Amended proposal for a European Parliament and Council Directive on the supplementary supervision of insurance undertakings in an insurance group
Date: 1998-01-28
Institutions: European Commission
Subjects: company law, financial control, financial solvency, group of companies, insurance company

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 28.01.1998 
COM(1998) 38 final 

95/ 0245 (COD) 

Amended proposal for a 

EUROPEAN PARLIAMENT AND COUNCIL DIRECTIVE 

ON THE SUPPLEMENTARY SUPERVISION 

OF INSURANCE UNDERTAKINGS IN AN INSURANCE GROUP 

(presented by the Commission pursuant to Article  189 a (2) 
of the EC-Treaty) 

EXPLANATORY  MEMORANDUM 

INTRODUCTION 

1.  On  4  October  1995  the  Commission  adopted  a  Proposal  for  a  Directive  on  the 
supplementary  supervision  of  insurance  undertakings  in  an  insurance  group1.  The 
proposal  was submitted  to Parliament and Council  by letter on 20 October  1995. 

2.  At its 334th plenary  session on 27 March  1996, the Economic and Social  Committee 
adopted a favourable  opinion2 on the Proposal for a Directive and suggested  certain 
amendments. 

3.  The  Parliament  adopted  a  legislative  resolution  embodying  its  opinion3  on  the 
Commission's  Proposal  for  a  Directive  at  its  plenary  session  on  23  October  1997. 
The  Parliament's  opinion  includes  24  amendments.  A  large  number  of  these 
amendments,  which  will  contribute  to  clarify  and  improve  the  Proposal,  were 
accepted  by the Commission,  some totally, others  in part, either  in accordance  with 
their spirit or with some adaptation of their text. 

4. 

The  amended  proposal  has  been  drafted  to  take  account  of  the  opinions  of  both 
institutions. 

COMMKNTS ON THE AMENDMENTS  INTRODUCED  INTO THE  PROPOSAL 

5.  Article  1  (b) [new] 

A definition  of 'third country insurance undertaking' has been introduced  in the text 
in  order  to  be  able  to  incorporate  Parliament's  Amendment  N° 7,  relating  to  the 
definition  of'mixed  activity  insurance holding company'. This amendment refers to 
third  country  insurance  undertakings,  a  term  which  was  not  defined  in  the  initial 
Proposal, although  it  was  implicitly  referred  to  in  Article  9(2). The  definition  will 
also contribute to a clearer understanding of Annex I. 

6.  Article  1  (d) and (e) [formerly,  Article  1(c) and (d)] 

A reference  to the whole of Article  1  of Directive  83/349/RKC4 (the initial  Proposal 
only  referred  to  paragraph  1)  has  been  introduced  in  the  definitions  of  'parent 
undertaking'  and  'subsidiary'  to  take  partial  account  of  Parliaments'  Amendment 
Nos  1 and  2.  This  change  will  permit  the  inclusion  in  the  definition  of  cases  of 
in  Article  1(2)  of  Directive 
effective  dominant 
83/349/EEC.  However,  since  the  application  of  Article  1(2)  depends  on  Member 
States'  discretion,  the  last  sentence  of  the  definitions  contained  in  the  initial 

influence  as  provided  for 

1  OJN°C341,  Î9.12.1995, p. 16. 

2  OJN°C  174,  17.06.1996, p. 16. 

3  A4-0295/97.  Minutes  of the plenary  session  of 23.10.1997  (PE 262.699). 

4 

Seventh  Company  Law  Directive:  OJ N° 1-193,  18.07.1983, p. 1. 

1 

Proposal  has  been  maintained  in  order  to  permit  the  competent  authorities  to  assess 
where  a  dominant 
is  exercised.  This  assessment  by  the  competent 
authorities  is considered  necessary  so that  they  can  properly  perform  their  prudential 
duties. 

influence 

7.  Article  I (0  |formerly.  Article  l(e)| 

lo  Article  17,  lirsl  sentence,  of  Directive  7X/660/f l',Cs  has  been 
A  reference 
introduced  into  the  definition  of  a  "participation"  in  order  to  take  partial  account  of 
Amendment  N" 3 adopted  by  the  Parliament.  In  this  way  the  qualitative  criterion  of 
""durable link" provided  for  in this  Article  is rellected  in the definition.  Nevertheless, 
the  automatic  criterion  of  the  20%  threshold  has  been  kept  in  the  text.  Legal 
certainty  is  required  on  such  an  important  element  to  determine  the  scope  of 
application  of the  Directive. 

8.  Article  1 (j)  [formerly,  Article  l(i)] 

In  accordance  with  Amendment  N°  7  as  proposed  by  Parliament,  the  definition  of 
'mixed  activity  insurance  holding  company'  has  been  clarified  by  specifically 
excluding  from  its  scope  "third  country  insurance  undertakings'  and  "reinsurance 
undertakings". 

9.  Article  6 

As  suggested  by  the  Parliament  (Amendment  N"  10) changes  have  been  introduced 
I  of  this  Article  in  order  to  ensure  that  direct  access  to  the 
into  paragraph 
information  concerning  an  undertaking  of  the  group  is  only  granted  when  such 
information 
to 
supplementary  supervision.  Minor  drafting  changes  have  also  been  made  in  this 
paragraph  to avoid  unnecessary  repetition. 

insurance  undertaking  subject 

is  not  communicated  by 

the 

A  reference  to  paragraph  1 has  been  introduced  into  paragraph  3  of  this  Article  to 
correct an omission  in the initial  Proposal. 

10.  Article  9(1) 

The text  has been  improved  to take account  of Parliament's  Amendment  N°  11. 

11.  Article  II 

In  paragraph  1 of  this  Article,  the  date  of  implementation  of  the  Directive  has  been 
revised  to  lake  account  of  the  expected  timetable.  A  new  paragraph  2  has  been 
introduced  in  order  lo  specify  the  lirsl  financial  year  for  which  the  supplementary 
supervision  provided  for  in the  Directive  should  apply. 

As  requested  by  Parliament  (Amendment  N°  12)  a  new  paragraph  6  has  been 
included  whereby  the Commission  shall  submit  a report  to the  Insurance  Committee 
on  the  implementation  of  the  Directive  and,  where  appropriate,  on  any  need  for 

5  Fourth Company  Law Directive: OJ N° L 222,  14.08.1978, p.  11. 

2 

further  harmonization  in this area. The deadline  for  the preparation  of this report  is 
live  years.  After  consultation  with  the  national  experts,  this  deadline  has  been 
considered  more  appropriate  in  order  properly  to  assess  the  functioning  of  the 
supervisory  mechanism  provided  for in the Directive. 

12.  Annex  I, section  l.A 

References  lo  the  First  Insurance  Directives  have  been  introduced  in  order  to  take 
account  of  Amendment  N°  13  by  Parliament.  References  to  the  Third  Insurance 
Directives,  also  requested  by  Parliament,  have  not  been  included  since,  in 
accordance  with  the  usual  rules  for  drafting  legal  instruments  in the  Community,  a 
reference  to  the  original  Directive  is  sufficient  where  a  reference  to  the  amending 
Directive is already contained in the recital or in other parts of the text. 

13.  Annex I, section  l.C [formerly,  second part of section  l.B] 

Changes  to  this  section  have  been  made  in  order  to  take  partial  account  of 
Amendment  N°  14 by Parliament, and have been incorporated  in a separate  section, 
under "C".  Elements  that  were totally  excluded  from  the  calculation  in  accordance 
with the initial  Proposal are now accepted with no restriction where they concern the 
participating  insurance  undertaking  at  the  level  of  which  the  calculation  of  the 
adjusted  solvency  situation  is being performed.  They  are also accepted,  where they 
concern  related  insurance  undertakings,  insofar  as  they  are  eligible  to  cover  the 
solvency  margin  requirement  of  that  related  undertaking.  In  addition, 
the 
admissibility  of  these  elements  must  be  consistent  with  the  elimination  of  double 
gearing  of  capital:  a  sentence  making  reference  to  section  B  has  therefore  been 
introduced  at the beginning of the new section C. 

Other  elements  whose  inclusion  was  requested  by  the  Parliament  have  not  been 
mentioned  in  this  section,  since  either  they  are  already  included  in  the  general 
references  contained  in section LA of Annex  I, or they are not admissible under the 
insurance directives for the cover of the solvency margin requirement. 

