ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(75)468
Vol.1975/0177

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COMMISSION OBTHB1UXOPBAN CQMMUMÏ1ES
COM(75)468 final
Brussels ,15September 1975
PROPOSAL FOR ADIRECTIVE AMENDING THE COUNCIL DIRECTIVE
of24July 1973
oncoordination oflaws ,regulations and
administrative provisions concerning the
taking-up and pursuit ofactivities in
direct insurance other than life assurance
(submitted totheCouncil bytheCommission )
COM(75 )468final

XV/166/75-E
Orig»P
COMMISSION OPTHEEUROPEANCOMMUNITIES
ProposalforanamendmenttotheCouncilDirectiveof24July1973
onthecoordination oflaws,regulations andadministrative provisions
relatingtothetalcingupandpursuitofthebusinessofdirect
insuranceotherthanlifeassurance(l)
(forwardedtotheCouncilbytheCommission)
EXPLANATORY MEMORANDUM
TheunitofaccountiareferredtoonseveraloccasionsintheDirectiveof
24July1973:firstandforemost,forthedetermination oftheabsolute
minimumguaranteefundthatundertakings mustestablish(Article17(2)(a))
butalsoforthedetermination ofthecontribution incomelevelwhichhas
tobereachedbeforecertainmutualassociations cancomewithinthescope
ofapplicationoftheDirective(Article3(l))andtospecifycertain
thresholdsrelatingtothecalculationofthesolvencymargin(Article16(3)).
_____ -A
(l)TheDirectiveof24July1973waspublishedinOJNoL228,
16August1973»

Article5(a)ofthatDirectivelaysdownthat"'unitofaccount'meansthat
unitwhichisdefinedinArticle4'oftheStatuteoftheEuropeaninvestment
Bank",thatistosayitisrelatedtogold,theunitofaccount "being
definedashavingthevalueof0,88867088grammesoffinegold.
Theuseofthegoldparitymaygiverisetoappreciabledifferences "between
countries,particularly asregardstheconstitution oftheabsoluteminimum
guaranteefund.Withthisparity,oneu.a,isworthIM3.66andLit625.
Ifthe_marketrateistakenintoaccountvrhentheEuropean.unitof.account,
whichisreferredtointhisproposal,isused,theeffectiveguarantee
requiredinGermanywould,asaresult,beaboutLit978»asopposedto
Lit625inItaly,Conversely,therequiredguaranteeofLit625wouldbe
equivalenttoarealguaranteeofM2.34,as,opposedtoM3-66inGermany#
AEuropeanunitof.account(EUA)hasrecentlybeendevised,basedona.
"basket"oftheMemberStates'currencies,whoseconversionratesagainst
theEUAareavailableandsirepublishedeverydayintheOfficialJournal
of,theEuropeanCommunities,Forinstance,comparedwiththefixed,con--
versionrateforthegold-parityu.a,,theseconversionrates,which
automatically followmarketrates,werethefollowingon16June1975
(rounded ,figures):
IBfrs/Lfrsmpi
. 1PoundSt !
IrishPoundHer•FFj
IILit
!_
1gold-parityu.a,»503.663.62
10,417.55.55625
1EUA(basket)-
(16,6,1975)45.453.05I
[3.130.577.055.21815

