Proposal for a Directive of the European Parliament and of the Council concerning life assurance (recast version) (presented by the Commission)
Date: 2000-06-28
Institutions: European Commission
Subjects: EC Directive, freedom to provide services, insurance company, life assurance, single market

19.12.2000

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Official Journal of the European Communities

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II

(Preparatory Acts)

COMMISSION

Proposal for a Directive of the European Parliament and of the Council concerning life assurance
(recast version)

(2000/C 365 E/01)

COM(2000) 398 final (cid:26) 2000/0162(COD)

(Submitted by the Commission on 28 June 2000)

THE EUROPEAN PARLIAMENT AND THE
COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community, and in particular Articles 47(2) and 55 thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of
Committee,

the Economic and Social

Acting in accordance with the procedure laid down in Article
251 of the Treaty,

the business of direct

(1) The First Council Directive 79/267/EEC of 5 March 1979
on the coordination of
laws, regulations and adminis-
trative provisions relating to the taking up and pursuit
life assurance (1), Council
of
Directive 90/619/EEC of 8 November 1990 on the coor-
dination of laws, regulations and administrative provisions
relating to direct life assurance laying down provisions to
facilitate the effective exercise of
freedom to provide
services and amending Directive 79/267/EEC (2) and
Council Directive 92/96/EEC of 10 November 1992 on
the coordination of laws, regulations and administrative
provisions relating to direct life assurance and amending
Directives 79/267/EEC and 90/619/EEC (third
life
assurance Directive) (3) have been substantially amended
several times. Since further amendments are to be made,
the Directives should be recast in the interests of clarity.

it

is essential

life assurance,

(2) In order to facilitate the taking-up and pursuit of the
to eliminate
business of
certain divergences which exist between national super-
visory legislations. In order to achieve this objective and
at the same time ensure adequate protection for policy-
holders and beneficiaries
the
provisions relating to the financial guarantees required
of life assurance undertakings should be coordinated.

in all Member States,

(1) OJ L 63, 13.3.1979, p. 1; Directive as last amended by Directive
95/26/EC of the European Parliament and of the Council (OJ L 168,
18.7.1995, p. 7).

(2) OJ L 330, 29.11.1990, p. 50; Directive as amended by Directive

92/96/EEC (OJ L 360, 9.12.1992, p. 1).

(3) OJ L 360, 9.12.1992, p. 1; Directive as amended by Directive

95/26/EC.

(3) It is necessary to complete the internal market in direct
life assurance, from the point of view both of the right of
establishment and of the freedom to provide services in
the Member States, to make it easier for assurance under-
takings with head offices in the Community to cover
commitments situated within the Community and to
make it possible for policy-holders to have recourse not
only to assurers established in their own country, but also
to assurers which have
in the
Community and are established in other Member States.

their head office

(4) Under

the Treaty, any discrimination with regard to
freedom to provide services based on the fact that an
undertaking is not established in the Member State in
which the services are provided is prohibited. That
prohibition applies to services provided from any estab-
lishment in the Community, whether it be the head office
of an undertaking or an agency or branch.

(5) This Directive therefore represents an important step in
the merging of national markets into an integrated market
with a view to enabling all policy-holders to have recourse
to any assurer with a head office in the Community who
carries on business there, under the right of establishment
or the freedom to provide services, while guaranteeing
them adequate protection.

the body of Community
(6) This Directive forms part of
legislation in the field of
life assurance which also
includes Council Directive 91/674/EEC of 19 December
1991 on the annual accounts and consolidated accounts
of insurance undertakings (4).

(7) The approach adopted consists in bringing about such
harmonisation as is essential, necessary and sufficient to
achieve the mutual recognition of authorisations and
prudential control systems,
thereby making it possible
the
to grant a single authorisation valid throughout
Community and apply the principle of supervision by
the home Member State.

(4) OJ L 374, 31.12.1991, p. 7.

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(8) As a result, the taking-up and the pursuit of the business
of assurance are subject to the grant of a single official
authorisation issued by the competent authorities of the
Member State in which an assurance undertaking has its
head office. Such authorisation enables an undertaking to
carry on business throughout the Community, under the
right of establishment or the freedom to provide services.
The Member State of the branch or of the provision of
services may not require assurance undertakings which
wish to carry on assurance business there and which
have already been authorised in their home Member
State to seek fresh authorisation.

(9) Whereas the competent authorities should not authorise
or continue the authorisation of an assurance undertaking
where they are liable to be prevented from effectively
exercising their supervisory functions by the close links
between that undertaking and other natural or legal
persons. Assurance undertakings already authorised must
also satisfy the competent authorities in that respect.

(10) The definition of =close links> in this Directive lays down
minimum criteria and that does not prevent Member
States from applying it to situations other than those
envisaged by the definition.

(11) The sole fact of having acquired a significant proportion
of a company’s capital does not constitute participation
for the purposes of this Directive if that holding has been
acquired solely as a temporary investment which does not
make it possible to exercise influence over the structure
or financial policy of the undertaking.

(12) The principles of mutual

stricter

such as

authorities

should not grant or
factors

recognition and of home
Member State supervision require that Member States’
should
competent
withdraw authorisation where
the
content of programmes of operations, the geographical
distribution of the activities actually carried on indicate
clearly that an assurance undertaking has opted for the
legal system of one Member State for the purpose of
evading the
in another
standards
Member State within whose territory it carries on or
intends to carry on the greater part of its activities. An
assurance undertaking which is a legal person must be
authorised in the Member State in which it has its
registered office. An assurance undertaking which is not
a legal person must have its head office in the Member
State in which it has been authorised.
In addition,
Member States must require that an assurance under-
taking’s head office always be situated in its home
Member State and that it actually carries on its business
there.

in force

(14) A classification by class of insurance is necessary in order
to

in particular,

the activities

subject

to determine,
compulsory authorisation.

(15) Certain mutual associations which, by virtue of their legal
status, fulfil requirements as to security and other specific
financial guarantees should be excluded from the scope of
this Directive. Certain organisations whose activity covers
only a very restricted sector and is limited by their articles
of association should also be excluded.

(16) Life assurance is subject

to official authorisation and
supervision in each Member State. The conditions for
the granting or withdrawal of such authorisation should
be defined.

(17)

It is desirable to clarify the powers and means of super-
vision vested in the competent authorities.
is also
desirable to lay down specific provisions regarding the
taking-up, pursuit and supervision of activity by way of
freedom to provide services.

It

(18) The competent authorities of home Member States should
be responsible for monitoring the financial health of
assurance undertakings, including their state of solvency,
the establishment of adequate technical provisions and the
covering of those provisions by matching assets.

(19)

is appropriate to provide for

the possibility of
It
exchanges of information between the competent auth-
orities and authorities or bodies which, by virtue of
their function, help to strengthen the stability of
the
financial system.
In order to preserve the confidential
nature of the information forwarded, the list of addressees
must remain within strict limits.

(20) Certain behaviour, such as fraud and insider offences, is
the
even when involving undertakings

including integrity, of

liable to affect
financial
system,
other than financial ones.

the stability,

(21)

It is necessary to specify the conditions under which the
abovementioned exchanges of information are authorised.

(22) Where it is stipulated that information may be disclosed
only with the express agreement of the competent auth-
orities,
their
agreement subject to compliance with strict conditions.

these may, where

appropriate, make

(13) For practical reasons, it is desirable to define provision of
services taking into account both the assurer’s estab-
lishment and the place where the commitment is to be
covered. Therefore, commitment should also be defined.
Moreover, it is desirable to distinguish between activities
pursued by way of establishment and activities pursued by
way of freedom to provide services.

(23) For the purpose of strengthening the prudential super-
vision of assurance undertakings and protection of
clients of assurance undertakings, it should be stipulated
that an auditor must have a duty to report promptly to
the competent authorities, wherever, as provided for by
this Directive, he becomes aware, while carrying out his
tasks, of certain facts which are liable to have a serious
effect on the financial situation or the administrative and
accounting organisation of an assurance undertaking.

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(24) Having regard to the aim in view,

is desirable for
Member States to provide that such a duty should apply
in all circumstances where such facts are discovered by an
auditor during the performance of his tasks in an under-
taking which has close links with an assurance under-
taking.

it

(25) The duty of auditors to communicate, where appropriate,
to the competent authorities certain facts and decisions
concerning an assurance undertaking which they discover
during the performance of their tasks in a non-financial
undertaking does not in itself change the nature of their
tasks in that undertaking nor the manner in which they
must perform those tasks in that undertaking.

(26) The performance of the operations of management of
group pension funds cannot under any circumstances
affect the powers conferred on the respective authorities
with regard to the entities holding the assets.

(27) Certain provisions of

this Directive define minimum
standards. A home Member State may lay down stricter
rules for assurance undertakings authorised by its own
competent authorities.

(28) The competent authorities of the Member States must
have at their disposal such means of supervision as are
necessary to ensure the orderly pursuit of business by
the Community
assurance undertakings
whether carried on under the right of establishment or
the freedom to provide services. In particular, they must
be able to introduce appropriate safeguards or impose
and
sanctions
infringements of the provisions on assurance supervision.

irregularities

throughout

preventing

aimed

at

(29) The provisions on transfer of portfolio should include
provisions specifically concerning the transfer to another
undertaking of the portfolio of contracts concluded by
way of freedom to provide services.

(30) The provisions on transfers of portfolios must be in line
with the single legal authorisation system provided for in
this Directive.

(31) Undertakings formed after the dates referred to in Article
18(3) should not be authorised to carry on life assurance
and non-life insurance activities simultaneously. Member
States should be allowed to permit undertakings which,
on the dates refered to in Article 18(3), carried on these
activities simultaneously to continue to do so provided
that separate management is adopted for each of their
activities,
life
policy-holders and non-life policy-holders are safeguarded
and the minimum financial obligations in respect of one
of
the activities are not borne by the other activity.
Member States should be given the option of requiring
those existing undertakings established in their territory
which carry on life assurance and non-life insurance

the respective interests of

in order that

simultaneously to put an end to this practice. Moreover,
specialised undertakings
to special
supervision where a non-life undertaking belongs to the
same financial group as a life undertaking.

should be subject

(32) Nothing in this Directive would prevent a composite
undertaking from dividing itself into two undertakings,
the other in
one active in the field of
In order to allow such division to
non-life insurance.
take place under
is
the best possible conditions,
in accordance with
desirable to permit Member States,
to provide for
Community rules of competition law,
in particular with regard
appropriate tax arrangements,
to the capital gains such division could entail.

life assurance,

it

(33) Those Member States which so wish should be able to
grant the same undertaking authorisations for the classes
referred to in Annex I and the insurance business coming
under classes 1 and 2 in the Annex to Council Directive
73/239/EEC of 24 July 1973 on the coordination of laws,
regulations and administrative provisions relating to the
taking-up and pursuit of the business of direct insurance
assurance (1). That possibility may,
other
to certain conditions as regards
however, be subject
compliance with
on
winding-up.

accounting

than life

rules

rules

and

(34) It is necessary from the point of view of the protection of
lives assured that every assurance undertaking should
establish adequate technical provisions. The calculation
of
the most part on
is based for
actuarial principles. Those principles should be coor-
dinated in order to facilitate mutual recognition of the
prudential rules applicable in the various Member States.

such provisions

(35) It is desirable, in the interests of prudence, to establish a
minimum of coordination of rules limiting the rate of
interest used in calculating the technical provisions. For
the purposes of such limitation, since existing methods
are all equally correct, prudential and equivalent, it seems
appropriate to leave Member States a free choice as to the
method to be used.

(36) The

the

calculation of

governing
spread,

localisation and matching of

technical
rules
provisions,
the
assets used to cover technical provisions must be coor-
dinated in order to facilitate the mutual recognition of
Member States’
take
capital movements
account of
the
provided for
the Treaty and the
progress made by the Community towards economic
and monetary union.

rules. That
liberalisation of

coordination must

in Article 56 of

(1) OJ L 228, 16.8.1973, p. 3; Directive as last amended by Directive

95/26/EC.

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(37) The home Member State may not

require assurance
undertakings to invest the assets covering their technical
provisions in particular categories of assets, as such a
requirement would be incompatible with the liberalisation
of capital movements provided for in Article 56 of the
Treaty.

course of business the solvency margin in no event falls
below a minimum of security. The whole or a specified
part of this guarantee fund must consist of explicit asset
items.

that

implicit

assets,
fluctuations.

(38) It is necessary that, over and above technical provisions,
including mathematical provisions, of sufficient amount
to meet
their underwriting liabilities, assurance under-
takings should possess a supplementary reserve, known
as the solvency margin, represented by free assets and,
the competent authority, by
with the agreement of
against
to provide
in order
other
business
the
to ensure
In order
requirements imposed for such purposes are determined
according to objective criteria whereby undertakings of
the same size will be placed on an equal
footing as
regards competition,
it is desirable to provide that this
margin shall be related to all the commitments of the
undertaking and to the nature and gravity of the risks
presented by the various activities falling within the
scope of
this Directive. This margin should therefore
vary according to whether the risks are of investment,
death or management only.
It should accordingly be
determined in terms of mathematical provisions and
risk underwritten by an undertaking, of
capital at
premiums
technical
or
provisions only or of the assets of tontines.

contributions

received,

of

(39) Directive 92/96/EEC provided for a provisional definition
of a regulated market, pending the adoption of a directive
on investment services in the securities field, which would
harmonise that concept at Community level. Council
Directive 93/22/EEC of 10 May 1993 on investment
services in the securities field (1), provides for a definition
of regulated market, although it excludes from its scope
life assurance activities. It is therefore appropriate to also
apply the concept of regulated market to life assurance
activities.

(40) The list of items of which the solvency margin required
by this Directive may be made up takes account of new
financial instruments and of the facilities granted to other
financial
their own
institutions for the constitution of
funds.

(41)

It is necessary to require a guarantee fund, the amount
and composition of which are such as to provide an
adequate
assurance
resources when they are set up and that in the subsequent

undertakings

possess

that

the

(1) OJ L 141, 11.6.1993, p. 27; Directive as last amended by European
Parliament and Council Directive 97/9/EC (OJ L 84, 26.3.1997, p.
22).

(42) The provisions in force in the Member States regarding
contract law applicable to the activities referred to in this
Directive differ. The harmonisation of assurance contract
law is not a prior condition for the achievement of the
internal market in assurance. Therefore, the opportunity
afforded to the Member States of imposing the application
of their law to assurance contracts covering commitments
within their
likely to provide adequate
safeguards for policy-holders. The freedom to choose, as
the law applicable to the contract, a law other than that
of the State of the commitment may be granted in certain
cases, in accordance with rules which take into account
specific circumstances.

territories

is

(43) For life assurance contracts the policy-holder should be
given the opportunity of cancelling the contract within a
period of between 14 and 30 days.

(44) Within the framework of an internal market it is in the
policy-holder’s interest that they should have access to the
widest possible range of assurance products available in
the Community so that they can choose that which is best
suited to their needs. It is for the Member State of the
commitment to ensure that there is nothing to prevent
the marketing within its territory of all the assurance
products offered for sale in the Community as long as
they do not conflict with the legal provisions protecting
the general good in force in the Member State of the
commitment and in so far as the general good is not
safeguarded by the rules of
the home Member State,
provided that such provisions must be applied without
discrimination to all undertakings operating in that
Member State and be objectively necessary and in
proportion to the objective pursued.

(45) The Member States must be able to ensure that

the
assurance products and contract documents used, under
the right of establishment or the freedom to provide
services, to cover commitments within their territories
comply with such specific legal provisions protecting
the general good as are applicable. The systems of super-
vision to be employed must meet the requirements of an
internal market but their employment may not constitute
a prior condition for carrying on assurance business.
From this standpoint, systems for the prior approval of
policy conditions do not appear to be justified.
is
therefore necessary to provide for other systems better
suited to the requirements of an internal market which
enable every Member State to guarantee policy-holders
adequate protection.