14.  Annex I, section  l.D [formerly, section  l.C] 

The  wording  of  this  section  has  been  modified  as  requested  by  Parliament 
(Amendment  N°  15). The  definition  of  the  'proportional  share'  (a  footnote  in  the 
initial  Proposal)  has  been  inserted  in  the  main  text.  In  order  to  clarify  the  initial 
Proposal,  explicit  references  have  been  made  to  the  different  calculation  methods 
laid down  in Annex I. 

15.  Annex  I, section  l.K [formerly, section  l.D| 

A reference  to the  Insurance  Accounts  Directive  (Directive  91/674/EEC6) has been 
introduced  in  order  to  take  into  account  Amendment  N° 16  as  requested  by 
Parliament. 

OJN°L  374, 31.12.91, p. 7. 

16.  Annex  I, section 2.1 

The  wording  of  the  last  paragraph  of  this  section  has  been  modified  as  also 
requested  by Parliament  (Amendment N°  17). The waiver provided  for  in the initial 
Proposal  where  participations  are held  within  one  Member  State has been  extended 
to  the  case  where  the  participating  undertaking  of  the  insurance  undertaking  is 
located  in  another  Member  Stale.  However,  the  use  of  the  waiver  in  cross-border 
situations  has  been  made  subject  to  the  condition  that  the  competent  authorities 
concerned  have  reached  an  agreement,  in  order  to  ensure  that  supervision  is 
effective.  Drafting  changes  have  also  been  made  with  a  view  to  facilitating  the 
understanding of this section. 

17.  Annex  1, section 2.3 

As  requested  by  Parliament  (Amendment  Nos  18  and  19),  funds  of  an  insurance 
holding  company  arising  from  outside  the  group  have  been  recognised.  In  order  to 
avoid  that  any  kind  of debt  held  by an  insurance  holding  company  is  automatically 
considered as equivalent to own funds,  it has been provided that the debt has to  fulfil 
the  same  conditions  as  in  the  First  Insurance  Directives  (as  amended  by  the  Third 
Insurance  Directives)  concerning  subordinated  loan  capital,  cumulative  preferential 
shares, other securities with no specified  maturity date and other instruments. 

18.  Annex I, section 3 

Following  Amendment  N° 27  requested  by  Parliament,  the  exact  treatment  of 
related  third  country  insurance  undertakings,  which  was  implicit  in  Annex  I of  the 
initial  Proposal,  has  been  specified.  In  principle,  the  EU  solvency  margin  rules, 
which  apply  to  the  participating  insurance  undertaking,  should  also  be  used  in 
relation  to  related  insurance  undertakings  in  order  to  assess  the  adjusted  solvency 
situation  of  that  participating  undertaking.  However,  where  a  related  insurance 
undertaking  is  situated  in  a  third  country  in  which  a  solvency  margin  requirement 
comparable  to  that  of  the  HU  is  enforced,  that  requirement  may  be  recognised  in 
performing  the calculation. 

19.  Annex I, section 4 

This section has been deleted in accordance with Amendment N° 21 of Parliament. 

20.  Annex II, sections 2.1 and 2.2 

Changes have been made to these sections in order to take into account  Amendment 
Nos 23 and 24 as requested  by Parliament. The same comments as for  section 2.3 of 
Annex I (paragraph  17 of this Explanatory Memorandum) apply. 

Amended  Proposal  for a  European  Parliament  and  Council  Directive  on  the  supplementary 
supervision  of  insurance  undertakings  in an  insurance  group 

INITIAL  PROPOSAL 

AMUNDttl)  PROPOSAL 

THE  EUROPEAN  PARLIAMENT  AND  THE  THE  EUROPEAN  PARLIAMENT  AND  THE 
COUNCIL  OF THE  EUROPEAN  UNION, 

COUNCIL  OF THE  EUROPEAN  UNION, 

in 

and 

regard 

particular 

Having  regard  to  the  Treaty  establishing  the  UNCHANGED 
European  Community, 
Article  57 (2)  thereof, 
Having 
Commission, 
Having  regard  to  the  opinion  of  the  Economic 
and  Social  Committee, 
Acting  in accordance  with  the  procedure  referred 
to  in Article  1 89b of the  Treaty, 

the  proposal 

from 

the 

to 

UNCHANGED 

and 

1973  on 

the  coordination  of 

Whereas  Council  Directive  73/239/EEC  of  24 
July 
laws, 
provisions 
regulations 
administrative 
to  the  taking-up  and  pursuit  of  the 
relating 
business  of  direct 
life 
insurance  other 
assurance(1),  as 
last  amended  by  European 
Parliament  and  Council  Directive  95/26/EC(2) 
and  Council  Directive  79/267/EEC  of  5  March 
1979  on  the  coordination  of  laws,  regulations 
and  administrative  provisions  relating  to  the 
taking-up  and  pursuit  of  the  business  of  direct 
life  a s s u r a n c e,  as  last  amended  by  Directive 
95/26/EC 
to 
possess  a solvency  margin; 

insurance  undertakings 

require 

than 

of 

and 

and 

laws, 

assurance 

regulations 

regulations 

Whereas,  as  a  result  of  Council  Directive  UNCHANGED 
92/49/EEC  of  IK June  1992  (in  the  coordination 
of 
administrative 
provisions  relating  to direct  insurance  other  than 
amending  Directives 
life 
73/239/EEC  and  88/357/EEC 
(third  non-life 
assurance  Directive)'4',  and  Council  Directive 
the 
92/96/EEC  of  10  November  1992  on 
coordination 
and 
laws, 
administrative  provisions  relating  to  direct  life 
assurance  and  amending  Directives  79/267/EEC 
and 
assurance 
Directive)(D), the  taking-up  and  the  pursuit  of  the 
business  of  insurance  is  subject  to  the  granting 
of  a single authorization  issued  by the  competent 
authorities  of  the  Member  State  in  which  an 
its  head  office; 
insurance  undertaking  has 
an 
allows 
such 
whereas 
undertaking  to  carry  on  business  throughout  the 
Community,  under  the  right  of  establishment  or 
the  freedom 
to  provide  services;  whereas  the 
competent  authorities  of  home  Member  States 
financial 
are  responsible 

for  monitoring 

authorization 

90/619/EEC 

(third 

life 

the 

INITIAL  PROPOSAL 
health  of  insurance  undertakings,  including  their 
state of  solvency; 

AMKNDKI)  PROPOSAL 

UNCHANGED 

UNCHANGED 

involving 

insurance  undertakings 

supplementary 
Whereas  measures 
supervision  on 
in  a 
group  should  enable  the authorities  supervising  a 
parent  insurance  undertaking  to  make  a  more 
soundly  based  judgement  about  the  financial 
situation  of  that  insurance  undertaking;  whereas 
into 
supplementary 
account  certain  undertakings  which  are  presently 
not  subject 
to  supervision  under  Community 
directives;  whereas  this  Directive  does  not  in 
any  way  imply  thai  Member  Stales  are  required 
to play  a supervisory  role  in  relation  to  those 
undertakings  standing  alone; 

supervision  should 

take 

therefore 

requirements  must 

insurance  undertakings 

Whereas 
in  a  single 
insurance  market  engage  in  direct  competition 
with  each  other  and  the  standards  pertaining  to 
capital 
be 
equivalent;  whereas,  to  that  end,  the  criteria  for 
determining  supplementary  supervision  must  not 
be  left  solely  to  Member  States;  whereas  the 
adoption  of  common  basic  standards  will  be  in 
the  best  interests  of  the  Community  in  that  it 
will  prevent  Distortions  of  competition  and  will 
insurance  system; 
strengthen 
whereas 
to  eliminate  certain 
differences  between  the  laws  of  the  Member 
States  as  regards  the  prudential  rules  to  which 
insurance  undertakings  that  arc  part  of  a  group 
are  subject; 

the  Community 

it  is  necessary 

Whereas  it  is  necessary  to  calculate  an  adjusted 
solvency  situation  for  insurance  undertakings  in 
a  group;  whereas  different  methods  are  applied 
by  some  authorities  in  the  Community  to  take 
into  account  the  effects  on  the  financial  position 
of  an  insurance  undertaking  in  a  group;  whereas 
the  principle  is  accepted  that  these  methods  are 
prudentially  equivalent; 

