19. 9. 74 Official  Journal  of the  European  Communities No C 109/1 
II 
(Preparatory  Acts) 
ECONOMIC  AND  SOCIAL  COMMITTEE 
OPINION  OF  THE  ECONOMIC  AND  SOCIAL  COMMITTEE 
on the proposal  for a first  Council  Directive  on the coordination  of laws,  regulations  and 
administrative  provisions  relating  to the taking-up  and  pursuit  of the business  of direct 
life assurance  and  on the  proposal  for  a Council  Directive  abolishing  restrictions  of 
freedom  of establishment  in the business  of direct  life assurance 
The texts  referred  to the Committee  have  been  published  in the Official  Journal  of the 
European  Communities  No  C 35 of 28 March  1974,  page  9, and  No C 27 of 15 March 
1974,  page  7. 
A. LEGAL  BASIS  FOR  THE  OPINION 
At its meetings  held  on 2 and  31 January  1974,  the  Council  referred  the  above-
mentioned  proposals  for Directives  to the Economic  and  Social  Committee  in accord-
ance  with  Articles  54 and  198  of the  Treaty  establishing  the  European  Economic 
Community. 
The requests  for  Opinions  were  sent  by the  Council  to the  Economic  and  Social 
Committee  on 3 January  and  1 February  1974. 
B. OPINION  OF  THE  ECONOMIC  AND  SOCIAL  COMMITTEE 
The Economic  and  Social  Committee  prepared  its Opinion  on the above  matter  at its 
120th  Plenary  Session,  held  in Brussels  on 29 and  30 May  1974. 
The full  text  of the Opinion  is as follows  : 
THE  ECONOMIC  AND  SOCIAL  COMMITTEE, 
Having  regard  to the requests,  dated  3 January  1974 
and 1 February  1974,  from  the Council  of the Euro-
pean  Communities  for opinions  on the proposal  for 
a first  Council  Directive  on the  coordination  of 
laws,  regulations  and  administrative  provisions 
relating  to the taking-up  and  pursuit  of the business 
of direct  life  assurance,  and  the  proposal  for  a 
Council  Directive  abolishing  restrictions  of freedom 
of establishment  in the business  of direct  life  assur-
ance  ; 
Having  regard  to Articles  54 and  198  of the  EEC 
Treaty  ; Having  regard  to the  Decisions  of the  Bureau  and 
of the  Chairman  of the  Committee  on 29 January 
and 8 February  1974  entrusting  the  Section  for 
Industry,  Commerce,  Crafts  and  Services  with  the 
preparation  of an opinion  and  a report  on this 
matter  ; 
Having  regard  to the  Opinion  delivered  by  the 
Section  for Industry,  Commerce,  Crafts  and  Services 
at its meeting  on 8 May  1974  ; 
Having  regard  to the  report  submitted  by Mr  De 
Bruyn,  the Rapporteur,  and  Mr Peyromaure-Debord-
Broca,  the Co-Rapporteur  ; 
No C 109/2 Official  Journal  of the  European  Communities 19. 9. 74 
Having  regard  to the  discussions  at its  120th 
Plenary  Session  on 29 and  30 May  1974  (meeting 
on 29 May  1974), 
HAS  ADOPTED  THE  FOLLOWING  OPINION  : 
The Economic  and  Social  Committee  approves  the 
proposed  Directives  and  makes  the  following 
comments  : 
1. GENERAL  COMMENTS 
1.1. The  Committee  notes  with  pleasure  that 
following  adoption  by the Council  on 24 July  1973 
of the  two  Directives  on the  taking-up  and  pursuit 
of the business  of direct  insurance  other  than  life  as-
surance,  the  Commission  has  produced  two  new 
draft  directives  on the  taking-up  and  pursuit  of the 
business  of direct  life  assurance.  The  Commission's 
initiative  is consistent  with  the  objectives  of the 
Treaty  of Rome,  in particular  the  section  on the 
right  of establishment.  It meets  the requirements  of 
the General  Programme  for the abolition  of restric-
tions  on freedom  of establishment  which  stipulates 
a two-year  time  lag  between  introduction  of 
freedom  of establishment  in the  field  of insurance 
other  than  life  assurance  and  freedom  of establish-
ment  in the field  of life  assurance.  The  Committee 
notes  that  such  a time-lag  is necessary  as it was 
more  difficult  to solve  the problems  connected  with 
life assurance  than  those  of other  types  of insur-
ance.  This  is because  life  assurance  is dependent  on 
the savings  of the general  public,  manages  funds  on 
behalf  of the  insured  persons  over  a long  period 
and is subject  to strict  control  in the  various 
Member  States. 