It

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(46) It is necessary to make provision for cooperation between
the Member States and

the competent authorities of
between those authorities and the Commission.

(47) Provision should be made for a system of penalties to be
imposed when,
in the Member State in which the
commitment is entered into, an assurance undertaking
does not comply with those provisions protecting the
general good that are applicable to it.

(48) It is necessary to provide for measures in cases where the
financial position of the undertaking becomes such that it
is difficult for it to meet its underwriting liabilities.

(49) For the purposes of implementing actuarial principles in
conformity with this Directive, the home Member State
may require systematic notification of the technical bases
used for calculating scales of premiums and technical
provisions, with such notification of
technical bases
excluding notification of the general and special policy
conditions and the undertaking’s commercial rates.

(50) In an internal assurance market the consumer will have a
wider and more varied choice of contracts. If he is to
profit
fully from this diversity and from increased
competition, he must be provided with whatever
information is necessary to enable him to choose the
contract best
information
suited to his needs. This
requirement is all the more important as the duration
of commitments can be very long. The minimum
provisions must
therefore be coordinated in order for
the consumer to receive clear and accurate information
on the essential characteristics of the products proposed
to him as well as the particulars of the bodies to which
any complaints of policy-holders, assured persons or
beneficiaries of contracts may be addressed.

(51) Publicity for assurance products is an essential means of
enabling assurance business to be carried on effectively
within the Community. It is necessary to leave open to
assurance undertakings the use of all normal means of
the branch or of
advertising in the Member State of
provision of services. Member States may nevertheless
rules on the
require compliance with their national
form and content of advertising, whether
laid down
to Community legislation on advertising or
pursuant
adopted by Member States for reasons of
the general
good.

(52) Within the framework of the internal market, no Member
State may continue to prohibit the simultaneous carrying
on of assurance business within its territory under the
right of establishment and the freedom to provide
services.

(53) Some Member States do not subject assurance trans-
taxation, while the
forms of

to any form of

indirect
taxes

actions
majority

and other

special

apply

It

in which they are applied.

contribution. The structures and rates of such taxes and
contributions vary considerably between the Member
States
is desirable to
leading to distortions of
prevent existing differences
services between Member
competition in assurance
States. Pending subsequent harmonisation, application of
the tax systems and other forms of contribution provided
for by the Member States in which commitments entered
into are likely to remedy that problem and it is for the
Member States to make arrangements to ensure that such
taxes and contributions are collected.

(54) It is important to introduce Community coordination on
the winding-up of assurance undertakings. It is henceforth
essential to provide, in the event of the winding-up of an
assurance undertaking, that the system of protection in
place in each Member State must guarantee equality of
irrespective of
treatment
nationality and of
the method of entering into the
commitment.

for all assurance creditors,

(55) The coordinated rules concerning the pursuit of

the
business of direct
insurance within the Community
should, in principle, apply to all undertakings operating
on the market and, consequently, also to agencies and
the undertaking is
branches where the head office of
situated outside the Community. As regards the methods
of supervision this Directive lays down special provisions
for such agencies or branches, in view of the fact that the
the undertakings to which they belong are
assets of
situated outside the Community.

(56) It is desirable to provide for the conclusion of reciprocal
agreements with one or more third countries in order to
permit the relaxation of such special conditions, while
observing the principle that such agencies and branches
should not obtain more
than
Community undertakings.

favourable

treatment

(57) A provision should be made for a flexible procedure to
make it possible to assess reciprocity with third countries
on a Community basis. The aim of this procedure is not
to close the Community’s financial markets but rather, as
the Community intends to keep its financial markets open
to the rest of the world, to improve the liberalisation of
the global financial markets in other third countries. To
for
that end,
for procedures
negotiating with third countries. As a last resort,
the
possibility of taking measures involving the suspension
of new applications for authorisation or the restriction
of new authorisations should be provided for using the
regulatory procedure under Article 5 of Council Decision
1999/468/EC (1).

this Directive provides

(58) This Directive should establish provisions concerning
proof of good repute and no previous bankruptcy.

(1) OJ L 184, 17.7.1999, p. 23.

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(59) In order to clarify the legal regime applicable to life
assurance activities covered by this Directive,
some
provisions of Directives 79/267/EEC, 90/619/EEC and
92/96/EEC should be adapted. For that purpose some
provisions concerning the establishment of the solvency
margin and the rights acquired by branches of assurance
undertakings established before 1 July 1994 should be
amended. The content of
the scheme of operation of
branches of third country undertakings to be established
in the Community should also be defined.

the future development of

(60) Technical adjustments to the detailed rules laid down in
this Directive may be necessary from time to time to take
account of
the assurance
industry. The Commission will make such adjustments
as and when necessary, after consulting the Insurance
Committee set up by Council Directive 91/675/EEC (1),
the implementing powers conferred
in the exercise of
on it by the Treaty. These measures being measures of
general scope within the meaning of Article 2 of Decision
1999/468/EC, they should be adopted by the use of the
regulatory procedure provided for in Article 5 of that
Decision.

(a)

assurance undertaking: shall mean an undertaking which has
received official authorisation in accordance with Article 4;

(b) branch: shall mean an agency or branch of an assurance

undertaking;

Any permanent presence of an undertaking in the territory
of a Member State shall be treated in the same way as an
agency or branch, even if that presence does not take the
form of a branch or agency, but consists merely of an
office managed by the undertaking’s own staff or by a
person who is independent but has permanent authority
to act for the undertaking as an agency would;

(c)

establishment: shall mean the head office, an agency or a
branch of an undertaking;

(61) Provision must be made for the right to apply to the
courts should an authorisation be refused or withdrawn.

(d)

commitment: shall mean a commitment represented by one
of
insurance or operations referred to in
Article 2;

the kinds of

(62) Pursuant to Article 15 of the Treaty, account should be
taken of the extent of the effort which must be made by
certain economies at different stages of development.
Therefore, transitional arrangements should be adopted
for the gradual application of this Directive by certain
Member States.

(63) Directives 79/267/EEC and 90/619/EEC granted special
derogation with regard to some undertakings existing at
the time of the adoption of these Directives. Such under-
takings have thereafter modified their structure. Therefore
they do not need any longer such special derogation.

(64) This Directive should not affect the obligations of Member
States concerning the deadlines for transposition and for
application of the Directives set out in Annex IV, Part B,

HAVE ADOPTED THIS DIRECTIVE:

TITLE I

DEFINITIONS AND SCOPE

Article 1

Definitions

1.

For the purposes of this Directive:

(1) OJ L 374, 31.12.1991, p. 32.

(e) home Member State: shall mean the Member State in which
the head office of the assurance undertaking covering the
commitment is situated;

(f) Member State of the branch: shall mean the Member State in
which the branch covering the commitment is situated;

(g) Member State of the commitment: shall mean the Member
State where the policy-holder has his habitual residence or,
if the policy-holder is a legal person, the Member State
to which the contract
where the latter’s establishment,
relates, is situated;

(h) Member State of

the provision of services: shall mean the
Member State of the commitment, if the commitment is
covered by an assurance undertaking or a branch situated
in another Member State;

(i)

control: shall mean the relationship between a parent
undertaking and a subsidiary, as defined in Article 1 of
Council Directive 83/349/EEC (2), or a similar relationship
between any natural or legal person and an undertaking;

(2) OJ L 193, 18.7.1983, p. 1. Directive as last amended by the Act of

Accession of Austria, Finland and Sweden.

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(j)

qualifying holding: shall mean a direct or indirect holding in
an undertaking which represents 10 % or more of the
it
capital or of
possible to exercise a significant
the
the undertaking in which a holding
management of
subsists;

the voting rights or which makes

influence over

this definition,

in the context of
For the purposes of
Articles 8 and 15 and of
the other levels of holding
referred to in Article 15, the voting rights referred to in
Article 7 of Council Directive 88/627/EEC (1) shall be
taken into consideration;

(k) parent undertaking: shall mean a parent undertaking as
defined in Articles 1 and 2 of Directive 83/349/EEC;

(l)

subsidiary: shall mean a subsidiary undertaking as defined
in Articles 1 and 2 of Directive 83/349/EEC; any
subsidiary of a subsidiary undertaking shall also be
regarded as a subsidiary of
the undertaking which is
those undertakings’ ultimate parent undertaking;

(m) regulated market shall mean:

E in the case of a market situated in a Member State, a
regulated market as defined in Article 1, point (13) of
Directive 93/22/EEC, and

E in the case of a market situated in a third country, a
financial market recognised by the home Member State
of the assurance undertaking which meets comparable
requirements. Any financial
instruments dealt in on
that market must be of a quality comparable to that
of the instruments dealt in on the regulated market or
markets of the Member State in question;

(n)

competent authorities: shall mean the national authorities
which are empowered by law or regulation to supervise
assurance undertakings;

(o) matching assets: shall mean the representation of under-
writing liabilities which can be required to be met in a
particular currency by assets expressed or realisable in the
same currency;

(p)

localisation of assets: shall mean the existence of assets,
whether movable or immovable, within a Member State
but shall not be construed as involving a requirement that
movable assets be deposited or that immovable assets be
subjected to restrictive measures such as the registration of
mortgages; assets represented by claims against debtors
shall be regarded as situated in the Member State where
they are realisable;

(q)

capital at risk: shall mean the amount payable on death less
the mathematical provision for the main risk;

(r)

close links: shall mean a situation in which two or more
natural or legal persons are linked by:

(1) OJ L 348, 17.12.1988, p. 62.

(i) participation, which shall mean the ownership, direct or
by way of control, of 20 % or more of the voting
rights or capital of an undertaking; or

(ii) control, any subsidiary undertaking of a subsidiary
undertaking shall also be considered a subsidiary of
the parent undertaking which is at the head of those
undertakings.

A situation in which two or more natural or legal persons
are permanently linked to one and the same person by a
control relationship shall also be regarded as constituting a
close link between such persons.

2. Wherever this Directive refers to the euro, the conversion
value in national currency to be adopted shall as from 31
December of each year be that of
the
preceding month of October
for which euro conversion
values are available in all the Community currencies.

the last day of

Article 2

Scope

This Directive concerns the taking up and pursuit of the self-
employed activity of direct
insurance carried on by under-
takings which are established in a Member State or wish to
become established there in the form of the activities defined
below:

1. The following kinds of

insurance where they are on a

contractual basis:

in particular, assurance on survival

(a) life assurance, that is to say, the class of insurance which
comprises,
to a
stipulated age only, assurance on death only, assurance
on survival to a stipulated age or on earlier death, life
assurance with return of premiums, marriage assurance,
birth assurance;

(b) annuities;

that
personal

(c) supplementary insurance carried on by life assurance
insurance
is to say,
undertakings,
against
for
injury
employment, insurance against death resulting from an
accident and insurance against disability resulting from
an accident or sickness, where these various kinds of
insurance are underwritten in addition to life assurance;

in particular,

incapacity

including

(d) the type of insurance existing in Ireland and the United
Kingdom known as permanent health insurance not
subject to cancellation.

2. The following operations, where they are on a contractual
basis, in so far as they are subject to supervision by the
administrative authorities responsible for the supervision of
private insurance:

(a) tontines whereby associations of subscribers are set up
with a view to jointly capitalising their contributions
and
thus
distributing
accumulated among the survivors or among the bene-
ficiaries of the deceased;

subsequently

assets

the

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(b) capital redemption operations based on actuarial calcu-
lation whereby, in return for single or periodic payments
agreed in advance, commitments of specified duration
and amount are undertaken;

(c) management of group pension funds,

i.e. operations
consisting, for the undertaking concerned, in managing
the investments, and in particular the assets representing
the reserves of bodies that effect payments on death or
survival or in the event of discontinuance or curtailment
of activity;

(d) the operations referred to in (c) where they are accom-
panied by insurance covering either conservation of
capital or payment of a minimum interest;

(e) the operations carried out by insurance companies such
as those referred to in Chapter 1, Title 4 of Book IV of
the French =Code des assurances>.

3. Operations relating to the length of human life which are
prescribed by or provided for in social insurance legislation,
when they are effected or managed at their own risk by
assurance undertakings in accordance with the laws of a
Member State.

Article 3

Activities and bodies excluded

This Directive shall not concern:

1. subject

to the application of Article 2(1)(c),

the classes

designated in the Annex to Directive 73/239/EC;

2. operations of provident and mutual-benefit

institutions
whose benefits vary according to the resources available
and which require each of their members to contribute at
the appropriate flat rate;

3. operations carried out by organisations other than under-
takings referred to in Article 2, whose object is to provide
benefits for employed or self-employed persons belonging to
an undertaking or group of undertakings, or a trade or
group of trades,
in the event of death or survival or of
discontinuance or curtailment of activity, whether or not
the commitments arising from such operations are fully
covered at all times by mathematical provisions;

6. mutual associations, where:

E the articles of association contain provisions for calling
up additional contributions or reducing their benefits or
claiming assistance from other persons who have
undertaken to provide it, and

E the annual contribution income for the activities covered
by this Directive does not exceed 500 000 euro for
three consecutive years. If this amount is exceeded for
three consecutive years this Directive shall apply with
effect from the fourth year;

7.

=Versorgungsverband deutscher Wirtschaftsorganisa-
the
tionen>
in
in Germany or the =Caisse d’Øpargne de l’Itat>
Luxembourg unless their statutes are amended as regards
the scope of their activities;

8. the pension activities of pension insurance undertakings
prescribed in the Employees’ Pension Act (TEL) and other
related Finnish legislation provided that:

(a) pension insurance companies which already under
Finnish law are obliged to have separate accounting
and management systems for their pension activities
will furthermore, as from the date of accession, set up
separate legal entities for carrying out these activities;

(b) the Finnish authorities shall allow in a non-discrimi-
natory manner all nationals and companies of Member
States to perform according to Finnish legislation the
activities
to this
exemption whether by means of:

in Article 2 related

specified

E ownership or participation in an existing insurance

company or group;

E creation

or
companies or groups,
companies;

participation

of

new insurance
including pension insurance

(c) the Finnish authorities will submit to the Commission
for approval a report within three months from the date
of accession, stating which measures have been taken to
split up TEL activities from normal insurance activities
carried out by Finnish insurance companies in order to
conform to all the requirements of this Directive.

4. subject to the application of Article 2, point (3), insurance

forming part of a statutory system of social security;

THE TAKING UP OF THE BUSINESS OF LIFE ASSURANCE

TITLE II

5. organisations which undertake to provide benefits solely in
the event of death, where the amount of such benefits does
not exceed the average funeral costs for a single death or
where the benefits are provided in kind;

Article 4

Principle of authorisation

The taking-up of the activities covered by this Directive shall be
subject to prior official authorisation.

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Official Journal of the European Communities

C 365 E/9

Such authorisation shall be sought from the authorities of the
home Member State by:

(a) any undertaking which establishes its head office in the

territory of that State;

(b) any undertaking which, having received the authorisation
required in the first subparagraph, extends its business to
an entire class or to other classes.

Article 5

Scope of authorisation

1.
Authorisation shall be valid for the entire Community. It
shall permit an assurance undertaking to carry on business
there, under either the right of establishment or freedom to
provide services.

2.
Authorisation shall be granted for a particular class of
assurance as listed in Annex I. It shall cover the entire class,
unless the applicant wishes to cover only some of the risks
pertaining to that class.

The competent authorities may restrict authorisation requested
for one of the classes to the operations set out in the scheme of
operations referred to in Article 7.

Each Member State may grant authorisation for two or more of
the classes, where its national laws permit such classes to be
carried on simultaneously.