UNCHANGED 

the  approach  adopted  consists 
as 
about 

Whereas 
in 
is 
bringing 
essential,  necessary  and  sufficient  to  achieve  the 
mutual  recognition  of  prudential  control  systems 
in this  field; 

such  harmonization 

UNCHANGED 

Whereas  certain  provisions  of  this  Directive 
define  minimum  standards;  whereas  a  home 
Member  State  may  lay  down  stricter  rules  for 
insurance  undertakings  authorized  by  its  own 
competent  authorities; 

UNCHANGED 

AMENDED  PROPOSAL 

UNCHANGED 

UNCHANGED 

INITIAL  PROPOSAL 
WTiereas  this  Directive  is  concerned  solely  with 
cases  where  one  insurance  undertaking  is  owned 
wholly  or 
insurance 
in  part  by  another 
undertaking  or  holding  company;  whereas  the 
supervision  of  individual  insurance  undertakings 
by 
an 
remains 
essential  principle  of  insurance  supervision; 

the  competent 

authorities 

from 

the  means 

Whereas  the  competent  authorities  must  at  least 
have 
all 
of  obtaining 
undertakings  within  a  group  (he 
information 
necessary  for  the  performance  of  their  function; 
the  authorities 
whereas  cooperation  between 
responsible  for 
insurance 
undertakings  as  well  as  between  the  authorities 
responsible 
the  supervision  of  different 
financial  sectors  must  be  established; 

the  supervision  of 

for 

intra-group  UNCHANGED 

of 

types 

certain 

insurance 

transactions 

undertaking;  whereas 

WTiereas 
transactions  can  affect  the  financial  position  of 
the 
an 
competent  authorities  should  determine  whether 
intra-group 
in 
principle  according  to  normal  market  conditions; 
whereas  the  application  of  this  general  principle 
does  not 
transactions 
concluded  on  other  terms  should  be  prohibited 
under  all  circumstances;  whereas  it  is  therefore 
desirable  that  the  competent  authorities  monitor 
such  transactions; 

intra-group 

concluded 

imply 

that 

are 

throughout 

Whereas  this  Directive  will,  in particular,  ensure  UNCHANGED 
the  homogeneous  application 
the 
Community  of  prudential  rules  established  by 
other  Community  legislation  and  facilitate  the 
taking-up  and  pursuit  of 
the  business  of 
insurance;  whereas  application  of  this  Directive 
must  be  aimed  at,  in  particular,  protecting  the 
interests  of 
insurance 
undertakings; 

the  policyholders  of 

this  Directive  UNCHANGED 

the  application  of 

Whereas 
requires  complicated  adaptations  to  be  made  to 
the  laws  of  certain  Member  States  in  the  fields 
law  and 
of  prudential  supervision,  company 
taxation,  and  that  these  adaptations 
therefore 
justify  that  these  Member  States  may  apply  the 
definition 
another 
undertaking  at  the  level  of  25 %  of  the  capital  or 
the  voting  rights  until  1 July  2001  at the  latest, 

participation 

of 

in 

a 

INITIAL  PROPOSAL 

AMENDED  PROPOSAL 

HAVE  ADOPTED  THIS  DIRECTIVE: 

HAVE  ADOPTED  THIS  DIRECTIVE: 

Article 1 
Definitions 

Article 1 
Definitions 

For the purpose  of this  Directive: 

UNCHANGED 

undertaking'  means 

'insurance 
(a) 
undertaking  which 
official 
authorization  in  accordance  with  Article  6  of 
Directive  73/239/EEC  or  Article  6  of  Directive 
79/267/EEC; 

received 

has 

an  UNCHANGED 

(b)  'third  country  insurance  underlaking,  means 
an  undertaking  which  if  IT  had  its  registered 
office 
require 
iiT~lhc  Comnuiniy  would 
authorization  in  accordance  with  Article  6  of 
Directive 
or  Article  6  of  Directive 
79/z67/EEC; 

'reinsurance 

undertaking'  means 

an 
(c) 
undertaking  which  only  accepts  risks  ceded  by 
an  insurance  undertaking  or  other  reinsurance 
undertakings  established  in the  Community  or  in 
a third  country; 

'parent 

(d) 
a  parent 
undertaking  means 
undertaking  within  the  meaning  of Article  1 [...] 
of  Council  Directive  83/349/EEC(6)  and  any 
the 
in 
undertaking  which, 
competent  authorities,  effectively  exercises  a 
dominant  influence  over another  undertaking; 

the  opinion  of 

'reinsurance 

undertaking'  means 

an 
(b) 
undertaking  which  only  accepts  risks  ceded  by 
an  insurance  undertaking  or  other  reinsurance 
undertakings  established  in the  Community  or  in 
a third  country; 

'parent  undertaking'  means 

(c) 
a  parent 
undertaking  within  the  meaning  of  Article  1 (1) 
of  Council  Directive  83/349/EEC(6)  and  any 
the 
in 
undertaking  which, 
competent  authorities,  effectively  exercises  a 
dominant  influence  over another  undertaking; 

the  opinion  of 

(d)  'subsidiary'  means  a  subsidiary  undertaking 
within  the  meaning  of  Article  1(1)  of  Directive 
83/349/EEC  and  any  undertaking  over  which,  in 
the  competent  authorities,  a 
the  opinion  of 
exercises  a 
parent  undertaking 
dominant 
of 
subsidiary  undertakings  shall  also  be  considered 
subsidiaries  of  the  undertaking 
that  is  their 
original  parent; 

influence.  All 

subsidiaries 

effectively 

(e)  'subsidiary'  means  a  subsidiary  undertaking 
within  the  meaning  of  Article  1 [.."]  of  Directive 
83/349/EEC  and  any  undertaking  over  which,  in 
the  competent  authorities,  a 
the  opinion  of 
a 
parent  undertaking 
dominant 
of 
subsidiary  undertakings  shall  also  be  considered 
subsidiaries  of  the  undertaking 
their 
original  parent; 

influence.  All 

subsidiaries 

effectively 

exercises 

that 

is 

(e)  'participation'  means  the  ownership,  direct  or 
indirect,  of  20  %  or  more  of  the  voting  rights  or 
capital  of an  undertaking; 

(f)  'participation'  means  participation  within  the 
meaning  of  Article  17, 
sentence  oT 
Directive  78/660/EEO/;  or  the  ownershipTlïïrëct 
or  indirect,  of  20%  or  more  of  the  voting  rights 
or capital  of an  undertaking; 

first 

'participating 

(f) 
an 
undertaking  which  is  cither  a  parent  undertaking 
or an  undertaking  which  holds a  participation; 

undertaking'  means 

'participating 

(g) 
an 
undertaking  which  is  either  a  parent  undertaking 
or an  undertaking  which  holds a  participation; 

undertaking'  means 

INITIAL  PROPOSAL 
'related  undertaking'  means 

(g) 
a 
subsidiary  or  any  other  undertaking  in  which  a  subsidiary  or  any  other  undertaking  in  which  a 
participation  is held; 

'related  undertaking'  means 

participation  is held 

either 

either 

(h) 

a 

AMENDED  PROPOSAL 

subsidiary  undertakings  of  which  are 

'insurance  holding  company'  means  an 

(h) 
'insurance  holding  company'  means  an 
undertaking  other  than  an  insurance  undertaking,  undertaking  other  than  an  insurance  undertaking, 
the 
are 
exclusively  or  mainly  insurance  or  reinsurance  exclusively  or  mainly  insurance  or  reinsurance 
undertakings,  one  at  least  of  such  subsidiaries  undertakings,  one  at  least  of  such  subsidiaries 
being  an  insurance  undertaking; 

subsidiary  undertakings  of  which 

being  an  insurance  undertaking; 

the 

(j) 

(i)  'mixed  activity  insurance  holding  company' 
than  an 
means  a  parent  undertaking,  other 
insurance  holding  company  or  an 
insurance 
undertaking,  the  subsidiaries  of  which  include  at 
least one insurance  undertaking; 

Q}  'mixed  activity  insurance  holding  company' 
than  an 
means  a  parent  undertaking,  other 
insurance  undertaking,  a  third  country  insurance 
undertaking,  a  reinsurance  undertaking  or  an 
insurance  holding  company,  the  subsidiaries  of 
insurance 
which 
undertaking; 

include 

least 

one 

at 

(j)  'competent  authorities'  means  the  national 
(k)  'competent  authorities'  means  the  national 
authorities  which  are  empowered  by  law  or  authorities  which  are  empowered  by  law  or 
regulation  to supervise  insurance  undertakings. 