1.2. The  Committee  also  notes  that  in this  sector 
the General  Programme  has  made  introduction  of 
freedom  of establishment  conditional  on prior  coor-
dination  in view  of the  diversity  and  inequality  of 
national  regulations,  this  inequality  being  particu-
larly  obvious  as regards  the  conditions  for  taking 
up and  pursuing  life assurance. 
1.3. This  is why  two  separate  Directives  are neces-
sary : 
— one  to abolish  restrictions  on freedom  of estab-
lishment, 
— another  to lay down  the essential  coordination. 1.4. The  Committee  is in general  agreement  with 
the aims  of the  two  draft  Directives  drafted  by the 
Commission.  But two  awkward  problems  arise  : 
— the  first  relates  to specialization  or non-specializ-
ation  of life assurance  undertakings, 
— the  second  relates  to the  financial  guarantees 
required,  that  is to say  the  provisions  on the 
'solvency  margin'. 
1.5. As  regards  the  first  point,  the  Committee 
notes  that  opinions  are  divided  as to whether  life 
assurance  companies  should  be  required  to 
specialize  or whether  firms  should  be allowed  to 
handle  both  non-life  insurance  and  life  assurance. 
The Committee  therefore  feels  that  it should  not 
make  any  substantive  comments  on the compromise 
solution  proposed  by the Commission. 
1.6. As  regards  the  second  point,  there  is some 
doubt  as to whether  it is really  necessary  to follow 
the example  of the  Directives  on 'insurance  other 
than life  assurance'  and  require  a solvency  margin. 
However,  the  Committee  feels  that  it should  not 
question  the  solution  proposed  by the  Commission 
and will  merely  aim  at improving  the Proposed  solu-
tions  in its specific  comments. 
2. SPECIFIC  COMMENTS 
2.1. Proposal  for  a Directive  abolishing  restrictions 
on freedom  of establishment  in the business  of 
direct  life assurance 
2.1.1.  The  Committee  approves  this  draft  direc-
tive, which  is similar  to the  Directive  of 24 July 
1973  on direct  insurance  other  than  life  assurance. 
The Committee  has  no comments  to make  on this 
proposal. 
2.2. Proposal  for  a first  Council  Directive  on the 
coordination  of laws,  regulations  and  adminis-
trative  provisions  relating  to the taking-up  and 
pursuit  of the business  of direct  life assurance 
2.2.1.  The  following  comments  were  made  on the 
articles  of the above  proposal  for a Directive  which 
contains  the  main  provisions  necessary  for  the 
19. 9. 74 Official  Journal  ot the European  Communities No C 109/3 
achievement  of freedom  of establishment  in this 
sector  : 
2.2.2.  . Article  1 
2.2.2.1.  A  number  of the  activities  defined  in the 
proposal  for a Directive  are carried  on by undertak-
ings which  cannot  be  described  as  insurance 
companies  ; the term  'insurance  undertaking'  should 
therefore  be replaced  by 'undertaking'. 
2.2.2.2.  The  Committee  therefore  proposes  that 
the first  paragraph  of Article  1 should  be amended 
to read  : 
'This  Directive  concerns  the taking-up  of the self-
employed  activity  of direct  insurance  carried  on 
by undertakings  established  in a Member  State 
or which  wish  to become  established  there,  and 
the pursuit  thereof  in the  form  of the  activities 
defined  below'. 
2.2.2.3.  The  Committee  also  considers  that  para-
graph  1 (b) ('annuities')  must  be incorporated  in 
paragraph  1 (a) which  defines  life  assurance.  This 
would  eliminate  any  doubt  as to whether  Article  19 
(a) applies  to annuities,  as well  as to life  assurance 
as a whole,  for  the  purpose  of calculation  of the 
solvency  margin  defined  in Article  19. 
2.2.2.4.  Consequently  subparagraphs  (c) and  (d) 
must  become  (b) and  (c). 
2.2.3.  Articles  1 and  2: Management  of group 
pension  funds  (Article  1 (2) (c) and  Article  2 (3)). 
2.2.3.1.  The  Committee  notes  that  it is the 
Commission's  intention  that  the  Directive  should 
apply  directly  to the  above  operations  where  they 
are handled  by  an insurance  undertaking,  while 
other  undertakings  are  to be exempted  from  the 
Directive  pending  further  coordination. 
2.2.3.2.  The  Committee  believes  this  may  well 
distort  competition  between  insurance  undertakings 
and other  undertakings  engaged  in managing  group 
pension  funds. 