Article 6

Conditions for obtaining authorisation

The home Member State shall require every assurance

1.
undertaking for which authorisation is sought to:

(a) adopt one of the following forms:

E in the case of

vennootschap>,

the Kingdom of Belgium:

=sociØtØ
anonyme/naamloze
en
commandite par actions/commanditaire vennootschap
op
d’assurance mutuelle/
onderlinge verzekeringsvereniging>, =sociØtØ coopØrative/
coJperatieve vennootschap>,

=association

aandelen>,

=sociØtØ

E in the case of the Kingdom of Denmark: =aktieselskaber>,
=gensidige selskaber>, =pensionskasser omfattet af lov om
forsikringsvirksomhed (tvKrgLende pensionskasser)>,

E in the case of

the Federal Republic of Germany:
=Aktiengesellschaft>,
=Versicherungsverein auf Gegensei-
tigkeit>, =Jffentlich-rechtliches Wettbewerbsversicherung-
sunternehmen>,

E in the case of Ireland: incorporated companies limited
by shares or by guarantee or unlimited,
societies
registered under the Industrial and Provident Societies
Acts and societies registered under the Friendly Societies
Acts,

E in the case of the Italian Republic: =societÆ per azioni>,

=societÆ cooperativa>, =mutua di assicurazione>,

E in the case of the Grand Duchy of Luxembourg: =sociØtØ
anonyme>,
actions>,
=association d’assurances mutuelles>, =sociØtØ coopØrative>,

commandite

=sociØtØ

par

en

E in the case of

=naamloze vennootschap>,
chappij>,

the Kingdom of

the Netherlands:
=onderlinge waarborgmaats-

E in the case of

the United Kingdom:

incorporated
limited by shares or by guarantee or
companies
unlimited societies registered under the Industrial and
Provident Societies Acts, societies registered or incor-
porated
the
Friendly
association of underwriters known as Lloyd’s,

Societies Acts,

under

the

E in the case of the Hellenic Republic:

=Æ(cid:2)(cid:3)(cid:2)ı(cid:5)(cid:6) (cid:7)(cid:8)ÆØæ(cid:11)Æ>;

E in the case of

the Kingdom of Spain:

=sociedad

anonima>, =sociedad mutua>, =sociedad cooperativa>,

E in the case of

the Portuguese Republic:

=sociedade

anNnima>, =mœtua de seguros>,

E in the case of

the Republic of Austria:

=Aktienge-

sellschaf>, =Versicherungsverein auf Gegenseitigkeit>,

E in the case of

the Republic of Finland:
vakuutusyhtiJ/Jmsesidigt fJrsPkringsbolag>,
sakeyhtiJ/fJrsPkringsaktiebolag>,
fJrsPkringsfJrening>,

=keskinPinen
=vakuutuso-
=vakuutusyhdistys/

E in the case of Kingdom of Sweden:
=Jmsesidiga fJrsPkringsbolag>,

tiebolag>,
ningar>.

=fJrsPkringsak-
=understJdsfJre-

An assurance undertaking may also adopt the form of a
European company when that has been established.

Furthermore, Member States may, where appropriate, set
up undertakings in any public-law form provided that
insurance operations
such bodies have as their object
to those under which
under
private-law undertakings operate;

conditions

equivalent

(b) limit

its objects to the business provided for

in this
Directive and operations directly arising therefrom, to the
exclusion of all other commercial business;

(c) submit a scheme of operations in accordance with Article

7;

E in the case of the French Republic:

=sociØtØ anonyme>,
=sociØtØ d’assurance mutuelle>, =institution de prØvoyance
rØgie par le code de la sØcuritØ sociale>,
=institution de
prØvoyance rØgie par le code rural> and =mutuelles rØgies
par le code de la mutualitØ>

(d) possess the minimum guarantee fund provided for

in

Article 29(2);

(e) be effectively run by persons of good repute with appro-

priate professional qualifications or experience.

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Moreover, where close links exist between the assurance under-
taking and other natural or legal persons, the competent auth-
orities shall grant authorisation only if
those links do not
prevent the effective exercise of their supervisory functions.

The provisions set out in paragraphs 1 to 4 may not
5.
require that any application for authorisation be considered
in the light of the economic requirements of the market.

The competent authorities shall also refuse authorisation if the
laws, regulations or administrative provisions of a non-member
country governing one or more natural or legal persons with
which the undertaking has close links, or difficulties involved
in their enforcement, prevent the effective exercise of their
supervisory functions.

The competent authorities shall require assurance undertakings
to provide them with the information they require to monitor
compliance with the conditions referred to in this paragraph
on a continuous basis.

Article 7

Scheme of operations

The scheme of operations referred to in Article 6(1) (c) and (3)
shall include particulars or evidence of:

(a) the nature of the commitments which the assurance under-

taking proposes to cover;

(b) the guiding principles as to reassurance;

(c) the items constituting the minimum guarantee fund;

2. Member States shall require that
the head offices of
insurance undertakings be situated in the same Member State
as their registered offices.

(d) estimates relating to the costs of setting up the adminis-
trative services and the organisation for securing business
and the financial resources intended to meet those costs;

3.
An assurance undertaking seeking authorisation to extend
its business to other classes or to extend an authorisation
covering only some of the risks pertaining to one class shall
be required to submit a scheme of operations in accordance
with Article 7.

in addition, for the first three financial years:

(e) a plan setting out detailed estimates of income and expen-
diture in respect of direct business, reassurance acceptances
and reassurance cessions;

shall,

it
furthermore, be required to show proof
It
possesses the solvency margin provided for in Article 28 and
the guarantee fund referred to in Article 29(1) and (2).

that

4. Member States shall not adopt provisions requiring the
prior approval or systematic notification of general and special
policy conditions, of scales of premiums, of the technical bases,
used in particular for calculating scales of premiums and
printed
technical
documents which an assurance undertaking intends to use in
its dealings with policy-holders.

provisions

forms

other

and

or

of

Notwithstanding the first subparagraph, for the sole purpose of
verifying compliance with national provisions concerning
actuarial principles,
the home Member State may require
systematic notification of the technical bases used for calcu-
lating scales of premiums and technical provisions, without
that
an
constituting a prior
assurance undertaking to carry on its business.

condition for

requirement

(f) a forecast balance sheet;

(g) estimates relating to the financial resources intended to
cover underwriting liabilities and the solvency margin.

Article 8

Shareholders and members with qualifying holdings

The competent authorities of the home Member State shall not
grant an undertaking authorisation to take up the business of
assurance before they have been informed of the identities of
the shareholders or members, direct or
indirect, whether
natural or legal persons, who have qualifying holdings in that
undertaking and of the amounts of those holdings.

the need to ensure

The same authorities shall refuse authorisation if, taking into
sound and prudent
account
they are not
management of an assurance undertaking,
satisfied as
the shareholders or
members.

to the qualifications of

the

Nothing in this Directive shall prevent Member States from
maintaining in force or introducing laws, regulations or admin-
istrative provisions requiring approval of
the memorandum
and articles of association and the communication of any
other documents necessary for the normal exercise of super-
vision.

Article 9

Refusal of authorisation

Any decision to refuse an authorisation shall be accompanied
by the precise grounds for doing so and notified to the under-
taking in question.

Not later than 1 July 1999, the Commission shall submit a
report to the Council on the implementation of this paragraph.

Each Member State shall make provision for a right to apply to
the courts should there be any refusal.

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Such provision shall also be made with regard to cases where
the competent authorities have not dealt with an application
for an authorisation upon the expiry of a period of six months
from the date of its receipt.

Article 12

Prohibition on compulsory ceding of part
of underwriting

TITLE III

CONDITIONS GOVERNING THE BUSINESS
OF ASSURANCE

C h a pt e r 1

Principles and methods of financial supervision

Article 10

Competent authorities and object of supervision

the home Member State.

The financial supervision of an assurance undertaking,
1.
including that of
the business it carries on either through
branches or under the freedom to provide services, shall be
the
the sole responsibility of
competent authorities of the Member State of the commitment
have reason to consider that the activities of an assurance
undertaking might affect
they shall
inform the competent authorities of the undertaking’s home
Member State. The latter authorities shall determine whether
the undertaking is complying with the prudential principles
laid down in this Directive.

its financial soundness,

If

2.
That financial supervision shall include verification, with
respect to the assurance undertaking’s entire business, of its
state of solvency, the establishment of
technical provisions,
including mathematical provisions, and of the assets covering
them,
in accordance with the rules laid down or practices
followed in the home Member State pursuant to the provisions
adopted at Community level.

The competent authorities of the home Member State
require every assurance undertaking to have sound
and adequate

3.
shall
administrative
internal control mechanisms.

and accounting procedures

Article 11

Supervision of branches established in another Member
State

The Member State of the branch shall provide that, where an
assurance undertaking authorised in another Member State
carries on business through a branch, the competent auth-
orities of
the home Member State may, after having first
informed the competent authorities of the Member State of
the branch, carry out themselves, or through the intermediary
of persons they appoint for that purpose, on-the-spot verifi-
cation of the information necessary to ensure the financial
supervision of
the
Member State of the branch may participate in that verifi-
cation.

the undertaking. The

authorities of

Member States may not require assurance undertakings to cede
part of their underwriting of activities listed in Article 2 to an
organisation or organisations designated by national
regu-
lations.

Article 13

Accounting, prudential and statistical information: super-
visory powers

1.
Each Member State shall require every assurance under-
taking whose head office is situated in its territory to produce
an annual account, covering all
its
financial situation and solvency.

types of operation, of

2. Member States shall require assurance undertakings with
head offices within their territories to render periodically the
returns,
together with statistical documents, which are
necessary for the purposes of supervision. The competent auth-
orities shall provide each other with any documents and
information that are useful for the purposes of supervision.

the supervision of

Every Member State shall

take all steps necessary to
3.
ensure that the competent authorities have the powers and
means necessary for
the business of
assurance undertakings with head offices within their terri-
tories, including business carried on outside those territories,
in accordance with the Council directives governing those
activities and for the purpose of seeing that they are imple-
mented.

These powers and means must,
competent authorities to:

in particular, enable the

(a) make detailed enquiries regarding the assurance under-
taking’s situation and the whole of its business, inter alia by:

E gathering information or requiring the submission of

documents concerning its assurance business,

E carrying out on-the-spot investigations at the assurance

undertaking’s premises;

(b) take any measures, with regard to the assurance under-
its directors or managers or
the persons who
taking,
control
it, that are appropriate and necessary to ensure
that the undertaking’s business continues to comply with
the laws, regulations and administrative provisions with
which the undertaking must comply in each Member
State and in particular with the scheme of operations in
so far as it remains mandatory, and to prevent or remedy
any irregularities prejudicial to the interests of the assured
persons;

(c) ensure that those measures are carried out, if need be by
enforcement, where appropriate through judicial channels.

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Member States may also make provision for the competent
authorities
to obtain any information regarding contracts
which are held by intermediaries.

Article 14

Transfer of portfolio

Under the conditions laid down by national

law, each
1.
Member State shall authorise assurance undertakings with
head offices within its territory to transfer all or part of their
portfolios of contracts, concluded under either the right of
to an
the freedom to provide services,
establishment or
the
accepting office established within the Community,
if
the
the home Member State of
competent authorities of
accepting office certify that after
into
taking the transfer
account the latter possesses the necessary solvency margin.

2. Where a branch proposes to transfer all or part of its
portfolio of contracts, concluded under either the right of
the
freedom to provide
establishment or
Member State of the branch shall be consulted.

services,

the

In the circumstances referred to in paragraphs 1 and 2,
3.
the authorities of the home Member State of the transferring
assurance undertaking shall
after
obtaining the agreement of the competent authorities of the
Member States of the commitment.

authorise

transfer

the

The

the Member

authorities of
their opinion or

States
4.
competent
consulted shall give
to the
competent authorities of the home Member State of the trans-
ferring assurance undertaking within three months of receiving
a request; the absence of any response within that period from
the authorities consulted shall be considered equivalent to a
favourable opinion or tacit consent.

consent

5.
A transfer authorised in accordance with this Article shall
be published as laid down by national law in the Member State
of the commitment. Such transfers shall automatically be valid
the assured persons and any other
against policy-holders,
person having rights or obligations arising out of
the
contracts transferred.

This provision shall not affect the Member States’ rights to give
policy-holders the option of cancelling contracts within a fixed
period after a transfer.

Article 15

Qualifying holdings

1. Member States shall require any natural or legal person
who proposes to acquire, directly or indirectly, a qualifying
to inform the
holding in an assurance undertaking first

competent authorities of the home Member State, indicating
the size of the intended holding. Such a person must likewise
inform the competent authorities of the home Member State if
he proposes to increase his qualifying holding so that
the
proportion of the voting rights or of the capital held by him
would reach or exceed 20 %, 33 % or 50 % or so that the
assurance undertaking would become his subsidiary.

The competent authorities of the home Member State shall
have a maximum of three months from the date of the notifi-
cation provided for in the first subparagraph to oppose such a
in view of the need to ensure sound and prudent
plan if,
management of
they are not
the assurance undertaking,
satisfied as to the qualifications of the person referred to in
the first subparagraph.
they do not oppose the plan in
question they may fix a maximum period for its implemen-
tation.

If

2. Member States shall require any natural or legal person
who proposes to dispose, directly or indirectly, of a qualifying
holding in an assurance undertaking first
to inform the
competent authorities of the home Member State, indicating
the size of his intended holding. Such a person must likewise
inform the competent authorities if he proposes to reduce his
qualifying holding so that the proportion of the voting rights
or of the capital held by him would fall below 20 %, 33 % or
50 % or so that the assurance undertaking would cease to be
his subsidiary.

On becoming aware of
competent
inform the

them, assurance undertakings
3.
shall
their home
Member States of any acquisitions or disposals of holdings in
their capital that cause holdings to exceed or fall below one of
the thresholds referred to in paragraphs 1 and 2.

authorities of

They shall also, at least once a year, inform them of the names
of shareholders and members possessing qualifying holdings
and the sizes of such holdings as shown, for example, by the
information received at the annual general meetings of share-
holders and members or as a result of compliance with the
regulations relating to companies listed on stock exchanges.

if

the

that,

shall

require

influence
4. Member States
exercised by the persons referred to in paragraph 1 is likely
the prudent and sound
to operate to the detriment of
management of
the competent
the assurance undertaking,
authorities of the home Member State shall take appropriate
measures to put an end to that situation. Such measures may
consist, for example, in injunctions, sanctions against directors
and managers, or the suspension of the exercise of the voting
rights attaching to the shares held by the shareholders or
members in question.

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Similar measures shall apply to natural or legal persons failing
to comply with the obligation to provide prior information, as
laid down in paragraph 1. If a holding is acquired despite the
opposition of the competent authorities, the Member States
to be adopted,
shall,
provide either for exercise of the corresponding voting rights
to be suspended, or for the nullity of votes cast or for the
possibility of their annulment.

regardless of any other

sanctions

Article 16

Professional secrecy

1. Member States shall provide that all persons working or
who have worked for the competent authorities, as well as
auditors or experts acting on behalf of the competent auth-
orities, shall be bound by the obligation of professional secrecy.
This means that no confidential information which they may
receive in the course of their duties may be divulged to any
person or authority whatsoever, except
in summary or
aggregate form, such that individual assurance undertakings
cannot be identified, without prejudice to cases covered by
criminal law.

Nevertheless, where
an assurance undertaking has been
declared bankrupt or is being compulsorily wound up, confi-
information which does not concern third parties
dential
involved in attempts
to rescue that undertaking may be
divulged in civil or commercial proceedings.

2.
Paragraph 1 shall not prevent the competent authorities
of the different Member States from exchanging information in
accordance with the directives applicable to assurance under-
takings. That information shall be subject to the conditions of
professional secrecy indicated in paragraph 1.

3. Member States may conclude cooperation agreements,
providing for exchanges of information, with the competent
authorities of
information
disclosed is subject to guarantees of professional secrecy at
least equivalent to those referred to in this Article.

third countries only

the

if

4.
Competent authorities receiving confidential information
under paragraphs 1 or 2 may use it only in the course of their
duties:

E to check that the conditions governing the taking-up of the
business of assurance are met and to facilitate monitoring
of the conduct of such business, especially with regard to
the monitoring of technical provisions, solvency margins,
administrative and accounting procedures and internal
control mechanisms, or

E in court proceedings initiated pursuant to Article 68 or
under special provisions provided for in this Directive
and other directives adopted in the field of assurance under-
takings.