regulation to  supervise  insurance  undertakings 

Article  2 
>e 

Article  2 
Scope 

to  the  provisions  of  Article  3,  this  UNCHANGED 

Subject 
Directive  shall  apply  to  insurance  undertakings 
which  have 
the 
Community. 

registered  offices 

their 

in 

Article  3 
Supplementary  supervision  of  insurance 
undertakings  in a  group 

Article  3 
Supplementary  supervision  of  insurance 
undertakings  in a  group 

UNCHANGED 

of 

for 

the 

1.  In  addition  to  the  provisions  of  Directives 
73/239/EEC  and  79/267/EEC  laying  down  the 
rules 
insurance 
supervision 
undertakings,  Member  States  shall  provide  that 
the  supervision  of  any  insurance  undertaking 
which  is  a  participating  undertaking  of  at  least 
one 
reinsurance 
undertaking 
undertaking  shall  be  supplemented  to  the  extent 
and  in  the  manner  prescribed  in  Articles  5,  6,  8 
and  9. 

insurance 

or 

the  parent 
insurance  undertaking 
2.  Every 
undertaking  of  which  is  an  insurance  holding 
company  which  has  its  registered  office  in  the 
Community  shall  be  subject,  to the  extent  and  in 
the  manner  prescribed  in  Articles  5  (2),  6,  8 
and  10, to  supplementary  supervision. 

UNCHANGED 

INITIAL  PROPOSAL 
insurance  undertaking 

livery 

3. 
undertaking  of  which 
insurance  holding  company  which  has 
registered  office 
subject, 
prescribed 
supplementary  supervision. 

the  parent 
is  a  mixed  activity 
its 
in  the  Community  shall  be 
the  manner 
in 
to 

in  Articles  5  (2),  6  and  8, 

the  extenl  and 

to 

AMENDED  PROPOSAL 

l INCHANGE! 

4.  The  exercise  of  supplementary  supervision  in 
accordance  with this Article  shall  not  in any  way 
imply  that  the  competent  authorities  are  required 
to  play  a  supervisory  role  in  relation  to  the 
insurance  holding  company  or  mixed  activity 
insurance  holding  company  or 
reinsurance 
undertaking  standing  alone. 

UNCHANGED 

for 

exercising 

5.  Member  States  or  the  competent  authorities 
responsible 
supplementary 
supervision  may  decide  that  in  the  cases  listed 
below  an 
insurance  undertaking  or  other 
undertaking  which  is  a  subsidiary  or  in  which  a 
participation  is  held  need  not  be  included  in  the 
supplementary  supervision: 

JNCHANGED 

-  if  the  undertaking  thai  should  be  included  is 
situated  in  a  third  country  where  there  are  legal 
impediments  to  the  transfer  of  the  necessary 
information; 

-  if,  in  the  opinion  of  the  competent  authorities, 
the  undertaking  that  should  be  included  is  of 
negligible 
the 
objective  of  monitoring  insurance  undertakings; 
or 

interest  only  with  respect 

to 

-  if,  in  the  opinion  of  the  competent  authorities, 
the  inclusion  of  the  financial  situation  of  the 
undertaking  in  the  calculation  of  the  adjusted 
solvency  situation  would  be  inappropriate  or 
misleading  as 
the 
supplementary 
insurance 
undertakings  are  concerned. 

the  objectives  of 
of 

supervision 

far  as 

Article 4 
Competent  authorities  for  exercising 
supplementary  supervision 

Article  4 
Competent  authorities  for  exercising 
supplementary  supervision 

1.  The  supervision  referred  to  in  Article  3  shall 
be  exercised  by  the  competent  authorities  of  the 
Member  State 
insurance 
that  authorized 
undertaking  under  Article  6  of  Directive 
73/239/EEC 
of  Directive 
79/267/EEC. 

or  Article 

the 

6 

UNCHANGED 

2.  Where  Member  States  have  more  than  one  UNCHANGED 

10 

INITIAL PROPOSAI, 
competent 
prudential 
the 
authority 
insurance  undertakings  and 
supervision  of 
reinsurance  undertakings.  Member  States  shall 
take 
to  organize 
coordination between such authorities. 

requisite  measures 

the 

for 

AMKNDKI) PROPOSAL 

Article 5 
Availability and quality of  information 

Availability and quality of information 

Article 5 

the  UNCHANGED 

that 

1.  Member  States  shall  prescribe 
competent  authorities  shall  require  that,  in  any 
insurance  undertaking,  which  is  a  participating 
undertaking  or  related  undertaking  of  one  or 
more  insurance  undertakings,  insurance  holding 
companies or reinsurance  undertakings, there are 
adequate  internal  control  mechanisms  for  the 
production  of  any  data  and  information  which 
would  be 
the  purposes  of 
supervision  in accordance with this Directive. 

relevant 

for 

UNCHANGED 

2.  Member  States  shall  take  the  necessary  steps 
to  ensure  that  there  are  no  legal  impediments 
preventing  the  undertakings  that  are  subject  to 
the supervision  referred  to in Article 3, and their 
participating 
related 
undertakings, 
amongst 
themselves  any  information  which  would  be 
relevant  for  the  purposes  of  supervision  in 
accordance with this Directive. 

and 
exchanging 

undertakings 

from 

Article 6 
Access to  information 

Article 6 
Access to  information 

that 

1.  Member  States  shall  provide 
their 
competent  authorities  responsible  for  exercising 
the supervision  referred  to in Article 3 shall have 
access  to  any 
information  which  wouid  be 
relevant  for  the  purpose  of  supervision  of  an 
insurance  undertaking  which  has  participating 
undertakings,  related  undertakings  or  related 
undertakings of participating  undertakings  in the 
competent 
insurance 
undertaking. 
authorities  may  address 
the 
to 
undertakings  concerned  directly  to  ensure  the 
communication  of  the  required  information,  or 
they  may  receive  such  information  through  the 
insurance undertaking. 

themselves 

The 

to 

that 

referred 

supervision 

1.  Member  Slates  shall  provide 
their 
competent  authorities  responsible  for  exercising 
in 
supplementary 
Article 3  shall  have  access  to  any  information 
which  would  be  relevant  for  the  purpose  of 
supervision  of  an  insurance  undertaking  [...] 
subject  to  such  supplementary  supervision.  The 
competent authorities may address themselves to 
the undertakings concerned directly to ensure the 
communication of the required information,  [...] 
only  when  such information  has been  requested 
from  the  insurance  undertaking  and  it  has  not 
been supplied by it! 

that  their 
2.  Member  States  shall  provide 
competent authorities may carry out, within their 
territory, themselves or through the  intermediary 
of persons  they  appoint for that purpose,  an-the-
spot  verification  of  the  information  received 
under paragraph  1. 

UNCHANGED 

3.  Where, 
the 
competent  authorities of one Member  State wish 

in  applying  paragraph  2, 

3.  Where,  in  applying  paragraphs  1 and  2,  the 
competent authorities of one Member  State wish 

11 

INITIAL  PROPOSAL 
the 

in  specific  cases  to  verify 
information 
concerning  an  insurance  undertaking  situated  in 
another  Member  Slate,  they  must  ask 
the 
competent  authorities  of  that  other  Member 
State  to  have  that  verification  carried  out.  The 
authorities  which  receive  such  a  request,  must, 
within  the  framework  of  their  competence,  act 
upon  it  either  by  carrying  out  the  verification 
themselves,  by  allowing  the  authorities  who 
made the request  to carry  it out, or  by  allowing 
an auditor or expert to carry it out. 

AMENDED  PROPOSAL 

the 

in  specific  cases  to  verify 
information 
concerning  an  insurance  undertaking  situated  in 
another  Member  State,  they  must  ask 
the 
competent  authorities  of  rhat  other  Member 
State  to  have  that  verification  carried  out.  The 
authorities  which  receive  such  a  request,  must, 
within  the  framework  of  their  competence,  act 
upon  it  either  by  carrying  out  the  verification 
themselves,  by  allowing  the  authorities  who 
made the request to carry  it out, or by  allowing 
an auditor or expert to carry it out. 