2.2.3.3.  The  Committee  requests  that  the  coordi-
nation  referred  to in Article  2 (3) for undertakings 
other  than  insurance  undertakings  should  be 
achieved  within  four  years.  Article  2 (3)  should 
consequently  be worded  as follows  : 
'Subject  to further  coordination,  which  should 
be achieved  within  a period  of 4 years,  opera-
tions...'  (rest  unchanged). 2.2.4.  Article  4 
2.2.4.1.  The  following  words  should  be added  to 
this article  'and  in the  Grand  Duchy  of Luxem-
bourg  the Caisse  d'Epargne  de l'Etat'. 
2.2.5.  Article  8 
2.2.5.1.  The  Committee  stresses  that  the  wording 
of Article  8 1 (b) is not  entirely  accurate  in that 
insurance  undertakings  do not  limit  their  business 
activities  to the activities  referred  to in the proposal 
for a directive  and  to operations  directly  arising 
therefrom,  but  traditionally  also  handle  reinsurance 
acceptances.  The  Committee  requests  the  Commis-
sion to ensure  that  Member  States  have  full  details 
of this  situation. 
2.2.6.  Article  11 
2.2.6.1.  The  rather  complex  formalities  in connec-
tion with  the submission  and  content  of schemes  of 
operations  referred  to in Article  11 seem  unwar-
ranted  in the  case  of a life  assurance  undertaking 
which  has  been  set up following  the  splitting,  in 
accordance  with  Article  12,  of an  undertaking 
handling  both  life  assurances  and  other  types  of 
insurance  into  two  distinct  undertakings,  one 
specializing  in  'life  assurance'  and  the  other 
handling  direct  insurance  other  than  life assurance. 
2.2.6.2.  The  Committee  requests  the  Commission 
to give  the Member  States  instructions  at the appro-
priate  juncture  in order  to ensure  that  formalities 
are simplified  in such  cases. 
"2.2.7.  Article  13 
2.2.7.1.  The  Section  notes  that  the  use  of the 
word  'individualists'  in the  French  version  of 
Article  13  (2)  could  give  the  impression  that 
'separate  management'  might  require  firms  to give 
an itemized  breakdown  of the assets  used  to back  life 
assurance.  This  does  not  seem  to be the  Commis-
sion's  intention. 
2.2.7.2.  Therefore,  to avoid  any  ambiguity,  the 
Committee  proposes  replacing  the word  'individuali-
sees'  in the French  text  by the word  'distinguees'. 
2.2.7.3.  The  Committee  also  notes  that  paragraph 
3 (c) is incomplete,  since  its provisions  apply  only 
to the Situation  of creditors  enforcing  claims  arising 
out of life  assurance  business  in the event  of execu-
tion or of a winding-up.  It does  not  cover  claims 
pertaining  to indemnity  insurance.  This  omission 
may give  rise to misinterpretation. 
No C 109/4 Official  Journal  of the  European  Communities 19. 9. 74 
2.2.7.4.  Consequently,  the  Committee  proposes 
that subparagraph  (c) should  be replaced  by : 
'In the event  of execution  being  levied  at the suit 
of one  or more  individual  creditors,  the  assets 
representing  the  life  portion  and  those  repre-
senting  the  indemnity  portion  shall  be applied 
exclusively  in satisfaction  of creditors  enforcing 
claims  arising  out  of business  in the  corres-
ponding  portion,  and  in  the  event  of  a 
winding-up  the  assets  of each  of these  portions 
shall  be applied  in priority  to all other  claims  in 
satisfaction  of all creditors  of the  corresponding 
portion'. 
2.2.7.5.  Furthermore,  and  in the  same  spirit,  the 
Committee  proposes  that  the  last  sentence  of sub-
paragraph  (b) should  be changed  as follows  : 
'Each  transfer  of assets  from  the  life  portion 
to the  indemnity  portion  and  vice  versa 
must  be approved  a posteriori  by the supervisory 
authority'. 
2.2.8.  Article  18 
2.2.8.1.  The  proposal  for  a Directive  equates  the 
assets  of 'mutual  concerns'  with  their  effective 
initial  funds.  However,  where  the  initial  fund  is 
effectively  increased  that  increase  should  also  be 
considered. 
2.2.8.2.  Consequently  the  Committee  proposes 
amending  the  second  indent  of paragraph  1 to 
read : 
'the paid-up  share  capital,  or, in the  case  of a 
mutual  concern,  the initial  or effective  fund.' 