-3- X17166/75-E
TheEUAisbeinggraduallyintroducedatCommunitylevel,
(a)Thus,on21April1975»"theCouncildecidedthatitwouldbeused
toexpresstheamountsofaidreferredtoinArticle42oftheACP-
EECLomeConvention (l),
(b)AprocedureunderArticle236oftheEECTreatyhasalsobeeninitiated
toamendArticle4oftheStatuteoftheEI3,whichestablishesagold
parityfortheunitofaccount,
Thepurposeoftheamendmentistoreplacethisdefinitionbyamore
flexibleformulaconferringontheBank'sboardsthepowertodefine
theunitofaccountandtheconversion methods.
Underadecisionof18March1975takenbytheBoardofGovernorsof
theEIB,theEUAisnowusedbytheBankforitsaccountingftporations.
Thefinancialguaranteesrequiredofinsuranceundertakings areexpressed
inu,a,intheCommunitydirectivesconcernedbutTrustobviouslybeprovided
inthecountryinquestioninthenationalcurrencyofthatcountry.Use
oftheEUAfordeterminingtheconversionratsforthatcurrencyagainst
theu.a.istheonlymeansofenablingundertakings inthedifferent
MemberStatestocompeteonafootingofequality,sincethissystemis
basedontherealvalueofeachcurrencyatmarketrates:foroneu.a,,
aninsuranceundertakingwillhavetoprovideguaranteesofDM3.05
Lit815inGermanyandItalyrespectively ,thesebeingfiguresofequal
valueonthesamereferencedate.
Thedirectiveonthecoordination ofindemnityinsurancemustbeamended
accordingly,andthisisanurgentmattersincethedeadlineforthe
applicationofthisdirectivebytheundertakings concernedis31January
1976(Article35).
./•
(1)OJNoL104,24Aprii1975,P.35.

-4-ν · - ΧνΑβ6 /75-3
THECOUNCIL OFTHEEUROPEAN COMIUNI TIES ,
Having regard totheTreaty establishing theEuropean Economic
Community ,and'inparticular Article 57(2 )'"thereof ;
Having regard totheproposal from theCommission ;
Having regard totheOpinion oftheEuropean Parliament ;
Having regard totheOpinion oftheEconomic andSocial Committee ;
Whereas Council Directive No73/239/EECof24July 1973 (1),aimed
atfacilitating the talcing upofthebusiness ofdirect insurance
other than life assurance,' has eliminated certain divergencies
which exist between national legislations ;whereas inorder to
achieve this objective ,and atthesame time toensure adequate
protection forinsured andthird parties inall theMember States ,
ithascoordinated theprovisions dealing with ,thefinancial
guarantees required ofinsurance undertakings ;
Whereas ,pursuant to -that Directive ,theguarantee fund which
each Member State requires ofeach insurance undertaking with a
head office inits territory may not beless than certain amounts
which areexpressed intheDirective inunits ofaccount ;
Whereas the unit ofaccount isalso referred totherein for
determining theamount ofthecontribution revenus below which
theDirective does notapply tocertain mutual associations ;
Whereas forthepurposes -ofthesaid Directive "unit ofaccount "
means that unit which isdefined inArticle 4ofthe Statute of
theEuropean Investment Bank ;whereas theconvention ofsome of
therequirements intheDirective into national currencies onthe
basis ofthis definition would lead todistortions ofcompetition
between undertakings which have head offices indifferent Member
States .
(1)OJNoL228 ,16August 1973 ,p.3.

-5- XV/166/75-E
Whereas byitsDecision of21April 1975 (1)theCouncil defined
aEuropean unit ofaccount asrepresenting theaverage of-any
changes inthevalue ofthe currencies oftheMember States of
theCommunity ;whereas theconversion rate foreach currency
against this unit ofaccount isfixed automatically byreference
toquotations ontheexchanges ;whereas theuse ofthis European
unit ofaccount places insurance undertakings onthesame
competitive footing ;
Whereas Article 4oftheProtocol onthe Statute oftheEuropean
Investment Bank isundergoing revision andwhereas ,inpursuance
oftheDecision of18March 1975 ofthe Board ofGovernors ofthe
EIB ,theBank uses theunit ofaccount defined bytheCouncil
Decision of21April 1975 ;
Whereas thevalue oftheEuropean unit ofaccount ineach ofthe
Member States' currencies isfixed daily andwhereas areference
time must also befixed forusewhen applying theDirective ;
HAS ADOPTED THIS DIRECTIVE ;
Article 1
Article 5(a)ofDirective No73/239/EECshall bereplaced bythe
following ;
"'Unit ofaccount' means theEuropean unit ofaccount (EUA )as
defined byCouncil Decision No75/250/EECof21April 1975 .
Whenever reference ismade inthis Directive tothe unit of
account ,theexchange value innational currency tobeadopted
shall bethat ofthelast working day oftheyear ".
(1)OJNoL104 ,24April 1975 ,p.35