Article 7 
* dopera lie m between competent  authorities 

Article 7 
Cooperation  between competent authorities 

a 

have 

related,  or 

1. Where  insurance  undertakings  are  directly  or 
indirectly 
common 
participating  undertaking  and  are  established  in 
competent 
different  Member  States, 
shall 
authorities  of  each  Member  State 
communicate 
relevant 
information  which may allow or aid the exercise 
this 
the 
of  supervision 
Directive. 

to  each  other  all 

framework  cf 

the 

in 

have 

related,  or 

2.  Where  an  insurance  undertaking  and  a  credit 
in  Council  Directive 
institution  as  defined 
77/780/EEC(7)  or  investment  firm  as  defined  in 
Council  Directive  93/22/EECw  are  directly  or 
common 
indirectly 
participating 
competent 
authorities and  the authorities entrusted  with  the 
public 
ihose  other 
undertakings  shall  cooperate  closely.  Without 
prejudice 
to  their  respective  responsibilities, 
those  authorities  shall  provide  one  another  with 
any  information  likely  to  simplify  their  task,  in 
particular in the framework  of this Directive. 

undertaking, 

supervising 

task  of 

the 

a 

UNCHANGED 

related, 

or  have 

2.  WTiere an  insurance  undertaking  and  a  credit 
in  Council  Directive 
institution  as  defined 
77/780/EECffi  or  investment  firm  as  defined  in 
Council  Directive  93/22/EEC®  are  directly  or 
common 
indirectly 
competent 
participating 
authorities  and  the authorities entrusted  with the 
public 
those  other 
undertakings  shall  cooperate  closely.  Without 
prejudice 
to  their  respective  responsibilities, 
those  authorities  shall  provide  one  another  with 
any  information  likely  to  simplify  their  task,  in 
particular in the framework  of this Directive. 

undertaking, 

supervising 

task  of 

the 

a 

to 

Information 

received  pursuant 

3. 
Directive  and,  in  particular,  any  exchange  of 
information  between  competent 
authorities 
which  is  provided  for  in  this  Directive  shall  be 
subject  to the obligation  of professional  secrecy 
defined  in  Article  16  of  Directive  92/49/EEC 
and Article  15 of Directive 92/96/EEC. 

this  UNCHANGED 

12 

INITIAL  PROPOSAI, 

AMENDED  PROPOSAL 

Article 8 
Intra-group  transactions 

Article 8 
Intra-group  transactions 

to  establishing  whether  UNCHANGED 

a  view 
arc, 

1.  With 
transactions 
in  principle,  carried  out 
according  lo  normal  market  conditions.  Member 
Stales 
competent 
shall 
authorities  monitor: 

provide 

that 

the 

(a)  the  transactions  referred  to  in  paragraph  2 
between  an  insurance  undertaking  and: 

the 

related  undertaking  of 

(i)  a 
undertaking; 
(ii)  a  participating  undertaking  in  the  insurance 
undertaking; 
(iii)  a  related  undertaking  of  a  participating 
undertaking  in the insurance  undertaking; 

insurance 

(b)  the  transactions  referred  to  in  paragraph  2 
between  the  insurance  undertaking  and  a  natural 
person  which  holds a participation  in: 

(i) the  insurance  undertaking  or  any  of  its  related 
undertakings; 
(ii)  a  participating  undertaking  in  the  insurance 
undertaking; 
(iii)  a  related  undertaking  of  a  participating 
undertaking  in the  insurance  undertaking. 

in  paragraph 

2.  Member  States  shall  require  at  least  an  annual  UNCHANGED 
reporting  by  the  insurance  undertaking  to  the 
transactions  as 
competent  authorities  of  the 
described 
in 
particular  significant: 
- loans, 
-  guarantees 
transactions, 
- elements eligible  for the solvency  margin, 
-  investments. 

and  other  off-balance 

1,  concerning 

sheet 

13 

INITIAL  PROPOSAI, 
Article  9 
Aili"sled  solvency  requirement 

AMENDED  PROPOSAI, 
Article  9 
Adjusted  solvency  requirement 

to  in  Article  3  (1). 
1.  Subject  to  Article  3  (1),  Member  Stales  shall 
require  that  an  adjusted  solvency  calculation  Member  Stales  shall  require  thai  an  adjusted 
in 
shall  be carried  out  in accordance  with  Annex  I. 

1.  In  the  cases  referred 

solvency  calculation  shall  be  carried  out 
accordance  with  Annex  I. 

2.  The  calculation  described  in  Annex  1  shall 
include  a  related  undertaking  or  participating 
undertaking  which  has  its  registered  office  in  a 
third  country  and  which  is: 

-  an  undertaking  which,  if  it  were  established  in 
the  Community,  would  be  required  to  have  an 
authorization  in  accordance  with  Article  6  of 
Directive  73/239/EEC  or  Article  6  of  Directive 
79/267/EEC, 
- a reinsurance  undertaking,  or 
- an  insurance  holding  company. 

3.  If  the  adjusted  solvency  situation  is  negative, 
the  competent  authorities  shall  take  appropriate 
measures  at  the  level  of  the  relevant  insurance 
undertaking. 

JNC1IANGED 

UNCHANGED 

Article  10 
Insurance  holding  companies 

Article  10 
Insurance  holding  companies 

1.  In  the  case  referred 
Member  States  shall  require  the  application  of 
one 
of 
supervision  in accordance  with  Annex  II. 

supplementary  methods 

the 

of 

to  in  Article  3  (2),  UNCHANGED 

2.  In  the  case  referred  to  in  Article  3  (2),  the  UNCHANGED 
calculation  shall  include  all  related  undertakings 
of  the  insurance  holding  company  referred  to  in 
Article  9 (2). 

3.  If,  as  a  result,  the  competent  authorities  are  of  UNCHANGED 
the  opinion  that the  state of solvency  of a  related 
insurance  undertaking  of  the  insurance  holding 
company  is  affected,  the  competent  authorities 
shall  take  appropriate  measures  at  the  level  of 
that  insurance  undertaking. 

Article  11 
Implementation 

Article  ! 1 
Implementation 

and 

shall 

adopt 
administrative 

the 
laws, 
1.  Member  States 
provisions 
regulations 
necessary  to  comply  with  this  Directive  no  later  necessary  to  comply  with  this  Directive  no  later 
than  !  January  1997,  and  bring  them  into  force 
shall 
no 
shall 
1  July 
immediately  inform  the Commission  thereof. 

than 
immediately  inform  ihc  Commission  thereof, 

adopt 
administrative 

laws,  1.  Member  States 

the 
provisions 

1997.  They 

regulations 

Januarv 

They 

1999 

shall 

'•••). 

later 

than 

and 

I 

14 

INITIAL  PROPOSAI, 

AMUNDFJ)  PROPOSAL 

shall  provide 

the 
2.  Member_  States 
provisï(>ns  refcijed^  io  in  paragraph  I  shall  first 
apply  to the supervision  of accounts  for  financial 
years  beginning  on  I  January  2000  or  during 
that calendar  year. 

that 

2.  Member  States  may  decide  to  apply 
the 
definition  of  a  'participation'  at  a  level  of  25  %  definition  of  a  'participation'  at  a  level  of  25  % 
for  a period  expiring  not  later than  1 July  2001. 

the  3.  Member  States  may  decide  to  apply 

for  a period  expiring  not  later than  1 July  2001. 

3.  When  Member  States  adopt  the  measures 
referred  to  in  paragraph  1,  these  shall  contain  a 
reference 
shall  be 
accompanied  by  such  reference  at  the  time  of 
their  official  publication.  The  procedure  for  such 
reference  shall  be adopted  by  Member  States. 

this  Directive,  or 

to 

4.  When  Member  States  adopt  the  measures 
referred  to  in  paragraph  1,  these  shall  contain  a 
reference 
shall  be 
accompanied  by  such  reference  at  the  time  of 
their  olTicial publication.  The  procedure  for  such 
reference  shall  be adopted  by  Member  States. 

this  Directive,  or 

to 

4.  Member  States  shall  communicate 
Commission  the  texts  of  the  main  provisions  of 
national 
covered  by  this  Directive. 

they  adopt 

law  which 

in 

to  the  5.  Member  States  shall  communicate 

to  the 
rommission  the  texts  of  the  main  provisions  of 
the  field 

the  field  national 

they  adopt 

law  which 

in 

covered  by  this  Directive. 

of 

this  Directive, 

6.  hive  years  at  the  latest  after  the  deadline  for 
implementation 
the 
Commission  shall  submit 
Insurance 
Committee  a report  on  its implementation  and,  if 
further 
iurther 
appropriate, 
harmonization  of  supplementary  supervision  of 
insurance undertakings  in an insurance  group. 

need 
need 

any 

for 
tor 

the 

on 

to 

Article  12 
Entry  into  force 

Article  12 
Entry  into  force 

This  Directive  shall  enter 
into  force  on  the 
twentieth  day  following  that  of  its  publication  in 
the  Official 
European 
Communities. 