2.2.8.3.  In  addition  the  Committee  notes  that 
according  to Article  18 (2) profit  reserves  can consti-
tute part  of the  solvency  margin  only  when  they 
appear  in the  balance  sheet.  In some  Member 
States,  for  certain  categories  of  . operations 
mentioned  in Article  1 (2) (c) of the Directive,  insur-
ance  undertakings  can  have  profit  reserves  which, 
by virtue  of the  law  or regulations,  cannot  be 
included  in the balance  sheet,  but must  be given  in 
a separate  special  account;  these  profit  reserves 
provide  the same  guarantees  as regards  solvency  of 
the undertaking  as reserves  which  appear  in the 
balance  sheet. 
2.2.8.4.  The  Committee  therefore  proposes  dele-
tion of the words  'appearing  in the balance  sheet'  in 
Article  18 (2). 
2.2.9.  Article  19 — Introduction 
2.2.9.1.  The  Committee  considers  that  in order  to 
avoid  any  confusion  between  the  real  solvency margin  and  the  minimum  solvency  margin  as 
required  in  accordance  with  the  provisions  of 
Article  19, the introduction  to this  Article  should  be 
changed  to read  : 
'Subject  to the  provisions  of Article  20,  the 
minimum  solvency  margin  shall  be determined 
as shown  below  according  to the  class  of insur-
ance  practised'. 
2.2.9.2.  Besides,  the  word  'minimum'  is 
mentioned  in Article  24 (2). 
2.2.10.  Article  19,  paragraph  (a)  — first  result 
2.2.10.1.  The  Committee  stresses  that  the  way  in 
which  this  first  result  is to be computed  must  be 
linked  to the solution  proposed  in Article  17 (1) of 
the proposal  for  a Directive,  which  states  that  'the 
amount  of technical  reserves,  including  mathemat-
ical reserves,  shall  be determined  according  to the 
rules  fixed  by the State,  or, in the absence  of such 
rules,  according  to the established  practices  in such 
State'. 
2.2.10.2.  Given  that,  pursuant  to Article  17 (1), 
Member  States  may  authorize  insurance  undertak-
ings to establish  mathematical  reserves  net  of rein-
surance  (i.e.  after  deduction  of that  part  of their 
commitments  which  they  have  reinsured),  and 
given  that  it is proposed  in the present  proposal  for 
a Directive  to coordinate  provisions  in respect  of 
solvency  margins  —  which  implies  that  such 
margins  must  be calculated  from  equivalent  mathe-
matical  reserves  in the  various  Member  States, 
the Committee  considers  (fiat.  this first  result  must 
be calculated  in all Member  States  on the  basis  of 
mathematical  reserves  net of reinsurance.  This  is all 
the more  justified  since,  pursuant  to Article  17 (3), 
transfers  for reinsurance  may  be taken  into  consider-
ation  for  the  purpose  of covering  mathematical 
reserves,  since  these  transfers  are  also  taken  into 
account  for  the  purpose  of calculating  the  second 
result  in accordance  with  Article  19 (a),  and  above 
all since  Article  16 of the first  coordinating  Directive 
on insurance  other  than  life  assurance  also  states 
that reinsurance  is to be taken  into  consideration 
when  calculating  the margin. 
2.2.10.3.  The  Committee  therefore  proposes  that 
the first  indent  of Article  19 (a) should  be amended 
to read  : 
'first  result:  4 °/o of the  mathematical  reserves 
net of reinsurance  or retrocessions  relating  to 
direct  business  and  reinsurance  acceptances'. 
2.2.11.  Article  19,  paragraph  (a)  — second  result 
2.2.11.1.  The  Committee  believes  that  to obviate 
any misinterpretation  in the second  indent  of Article 
19. 9. 74 Official  Journal  of the European  Communities No C 109/5 
19 (a) the second  result  must  be amended  to read  : 
'the figure  representing  3 °/o of the capital  at risk 
for which  the  undertaking  is responsible  and 
which  relates  to direct  business  and  reinsurance 
acceptances,  multiplied  by the  ration...'  (rest 
unchanged). sector,  the  supplementary  and  temporary  insurance 
transactions  referred  to in Article  19 (b) represent 
only a small  part  of the  portfolio  of life  assurance 
companies.  The  Committee  therefore  feels  that  in 
the case  of life  assurance  the  'first  portion'  should 
logically  be smaller  than  that  specified  in the Direc-
tive on non-life  insurance. 
2.2.12.  Article  19,  paragraph  (b) 
2.2.12.1.  The  Committee  notes  that  the  method 
prescribed  in Article  19  (b)  for  calculating  the 
solvency  margin  is similar  to that  adopted  in the 
Directive  on the  coordination  of laws,  regulations 
and administrative  provisions  relating  to  the 
taking-up  and  pursuit  of direct  insurance  other  than 
life assurance.  The  Committee  endorses  this  method 
but stresses  that  it should  apply  to all types  of insur-
ance  which  are  similar  to direct  non-life  insurance 
and have  only  a small  mathematical  reserve.  This  is 
already  the  case  with  temporary  insurance  for  a 
period  exceeding  the  5 years  referred  to in Article 
19 (b). 