5.
Paragraphs 1 and 4 shall not preclude the exchange of
information within a Member State, where there are two or
more competent authorities in the same Member State, or,
between Member States, between competent authorities and:

E authorities responsible for the official supervision of credit
institutions and other financial organisations and the auth-
orities responsible for the supervision of financial markets,

E bodies

involved in the liquidation and bankruptcy of
assurance undertakings and in other similar procedures,
and

E persons responsible for carrying out statutory audits of the
accounts of assurance undertakings and other financial
institutions,

to

their
in the discharge of
supervisory functions, and the
disclosure,
bodies which
(compulsory)
information
winding-up proceedings or guarantee funds, of
necessary to the performance of their duties. The information
received by these authorities, bodies and persons shall be
subject to the obligation of professional secrecy laid down in
paragraph 1.

administer

Notwithstanding paragraphs 1 to 4, Member States may
information between the competent

6.
authorise exchanges of
authorities and:

E the authorities

for overseeing the bodies
involved in the liquidation and bankruptcy of assurance
undertakings and other similar procedures, or

responsible

E the authorities

charged with carrying out
accounts of
investment firms and other financial institutions, or

responsible for overseeing the persons
the
statutory
institutions,

insurance undertakings, credit

audits of

E independent actuaries of insurance undertakings carrying
those undertakings and the

out
bodies responsible for overseeing such actuaries.

supervision of

legal

Member States which have recourse to the option provided for
the
in the first
following conditions are met:

subparagraph shall

require at

least

that

E to impose sanctions, or

E this information shall be for the purpose of carrying out
the overseeing or legal supervision referred to in the first
subparagraph;

E in administrative appeals against decisions of the competent

authority, or

E information received in this context shall be subject to the
conditions of professional secrecy imposed in paragraph 1;

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Official Journal of the European Communities

19.12.2000

E where the information originates in another Member State,
it may not be disclosed without the express agreement of
the competent authorities which have disclosed it and,
where appropriate,
for which
those authorities gave their agreement.

the purposes

solely for

Member States shall communicate to the Commission and to
the other Member States the names of the authorities, persons
and bodies which may receive information pursuant to this
paragraph.

Notwithstanding paragraphs 1 to 4, Member States may,
7.
with the aim of strengthening the stability, including integrity,
of the financial system, authorise the exchange of information
between the competent authorities and the authorities or
bodies responsible under the law for the detection and inves-
tigation of breaches of company law.

Member States which have recourse to the option provided for
in the first
the
following conditions are met:

subparagraph shall

require at

least

that

E the information shall be for the purpose of performing the

task referred to in the first subparagraph;

E information received in this context shall be subject to the
conditions of professional secrecy imposed in paragraph 1;

E where the information originates in another Member State,
it may not be disclosed without the express agreement of
the competent authorities which have disclosed it and,
where appropriate,
for which
those authorities gave their agreement.

the purposes

solely for

Where, in a Member State, the authorities or bodies referred to
in the first subparagraph perform their task of detection or
investigation with the aid, in view of their specific competence,
of persons appointed for that purpose and not employed in the
public
exchanging information
provided for in the first subparagraph may be extended to
such persons under the conditions stipulated in the second
subparagraph.

the possibility of

sector,

to implement

the second
the third indent of
In order
subparagraph,
the authorities or bodies referred to in the
first subparagraph shall communicate to the competent auth-
orities which have disclosed the information, the names and
precise responsibilities of the persons to whom it is to be sent.

Member States shall communicate to the Commission and to
the other Member States the names of the authorities or bodies
which may receive information pursuant to this paragraph.

Before 31 December 2000, the Commission shall draw up a
report on the application of this paragraph.

8. Member States may authorise the competent authorities
to transmit:

E to central banks and other bodies with a similar function in

their capacity as monetary authorities;

E where appropriate, to other public authorities responsible

for overseeing payment systems,

information intended for the performance of their task and
may authorise such authorities or bodies to communicate to
the competent authorities such information as they may need
for the purposes of paragraph 4. Information received in this
to the conditions of professional
context shall be subject
secrecy imposed in this Article.

9.
In addition, notwithstanding paragraphs 1 and 4, Member
States may, under provisions laid down by law, authorise the
disclosure of certain information to other departments of their
central government administrations responsible for legislation
on the supervision of credit institutions, financial institutions,
investment
and to
inspectors acting on behalf of those departments.

and assurance undertakings

services

However, such disclosures may be made only where necessary
for reasons of prudential control.

that

shall provide

However, Member States
information
received under paragraphs 2 and 5 and that obtained by
means of the on-the-spot verification referred to in Article
11 may never be disclosed in the cases referred to in this
paragraph except with the express consent of the competent
the
authorities which disclosed the
competent
in which
authorities of
on-the-spot verification was carried out.

information or of
State

the Member

Article 17

Duties of auditors

1. Member States shall provide at least that:

78/660/EEC (2), Article
of

(a) any person authorised within the meaning of Council
Directive 84/253/EEC (1), performing in an assurance
undertaking the task described in Article 51 of Council
of Directive
37
Directive
83/349/EEC
Council Directive
31
85/611/EEC (3) or any other statutory task, shall have a
duty to report promptly to the competent authorities any
fact or decision concerning that undertaking of which he
has become aware while carrying out that task which is
liable to:

or Article

E constitute a material breach of the laws, regulations or
the
administrative
provisions which
conditions governing authorisation or which specifically
govern pursuit of
the activities of assurance under-
takings, or

down

lay

(1) OJ L 126, 12.5.1984, p. 20.
(2) OJ L 222, 14.8.1978, p. 11. Directive as last amended by Directive

1999/60/EC (OJ L 162, 26.6.1999, p. 65).

(3) OJ L 375, 31.12.1985, p. 3. Directive as amended by Directive

95/26/EEC.

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E affect

the continuous

functioning of

the assurance

undertaking, or

E lead to refusal

to certify the accounts or

to the

expression of reservations;

(b) that person shall likewise have a duty to report any facts
and decisions of which he becomes aware in the course of
carrying out a task as described in (a) in an undertaking
having close links resulting from a control relationship with
the assurance undertaking within which he is carrying out
the abovementioned task.

2.
The disclosure in good faith to the competent authorities,
by persons authorised within the meaning of Directive
84/253/EEC, of any fact or decision referred to in paragraph
1 shall not constitute a breach of any restriction on disclosure
of information imposed by contract or by any legislative, regu-
latory or administrative provision and shall not involve such
persons in liability of any kind.

Article 18

Pursuit of life assurance and non-life insurance activities

1. Without prejudice to paragraphs 3 and 7, no undertaking
may be authorised both pursuant
to this Directive and
pursuant to Directive 73/239/EEC.

By way of derogation from paragraph 1, Member States

2.
may provide that:

E undertakings authorised pursuant to this Directive may also
obtain authorisation,
in accordance with Article 6 of
Directive 73/239/EEC for the risks listed in classes 1 and
2 in the Annex to that Directive,

E undertakings authorised pursuant to Article 6 of Directive
73/239/EEC solely for the risks listed in classes 1 and 2 in
the Annex to that Directive may obtain authorisation
pursuant to this Directive.

Subject

3.
paragraph 2 and those which on:

to paragraph 6, undertakings

referred to in

E 1 January 1981 for undertakings authorised in Greece,

E 1 January 1986 for undertakings authorised in Spain and

Portugal,

E 2 May 1992 for undertakings authorised in Austria, Finland

and Sweden, and

E 15 March 1979 for all other undertakings,

carried on simultaneously both of the activities covered by this
Directive and by Directive 73/239/EEC may continue to do so,
provided that each activity is separately managed in accordance
with Article 19 of this Directive.

that

4. Member States may provide
the undertakings
referred to in paragraph 2 shall comply with the accounting
rules governing assurance undertakings authorised pursuant to
this Directive for all of their activities. Pending coordination in
this respect, Member States may also provide that, with regard
to rules on winding-up, activities relating to the risks listed in
classes 1 and 2 in the Annex to Directive 73/239/EEC carried
on by the undertakings referred to in paragraph 2 shall be
governed by the rules applicable to life assurance activities.

5. Where an undertaking carrying on the activities referred
financial,
to in the Annex to Directive 73/239/EEC has
commercial or administrative links with an assurance under-
taking carrying on the activities covered by this Directive, the
competent authorities of the Member States within whose terri-
tories the head offices of those undertakings are situated shall
ensure that the accounts of the undertakings in question are
not distorted by agreements between these undertakings or by
any arrangement which could affect
the apportionment of
expenses and income.

6.
Any Member State may require assurance undertakings
whose head offices are situated in its territory to cease, within
a period to be determined by the Member State concerned, the
simultaneous pursuit of activities in which they were engaged
on the dates referred to in paragraph 3.

The provisions of this Article shall be reviewed on the
7.
basis of a report from the Commission to the Council in the
light of future harmonisation of the rules on winding-up, and
in any case before 31 December 1999.

Article 19

Separation of

life assurance and non-life insurance

management

1.
The separate management referred to in Article 18(3)
must be organised in such a way that the activities covered
by this Directive are distinct from the activities covered by
Directive 73/239/EEC in order that:

E the respective interests of life policy-holders and non-life
policy-holders are not prejudiced and,
in particular, that
profits from life assurance benefit life policy-holders as if
the assurance undertaking only carried on the activity of
life assurance,

E the minimum financial obligations, in particular solvency
margins, in respect of one or other of the two activities,
namely an activity under this Directive and an activity
under Directive 73/239/EEC are not borne by the other
activity.

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19.12.2000

the

However, as long as the minimum financial obligations are
fulfilled under the conditions laid down in the second indent
of
competent
authority is informed, the undertaking may use those explicit
items of the solvency margin which are still available for one
or other activity.

subparagraph and, provided the

first

The competent authorities shall analyse the results in both
this
to ensure
so as
activities
paragraph are complied with.

the provisions of

that

2. (a) Accounts shall be drawn up in such a manner as to
show the sources of the results for each of the two
activities, life assurance and non-life insurance. To this
end all income (in particular premiums, payments by
re-insurers and investment income) and expenditure (in
particular insurance settlements, additions to technical
provisions, reinsurance premiums, operating expenses
in respect of
shall be broken
down according to origin.
Items common to both
activities shall be entered in accordance with methods
to be accepted by the competent
of apportionment
authority.

insurance business)

(b) Assurance undertakings must, on the basis of

the
accounts, prepare a statement clearly identifying the
items making up each solvency margin, in accordance
with Article 27 of this Directive and Article 16(1) of
Directive 73/239/EEC.

is

If one of

insufficient,

the solvency margins

3.
the
competent authorities shall apply to the deficient activity the
measures provided for in the relevant Directive, whatever the
results in the other activity. By way of derogation from the
second indent of the first subparagraph of paragraph 1, these
measures may involve the authorisation of a transfer from one
activity to the other.

C h a pt e r 2

Rules relating to technical provisions

Article 20

Establishment of technical provisions

The home Member State shall require every assurance
technical provisions,
its entire

1.
undertaking
including mathematical provisions,
business.

to establish sufficient

in respect of

conditions for each existing contract, including:

E all

guaranteed benefits,

including

guaranteed

surrender values,

E bonuses to which policy-holders are already either
collectively or individually entitled, however those
bonuses are described E vested, declared or
allotted,

E all options available to the policy-holder under the

terms of the contract,

E expenses, including commissions;

taking credit for future premiums due;

(ii) the use of a retrospective method is allowed, if it can
be shown that the resulting technical provisions are
not lower than would be required under a sufficiently
prudent prospective calculation or if a prospective
method cannot be used for
the type of contract
involved;

(iii) a prudent valuation is not a =best estimate> valuation,
include an appropriate margin for adverse

but shall
deviation of the relevant factors;

(iv) the method of valuation for the technical provisions
must not only be prudent in itself, but must also be so
having regard to the method of valuation for the
assets covering those provisions;

(v) technical provisions shall be calculated separately for
each contract. The use of appropriate approximations
or generalisations is allowed, however, where they are
likely to give approximately the same result as indi-
vidual calculations. The principle of separate calcu-
lation shall
in no way prevent the establishment of
additional provisions for general risks which are not
individualised;

(vi) where the surrender value of a contract is guaranteed,
the amount of the mathematical provisions for the
contract at any time shall be at least as great as the
value guaranteed at that time.

The amount of such technical provisions shall be determined
according to the following principles:

B. The rate of interest used shall be chosen prudently. It shall
the
be determined in accordance with the rules of
competent
State,
authority
applying the following principles:

in the home Member

A.

(i) The amount of the technical life-assurance provisions
shall be calculated by a sufficiently prudent pros-
taking account of all
pective actuarial valuation,
the policy
future

determined

liabilities

by

as

(a) for all contracts,

the competent authority of

the
assurance undertaking’s home Member State shall fix
one or more maximum rates of interest, in particular
in accordance with the following rules:

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(i) when contracts contain an interest rate guarantee,
the competent authority in the home Member State
shall set a single maximum rate of interest. It may
differ according to the currency in which the
contract is denominated, provided that it is not
more than 60 % of the rate on bond issues by
is
the State in whose currency the contract
denominated.
contract
the
denominated in euro,
this limit shall be set by
to euro-denominated issues by the
reference
Community institutions.

case

of

In

a

the first
of

If a Member State decides, pursuant to the second
to set a
sentence of
maximum rate
contracts
denominated in another Member State’s currency,
it shall first consult the competent authority of the
Member State in whose currency the contract is
denominated;

subparagraph,
for
interest

(ii) however, when the assets of the assurance under-
taking are not valued at their purchase price, a
Member State may stipulate that one or more
maximum rates may be calculated taking into
account
the yield on the corresponding assets
currently held, minus a prudential margin and, in
particular for contracts with periodic premiums,
the anticipated
furthermore taking into account
yield on future assets. The prudential margin and
the maximum rate or rates of interest applied to
the anticipated yield on future assets shall be fixed
by the competent authority of the home Member
State;

(d) the Member State shall require an assurance under-
taking to set aside in its accounts a provision to
meet interest-rate commitments vis-Q-vis policy-holders
if the present or foreseeable yield on the undertaking’s
assets is insufficient to cover those commitments;

(e) the Commission and the competent authorities of the
Member States which so request shall be notified of the
maximum rates of interest set under (a).

C. The statistical elements of the valuation and the allowance
for expenses used shall be chosen prudently, having regard
to the Member State of
the type of
policy and the administrative costs and commissions
expected to be incurred.

the commitment,

D.

In the case of participating contracts, the method of calcu-
lation for technical provisions may take into account,
either implicitly or explicitly, future bonuses of all kinds,
in a manner consistent with the other assumptions on
future
current method of
distribution of bonuses.

experience and with the

E. Allowance for future expenses may be made implicitly, for
future premiums net of
the overall allowance,
less than a prudent

instance by
management charges. However,
implicit or explicit, shall be not
estimate of the relevant future expenses.

the use of

(b) the establishment of a maximum rate of interest shall
not imply that the assurance undertaking is bound to
use a rate as high as that;

(c) the home Member State may decide not to apply (a) to

the following categories of contracts:

F.

The method of calculation of technical provisions shall not
be subject to discontinuities from year to year arising from
arbitrary changes to the method or the bases of calculation
and shall be such as to recognise the distribution of profits
in an appropriate way over the duration of each policy.

E unit-linked contracts,

E single-premium contracts for a period of up to

eight years,

E without-profits contracts, and annuity contracts

with no surrender value.

In the cases referred to in the second and third indents
of the first subparagraph, in choosing a prudent rate of
the currency in
interest, account may be taken of
which the contract is denominated and corresponding
assets currently held and where the undertaking’s assets
are valued at their current value, the anticipated yield
on future assets.

