe contract is situated
(a) 3. The address of the head office and,
where appropriate, of the agency orbranch concludingthe contract(a) 4. Definition of each benefit and each
option
(a) 5. Term of the contract(a) 6. Means of terminatingthe contract(a) 7. Means of payment of premiums and
duration of payments
(a) 8. Means of calculation and distribu-
tion of bonuses
(a) 9. Indication of surrender and paid-up
values and the extent to which theyare guaranteed
(a) 10. Information on the premiums for
each benefit, both main benefitsand supplementary benefits, whereappropriate
(a) 11. For unit-linked policies, definition
of the units to which the benefitsare linked
(a) 12. Indication of the nature of the
underlyingassets for unit-linkedpolicies
(a) 13. Arrangements for application of the
cooling-off period
(a) 14. General information on the tax
arrangements applicable to the typeof policy
(a) 15. The arrangements for handling
complaints concerningcontractsby policy-holders, lives assured orbeneficiaries under contractsincluding, where appropriate, theexistence of a complaints body,without prejudice to the right totake legal proceedings
(a) 16. Law applicable to the contract
where the parties do not have afree choice or, where the partiesare free to choose the law applic-able, the law the assurer proposesto choose
B.During the term of the contract
In addition to the policy conditions, both general and special, the policy-holder must receive the
followinginformation throug hout the term of the contract.
(b) 1. Any change in the name of the
undertaking, its legal form or theaddress of its head office and, whereappropriate, of the agency or branchwhich concluded the contract(b) 2. All the information listed in points
(a) (4) to (a) (12) of A in the eventof a change in the policy conditionsor amendment of the law applicableto the contract
(b) 3. Every year, information on the state
of bonuses