2.2.12.2.  Moreover,  there  would  be serious  admi-
nistrative  difficulties  in distinguishing  between 
temporary  insurance  for  a period  not  exceeding  5 
years  on  the  one  hand  and  that  for  a period 
exceeding  5 years  on the other. 
2.2.12.3.  Care  must  also  be taken  to ensure  that, 
in order  to prevent  the cost  of this  type  of insurance 
from  being  exorbitant,  the extra  guarantees  required 
do not exceed  what  is technically  essential. 
2.2.12.4.  In  view  of the attitude  of national  super-
visory  authorities,  however,  it appears  to be prefer-
able to seek  a compromise  solution  by confining 
oneself  to temporary  insurance  with  relatively  low 
mathematical  reserves  ; for  this  reason  the 
Committee  proposes  extending  the  solution  set out 
in paragraph  (b) of this  Article  to temporary  insur-
ance  for a period  not exceeding  10 years. 
2.2.12.5.  Consequently  the  first  subparagraph  of 
19 (b) should  be amended  to read  : 
'For assurance  on death,  which  is temporary  or 
for a period  not  exceeding  10 years,  referred  to 
in Class  I. ..' (rest  unchanged). 
2.2.12.6.  Apart  from  this,  the  penultimate  sub-
paragraph  of Article  19 (b) contains,  for the classes 
mentioned,  exactly  the same  sliding-scale  provisions 
as those  in the  'coordination'  Directive  on  the 
taking-up  and  pursuit  of direct  insurance  other  than 
life assurance.  The  Committee  stresses  that  while 
the 'non-life'  Directive  covers  all  transactions 
carried  out  by insurance  companies  in the 'non-life' 2.2.12.7.  Therefore  the penultimate  subparagraph 
of Article  19 (b) s;hould  be amended  to read  : 
'The  amount  so obtained  shall  be divided  into 
two portions,  the first  portion  extending  up to 5 
million  u.a.,  the  second  comprising  the  excess  ; 
18%  and  16 % of these  portions  respectively 
shall  be calculated  and  added  together'. 
2.2.12.8.  The  Committee  stresses  that  the solution 
proposed  in the last  subparagraph  of Article  19 (b) 
to take  account  of transfers  for  reinsurance  has 
serious  disadvantages,  particularly  for  small  busi-
nesses.  The  number  of claims  paid  out  during  a 
financial  year  can  vary  considerably,  and  this  would 
involve  serious  fluctuations  from  one  year  to 
another  in the rate  of reduction  for reinsurance. 
2.2.12.9.  The  Committee  therefore  considers  that 
a more  stable  criterion  should  be chosen  for reinsur-
ance,  that  is to say  a reference  period  longer  than 
one financial  year. 
2.2.12.10.  This  paragraph  should  therefore  be 
amended  to read  as follows  : 
'The  sum  so calculated  shall  be multiplied  by 
the ratio  existing  in respect  of the  last  three 
financial  years  between  the amount  of dawns...' 
(rest unchanged). 
2.2.12.11.  Finally,  the  Committee  notes  that  the 
methods  of calculation  proposed  in Article  19 (b) 
do not  allow  for  the  special  features  of Lloyds 
management,  which  are  such  that  the  solvency 
margin  cannot  be calculated  from  the  volume  of 
premiums  issued.  The  Committee  therefore  feels 
that it is essential  to add  to Article  19 (b) a new 
subparagraph,  as has  already  been  done  in Article 
16 (5) of the  coordinating  Directive  on insurance 
other  than  direct  life assurance. 
2.2.12.12.  Consequently  the  following  subpara-
graph  should  be added  to 19 (b) : 
'In the  case  of Lloyds,  the  calculation  of the 
amount  of the  margin  shall  be made  on the 
No C 109/6 Official  Journal  of the  European  Communities 19. 9. 74 
basis  of net premiums,  which  shall  be multiplied 
by a flat-rate  percentage  fixed  annually  by the 
internal  auditor.  This  flat-rate  percentage  must 
be calculated  on the  basis  of the  most  recent 
statistical  data  on commissions  paid.  The  details 
together  with  the  relevant  calculations  shall  be 
sent to the  authorities  of the  countries  where 
Lloyds  is established'. 