Journal 

the 

of 

UNCHANGED 

Article  13 
Addressees 

Article  13 
Addressees 

This  Directive 
States. 

is  addressed 

to  the  Member  UNCHANGED 

(1) OJ No  L 228,  16. 8.  1973, p. 3. 
( 2 ) O J N o L 1 6 8,  18. 7.  1995, p. 7. 
(3) OJ No  L 63,  13.3.  1979, p.  1. 
(4) OJ No  L 228,  11.8.  1992, p.  1. 
(5) OJ No  L 360, 9.  12.  1992, p.  1. 
( 6 ) O J N oL  193, 18.7.  1983, p.  1. 
(7) OJ No  L 322,  17.12.1977,  p. 30. 
( 8 ) O J N oL  141, 11.6.  1993, p. 27. 

( l ) O J N o L 2 2 8,  16. 8.  1973, p. 3. 
( 2 ) O J N o L 1 6 8,  18. 7.  1995, p. 7. 
( 3 ) O J N o L 6 3,  13.3. 1979, p.  1. 
(4) OJ No L 228,  11.8.  1992, p.  1. 
(5) OJ No L 360, 9.  12. 1992, p.  1. 
( 6 ) O J N o L 1 9 3,  18. 7.  1983, p.  1. 
(7) OJ No  L 222,  14.08.1978, p.  11. 
(8} OJ No  L 322,  17.  12.  1977, p. 30. 
( 9 } O J N oL  141, 11.6.  1993, p. 27. 

15 

INITIAL  PROPOSAL 

AMENDED  PROPOSAL 

ANNEX  I 

ANNEX  I 

CALCULATION  OF  T HE  ADJUSTED 
SOLVENCY  SITUATION 

CALCULATION  OF  T HE  ADJUSTED 
SOLVENCY  SITUATION 

1.  Choice  of  method 
gene nil  principles 

of  calculation  and 

I.  Choice  of  method  of  calculation 
general  principles 

and 

for 

solvency 

One  or  more  of  the  methods  described  below 
A 
the 
shall  be  applied 
adjusted 
insurance 
undertakings  referred  to  in  Article  3(1).  For  this 
purpose,  the  elements  eligible  for  the  solvency 
margin  shall  be  adjusted  an  compared  with  an 
adjusted  solvency  margin. 

the  calculation  of 
of 

situation 

for 

situation 

solvency 

the  calculation  of 
of 

A.  One  or  more  of  the  methods  described  below 
the 
shall  be  applied 
adjusted 
insurance 
undertakings  referred  to  in  Article  3 (1). For  this 
purpose,  the  elements  eligible  for  the  solvency 
margin  mentioned  in  Article  16  paragraph  1  of 
Directive  73/239/EEC  or 
in  Article  18  of 
Directive  79/267/EEC  shall  be  adjusted  an 
compared  with an adjusted  solvency  margin. 

B.  Regardless  of  the  method  applied,  the  intra-
the 
group  creation  of  elements  eligible  for 
the 
in 
solvency  margin  must  be  eliminated 
calculation  of the adjusted  solvency  situation. 

B.  UNCHANGED 

For  this  purpose,  where  the  methods  do  not  UNCHANGED 
already  provide  for  this,  for  Ihe  calculation  of 
the  elements  eligible  for  the  adjusted  solvency 
situation  no account  shall  be taken  of: 

the 

insurance  undertaking  for  which 

(i)  all  elements  eligible  for  the  solvency  margin  UNCHANGED 
the 
of 
adjusted  solvency  situation  is  calculated,  which 
ultimately  originate  from: 
-  a 
undertaking,  or 
-  a 
undertaking  in the insurance  undertaking; 

related  undertaking  of  a  participating 

related  undertaking  of 

insurance 

this 

UNCHANGED 

and 

related 

situation 

insurance  undertaking  or 
requirement  of  a 

(ii)  all  elements  eligible  for  the  solvency  margin 
the 
of  a 
notional  solvency 
related 
reinsurance  undertaking,  of  a  participating 
insurance  undertaking  for  which  the  adjusted 
solvency 
is  calculated,  originating 
from: 
-  the participating  insurance  undertaking, 
- 
insurance  undertaking, 
related  undertaking  of  a  participating 
-  a 
insurance 
the  participating 
undertaking 
undertaking  for  which  the  adjusted  solvency 
situation  is  calculated. 

related  undertakings  of 

the  participating 

in 

Applying  the  same  rules  mutatis  mutandis,  the 
calculation  shall  also not take  into  account: 

C. Without  prejudice 
section  B of this  Annex: 

"thi 

to 

the  provisions  of 

16 

INITIAL  PROPOSAI, 

AMENDED  PROPOSAL 

-  all  subscribed  but  non  paid-in  parts  ol 
capital. 

the 

-  [...J  subscribed  but  non  paid-in  parts  of  the 
capital  of  a  related  insurance  undertaking  of  the 
insimmcc  undertaking  for  which  the  adjusted 
solvency  is calculated" and 

-  pro lit 
reserves  and 
assurance  undertakings. 

future  profits  of 

life 

-  profit  reserves  and  future  profits  arising  in  a 
related 
the 
insurance  undertaking  for  which  the  adjusted 
solvency  is calculated 

insurance  undertaking  of 

life 

may  only  be  included  in  the  calculation  insofar 
is  they  are eligible  to  cover  the  solvency  margin 
requirement  of that related  undertaking 

C.  With  the  exception  of  calculating  a  solvency 
deficit  in  a  subsidiary,  the  calculation  shall  be 
carried  out  on  a  proportional  basis(1)  taking  into 
account 
the 
relevant 
the 
mediating  participations. 

percentages 

of 

(I)  Where  this  Annex  refers  to  a  proportional 
the  calculation 
share  or  relevant  percentage, 
shall  be  based  on  the  basis  of  the  percentage 
used  for  the  establishment  of  the  consolidated 
accounts. 

for 

D.  The  competent  authorities  shall  ensure  that 
the  adjusted  solvency  situation  is  calculated  at 
the  same  frequency  as  the  calculation  of  the 
insurance  undertakings 
solvency  margin 
according 
and 
73/239/EEC 
the  assets  and 
79/267/EEC.  The  value  of 
liabilities  shall  be  assessed  according  to  the 
relevant  provisions  of  Directives  73/239/EEC 
and  Directive  79/267/EEC,  as  amended  by 
Directives  92/49/EEC  and  92/96/EEC. 

to  Directives 

D. The  calculation of the adjusted  solvency  of  an 
insurance  undertaking  shall  take  account  of  the 
relevant 
held 
proportional 
share 
participating 
related 
undertaking 
undertakings  concerned. 

the 
the 

by 
in 

Proportional  share  means  either,  where  method  1 
is  used,  the  proportion  of  the 
or  method~2 
that  is  owned,  directly  "or 
subscribed  capital 
indirectly, 
participating 
undertaking  or,  where  method  3  is  used,  the 
percentages  used  in  drawing  up  the  consolidated 
accounts. 

relevant 

the 

by 

However,  whichever  method  is  used,  when  the 
related  undertaking  is  a  subsidiary  and  has~i 
solvency  deficit,  the  total  solvency  deficit  of  the 
~ 
subsidiary  has to be taken  into account. 

E.  The  competent  authorities  shall  ensure  that 
the  adjusted  solvency  situation  is  calculated  at 
the  same  frequency  as  the  calculation  of  the 
insurance  undertakings 
solvency  margin 
according 
and 
73/239/EEC 
the  assets  and 
79/267/EEC.  The  value  of 
liabilities  shall  be  assessed  according 
to  the 
relevant  provisions  of  Directives  73/239/EEC, 
J _] 79/267/EEC  \...] and  91/674/EEC. 

to  Directives 

for 

2.  Methods  and  relevant  situations 

2.  Methods  and  relevant  situations 

2.1.  Related  insurance 

undertakings 

2.1.  Related  insurance 

undertakings 

In  the  case  of  an  insurance  undertaking  which  is  UNCHANGED 
a  directly  participating  undertaking  in  another 
insurance  undertaking,  the  adjusted  solvency 
calculation  shall  be  carried  out  in  accordance 
with  one of the following  methods. 