2.
Assurance undertakings shall make available to the public
the bases and methods used in the calculation of the technical
provisions, including provisions for bonuses.

3.
The home Member State shall require every assurance
undertaking to cover the technical provisions in respect of its
entire business by matching assets, in accordance with Article
26. In respect of business written in the Community, these
assets must be localised within the Community. Member
States shall not require assurance undertakings to localise
their assets in a particular Member State. The home Member
State may, however, permit relaxations in the rules on the
localisation of assets.

Under no circumstances may the rate of interest used
be higher than the yield on assets as calculated in
accordance with the accounting rules in the home
Member State, less an appropriate deduction;

If the home Member State allows any technical provisions
it shall
fix the
it may not require the

4.
to be covered by claims against reassurers,
percentage so allowed. In such case,
localisation of the assets representing such claims.

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Article 21

(i) advances against policies;

Premiums for new business

Premiums for new business shall be sufficient, on reasonable
to enable assurance undertakings to
actuarial assumptions,
meet all
to establish
in particular,
adequate technical provisions.

their commitments and,

(j)

tax recoveries;

(k) claims against guarantee funds;

For this purpose, all aspects of the financial situation of an
assurance undertaking may be taken into account, without the
input from resources other than premiums and income earned
thereon being systematic and permanent in such a way that it
may jeopardise the undertaking’s solvency in the long term.

Article 22

Assets covering technical provisions

The assets covering the technical provisions shall take account
of the type of business carried on by an assurance undertaking
in such a way as to secure the safety, yield and marketability of
its investments, which the undertaking shall ensure are diver-
sified and adequately spread.

C. Others

(l)

tangible fixed assets, other than land and buildings,
valued on the basis of prudent amortisation;

(m) cash at bank and in hand, deposits with credit insti-
tutions and any other body authorised to receive
deposits;

(n) deferred acquisition costs;

Article 23

prepayments;

(o) accrued interest and rent, other accrued income and

Categories of authorised assets

1.
The home Member State may not authorise assurance
undertakings to cover their technical provisions with any but
the following categories of assets:

(p)

reversionary interests.

A.

Investments

(a) debt securities, bonds and other money- and capital-

market instruments;

(b) loans;

(c) shares and other variable-yield participations;

(d) units in undertakings for collective investment in trans-
ferable securities (UCITS) and other investment funds;

(e) land, buildings and immovable property rights;

B. Debts and claims

2.
In the case of the association of underwriters known as
Lloyd’s, asset categories shall also include guarantees and letters
of credit issued by credit institutions within the meaning of
European Parliament and Council Directive . . ./. . ./EC or by
assurance undertakings, together with verifiable sums arising
out of life assurance policies, to the extent that they represent
funds belonging to members.

3.
The inclusion of any asset or category of assets listed in
. . . paragraph (1) shall not mean that all these assets should
automatically be accepted as cover for technical provisions. The
home Member State shall lay down more detailed rules fixing
in this
the use of acceptable assets;
the conditions
connection,
it may require valuable security or guarantees,
particularly in the case of debts owed by reassurers.

for

In determining and applying the rules which it lays down, the
home Member State shall,
the
following principles are complied with:

in particular, ensure that

(f) debts owed by reassurers, including reassurers’ shares

of technical provisions;

(i) assets covering technical provisions shall be valued net of

any debts arising out of their acquisition;

(g) deposits with and debts owed by ceding undertakings;

(h) debts owed by policy-holders

and intermediaries

arising out of direct and reassurance operations;

(ii) all assets must be valued on a prudent basis, allowing for
the risk of any amounts not being realisable. In particular,
tangible fixed assets other than land and buildings may be
accepted as cover for technical provisions only if they are
valued on the basis of prudent amortisation;

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(iii) loans, whether to undertakings, to a State or international
organisation, to local or regional authorities or to natural
persons, may be
technical
accepted as
provisions only if there are sufficient guarantees as to
their security, whether these are based on the status of
the borrower, mortgages, bank guarantees or guarantees
granted by assurance undertakings or other forms of
security;

cover

for

(iv) derivative instruments such as options, futures and swaps
in connection with assets covering technical provisions
may be used in so far as they contribute to a reduction
efficient portfolio
of
management. They must be valued on a prudent basis
and may be taken into account in the valuation of the
underlying assets;

investment

risks or

facilitate

(v) transferable securities which are not dealt

in on a
regulated market may be accepted as cover for technical
provisions only if they can be realised in the short term
or if they are holdings in credit institutions, in assurance
undertakings, within the limits permitted by Article 6, or
in investment undertakings established in a Member State;

(vi) debts owed by and claims against a third party may be
accepted as cover for the technical provisions only after
deduction of all amounts owed to the same third party;

(vii) the value of any debts and claims accepted as cover for
technical provisions must be calculated on a prudent
basis, with due allowance for the risk of any amounts
not being realisable. In particular, debts owed by policy-
holders and intermediaries arising out of assurance and
reassurance operations may be accepted only in so far as
they have been outstanding for not more than three
months;

(viii) where the assets held include an investment

in a
subsidiary undertaking which manages all or part of the
assurance undertaking’s investments on its behalf,
the
home Member State must, when applying the rules and
principles laid down in this Article, take into account the
underlying assets held by the subsidiary undertaking; the
home Member State may treat
the assets of other
subsidiaries in the same way;

(ix) deferred acquisition costs may be accepted as cover for
is
the mathematical

technical provisions only to the extent
consistent with the calculation of
provisions.

that

this

Notwithstanding paragraphs 1, 2 and 3,

4.
in exceptional
circumstances and at an assurance undertaking’s request, the

home Member State may, temporarily and under a properly
reasoned decision, accept other categories of assets as cover
for technical provisions, subject to Article 22.

Article 24

Rules for investment diversification

As regards the assets covering technical provisions, the
1.
home Member State shall require every assurance undertaking
to invest no more than:

(a) 10 % of its total gross technical provisions in any one piece
of
land or
land or building, or a number of pieces of
buildings close enough to each other to be considered
effectively as one investment;

(b) 5 % of its total gross technical provisions in shares and
other negotiable securities treated as shares, bonds, debt
securities and other money- and capital-market instruments
from the same undertaking, or in loans granted to the same
borrower, taken together, the loans being loans other than
those granted to a State, regional or local authority or to an
international organisation of which one or more Member
States are members. This limit may be raised to 10 % if an
undertaking invests not more than 40 % of
its gross
technical provisions in the loans or securities of issuing
bodies and borrowers in each of which it invests more
than 5 % of its assets;

(c) 5 % of

its total gross technical provisions in unsecured
loans, including 1 % for any single unsecured loan, other
than loans granted to credit institutions, assurance under-
takings in so far as Article 6 allows it and investment
undertakings established in a Member State. The limits
may be raised to 8 % and 2 % respectively by a decision
taken on a case-by-case basis by the competent authority of
the home Member State;

(d) 3 % of its total gross technical provisions in the form of

cash in hand;

(e) 10 % of its total gross technical provisions in shares, other
securities treated as shares and debt securities which are not
dealt in on a regulated market.

The absence of a limit in paragraph 1 on investment in
2.
any particular category does not
imply that assets in that
category should be accepted as cover for technical provisions
without limit. The home Member State shall lay down more
detailed rules fixing the conditions for the use of acceptable
assets. In particular it shall ensure, in the determination and the
application of those rules, that the following principles are
complied with:

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(i) assets covering technical provisions must be diversified and
spread in such a way as to ensure that there is no excessive
reliance on any particular category of asset,
investment
market or investment;

E securities which are not dealt in on a regulated market, as

compared with those which are,

(ii) investment in particular types of asset which show high
levels of risk, whether because of the nature of the asset or
the quality of the issuer, must be restricted to prudent
levels;

(iii) limitations on particular categories of asset must

take
account of the treatment of reassurance in the calculation
of technical provisions;

(iv) where the assets held include an investment in a subsidiary
undertaking which manages all or part of the assurance
undertaking’s investments on its behalf, the home Member
State must, when applying the rules and principles laid
down in this Article, take into account the underlying
assets held by the subsidiary undertaking;
the home
Member State may treat the assets of other subsidiaries
in the same way;

E bonds, debt securities and other money- and capital-market
instruments not issued by States,
local or regional auth-
orities or undertakings belonging to Zone A as defined in
Directive ../.../EC or the issuers of which are international
least one Community
organisations not numbering at
Member State among their members, as compared with
the same financial instruments issued by such bodies.

the

limit

4. Member States may raise
laid down in
paragraph 1(b) to 40 % in the case of certain debt securities
when these are issued by a credit institution which has its head
office in a Member State and is subject by law to special official
supervision designed to protect
those debt
securities. In particular, sums deriving from the issue of such
debt securities must be invested in accordance with the law in
assets which, during the whole period of validity of the debt
securities, are capable of covering claims attaching to debt
securities and which,
the issuer,
in the event of
would be used on a priority basis for the reimbursement of
the principal and payment of the accrued interest.

the holders of

failure of

(v) the percentage of assets covering technical provisions
which are the subject of non-liquid investments must be
kept to a prudent level;

5. Member States shall not require assurance undertakings
to invest in particular categories of assets.

(vi) where the assets held include loans to or debt securities
the home Member
issued by certain credit institutions,
rules and principles
State may, when applying the
contained in this Article, take into account the underlying
assets held by such credit institutions. This treatment may
be applied only where the credit institution has its head
office in a Member State,
is entirely owned by that
Member State and/or that State’s local authorities and its
business, according to its memorandum and articles of
association,
inter-
mediaries, loans to, or guaranteed by, States or local auth-
orities or of loans to bodies closely linked to the State or
to local authorities.

consists of extending,

through its

In the context of

3.
the detailed rules laying down the
conditions for the use of acceptable assets, the Member State
shall give more limitative treatment to:

E any loan unaccompanied by a bank guarantee, a guarantee
issued by an assurance undertaking, a mortgage or any
other form of security, as compared with loans accom-
panied by such collateral,

E UCITS not coordinated within the meaning of Directive
funds, as compared
that

85/611/EEC and other
with UCITS coordinated within the meaning of
Directive,

investment

Notwithstanding paragraph 1,

6.
in exceptional circum-
stances and at the assurance undertaking’s request, the home
Member State may, temporarily and under a properly reasoned
decision, allow exceptions to the rules laid down in paragraph
1 (a) to (e), subject to Article 22.

Article 25

Contracts linked to UCITS or share index

1. Where the benefits provided by a contract are directly
linked to the value of units in a UCITS or to the value of
assets contained in an internal
fund held by the insurance
undertaking, usually divided into units, the technical provisions
in respect of those benefits must be represented as closely as
possible by those units or,
in the case where units are not
established, by those assets.

2. Where the benefits provided by a contract are directly
linked to a share index or some other reference value other
than those referred to in paragraph 1, the technical provisions
in respect of those benefits must be represented as closely as
possible either by the units deemed to represent the reference
value or, in the case where units are not established, by assets
of appropriate security and marketability which correspond as
closely as possible with those on which the particular reference
value is based.

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Articles 22 and 24 shall not apply to assets held to match
3.
liabilities which are directly linked to the benefits referred to in
paragraphs 1 and 2. References to the technical provisions in
Article 24 shall be to the technical provisions excluding those
in respect of such liabilities.

4. Where the benefits referred to in paragraphs 1 and 2
include a guarantee of
some
additional
the
guaranteed
other
technical provisions shall be subject to Articles 22, 23 and 24.

investment performance or

corresponding

benefit,

be notified at least one month in advance and can
prohibit the payment within that period;

(c) the relevant provisions of

the memorandum and
articles of association may be amended only after
the competent authorities have declared that they
have no objection to the amendment, without
prejudice to the criteria stated in (a) and (b),

Article 26

Matching rules

E one half of the unpaid share capital or initial fund, once
the paid-up part amounts to 25 % of that share capital
or fund,

1.
For the purposes of Articles 20 (3) and 52, Member
States shall comply with Annex II as regards the matching
rules.

E reserves (statutory reserves and free reserves) not corre-

sponding to underwriting liabilities,

This Article shall not apply to the commitments referred

2.
to in Article 25.

E any profits brought forward,

C h a pt e r 3

Rules Relating to the Solvency Margin and to the Guarantee
Fund

Article 27

Solvency margin

E cumulative preferential share capital and subordinated
if so, only up to
loan capital may be included but,
the margin, no more than 25 % of which
50 % of
shall
fixed
maturity, or fixed-term cumulative preferential share
capital, if the following minimum criteria are met:

subordinated loans with a

consist of

Each Member State shall require of every assurance under-
taking whose head office is
territory an
adequate solvency margin in respect of its entire business.

situated in its

The solvency margin shall consist of:

(a) in the event of the bankruptcy or liquidation of the
assurance undertaking, binding agreements must
exist under which the subordinated loan capital or
preferential share capital ranks after the claims of all
other creditors and is not to be repaid until all other
debts outstanding at the time have been settled.

1. the assets of the assurance undertaking free of any fore-
In particular

less any intangible items.

seeable liabilities,
the following shall be included:

E the paid-up share capital or,

in the case of a mutual
assurance undertaking,
fund plus
any members’ accounts which meet all the following
criteria:

the effective initial

(a) the memorandum and articles of association must
stipulate that payments may be made from these
accounts to members only in so far as this does
not cause the solvency margin to fall below the
required level, or, after the dissolution of the under-
taking, if all the undertaking’s other debts have been
settled;

(b) the memorandum and articles of association must
to any such payments for
termination of
the competent authorities must

stipulate, with respect
reasons other than the individual
membership,

that

Subordinated loan capital must also fulfil the following
conditions:

(b) only fully paid-up funds may be taken into account;

(c) for loans with a fixed maturity, the original maturity
must be at least five years. No later than one year
before the repayment date the assurance undertaking
must submit to the competent authorities for their
approval a plan showing how the solvency margin
will be kept at or brought to the required level at
maturity, unless the extent to which the loan may
rank as a component of
the solvency margin is
gradually reduced during at least the last five years
before the repayment date. The competent auth-
orities may authorise the early repayment of such
loans provided application is made by the issuing
assurance undertaking and its solvency margin will
not fall below the required level;

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(d) loans the maturity of which is not fixed must be
repayable only subject to five years’ notice unless
the loans are no longer considered as a component
of the solvency margin or unless the prior consent
of the competent authorities is specifically required
for early repayment. In the latter event the assurance
undertaking must notify the competent authorities at
least six months before the date of the proposed
and required
repayment,
that
solvency margin both before
repayment.
shall
The
the assurance under-
authorise repayment only if
taking’s solvency margin will not
fall below the
required level;

specifying the

authorities

competent

actual

after

and

(e) the loan agreement must not

include any clause
providing that
in specified circumstances, other
than the winding-up of the assurance undertaking,
the debt will become repayable before the agreed
repayment dates;

(f)

the loan agreement may be amended only after the
competent authorities have declared that they have
no objection to the amendment,

fulfil

E securities with no specified maturity date and other
conditions,
instruments
that
including cumulative preferential
than
those mentioned in the fifth indent, up to 50 % of the
margin for the total of such securities and the subor-
dinated loan capital referred to in the fifth indent:

shares other

following

the

(a) they may not be repaid on the initiative of
consent of

the prior

bearer or without
competent authority;

the
the

(b) the contract of

undertaking to defer the payment of
the loan;

issue must enable the assurance
interest on

(c) the lender’s claims on the assurance undertaking
must rank entirely after those of all non-subor-
dinated creditors;

(d) the documents governing the issue of the securities
must provide for the loss-absorption capacity of the
enabling the
debt
assurance undertaking to continue its business;

and unpaid interest, while

(e) only fully paid-up amounts may be taken into

account;

2.

in so far as authorised under national law, profit reserves
appearing in the balance sheet where they may be used to

cover any losses which may arise and where they have not
been made available for distribution to policy-holders;