2.2.13.  Article  19 (c) and (d) 
2.2.13.1.  The  Committee  notes  that  the  method 
stipulated  in paragraph  (c)  for  calculating  the 
solvency  margin  refers  — like  that  of paragraph  (a) 
— to the  mathematical  reserves.  The  calculating 
method  in paragraph  (d) refers  to 'capital  managed', 
this being,  in practice,  also  mathematical  reserves. 
2.2.13.2.  Consequently,  the  Committee  considers 
that the  solution  proposed  above  for paragraph  (a) 
should  also  be used  in these  two  instances  in respect 
of the mathematical  reserves  which  are to be taken 
into consideration. 
2.2.14.  Article  20 
2.2.14.1.  The  Committee  notes  that  the  restora-
tion measures  provided  for  in Article  24 (3)  are 
linked  to the  solvency  margin  falling  below  the 
guarantee  fund  as defined  in Article  20.  But  there 
seems  to be no justification  for a firm  with  a parti-
cularly  high  (relative)  guarantee  fund  being 
submitted  to such  restoration  measures  when  its situ-
ation  is due  to it having  a higher  effective  solvency 
margin  than  that  required  under  Article  19.  It 
should  therefore  be specified  in Article  20 (1) that 
the guarantee  fund  is defined  as a function  of the 
minimum  and  not  of the  effective  solvency  margin. 
The Committee  thus  proposes  that  the first  sentence 
of Article  20 (1) should  be changed  to read  : 
'One-third  of the minimum  solvency  margin,  as 
laid down  in  Article  19,  shall  constitute  the 
guarantee  fund'. 
2.2.14.2.  Moreover,  the  draft  Directive  stipulates 
that 50 °/o of the  guarantee  fund  must  consist  of 
items  listed  in  Article  18  (1)  and  (2).  The 
Committee  considers  this  restriction  to be unaccep-
table  since,  by excluding  the items  listed  in Article 
18 (3),  it would  force  assurance  companies  to build 
up additional  amounts  of free  assets  from  funds 
which  would  normally  be set aside  for distribution to the  assured  as their  share  in the  profits.  This 
would  be unfair  since  it would  penalize  persons 
who had  been  assured  for a longer  period  vis-ci-vis 
the younger  generations  of assured  persons. 
2.2.14.3.  This  being  so,  the  Committee  requests 
deletion  of the  second  sentence  of Article  20 (1), 
namely 
'It shall  consist  to the extent  of a least  50 % of 
items  listed  in Article  18 (1) and  (2)'. 
2.2.14.4.  In  addition,  a third  paragraph  should  be 
added  to Article  20, along  the lines  of the  solution 
adopted  in the  Directive  on the  coordination  of 
direct  insurance  other  than  life  assurance.  This  para-
graph  should  make  provision  for  a reduced 
guarantee  fund  for  mutual  associations  and 
companies  of a similar  type.  The  third  paragraph 
should  read  : 
'Each  Member  State  can  reduce  the  minimum 
guarantee  fund  to 450  000 u.a.  for mutual  associ-
ations  and  companies  of the mutual  type'. 
2.2.15.  Article  22 
2.2.15.1.  The  Committee  points  out  that  manda-
tory transfer  may  well  constitute  an obstacle  to the 
freedom  sought  by the Treaty  of Rome  and  that  it 
would  be useful  if the  Member  States  were  to 
reduce  progressively  the  percentage  of these  offers. 
While  it considers  it vital  that  Article  22 (3) should  be 
retained,  it nevertheless  recognizes  that  in the 
immediate  future  Article  22 (1) and  Article  22 (2) 
may give  rise  to serious  implementing  difficulties 
for certain  Member  States.  It considers,  however, 
that the  problems  raised  by Article  22 (1)  and 
Article  22 (2)  must  be definitively  settled  when 
freedom  to provide  life assurance  services  is introdu-
ced. 
2.2.15.2.  It  is therefore  proposed  that  Article  22 
(1) and  (2)  should  be replaced  by the  following 
standstill  clause  : 
'Under  no  circumstances  may  Member  States 
increase  the  scope  of the  obligation  currently 
imposed  on undertakings  to effect  partial  reinsur-
ance,  in respect  of business  covered  by Article  1, 
with  one  or more  of the Agencies  designated  by 
national  rules'. 
2.2.16.  Article  28 
2.2.16.1.  The  Committee  notes  that  under  Article 
17 (3)  a Member  State  can  allow  the  technical 
reserves,  including  mathematical  reserves  of Commu-
nity undertakings  established  within  its territory,  to 
19. 9. 74 Official  Journal  of the European  Communities No C 109/7 
include  claims  against  reinsurances.  The  Committee 
sees no reason  why  this  provision  should  only  apply 
to Community  companies  and  feels  that  it should 
also apply  to agencies  and  branches  of companies 
from  non-member  countries.  This  is the  solution 
which  was  adopted  in the Directive  on the coordina-
tion of direct  insurance  other  than  life assurance. 