In  all  methods  and  in  the  case  that  the  insurance  UNCHANGED 
undertaking  has  more  than  one  directly  related 

17 

INITIAL  PROPOSAL 

AMENDED  PROPOSAL 

insurance  undertaking, 
the  adjusted  solvency 
calculation  shall  be  carried  out  by  integrating 
each of  these directly  related  undertakings. 

a 

is 

In  cases  of  successive  participations  (c.  g.  an 
participating 
insurance 
undertaking 
undertaking 
in  another  insurance  undertaking 
which  is  also  a  participating  undertaking  in  an 
insurance  undertaking)  the  adjusted  solvency 
calculation  shall  be  carried  out  at  the  level  of 
each  participating  undertaking  which  has  at  least 
one 
reinsurance 
undertaking. 

insurance 

related 

or 

related 

insurance 

undertakings 

If  method  3  is  applied,  and  without  prejudice  to 
specific  provisions  contained  in other  Directives, 
Member  States  may  waive  calculation  of  the 
adjusted  solvency  situation  for  an 
insurance 
is  a  related 
if  this  undertaking 
undertaking, 
undertaking  of  another  insurance  undertaking  in 
the  same  Member  State,  which  calculates  an 
adjusted  solvency  situation  taking  into  account 
its 
and 
reinsurance  undertakings.  The  same  waiver  shall 
be  allowed  where  the  participating  undertaking 
is  an  insurance  holding  company  which  has  its 
head  office  in  the  same  Member  State  as  the 
insurance  undertaking,  provided  that  it  is  subject 
to  the  same  standard  of  supervision  as  that 
exercised  over  insurance  undertakings.  In  both 
cases,  steps  must  be  taken  to  ensure  that  capital 
is  distributed  adequately  within  the  insurance 
group,  and  is  genuinely  available  for  transfer 
between 
participating 
undertaking  or undertakings  concerned. 

related 

and 

the 

UNCHANGED 

[...] Member  States may  waive  calculation  of  the 
adjusted 
insurance 
undertaking^ 

solvency 

[...]  of 

an 

if 

is  a 

related 
the  undertaking 
-  either 
undertaking  of  another  insurance  undertaking 
authorized  in  the  same  Member  State,  and  that 
related  undertaking  is  taken  into  account  in  the 
the  adjusted  solvency  of  The 
calculation  of 
participating  insurance  undertaTcmg; 

- or  if the  undertaking  is a related  undertaking  of 
an  insurance  holding  company  which  has  its 
registered  office  in  the  same  Member  State  as 
the  insurance  undertaking,  and  both  the  holding 
company  and  the  related  insurance  undertaking 
are  taken  into  account  in  the  calculation  carried 
out. 

undertaking 

Member  State  may  also  provide  for  the  waiver 
involved  in  the  above  two  cases  to  be  granted  in 
the  case  of  an  insurance  undertaking  which  is  a 
related 
insurance 
of 
undertaking  or  insurance  holding  company  that 
has  its  registered  office 
in  another  Member 
Stated 
IT  the  competent  authorities  of  ~thc 
Ivlcinber  States  conccrnëdlïavc  agreed  to  allow 
the  competent  authorities  of  the  other  Member 
State to carry  out  supplementary  supervision. 

another 

In  all  cases,  the  waiver  may  only  be  granted  if 
the  competent  authorities  are  satisfied  that  the 
elements  eligible  for  the  solvency  margin  of  the 
insurance  undertakings  to  be  included  in  the 
calculation  are  distributed  adequately  [...l~and 
genuinely  available  for  transfer  between  those 
undertakings. 

METHOD 
method 

1:  Deduction 

and  aggregation  METHOD 

1:  Deduction 

. and 

aggregation 

method 

adjusted 

The 
participating 

solvency 

situation 
insurance  undertaking 

of 
is 

the  UNCHANGED 
the 

INITIAL  PROPOSAI, 

AMENDED  PROPOSAL 

di(Terence  between: 

(i) the  sum  of: 

1.  (he  elements  eligible  lor  the  solvency  margin 
of the  participating  undertaking; 
2.  the  proportional  share  of  the  participating 
undertaking 
the 
related  undertaking,  which  originates  from  the 
participating  undertaking; 

the  solvency  margin  of 

in 

and 

(ii) the sum  of: 

in 

the  book  value 

the  participating 
the 

(a) 
undertaking  of  all  elements  eligible  for 
solvency  margin  of the related  undertaking; 
(b)  the  solvency  requirement  of  the  participating 
undertaking; 
(c) 
the  solvency 
requirement  of  the  related  undertaking;  if  the 
related  undertaking  is  a  subsidiary  and  has  a 
solvency  deficit,  the  total  requirement  has  to  be 
taken  into  account. 

the  proportional 

share  of 

METHOD  2:  Requirement  deduction  method 

METHOD  2: Requirement  deduction  method 

adjusted 

The 
participating 
difference  between(2): 

solvency 

situation 
insurance  undertaking 

of 
is 

the  UNCHANGED 
the 

(i)  the  sum  of  the  elements  eligible  for  the 
solvency  margin 
participating 
of 
undertaking; 

the 

and 

(ii) the sum  of: 

the  proportional 

(a)  the  solvency  requirement  of  the  participating 
undertaking; 
(b) 
the  solvency 
requirement  of  the  related  undertaking;  if  the 
related  undertaking  is  a  subsidiary  and  has  a 
solvency  deficit,  the  total  requirement  has  to  be 
taken  into  account. 

share  of 

(2)  The  participation  in  a  related  undertaking 
must be included  at the net asset value of shares. 

METHOD  3:  Accounting 
method 

consolidation-based  METHOD  3:  Accounting 

consolidation-based 

method 

The  calculation  of 
situation  of  the  participating  undertaking  shall 
start  from  the  consolidated  accounts  in  order  to 

the  adjusted 

solvency  UNCHANGED 

19 

INITIAL  PROPOSAL 
calculate  the  consolidated  elements  eligible  for 
the  solvency  margin  of  the  participating  and  the 
in  accordance 
related  undertakings  concerned 
with  Directive  9Î/674/EEC 
and  Directive 
73/239/EEC  and  Directive  79/267/EEC,  as 
and 
amended 
92/96/EEC. 

by  Directives 

92/49/EEC 

AMENDED  PROPOSAL 

adjusted 

The 
solvency 
participating  undertaking 
between: 

situation 
is 

the 

of 

the 
difference 

(i)  the  elements  eligible  for  the  solvency  margin 
as shown  in the consolidated  accounts; 
and 
(ii)  the  sum  of  the  solvency  requirement  of  the 
(he 
participating  undertaking,  and 
full  or 
relevant  proportional  share  of 
the  solvency 
requirement  of  the  related  undertaking.  If  the 
related  undertaking  is  a  subsidiary  and  has  a 
solvency  deficit,  its  solvency  requirement  shall 
be taken  into account  in  full. 

2.2.  Related  reinsurance  undertaking 

2.2. Related  reinsurance  undertaking 

For  each  related  reinsurance  undertaking  of  an 
insurance  undertaking,  a  notional 
solvency 
requirement  shall  be  established  according  to  the 
same  rules  that  have  been  laid  down  in  Article 
16 (3) of  Directive  73/239/EEC  or  Article  18 (3) 
of  Directive  79/267/EIIC.  The  same  own  funds 
elements  for  the  reiaied  reinsurance  undertaking 
shall  be  recognized  as  eligible  for  its  national 
own  funds,  as  those  according  to  the  rules  laid 
down  in  Article  24  of  Directive  92/49/EEC  or 
Article  25  of  Directive  92/96/EEC.  The  value  of 
the  assets  and 
liabilities  shall  be  assessed 
according  to  the  same  rules  that  have  been  laid 
down  in  Directive  73/239/EEC  and  Directive 
79/267/EEC, 
by  Directives 
amended 
92/49/EEC  and  92/96/EEC. 

as 

adjusted 

solvency 

The 
the 
participating  insurance  undertaking  is  obtained 
by  applying  the  methods  and  general  principles 
described  above. 

situation 

of 

UNCHANGED 

UNCHANGED 

2.3.  Intermediate 

insurance  holding  company 

2.3.  Intermediate 

insurance  holding  company 

Methods  1 and  2 

Methods  1 and  2 

insurance  holding  company  which 

For  each  participating  insurance  undertaking  in  For  each  participating  insurance  undertaking  in 
is  a 
is  a  an 
an 
insurance 
participating 
undertaking  or 
the 
adjusted  solvency  situation  shall  be  calculated  adjusted  solvency  situation  shall  be  calculated 
the  methods  and  general  principles 
applying  the  methods  and  genera!  principles  applying 

in 
reinsurance  undertaking, 

in 
reinsurance  undertaking, 

insurance  holding  company  which 

insurance  participating 

the  undertaking  or 

undertaking 

undertaking 

an 

an 

20 

INITIAL  PROPOSAL 
described above, mutatis mutandis. 