3. upon application, with supporting evidence, by the under-
taking to the competent authority of the Member State in
the territory of which its head office is situated and with the
agreement of that authority:

the amount of

the future profits

(a) an amount equal to 50 % of the undertaking’s future
profits;
shall be
obtained by multiplying the estimated annual profit by
a factor which represents the average period left to run
on policies; the factor used may not exceed 10; the
estimated annual profit
arithmetical
average of the profits made over the last five years in
the activities listed in Article 2.

shall be

the

for calculating the factor by which the
The bases
estimated annual profit
is to be multiplied and the
items comprising the profits made shall be defined by
common agreement by the competent authorities of the
Member States in collaboration with the Commission.
be
Pending
determined in accordance with the laws of the home
Member State.

agreement,

items

those

such

shall

When the competent authorities have defined the
concept of profits made, the Commission shall submit
this concept by
proposals for the harmonisation of
means of a Directive on the harmonisation of
the
and
annual
providing for the coordination set out in Article 1(2)
of Directive 78/660/EEC;

undertakings

insurance

accounts

of

it

(b) where Zillmerizing is not practised or where,

if
practised,
is less than the loading for acquisition
costs included in the premium, the difference between
a non-Zillmerized or partially Zillmerized mathematical
provision and a mathematical provision Zillmerized at a
rate equal to the loading for acquisition costs included in
this figure may not, however, exceed
the premium;
3,5 % of
the differences between the
life assurance activities and
relevant capital sums of
the mathematical provisions for all policies for which
Zillmerizing is possible; the difference shall be reduced
by the amount of any undepreciated acquisition costs
entered as an asset;

the sum of

(c) where approval is given by the competent authorities of
the Member States concerned in which the assurance
undertaking is carrying on its activities any hidden
reserves resulting from the under-estimation of assets
and over-estimation of
than math-
ematical provisions in so far as such hidden reserves
are not of an exceptional nature.

liabilities other

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Article 28

Minimum solvency margin

Subject to Article 29, the minimum solvency margin shall be
shown below according to the classes of
determined as
insurance underwritten:

(a) For the kinds of insurance referred to in Article 2, point
(1)(a) and (b) other than assurances linked to investment
funds and for the operations referred to in Article 2(3), it
must be equal to the sum of the following two results:

E first result:

a 4 % fraction of the mathematical provisions, relating
to direct business gross of reinsurance cessions and to
reinsurance acceptances shall be multiplied by the ratio,
for the last financial year, of the total mathematical
provisions net of reinsurance cessions to the gross
total mathematical provisions as specified above; that
ratio may in no case be less than 85 %;

E second result:

for policies on which the capital at risk is not a negative
figure, a 0,3 % fraction of such capital underwritten by
the assurance undertaking shall be multiplied by the
ratio, for the last financial year, of the total capital at
risk retained as the undertaking’s liability after rein-
surance cessions and retrocessions to the total capital
at risk gross of reinsurance; that ratio may in no case be
less than 50 %.

For temporary assurance on death of a maximum term
of three years the above fraction shall be 0,1 %; for such
assurance of a term of more than three years but not
more than five years the above fraction shall be 0,15 %.

(b) For the supplementary insurance referred to in Article 2,
point (1)(c), it shall be equal to the result of the following
calculation:

E the premiums or contributions (inclusive of charges
ancillary to premiums or contributions) due in respect
of direct business in the last financial year in respect of
all financial years shall be aggregated;

E to this aggregate there shall be added the amount of
reinsurance in the last

premiums accepted for all
financial year;

E from this sum shall then be deducted the total amount
of premiums or contributions cancelled in the last
financial year as well as the total amount of taxes and
levies pertaining to the premiums or contributions
entering into the aggregate.

comprising the excess; 18 % and 16 % of these portions
respectively shall be calculated and added together.

The result shall be obtained by multiplying the sum so
the last
calculated by the ratio existing in respect of
financial year between the amount of claims remaining to
be borne by the assurance undertaking after deduction of
transfers for reinsurance and the gross amount of claims;
this ratio may in no case be less than 50 %.

In the case of the association of underwriters known as
Lloyd’s, the calculation of
the solvency margin shall be
made on the basis of net premiums, which shall be
multiplied by flat-rate percentage fixed annually by the
competent authority of
the head-office Member State.
This flat-rate percentage must be calculated on the basis
of the most recent statistical data on commissions paid.
The details together with the relevant calculations shall be
sent to the competent authorities of the countries in whose
territory Lloyd’s is established.

(c) For permanent health insurance not subject to cancellation
(1)(d), and for capital
referred to in Article 2, point
referred to in Article 2, point
redemption operations
(2)(b),
it shall be equal to a 4 % fraction of the math-
ematical provisions calculated in compliance with the
conditions set out in the first result in (a) of this Article.

(d) For tontines, referred to in Article 2, point (2)(a), it shall be

equal to 1 % of their assets.

(e) For assurances covered by Article 2, point (1)(a) and (b)
linked to investment funds and for the operations referred
to in Article 2, point (2)(c), (d) and (e) it shall be equal to

E a 4 % fraction of

the mathematical provisions,
calculated in compliance with the conditions set out
in the first result in (a) of this Article in so far as the
assurance undertaking bears an investment risk, and a
1 % fraction of the provisions calculated in the same
way, in so far as the undertaking bears no investment
risk provided that the term of the contract exceeds five
years and the allocation to cover management expenses
set out in the contract is fixed for a period exceeding
five years,

E a 0,3 % fraction of

the capital at risk calculated in
in the first
compliance with the conditions set out
this
(a) of
the second result of
subparagraph of
Article in so far as the assurance undertaking covers a
death risk.

Article 29

Guarantee fund

1.
One third of the minimum solvency margin as specified
in Article 28 shall constitute the guarantee fund. Subject to
paragraph 2, at least 50 % of this fund shall consist of the
items listed in Article 27, points (1) and (2).

The amount so obtained shall be divided into two portions,
the first extending up to 10 million euro and the second

2. (a) The guarantee fund may not, however, be less than a

minimum of 800 000 euro.

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(b) Any Member State may provide for the minimum of the
guarantee fund to be reduced to 600 000 euro in the
case of mutual associations and mutual-type associations
and tontines.

(c) For mutual associations

referred to in the second
sentence of the second indent of Article 3, point (6),
as soon as they come within the scope of this Directive,
the
and for tontines, any Member State may permit
establishment of a minimum of the guarantee fund of
100 000 euro to be increased progressively to the
amount fixed in (b) by successive tranches of 100 000
euro whenever the contributions increase by 500 000
euro.

he is a national, the parties may choose the law of the Member
State of which he is a national.

3. Where a State includes several territorial units, each of
which has its own rules of law concerning contractual obli-
gations, each unit shall be considered a country for
the
purposes of identifying the law applicable under this Directive.

A Member State in which various territorial units have their
own rules of law concerning contractual obligations shall not
be bound to apply the provisions of this Directive to conflicts
which arise between the laws of those units.

(d) The minimum of the guarantee fund referred to in (a),
(b) and (c) must consist of the items listed in Article 27,
points (1) and (2).

4.
Nothing in this Article shall restrict the application of the
rules of the law of the forum in a situation where they are
mandatory, irrespective of the law otherwise applicable to the
contract.

3. Mutual associations wishing to extend their business
within the meaning of Article 6(3) or Article 38 may not do
so unless they comply immediately with the requirements of
paragraph 2(a) and (b) of this Article.

If the law of a Member State so stipulates, the mandatory rules
of the law of the Member State of the commitment may be
applied if and in so far as, under the law of that Member State,
those rules must be applied whatever the law applicable to the
contract.

Article 30

Assets not used to cover technical provisions

1. Member States shall not prescribe any rules as to the
choice of the assets that need not be used as cover for the
technical provisions referred to in Article 20.

Subject to Article 20(3), Article 36(1), (2), (3) and (5), and
2.
the second subparagraph of Article 37(1), Member States shall
not restrain the free disposal of those assets, whether movable
or immovable,
the assets of authorised
assurance undertakings.

form part of

that

3.
Paragraphs 1 and 2 shall not preclude any measures
which Member States, while safeguarding the interests of the
lives assured, are entitled to take as owners or members of or
partners in the assurance undertakings in question.

C h a pt e r 4

Contract Law and Conditions of Assurance

Article 31

Law applicable

1.
The law applicable to contracts relating to the activities
referred to in this Directive shall be the law of the Member
State of the commitment. However, where the law of that State
so allows, the parties may choose the law of another country.

2. Where the policy-holder is a natural person and has his
habitual residence in a Member State other than that of which

5.
Subject to paragraphs 1 to 4, the Member States shall
apply to the assurance contracts referred to in this Directive
their general rules of private international
law concerning
contractual obligations.

Article 32

General good

The Member State of the commitment shall not prevent a
policy-holder from concluding a contract with an assurance
undertaking authorised under the conditions of Article 4 as
long as that does not conflict with legal provisions protecting
the general good in the Member State of the commitment.

Article 33

Rules relating to conditions of assurance and scales of
premiums

Member States shall not adopt provisions requiring the prior
approval or systematic notification of general and special
policy conditions, scales of premiums, technical bases used in
particular for calculating scales of premiums and technical
provisions or forms and other printed documents which an
assurance undertaking intends to use in its dealings with
policy-holders.

Notwithstanding the first subparagraph, for the sole purpose of
verifying compliance with national provisions concerning
. . . the home Member State may require
actuarial principles,
systematic communication of
the technical bases used in
particular for calculating scales of premiums and technical
provisions, without
requirement constituting a prior
condition for an assurance undertaking to carry on its business.

that

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Not later than 1 July 1999 the Commission shall submit a
report
those
to the Council on the implementation of
provisions.

Article 34

Cancellation period

Each Member State shall prescribe that a policy-holder
1.
who concludes an individual life-assurance contract shall have
a period of between 14 and 30 days from the time when he
was informed that the contract had been concluded within
which to cancel the contract.

The giving of notice of cancellation by the policy-holder shall
have the effect of releasing him from any future obligation
arising from the contract.

The other legal effects and the conditions of cancellation shall
be determined by the law applicable to the contract as defined
in Article 31, notably as
for
informing the policy-holder
the contract has been
concluded.

the arrangements

regards
that

2.
The Member States need not apply paragraph 1 to
contracts of six months’ duration or less, nor where, because
of the status of the policy-holder or the circumstances in which
the contract is concluded, the policy-holder does not need this
special protection. Member States shall specify in their rules
where paragraph 1 is not applied.

Article 35

Information for policy-holders

Before the assurance contract is concluded, at least the
shall be

1.
information listed in point A of Annex III
communicated to the policy-holder.

2.
The policy-holder shall be kept informed throughout the
term of the contract of any change concerning the information
listed in point B of Annex III.

The Member State of

the commitment may require
3.
assurance undertakings to furnish information in addition to
that listed in Annex III only if it is necessary for a proper
understanding by the policy-holder of the essential elements
of the commitment.

4.
The detailed rules for implementing this Article and
Annex III shall be laid down by the Member State of the
commitment.

C h a pt e r 5

Assurance undertakings in difficulty or in an
irregular situation

Article 36

Assurance undertakings in difficulty

1.
If an assurance undertaking does not comply with Article
20, the competent authority of its home Member State may
prohibit
after having
communicated its intention to the competent authorities of
the Member States of commitment.

disposal of

assets

free

the

its

2.
For the purposes of restoring the financial situation of an
assurance undertaking the solvency margin of which has fallen
below the minimum required under Article 28, the competent
authority of the home Member State shall require that a plan
for the restoration of a sound financial position be submitted
for its approval.

In exceptional circumstances, if the competent authority is of
the opinion that the financial situation of the assurance under-
taking will further deteriorate, it may also restrict or prohibit
the free disposal of the assurance undertaking’s assets. It shall
inform the authorities of other Member States within the terri-
tories of which the assurance undertaking carries on business
of any measures it has taken and the latter shall, at the request
of the former, take the same measures.

If the solvency margin falls below the guarantee fund as
3.
defined in Article 29, the competent authority of the home
Member State shall require the assurance undertaking to submit
a short-term finance scheme for its approval.

the free disposal of

It may also restrict or prohibit
the
assurance undertaking’s assets. It shall inform the authorities
of other Member States within the territories of which the
assurance undertaking carries on business accordingly and
the latter shall, at the request of the former, take the same
measures.

4.
The competent authorities may further take all measures
necessary to safeguard the interests of the assured persons in
the cases provided for in paragraphs 1, 2 and 3.

Each Member State shall take the measures necessary to
5.
be able in accordance with its national law to prohibit the free
disposal of assets located within its territory at the request, in
the cases provided for in paragraphs 1, 2 and 3, of
the
assurance undertaking’s home Member State, which shall
designate the assets to be covered by such measures.

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Article 37

Withdrawal of authorisation

(b) a scheme of operations setting out inter alia the types of
business envisaged and the structural organisation of the
branch;

Authorisation granted to an assurance undertaking by the
its home Member State may be

1.
competent authority of
withdrawn by that authority if that undertaking:

(a) does not make use of the authorisation within 12 months,
expressly renounces it or ceases to carry on business for
more than 6 months, unless the Member State concerned
has made provision for authorisation to lapse in such cases;

(b) no longer fulfils the conditions for admission;

(c) has been unable, within the time allowed,

measures
scheme referred to in Article 36;

specified in the restoration plan or

to take the
finance

(d) fails seriously in its obligations under the regulations to

which it is subject.

competent

authorities of

take appropriate measures

In the event of the withdrawal or lapse of the authorisation,
the competent authority of the home Member State shall notify
the other Member States
the
to
accordingly and they shall
prevent
the assurance undertaking from commencing new
operations within their territories, under either the freedom
of establishment or
the freedom to provide services. The
home Member State’s competent authority shall, in conjunction
with those authorities, take all necessary measures to safeguard
the interests of
in
the assurance
particular,
undertaking in accordance with Article 36(1),
(2), second
subparagraph, and (3), second subparagraph.

the assured persons and shall restrict,

the free disposal of

the assets of

2.
Any decision to withdraw an authorisation shall be
supported by precise reasons and notified to the assurance
undertaking in question.

TITLE IV

PROVISIONS RELATING TO RIGHT OF ESTABLISHMENT AND
FREEDOM TO PROVIDE SERVICES

Article 38

Conditions for branch establishment

1.
An assurance undertaking that proposes to establish a
branch within the territory of another Member State shall
notify the competent authorities of its home Member State.

2.
The Member States shall require every assurance under-
taking that proposes to establish a branch within the territory
of another Member State to provide the following information
when effecting the notification provided for in paragraph 1:

(a) the Member State within the territory of which it proposes

to establish a branch;

(c) the address in the Member State of the branch from which
documents may be obtained and to which they may be
delivered,
it being understood that that address shall be
the one to which all communications to the authorised
agent are sent;

(d) the name of

the branch’s authorised agent, who must
possess sufficient powers to bind the assurance undertaking
in relation to third parties and to represent it in relations
with the authorities and courts of the Member State of the
branch. With regard to Lloyd’s, in the event of any litigation
in the Member State of the branch arising out of under-
the assured persons must not be
written commitments,
the litigation had been
treated less favourably than if
brought against businesses of a conventional
type. The
authorised agent must, therefore, possess sufficient powers
for proceedings to be taken against him and must in that
capacity be
Lloyd’s underwriters
concerned.

to bind the

able

3.
Unless the competent authorities of the home Member
State have reason to doubt the adequacy of the administrative
structure or the financial situation of the assurance undertaking
or the good repute and professional qualification or experience
of the directors or managers or the authorised agent, taking
into account
they shall within three
months of
the information referred to in
paragraph 2 communicate that information to the competent
authorities of the Member State of the branch and shall inform
the undertaking concerned accordingly.

the business planned,
receiving all

that

The competent authorities of the home Member State shall also
attest
the minimum
solvency margin calculated in accordance with Articles 28
and 29.

the assurance undertaking has

the

to communicate

Where the competent authorities of the home Member State
information referred to in
refuse
paragraph 2 to the competent authorities of
the Member
State of
the branch they shall give the reasons for their
refusal to the assurance undertaking concerned within three
months of receiving all
the information in question. That
refusal or failure to act shall be subject to a right to apply to
the courts in the home Member State.