2.2.16.2.  The  Committee  therefore  requests  that 
the following  sentence  be added  to the second  para-
graph  of Article  28 : 
'However,  Article  17 (3) shall  be applicable'. 
2.2.17.  Article  30 
2.2.17.1.  The  Committee  notes  that,  subject  to the 
joint  approval  of the  relevant  Member  States,  the 
proposal  for a Directive  allows  undertakings  whose 
head  offices  are outside  the Community  and  which 
operate  in two  or more  countries  of the Community 
to obtain  the  advantages  listed  in subparagraphs 
(a), (b)  and  (c)  of Article  30.  However,  the 
Committee  notes  that  these  advantages  form  an 
indivisible  whole  and  that  there  can  be no question 
of granting  one  and  not  the others.  It would  also  be 
logical  for this  rule  to be applied  in respect  of insur-
ance  other  than  life assurance. 
2.2.17.2. 
that: Consequently,  the  Committee  proposes 
Article  30 (1) should  be amended  to read  : 
'Any  undertaking  which,  having  obtained  an 
authorization  from  one  Member  State,  obtains 
an authorization  from  one  or more  other 
Member  States  to establish  other  agencies  or 
branches  therein  may  apply  for  the following 
set of advantages'  ; — Article  30 (2) should  be amended  to read  : 
'Should  at least  two  of the Member  States  in 
question  approve  the application,  the  competent 
authority.  . .' (the  rest  remaining  unchanged). 
2.2.18.  Article  33 
2.2.18.1.  The  Committee  points  out  that  in 
Belgium  there  are undertakings  called  'Caisses  patro-
nales  de retraite'  (employers'  pension  funds)  which, 
are engaged  in the  operations  consisting  in the 
management  of group  pension  funds  mentioned  in 
Article  1 (2) (c) and  must  therefore  be subject  to the 
provisions  of the  proposed  Directive.  These  under-
takings  are  'non-profit-making  associations',  a legal 
form  not  mentioned  in  Article  8,  and  the 
Committee  thinks  that  such  undertakings  should 
not be compelled  to change  this  form. 
2.2.18.2.  The  Committee  proposes  that  this 
should  be made  clear  in the Directive  by inserting  a 
special  clause  in Article  33 (4).  The  clause  could 
read : 
'Those  undertakings  in Belgium  which  are called 
'Caisses  patronales  de retraite'  and  which  in 
accordance  with  their  object  are engaged  in the 
operations  consisting  in the  management  of 
group  pension  funds  as mentioned  in "Article  1 
(2) (c) may  pursue  such  activities  as non-profit-
making  associations  and  shall  not  be required  to 
adopt  one  of the  legal  forms  allowed  by Article 
8 (1) (a) of this  Directive'. 
Done  at Brussels,  29 May  1974. 
The Chairman 
of the Economic  and  Social  Committee 
Alfons  LAPP  AS 
No C 109/8 Official  Journal  of the European  Communities 19. 9. 74 
ANNEX 
to the Opinion  of the Economic  and  Social  Committee 
The following  amendments,  submitted  in accordance  with  the Economic  and  Social  Committee's 
Rules  of Procedure,  were  rejected  by the Plenary  Session  : 
Insert  the following  comments  before  the comments  on Article  13 (sub-section  2.2.7.)  : 
'Article  12 
The Committee  considers  that  the  problem  of undertakings  which  carry  on simultaneously 
the activities  referred  to in the  Annex  to the  first  Directive  on the  coordination  of 
indemnity  insurance  and  the  activities  listed  in the  Annex  to this  Directive  must  be dealt 
with  under  the  'Transitional  and  other  provisions'  (especially  Article  33).  The  Committee 
therefore  calls  for the deletion  of paragraphs  2 and  3 of Article  12'. 
Result  of voting 
For:  23 
Against:  45 
Abstentions  -.13. 
Sub-section  2.2.7.  (Article  13) 
Replace  the comments  on this  Article  by the following  : 
'The  Committee  calls  for the deletion  of this  Article'. 
Result  of voting 
For : 6 
Against:  53 
Abstentions  : 18. 
After  subsection  2.2.18.2. 
Add the following  after  subsection  2.2.18.2.  : 
'2.2.18.3. 