AMENDED  PROPOSAL 
described  above,  mutatis  mutandis.  When 
carrying  out  this  calculation,  resources  of  the 
insurance  holding  company  which  fulfil 
the 
same  conditions  as  laid  down  in  Article  15 
paragraph  1  of  Directive  73/239/EEC  or  in 
Article  18  of  Directive  79/267/EEC  shall  be 
recognized  as elements  eligible  for  the  solvency 
margin. 

Method 3 

Method 3 

The  insurance  holding  company  shall  be  taken 
into  account  in  the  assessment  by  integration  in 
the  accounting  consolidation  applying 
the 
methods  and general  principles described  above, 
mutatis mutandis. 

The  insurance  holding  company  shall  be  taken 
into  account  in  the  assessment  by  integration  in 
the  accounting  consolidation  applying 
the 
methods  and  general principles  described  above, 
mutatis  mutandis.  When  carrying  out 
this 
calculation,  resources  of  the  insurance  holding 
company which fulfil  the same conditions as laid 
down  in  Article  16  paragraph  1  of  Directive 
73/239/EEC  or 
in  Article  18  of  Directive 
79/267/E"EC  shall  be  recognized  as  elements 
eligible for the solvency  margin. 

3.  Undertakings  in third  countries 

3.  Undertakings  in third countries 

W1 îen  calculating  the  adjusted  solvency  of  an 
insurance  undertaking  w 
nich  is  a  participating 
undertaking  m  a 
insurance 
undertaking,  the  latter  shall  be  treated,  for  the 
sole purpose of that calculation, in a similar way 
to  a  related  insurance  undertaking,  by  applying 
the  general  principles  and  methods  described  m 
this Annexe 

third  country 

)ds 

However,  when  the  third  country  in  which  that 
undertaking  is  established  makes  it  subject "to 
authorization  and  imposes  on  it  a  solvency 
requirement  comparable  to  that  laid  down  In 
Directives  73/239/EEC  or  79/267/EEC,  taking 
into  account  the  elements  of  cover  of  that 
requirement,  Member  States  may  provide  that 
the calculation  shall take into account, as regards 
that  undertaking,  the  solvency  requirement  and 
the  elements  eligible  to  satisfy  that  requirement 
as laid down by the third country  in question. 

UNCHANGED 

legal 

there  are 

impediments 

Where 
to  the 
transfer  of  the  information  necessary  for  the 
inclusion  of  a  related  undertaking  situated  in  a 
third  country  as  referred  to  in  Article  9 (2),  the 
calculation  shall, 
the  methods 
referred  to  in  this  Annex,  deduct  from  the 
the  adjusted  solvency 
elements  eligible  for 
margin,  the  book  value  in  the  participating 
undertaking-  of  all  elements  eligible  for  the 
solvency margin of the related undertaking. 

in  applying 

21 

INITIAL  PROPOSAL 

AMENDED  PROPOSAL 

4.  Non-spcciHed  cases 

DELETED 

The  competent  authorities  shall  require  in  cases 
that  are  not  covered  in  2.1-2.3,  an  appropriate 
combination  of the described  methods. 

ANNEX  II 

ANNEX  II 

SUPPLEMENTARY  SUPERVISORY 
METHODS  FOR  INSURANCE 
UNDERTAKINGS  THAT  ARE 
SUBSIDIARIES  OF  AN  INSURANCE 
HOLDING  COMPANY  WHICH  IS  THE 
ULTIMATE  PARENT  OF  AN  INSURANCE 
UNDERTAKING  IN  A  GROUP 

SUPPLEMENTARY  SUPERVISORY 
METHODS  FOR  INSURANCE 
UNDERTAKINGS  THAT  ARE 
SUBSIDIARIES  OF  AN  INSURANCE 
HOLDING  COMPANY  WHICH  !S  T HE 
ULTIMATE  PARENT  OF  AN  INSURANCE 
UNDERTAKING  IN  A  GROUP 

1. Choice of supplementary  supervisory  method 

1.  UNCHANGED 

-  One  of  the  methods  described  below  shall  be 
applied  in  order  to  check  that  its  capital 
is 
sufficient. 
-  In  the  case  of  insurance  undertakings  referred 
to  in  Article  3  paragraph  2,  which  are  the 
subsidiaries  of  an  insurance  holding  company 
and  which  are  established  in  different  Member 
States,  the  competent  authorities  shall  ensure 
that  the  methods  described  in  this  Annex  are 
applied  in a coherent  manner. 
-  The  competent  authorities  shall  exercise  the 
same 
supervision 
supplementary 
frequency  as  (he  calculation  of  the  solvency 
margin  for  insurance  undertakings  according  to 
Directives  73/239/1 -EC and  79/267/EEC. 

the 

in 

2.  Methods 

2.  Methods 

2.I.  'Solvency  warning  test ' 

2.1.  'Solvency  warning  tesf 

The  capital  of  an  insurance  holding  company 
shall  equal  or  exceed  the  sum  of  the  solvency 
insurance 
its 
requirements 
the 
undertakings 
solvency 
reinsurance 
its 
requirements 
undertakings. 

related 
notional 

of 
and 
of 

related 

The  resources  of  an  insurance  holding  company 
which  fulfil  the  same  conditions  as  laid  down  in 
Article  16  paragraph  1 of  Directive  73/23 9/EEC 
or  in  Article  18  of  Directive  79/267/EEC  shall 
the  sum  oT~tEë  sôTv ency 
equal  or  exceed 
insurance 
of 
requirements 
solvency 
and. 
undertakings 
requirements 
reinsurance 
of 
undertakings, 

related 
notional 

its 
the 
its 

related 

2.2.  'Accounting  consolidation  test * 

2.2.  'Accountingconsolidation 

lest^ 

The  capital  situation  of  an  insurance  holding  The  resources  of  an  insurance  holding  company 
company  must  equal  or  exceed  the  sum  of  the  must  equaF  or  exceed  the  sum  of  the  solvency 
insurance 
solvency  requirements  of  its  related  insurance 
solvency 
the 
undertakings 
reinsurance 
its 
requirements 

requirements 
solvency  undertakings 
requirements 

related 
notional 

its 
the 
its 

of 
and 
of 

reinsurance 

notional 

and 
of 

related 

related 

22 

INITIAL  PROPOSAL 

this 
undertakings.  The  capital  situation  of 
in 
insurance  holding  company 
accordance  with  the  accounting  consolidation 
method  in Annex  1, under 2.3, method 3. 

is  calculated 

AMENDED  PROPOSAL 
undertakings.  The  resources  of  this  insurance 
holding  company,  including  the  elements  which 
fulfil  the same conditions as laid down in Article 
16  paragraph  1 of  Directive  73/239/EEC  orTn 
Article  18  of  Directive  79/267/EEC,  are 
calculated  in  accordance  with  the  accounting 
consolidation  method  in  Annex  1,  under  2.3, 
method 3. 

3. Undertakings in third  countries 

3. Undertakings in third countries 

legal 

there  are 

impediments 

Where 
to  the 
transfer  of  the  information  necessary  for  the 
inclusion  of  a  related  undertaking  situated  in  a 
third  country  as referred  to  in Article  10 (2), the 
calculation  shall, 
the  methods 
referred 
to  in  this  Annex,  deduct  from  the 
elements  eligible  for  the  adjusted  solvency 
margin the book value of the participation  and of 
all  other  elements  eligible  for  the  solvency 
margin  of  the  related  undertaking,  which  are 
held by the insurance undertaking. 

in  applying 

UNCHANGED 

23 

ISSN 0254-1475 

COM(98) 38  final 

DOCUMENTS 

EN 

10  09 

Catalogue  number  :  CB-CO-98-036-EN-C 

ISBN  92-78-30358-5 

Office  for Official  Publications of the European  Communities 

L-2985  Luxembourg 

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