4.
Before the branch of an assurance undertaking starts
business, the competent authorities of the Member State of
receiving the
the branch shall, within two months of
information
inform the
in paragraph 3,
competent authority of the home Member State, if appropriate,
of the conditions under which, in the interest of the general
good, that business must be carried on in the Member State of
the branch.

referred

to

5.
On receiving a communication from the competent auth-
orities of the Member State of the branch or, if no communi-
cation is received from them, on expiry of the period provided
for in paragraph 4, the branch may be established and start
business.

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In the event of a change in any of

the particulars
6.
communicated under paragraph 2 (b), (c) or (d), an assurance
undertaking shall give written notice of
the change to the
competent authorities of the home Member State and of the
Member State of the branch at least one month before making
the change so that the competent authorities of the home
Member State and the competent authorities of the Member
State of
their respective roles under
paragraphs 3 and 4.

the branch may fulfil

Article 41

Freedom to provide services: Changes in the nature
of commitments

Any change which an assurance undertaking intends to make
to the information referred to in Article 39 shall be subject to
the procedure provided for in Articles 39 and 40.

Article 39

Freedom to provide services: Prior notification to the
home Member State

Any assurance undertaking that intends to carry on business
for the first time in one or more Member States under the
freedom to provide services shall first inform the competent
authorities of the home Member State, indicating the nature of
the commitments it proposes to cover.

Article 42

Language

The competent authorities of the Member State of the branch
or the Member State of the provision of services may require
that
the information which they are authorised under this
Directive to request with regard to the business of assurance
undertakings operating in the territory of that State shall be
supplied to them in the official language or languages of that
State.

Article 40

Article 43

Freedom to provide services: Notification by the home
Member State

1. Within one month of the notification provided for in
Article 39 the competent authorities of the home Member
State shall communicate to the Member State or Member
States within the territory of which the assurance undertaking
intends to carry on business by way of the freedom to provide
services:

(a) a certificate attesting that the assurance undertaking has the
minimum solvency margin calculated in accordance with
Articles 28 and 29;

(b) the classes which the assurance undertaking has been auth-

orised to offer;

(c) the nature of the commitments which the assurance under-
the
taking proposes to cover in the Member State of
provision of services.

At the same time, they shall inform the assurance undertaking
concerned accordingly.

2. Where the competent authorities of the home Member
State do not communicate the information referred to in
paragraph 1 within the period laid down, they shall give the
reasons for their refusal to the assurance undertaking within
that same period. The refusal shall be subject to a right to
apply to the courts in the home Member State.

3.
The assurance undertaking may start business on the
certified date on which it is informed of the communication
provided for in the first subparagraph of paragraph 1.

Rules relating to conditions of assurance and scales of
premiums

The Member State of the branch or of provision of services
shall not lay down provisions requiring the prior approval or
systematic notification of general and special policy conditions,
scales of premiums, technical bases used in particular for calcu-
lating scales of premiums and technical provisions, forms and
other printed documents which an assurance undertaking
intends to use in its dealings with policy-holders. For the
purpose of verifying compliance with national provisions
concerning assurance contracts,
it may require an assurance
undertaking that proposes to carry on assurance business
within its territory, under the right of establishment or the
freedom to provide services,
to effect only non-systematic
those policy conditions and other printed
notification of
documents without
requirement constituting a prior
condition for an assurance undertaking to carry on its business.

that

Article 44

Assurance undertakings not complying with the
legal provisions

1.
Any assurance undertaking carrying on business under
the right of establishment or the freedom to provide services
shall submit to the competent authorities of the Member State
of the branch and/or of the Member State of the provision of
services all documents requested of it for the purposes of this
Article in so far as assurance undertakings the head office of
which is in those Member States are also obliged to do so.

If the competent authorities of a Member State establish
2.
that an assurance undertaking with a branch or carrying on
business under the freedom to provide services in its territory
is not complying with the legal provisions applicable to it in
that State,
require the assurance undertaking
concerned to remedy that irregular situation.

they shall

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If the assurance undertaking in question fails to take the
3.
necessary action,
the Member
the competent authorities of
State concerned shall inform the competent authorities of the
home Member State accordingly. The latter authorities shall, at
to
the earliest opportunity,
ensure that
the assurance undertaking concerned remedies
that irregular situation. The nature of those measures shall be
communicated to the competent authorities of the Member
State concerned.

take all appropriate measures

4.
If, despite the measures taken by the home Member State
or because those measures prove inadequate or are lacking in
that State, the assurance undertaking persists in violating the
legal provisions in force in the Member State concerned, the
latter may, after informing the competent authorities of the
home Member State, take appropriate measures to prevent or
penalise further irregularities, including, in so far as is strictly
necessary, preventing that undertaking from continuing to
territory.
conclude new assurance
Member States shall ensure that
is
possible to serve the legal documents necessary for such
measures on assurance undertakings.

contracts within its
in their

territories it

5.
Paragraphs 2, 3 and 4 shall not affect the emergency
power of the Member States concerned to take appropriate
to prevent or penalise irregularities committed
measures
include the possibility of
within their territories. This shall
preventing
to
from continuing
assurance
conclude new assurance contracts within their territories.

undertakings

Paragraphs 2, 3 and 4 shall not affect the power of the
6.
Member States to penalise infringements within their terri-
tories.

7.
If an assurance undertaking which has committed an
infringement has an establishment or possesses property in
the competent authorities of
the Member State concerned,
law, apply the
the latter may,
infringement by
administrative penalties prescribed for that
way of enforcement against that establishment or property.

in accordance with national

8.
Any measure adopted under paragraphs 3 to 7 involving
penalties or restrictions on the conduct of assurance business
must be properly reasoned and communicated to the assurance
undertaking concerned.

9.
Every two years, the Commission shall submit to the
Insurance Committee a report summarising the number and
type of cases in which, in each Member State, authorisation has
been refused pursuant to Articles 38 or 40 or measures have
been taken under paragraph 4 of this Article. Member States
shall cooperate with the Commission by providing it with the
information required for that report.

Article 45

Advertising

Nothing in this Directive shall prevent assurance undertakings
with head offices in other Member States from advertising their

services through all available means of communication in the
Member State of the branch or Member State of the provision
to any rules governing the form and
of services, subject
content of such advertising adopted in the interest of
the
general good.

Article 46

Winding up

Should an assurance undertaking be wound up, commitments
arising out of contracts underwritten through a branch or
under the freedom to provide services shall be met in the
same way as those arising out of
that undertaking’s other
assurance contracts, without distinction as to nationality as
far as the lives assured and the beneficiaries are concerned.

Article 47

Statistical information on cross-border activities

Every assurance undertaking shall
inform the competent
authority of its home Member State, separately in respect of
transactions carried out under the right of establishment and
those carried out under the freedom to provide services, of the
amount of the premiums, without deduction of reassurance, by
Member State and by each of classes I to IX, as defined in
Annex I.

The competent authority of
the home Member State shall,
within a reasonable time and on an aggregate basis forward
this information to the competent authorities of each of the
Member States concerned which so request.

Article 48

Taxes on premiums

1. Without prejudice to any subsequent harmonisation,
every assurance contract shall be subject exclusively to the
indirect taxes and parafiscal charges on assurance premiums
the commitment, and also, with
in the Member State of
regard to Spain,
legally established in
favour of
the Spanish =Consorcio de CompensaciNn de
Seguros> for the performance of its functions relating to the
losses arising from extraordinary events
compensation of
occurring in that Member State.

to the surcharges

The law applicable to the contract pursuant to Article 31

2.
shall not affect the fiscal arrangements applicable.

to

those

Pending future harmonisation, each Member State shall
3.
apply
cover
commitments situated within its territory its own national
provisions for measures to ensure the collection of indirect
taxes and parafiscal charges due under paragraph 1.

undertakings which

assurance

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TITLE V

and, in addition shall include, for the first three financial years:

RULES APPLICABLE TO AGENCIES OR BRANCHES ESTAB-
LISHED WITHIN THE COMMUNITY AND BELONGING TO
UNDERTAKINGS WHOSE HEAD OFFICES ARE OUTSIDE THE
COMMUNITY

Article 49

Principles and conditions of authorisation

1.
Each Member State shall make access to the activities
referred to in Article 2 by any undertaking whose head
office is outside the Community subject to an official author-
isation.

A Member State may grant an authorisation if the under-

2.
taking fulfils at least the following conditions:

(a) it is entitled to undertake insurance activities covered by

Article 2 under its national law;

(b) it establishes an agency or branch in the territory of such

Member State;

(c) it undertakes to establish at the place of management of the
agency or branch accounts specific to the activity which it
carries on there and to keep there all the records relating to
the business transacted;

(d) it designates a general representative, to be approved by the

competent authorities;

(e) it possesses in the Member State where it carries on an
activity assets of an amount equal in value to at least one
half of the minimum amount prescribed in Article 29(2)(a)
in respect of the guarantee fund and deposits one fourth of
the minimum amount as security;

(f)

it undertakes to keep a solvency margin complying with
Article 53;

(g) it submits a scheme of operations in accordance with the

provisions in paragraphs 3 and 4.

3.
The scheme of operation of the agency or branch referred
to in paragraph 2(g) shall contain the following particulars or
evidence of:

(a) the nature of

the commitments which the undertaking
proposes to take on in the host country; the general and
special policy conditions which it proposes to use;

(b) the technical bases which the undertaking proposes to
employ for each class of business,
including the data
needed to calculate premium rates and technical provisions
referred to in Article 20;

(c) the guiding principles as to reinsurance;

(d) the

state of

the undertaking’s

solvency margin and

guarantee fund referred to in Articles 27, 28 and 29;

(e) estimates relating to the expenses of installing the adminis-
trative services and the organisation for securing business
and the financial resources intended to cover them;

(f) a forecast balance sheet for the agency or branch;

(g) a plan setting out detailed estimates of income and expen-
diture in respect of direct business, reinsurance acceptances
and reinsurance cessions.

4.
The scheme of operations shall be accompanied by the
balance sheet and profit and loss account of the undertaking
for each of the past three financial years. If, however, it has not
yet been in business for three financial years it shall be required
to furnish them only for the financial years completed.

Article 50

Rules applicable to branches of

third country under-

takings

1. (a) Subject to point (b), agencies and branches referred to in
this Title may not simultaneously carry on in a Member
State the activities referred to in the Annex to Directive
73/239/EEC and those covered by this Directive.

(b) Subject to point (c), Member States may provide that
agencies and branches referred to in this Title which
on the date referred to in Article 18(3) carried on
both activities simultaneously in a Member State may
continue to do so there provided that each activity is
separately managed in accordance with Article 19.

(c) Any Member State which under Article 18(6) requires
undertakings established in its territory to cease the
simultaneous pursuit of
the activities in which they
were engaged on the dates referred to in Article 18(3)
must also impose this requirement on agencies and
branches referred to in this Title which are established
in its
territory and simultaneously carry on both
activities there.

(d) Member States may provide that agencies and branches
referred to in this Title whose head office simultaneously
carries on both activities and which on the dates referred
to in Article 18(3) carried on in the territory of a
Member State
solely the activity covered by this
Directive may continue their activity there. If the under-
taking wishes to carry on the activity referred to in
Directive 73/239/EEC in that
territory it may only
carry on the activity covered by this Directive through
a subsidiary.

Articles 13 and 36 shall apply mutatis mutandis

2.
agencies and branches referred to in this title.

to

the purposes of applying Article 36,

For
the competent
authority which supervises the overall solvency of agencies
or branches
the
competent authority of the head-office Member State.

shall be treated in the same way as

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In the case of a withdrawal of authorisation by the
3.
authority referred to in Article 54(2),
this authority shall
notify the competent authorities of the other Member States
where the undertaking operates and the latter authorities shall
take the appropriate measures. If the reason for the withdrawal
of authorisation is the inadequacy of
the solvency margin
calculated in accordance with Article 54(1)(a), the competent
authorities of the other Member States concerned shall also
withdraw their authorisations.

Article 51

Transfer of portfolio

Under the conditions laid down by national

1.
law, each
Member State shall authorise agencies and branches set up
within its territory and covered by this Title to transfer all or
their portfolios of contracts to an accepting office
part of
established in the same Member State if the competent auth-
orities of that Member State or, if appropriate, those of the
Member State referred to in Article 54 certify that after taking
the transfer into account the accepting office possesses the
necessary solvency margin.

Under the conditions laid down by national

2.
law, each
Member State shall authorise agencies and branches set up
within its territory and covered by this Title to transfer all or
part of their portfolios of contracts to an assurance under-
taking with a head office in another Member State if
the
competent authorities of that Member State certify that after
taking the transfer into account the accepting office possesses
the necessary solvency margin.

3.
law a
If under the conditions laid down by national
Member State authorises agencies and branches set up within
its territory and covered by this Title to transfer all or part of
their portfolios of contracts to an agency or branch covered by
this Title and set up within the territory of another Member
the
State it shall ensure that
Member State of the accepting office or,
if appropriate, of
the Member State referred to in Article 54 certify that after
taking the transfer into account the accepting office possesses
the necessary solvency margin, that the law of the Member
State of the accepting office permits such a transfer and that
the State has agreed to the transfer.

the competent authorities of

In the circumstances referred to in paragraphs 1, 2 and 3
4.
the Member State in which the transferring agency or branch is
situated shall authorise
transfer after obtaining the
agreement of the competent authorities of the Member State
of the commitment, where different from the Member State in
which the transferring agency or branch is situated.

the

The

the Member

authorities of
their opinion or

States
5.
competent
to the
consulted shall give
competent authorities of the home Member State of the trans-
ferring assurance undertaking within three months of receiving
a request; the absence of any response from the authorities
consulted within that period shall be considered equivalent to
a favourable opinion or tacit consent.

consent

A transfer authorised in accordance with this Article shall
6.
be published as laid down by national law in the Member State
of the commitment. Such transfers shall automatically be valid
against policy-holders, assured persons and any other persons
having rights or obligations arising out of the contracts trans-
ferred.

This provision shall not affect the Member States’ right to give
policy-holders the option of cancelling contracts within a fixed
period after a transfer.

Article 52

Technical provisions

shall

States

require undertakings

Member
to establish
provisions, referred to in Article 20, adequate to cover the
underwriting liabilities assumed in their territories. Member
States
such
provisions by means of assets which are equivalent to such
provisions and matching assets in accordance with Annex II.

the agency or branch covers

see that

shall

The law of the Member States shall be applicable to the calcu-
lation of such provisions, the determination of categories of
investment and the valuation of assets, and, where appropriate,
the determination of the extent to which these assets may be
used for the purpose of covering such provisions.

The Member State in question shall require that the assets
covering these provisions shall be localised in its territory.
Article 20(4) shall, however, apply.

Article 53

Solvency margin and guarantee fund

1.
Each Member State shall require of agencies or branches
set up in its territory a solvency margin consisting of the items
listed in Article 27. The minimum solvency margin shall be
calculated in accordance with Article 28. However,
for the
purpose of calculating this margin, account shall be taken
only of
the operations effected by the agency or branch
concerned.

One third of

2.
constitute the guarantee fund.

the minimum solvency margin shall

However, the amount of this fund may not be less than one
half of the minimum required under Article 29(2)(a). The initial
deposit lodged in accordance with Article 49(2)(e) shall be
counted towards such guarantee fund.

The guarantee fund and the minimum of such fund shall be
constituted in accordance with Article 29.

3.
The assets representing the minimum solvency margin
must be kept within the Member State where activities are
carried on up to the amount of the guarantee fund and the
excess within the Community.