The Committee  further  asks  that  paragraph  5 be amended  to read  : 
Undertakings  which,  contrary  to Article  12, carry  on simultaneously  the  activities  referred 
to in the  Annex  to the  first  Directive  on the  coordination  of indemnity  insurance  and  the 
activities  listed  dn the  Annex  to this  Directive  shall  have  12 years  from  the  date  of 
notification  of this  Directive  in which  to comply  with  Article  12.  Such  undertakings  may 
only  extend  their  activities,  within  the  meaning  of Article  10,  on  condition  that  in 
the countries  in which  observance  of the  principle  contained  iin Article  12 is at present 
compulsory  they  limit  such  activities  to one  of the  branches  of business  mentioned  in 
the preceding  sentence.' 
Reasons 
In the section  of its Explanatory  Memorandum  concerning  Articles  12 and  13,  the Commission 
states  that  'Specialization  is considered  to offer  the  best  protection  to life  policyholders  by 
ensuring  that  the  assets  of the  life  assurer  and  those  of the  indemnity  insurer  are  legally 
separate  and  thus  preventing  life  policyholders  from  suffering  as a result  of losses  iin 
indemnity  business'.  The  provisions  of Articles  12 and  13 are  at variance  with  this  correct 
observation,  since  they  would  permit  the  simultaneous  practice  of the  life  assurance  and  the 
indemnity  insurance  business  by one  and  the  same  undertaking  to continue  indefinitely.  They 
would  also  permit  the  extension  of this  simultaneous  practice  of the  life  assurance  and  the 
indemnity  insurance  business  to the  countries  in which  life  policyholders  have  hitherto  been 
19. 9. 74 Official  Journal  of the European  Communities No C 109/9 
protected  by the  principle  of the  separation  of the  two  branches,  a principle  the  wisdom 
of which  the  Commission  has  recognized.  The  special  nature  of life  assurance  as a means 
which  broad  sections  of the  population  use  to save  and  to obtain  security  for old age  and  for 
surviving  dependants  makes  it imperative  that  maximum  protection  be achieved  for  life 
policyholders  everywhere. 
Result  of voting 
For:  8 
Against:  50 
Abstentions:  21. 
OPINION  OF  THE  ECONOMIC  AND  SOCIAL  COMMITTEE 
on the  proposal  for  a fifth  Directive  to coordinate  the  safeguards  which,  for  the 
protection  of the  interests  of members  and  others,  are required  by Member  States  of 
companies  within  the meaning  of the second  paragraph  of Article  58 of the Treaty,  as 
regards  the structure  of 'societes  anonymes'  and  the  powers  and  obligations  of their 
organs 
The text  referred  to the Committee  has  been  published  in the Official  Journal  of the 
European  Communities  No  C 131  of 13 December  1972,  page  49. 
A. LEGAL  BASIS  FOR  THE  OPINION 
At its 212th  meeting,  held  on 6 November  1972,  the  Council  referred  the  above-
mentioned  proposal  for a Directive  to the Economic  and  Social  Committee  in accordance 
with  Article  54 (2) of the Treaty  establishing  the European  Economic  Community. 
The request  for  an Opinion  was  sent  by the  Council  to the  Economic  and  Social 
Committee  on 8 November  1972. 
B. OPINION  OF  THE  ECONOMIC  AND  SOCIAL  COMMITTEE 
The Economic  and  Social  Committee  prepared  its Opinion  on the  above  matter  at 
its 120th  Plenary  Session,  held  in Brussels  on 29 and 30 May  1974. 
The full  text  of the Opinion  is as follows  : 
THE  ECONOMIC  AND  SOCIAL  COMMITTEE, 
Having  regard  to the request  by the Council  of the 
European  Communities  dated  8 November  1972  for 
an opinion  on the  proposal  for  a fifth  Directive  to 
coordinate  the safeguards  which,  for the protection 
of the interests  of members  and  others,  are required 
by Member  States  of companies  within  the meaning 
of the second  paragraph  of Article  58 of the Treaty, 
as regards  the  structure  of the  societes  anonymes 
and the powers  and  obligations  of their  organs  ; Having  regard  to Article  54 (3) (g) of the  Treaty 
establishing  the European  Economic  Community  ; 
Having  regard  to the Decisions  of the Bureau  of the 
Economic  and  Social  Committee  on 28 November 
1972  and  25 January  1973  instructing  the  Section 
for Economic  Questions  and  subsequently  the 
Section  for Industry,  Commerce,  Crafts  and  Services 
to prepare  an Opinion  ; 
Having  regard  to the  Opinion  delivered  by  the 
Section  for Industry,  Commerce,  Crafts  and  Services 
on 3 April  1974  ;