-6- xv/l66/75-E
:■> Article2 ;
ThisDirectiveisaddressedtotheMemberStates.
* '■
•' * DoneatBrussels,
FortheCouncil
:o . ThePresident

XV/164/75-E
Orig.F
Changesinthedefinitionoftheiihit~of'account "irtthe"proposal
foraDirectiveonthecoordination oflifeassuranceandinthe
Directiveonthecoordination ofindemnityinsurance
•--UseoftheEuropeanunit,ofaccount
Atitsmeetingon28and29May1975»theCouncilWorkingParty'onEconomic
Questions(Establishment andServices)askedtheCommissiontoproduce
S
forit.amemorandumontheUnitofAccountusedintheproposalfora,
Directiveonthecoordination oflifeassurance(l)andintheDirective '
onthecoordinationofindemnityinsurance(2)andonconversionbetween
thisunitandthenationalcurrencies.
InresponsetothisrequesttheCommissionisableto'makethefollotfing
remarksandproposals,
!•Definitionoftheunitofaccount
1.Whereastheu.a.waspreviouslydefinedbyreferencetogold(0.88867O88
grammesoffinegold),theEuropeanUnitofAccount(SUA),isbasedon
a"basket"ofMemberStates*currencies,forwhichtherateofconversion
intotheEUAisavailableandi3publisheddailyintheOfficialJournal
oftheEuropeanCommunities# Asanillustration on16Junel975 »this
conversionrate,whichautomatically followsmarketprices,workedout
asfollowsinrelationtothefixedconversionrateofthegoldparity
u.a,(roundfigures)*' -'.'.
-A
(1)OJIToC35/9,28ïferch1974»
(2)OJTToL228/3,16August1973.

•- -2- xv/l64/75-E ■
η
Bfrs/Lfrs |ffii ;n.Pound St ]Dkr •
Irish Pound '■ .ΡΡ Lit
1sold parity u.a *=50 •3,66 !3,62
; j0,41 7,5 5,55625
1EUA (basket )=
ν' -..· ·.ν ··.«■· .'
(16June 1975 )
.45,45 ·,3,05 .3,.13
I
1I11 111 il . il«11 1111 1 1p.. –__-_ | , , ,
0,57 .J7,05
i-5,21 !815 |
!
2.SheEUA isbeing introduced atCommunity level . • .. "
(a)Thus ,on21April 1975 »theCouncil decided that theEUAwould beused
toexpress theamounts of ..aidmentioned inArticle 42ofthe ACP-EEC
Lome Convention (l)«
(b)Aprocedure hasalso been initiated toamend theStatute oftheEuropean
Investment Bank ,pursuant toArticle 236oftheEECTreaty .
Thepresent version ofArticle 4(1)oftheStatute states that "the
value oftheunit ofaccount shall ...be0.888 .67O88grannies of -fin© ,gold",
Shepurpose ofthe -amendment isinfact todelete this definition from
Article 4oftheProtocol oftheStatute oftheEuropean Investment
Bank andtoreplace itbyamore flexible formula giving theboards ofthe Bank
,itself authority todefine theunit ofaccount andtheconversion methods . '
Under adecision of18March 1975 taken bytheBoard ofGovernors ofthe
EI3,thdEUAisalreacly being usedbytheBank forits .aocoimting
operations .
II*Useoftheu.a .forincorporating intheMember States *le/dslation the
provisions oftheinsurance coordination -directives
1.Theu.a.isused inseveral places inthese directives ,namely *–––– ' ■ >/• •
(1)OJIToL104,24April 1975 ,P.35.

-3- XV/l64/75-E
6
Todeterminethesubscription orcontribution inoonelimitswhich,have-to
lif ■ ■fbereachedbeforecertainmutualassociations arecaughtby-thedirective
(.Article3(l),thirdindent,intheindemnityinsurancedirectiveand
Article3(2),secondindent,inthelifeassurancedirective),tofixthe
limitfortheamountofbenefitsintheeventofdeathwhichhastobe
reachedbeforecertaininstitutionsarecaughtbythedirective(.Article
3(l)ofthelifeassurancedirective)toshowcertainstagesinthecal­
culationofthesolvencymargin •(Article16(3),firstandsecond"results"
intheindemnityinsurancedirectiveandArticle19(b)inthelifeassurance
directive)andtodeterminetheabsoluteminimumguaranteefundwhichunder­
takingsmustconstitute(Article17(2)(a)intheindemnityinsurance
directiveandArticle20(2)(a)inthelifeassurancedirective),
2,Asanexample,thefinancialguaranteesrequiredfrominsuranceundertakings ,
giveninu.a,intheCommunitydirectives,mustbeprovided,inthecountry
concerned,in-thenationalcurrencyofthatcountry.Theuse'oftheEUA
for'determiningtheconversionrateforthiscurrencyintermsoftheu.a,
istheonlymeansofensuringthattheundertakingsofthevariousMember
States ,completeonafootingofequality.
Onthebasisofthefiguresgivenabove,theuseofthegoldparityu,a,
wouldresultinappreciabledifferences whichoneexamplewillbesufficient
toillustrate.Iftheconversionofoneu.a,intoMwasfixedat3*66and
theconversionintolirewasfixedat625,theactualguaranteerequired
inGermanyonthebasisofthemarketratewouldinfactbeapproximately
Lit973(compared,therefore,withLit625inItaly),Conversely,the
requirementforLit625wouldbeequivalenttoanactualguaranteeof
EM2,34(comparedwithM3*66)»
Ontheotherhandtheconversionoftheu.a,intonationalcurrencies
usingtheEUAsystemdoesawaywiththisdisadvantage sincethissystem,
bydefinition,isbasedontherealvalueofeachcurrencyatthemarket
rates:foroneu.a,,theinsuranceundertakingxri.llhavetoprovideres­
pectivelyaguaranteeofDM3»05inGermanyandLit815inItaly,these
amountsareofequalvalueonthesamereferencedate.

xv/l64/75-E
Thele^alconsequencestobedrawnfrom-thismustbeexaminedseparately,
dependingonwhethertheyconcernthelife-assurance directive,whichis
nou"beingprepared,"ortheindemnityinsurancedirective,whichMember .
Stateserenowunderanobligationtoincorporateintotheirnational'
legislation.
(a)Asfarasthelifeassurancedirectiveisconcerned,itisproposed
•..thatArticle5(a)bedeletedandreplacedbythefollowing:
"Unitofaccount"raeanstheEuropeanunitofaccount(SUA)asdefined
,inCouncilDecision75/25Q/EECof21April1975*
/WhereverreferenceismadeinthisDirectivetotheunitofaccount,.
thecorresponding amountinnationalcurrencytobereferredtoshall
bethatofthelastworkingdayoftheyear"*
(b)Asfortheindemnityinsurancedirective,Article.5refersexpressly
"totheunitofaccountdefinedinArticle4oftheStatuteofthe
,European ,Investment Bank,Thisconversionmethodmustnotnowbeused:
-forthereasonsstatedunder(l)above, '
-becausetheapplicationofadifferentsystemforthetwodirectives
....;wouldnotbejustified,.
-sincetheEIBitselfhasalreadyceasedusingit.
I?roathelegalpointofviewthemostappropriate methodistoamend
thedirectiveandtheCommissionisatpresentpreparingadraft
•proposal -withthisendinview.