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Article 54

TITLE VI

Advantages to undertakings authorised in more than one
Member State

Any undertaking which has requested or obtained auth-
1.
orisation from more than one Member State may apply for the
following advantages which may be granted only jointly:

(a) the solvency margin referred to in Article 53 shall be
calculated in relation to the entire business which it
carries on within the Community;
in such case, account
shall be taken only of the operations effected by all the
agencies or branches established within the Community
for the purposes of this calculation;

(b) the deposit required under Article 49(2)(e) shall be lodged

in only one of those Member States;

RULES APPLICABLE TO SUBSIDIARIES OF PARENT UNDER-
TAKINGS GOVERNED BY THE LAWS OF A THIRD COUNTRY
AND TO THE ACQUISITIONS OF HOLDINGS BY SUCH
PARENT UNDERTAKINGS

Article 56

Information from Member States to the Commission

The competent authorities of the Member States shall inform
the Commission:

(a) of any authorisation of a direct or indirect subsidiary one
or more parent undertakings of which are governed by the
laws of a third country. The Commission shall inform the
Committee referred to in Article 58(2) accordingly;

(c) the assets representing the guarantee fund shall be localised
in any one of the Member States in which it carries on its
activities.

(b) whenever such a parent undertaking acquires a holding in a
Community assurance undertaking which would turn the
latter into its subsidiary. The Commission shall inform the
Committee referred to in Article 58(2) accordingly.

2.
Application to benefit from the advantages provided for
in paragraph 1 shall be made to the competent authorities of
the Member States concerned. The application must state the
authority of the Member State which in future is to supervise
the solvency of the entire business of the agencies or branches
established within the Community. Reasons must be given for
the choice of authority made by the undertaking. The deposit
shall be lodged with that Member State.

indirect
When authorisation is granted to the direct or
subsidiary of one or more parent undertakings governed by
the law of third countries, the structure of the group shall
be specified in the notification which the competent authorities
shall address to the Commission.

Article 57

The advantages provided for in paragraph 1 may only be
3.
granted if the competent authorities of all Member States in
which an application has been made agree to them. They shall
take effect
from the time when the selected competent
authority informs the other competent authorities that it will
supervise the state of solvency of the entire business of the
agencies or branches within the Community.

Third country treatment of Community assurance under-
takings

1.
The Member States shall inform the Commission of any
general difficulties encountered by their assurance undertakings
in establishing themselves or carrying on their activities in a
third country.

The competent authority selected shall obtain from the other
Member States the information necessary for the supervision of
the overall solvency of the agencies and branches established in
their territory.

4.
At the request of one or more of the Member States
concerned, the advantages granted under this Article shall be
withdrawn simultaneously by all Member States concerned.

Periodically,

2.
the Commission shall draw up a report
examining the treatment accorded to Community assurance
in the terms referred to in
undertakings in third countries,
paragraphs 3 and 4, as
regards establishment and the
insurance activities, and the acquisition of
carrying on of
undertakings. The
holdings
Commission shall
to the Council,
together with any appropriate proposals.

insurance
those reports

third-country

submit

in

Article 55

Agreements with third countries

The Community may, by means of agreements concluded
to the Treaty with one or more third countries,
pursuant
agree to the application of provisions different
from those
provided for in this Title, for the purpose of ensuring, under
conditions of reciprocity, adequate protection for policy-holders
in the Member States.

3. Whenever it appears to the Commission, either on the
basis of the reports referred to in paragraph 2 or on the basis
of other information,
that a third country is not granting
Community assurance undertakings effective market access
comparable to that granted by the Community to insurance
undertakings from that third country, the Commission may
submit proposals to the Council for the appropriate mandate
for negotiation with a
comparable
competitive opportunities for Community assurance under-
takings. The Council shall decide by a qualified majority.

view to obtaining

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4. Whenever it appears to the Commission, either on the
basis of the reports referred to in paragraph 2 or on the basis
of other information, that Community assurance undertakings
in a third country are not receiving national treatment offering
the same competitive opportunities as are available to domestic
insurance undertakings and that
the conditions of effective
market access are not being fulfilled, the Commission may
initiate negotiations in order to remedy the situation.

In the circumstances described in the first subparagraph, it may
also be decided at any time, and in addition to initiating
negotiations, in accordance with the procedure laid down in
Article 58(2), that the competent authorities of the Member
States must limit or suspend their decisions:

E regarding requests pending at the moment of the decision

or future requests for authorisations, and

E regarding the acquisition of holdings by direct or indirect
the third

parent undertakings governed by the laws of
country in question.

The duration of the measures referred to may not exceed three
months.

Before the end of that three-month period, and in the light of
the results of the negotiations, the Council may, acting on a
proposal from the Commission, decide by a qualified majority
whether the measures shall be continued.

Such limitations or suspension may not apply to the setting up
of subsidiaries by assurance undertakings or their subsidiaries
duly authorised in the Community, or to the acquisition of
holdings in Community assurance undertakings by such under-
takings or subsidiaries.

5. Whenever it appears to the Commission that one of the
situations described in paragraphs 3 and 4 has arisen, the
Member States shall inform it at its request:

(a) of any request for the authorisation of a direct or indirect
subsidiary one or more parent undertakings of which are
governed by the laws of the third country in question;

(b) of any plans for such an undertaking to acquire a holding
in a Community assurance undertaking such that the latter
would become the subsidiary of the former.

This obligation to provide information shall lapse whenever an
agreement is reached with the third country referred to in
paragraph 3 or 4 when the measures referred to in the
second and third subparagraphs of paragraph 4 cease to apply.

6. Measures taken under this Article shall comply with the
Community’s obligations under any international agreements,
bilateral or multilateral, governing the taking-up and pursuit of
the business of insurance undertakings.

Article 58

Committee procedure

The Commission shall be assisted by a committee
the Member States and

1.
representatives of
composed of
chaired by the representative of the Commission.

2. Where reference is made to this paragraph, the regulatory
procedure laid down in Article 5 of Decision 1999/468/EC
shall apply,
in compliance with Article 7(3) and Article 8
thereof.

The period provided for in Article 5(6) of Decision

3.
1999/468/EC shall be three months.

TITLE VII

TRANSITIONAL AND OTHER PROVISIONS

Article 59

Derogations and abolition of restrictive
measures

1.
Undertakings set up in the United Kingdom by Royal
Charter or by private Act or by special Public Act may carry
on their activity in the form in which they were constituted on
15 March 1979 for an unlimited period.

The United Kingdom shall draw up a list of such undertakings
to the other Member States and the
and communicate it
Commission.

2.
The societies registered in the United Kingdom under the
Friendly Societies Acts may continue the activities which they
were carrying on on 15 March 1979.

Article 60

Proof of good repute

1. Where a Member State requires of
its own nationals
proof of good repute and proof of no previous bankruptcy,
or proof of either of these, that State shall accept as sufficient
evidence in respect of nationals of other Member States the
production of an extract from the =judicial record> or, failing
this, of an equivalent document issued by a competent judicial
or administrative authority in the home Member State or the
Member State whence the foreign national comes showing that
these requirements have been met.

2. Where the home Member State or the Member State
whence the foreign national concerned comes does not issue
the document referred to in paragraph 1, it may be replaced by
a declaration on oath E or in States where there is no
provision for declaration on oath by a solemn declaration E
made by the person concerned before a competent judicial or
administrative authority or, where appropriate, a notary in the
home Member State or the Member State whence that person
comes;
issue a certificate
attesting the authenticity of
the declaration on oath or
solemn declaration. The declaration in respect of no previous
bankruptcy may also be made before a competent professional
or trade body in the said country.

such authority or notary shall

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Documents issued in accordance with paragraphs 1 and 2
3.
must not be produced more than three months after their date
of issue.

TITLE VIII

FINAL PROVISIONS

Article 63

4. Member States shall designate the authorities and bodies
competent to issue the documents referred to in paragraphs 1
and 2 and shall forthwith inform the other Member States and
the Commission thereof.

Each Member State shall also inform the other Member States
and the Commission of the authorities or bodies to which the
documents referred to in this Article are to be submitted in
support of an application to carry on in the territory of this
Member State the activities referred to in Article 2.

Article 61

Transitional regime for investments in land and buildings

Member States may allow assurance undertakings with head
territories, and whose buildings and land
offices in their
covering their technical provisions exceed, on 27 November
1992, the percentage laid down in Article 24(1)(a), a period
expiring no later than 31 December 1998 within which to
comply with that provision.

Article 62

Transitional regime for Sweden

1.
The Kingdom of Sweden may operate a transitional
arrangement up to 1 January 2000 for complying with
Article 24(1)(b),
it being understood that the Swedish auth-
orities have submitted, before 1 July 1994 for approval by
the Commission, a schedule of
the measures to have the
exposures exceeding the limits of Article 24(1)(b) brought
within the limits laid down by this Directive.

No later than the date of Swedish accession and on 31
2.
December 1997 the Swedish authorities shall present progress
reports to the Commission on the measures taken to comply
with this Directive. The Commission shall on the basis of these
reports review these measures. In the light of developments,
these measures shall, if appropriate, be adapted with a view to
accelerating the process of reduction of the exposures. The
Swedish authorities shall require the life assurance undertakings
concerned to initiate immediately the process of reduction of
the relevant exposures. The assurance undertakings concerned
will at no time increase these exposures, unless they are already
within the limits prescribed by this Directive and any such
increase does not
lead them to exceed those limits. The
Swedish authorities shall submit by the end of the transitional
period a final report on the results of the above measures.

Cooperation between the Member States

and the

Commission

The Commission and the competent authorities of the Member
States shall collaborate closely with a view to facilitating the
supervision of
insurance and the operations
referred to in this Directive within the Community.

the kinds of

Each Member State shall inform the Commission of any major
difficulties to which application of this Directive gives rise, inter
alia any arising if a Member State becomes aware of an
abnormal transfer of business referred to in this Directive to
the detriment of undertakings established in its territory and to
the advantage of agencies and branches located just beyond its
borders.

The Commission and the competent authorities of the Member
States concerned shall examine such difficulties as quickly as
possible in order to find an appropriate solution.

Where necessary,
proposals to the Council.

the Commission shall submit appropriate

Article 64

Reports on the development of the market under the
freedom to provide services

The Commission shall forward to the European Parliament and
the Council regular reports, the first on 20 November 1995, on
the development of the market in assurance and operations
transacted under conditions of freedom to provide services.

Article 65

Technical adjustment

The following technical adjustments
to be made to this
Directive shall be adopted in accordance with the procedure
laid down in Article 66(2):

E extension of the legal forms provided for in Article 6(1)(a),

E amendments to the list set out in Annex I, or adaptation of
the terminology used in that list to take account of the
development of assurance markets,

E clarification of the items constituting the solvency margin
listed in Article 27 to take account of the creation of new
financial instruments,

E alteration of the minimum guarantee fund provided for in
Article 29(2) to take account of economic and financial
developments,

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instruments,

to take account of

the creation of new
E amendments,
financial
to the list of assets acceptable as
cover for technical provisions set out in Article 23 and
to the rules on the spreading of investments laid down in
Article 24,

E changes in the relaxations in the matching rules laid down
in Annex II, to take account of the development of new
currency-hedging
in
instruments
economic and monetary union,

progress made

or

E clarification of the definitions in order to ensure uniform
application of this Directive throughout the Community,

E the technical adjustments necessary to the rules for setting
the maxima applicable to interest rates, pursuant to Article
20,
in particular to take account of progress made in
economic and monetary union.

Article 66

Committee procedure

The Commission shall be assisted by the Insurance

1.
Committee instituted by Directive 91/675/EEC.

2. Where reference is made to this paragraph, the regulatory
procedure laid down in Article 5 of Decision 1999/468/EC
in compliance with Article 7(3) and Article 8
shall apply,
thereof.

The period provided for in Article 5(6) of Decision

3.
1999/468/EC shall be three months.

Article 67

Rights acquired by existing branches and assurance under-
takings

1.
Branches which have started business, in accordance with
the provisions in force in the Member State of the branch,
before 1 July 1994 shall be presumed to have been subject
to the procedure laid down in Article 38(1) to (5).

They shall be governed from that date by Articles 13, 20, 36,
37 and 44.

Articles 39 and 40 shall not affect rights acquired by
the

2.
assurance undertakings
freedom to provide services before 1 July 1994.

carrying on business under

Article 68

Right to apply to the courts

Member States shall ensure that decisions taken in respect of an
assurance undertaking under laws, regulations and adminis-
trative provisions adopted in accordance with this Directive
may be subject to the right to apply to the courts.

Article 69

Review of amounts expressed in euro

1.
The Commission shall submit to the Council before 15
March 1985 a report dealing with the effects of the financial

requirements imposed by this Directive on the situation in the
insurance markets of the Member States.

2.
The Council, acting on a proposal from the Commission,
shall every two years examine and, where appropriate, review
the amounts expressed in euro in this Directive, in the light of
how the Community’s economic and monetary situation has
evolved.

Article 70

Implementation of new provisions

Member States shall adopt not later than 31 December 2001
the laws, regulations and administrative provisions necessary to
comply with Article 1(1), point (m), Article 18(3), Article 27,
point
(3)(a), second subparagraph, second sentence, Article
49(2)(g), and (3) and (4), Article 59(2) and Article 67(1).
They shall immediately inform the Commission thereof.

They shall apply those provisions with effect from 1 January
2002.

When Member States adopt those provisions, they shall contain
a reference to this Directive or be accompanied by such a
reference on the occasion of
their official publication.
Member States shall determine how such reference is to be
made.

Article 71

Information to the Commission

The Member States shall communicate to the Commission the
texts of the main provisions of national law which they adopt
in the field covered by this Directive.

Repealed directives

Article 72

and their
Directive

correlation with this

The Directives listed in Annex IV, Part A are hereby
1.
repealed, without prejudice to the obligations of the Member
States concerning the time-limits for transposition and for
application of the said Directives listed in Annex IV, Part B.

2.
References to the repealed Directives shall be construed
as references to this Directive and shall be read in accordance
with the correlation table in Annex V.

Article 73

Entry into force

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

Article 74

Adressees

This Directive is addressed to the Member States.

19.12.2000

EN

Official Journal of the European Communities

C 365 E/35

ANNEX I

CLASSES OF INSURANCE

I. The

assurance

referred

to

in Article

2(1)(a),

(b)

and

(c)

excluding

those

referred

to

in

II

and III

II. Marriage assurance, birth assurance

III. The assurance referred to in Article 2(1)(a) and (b), which are linked to investment funds

IV. Permanent health insurance, referred to in Article 2(1)(d)

V. Tontines, referred to in Article 2(2)(a)

VI. Capital redemption operations, referred to in Article 2(2)(b)

VII. Management of group pension funds, referred to in Article 2(2)(c) and (d)

VIII. The operations referred to in Article 2(2)(e)

IX. The operations referred to in Article 2(3)

ANNEX II

MATCHING RULES

The currency in which the assurer’s commitments are payable shall be determined in accordance with the following
rules:

1. Where the cover provided by a contract is expressed in terms of a particular currency, the assurer’s commitments are

considered to be payable in that currency.

2. Member States may authorise assurance undertakings not to cover their technical provisions, including their math-
ematical provisions, by matching assets if application of the above procedures would result in the undertaking being
obliged, in order to comply with the matching principle, to hold assets in a currency amounting to not more than
7 % of the assets existing in other currencies.

3. Member States may choose not

to require assurance undertakings to apply the matching principle where
commitments are payable in a currency other than the currency of one of the Member States, if investments in
that currency are regulated, if the currency is subject to transfer restrictions or if, for similar reasons, it is not suitable
for covering technical provisions.

4. Assurance undertakings are authorised not to hold matching assets to cover an amount not exceeding 20 % of their

commitments in a particular currency.

However, total assets in all currencies combined must be at least equal to total commitments in all currencies
combined.

5. Each Member State may provide that, whenever under the preceding procedures a commitment has to be covered by
assets expressed in the currency of a Member State, this requirement shall also be considered to be satisfied when the
assets are expressed in euro.

C 365 E/36

EN

Official Journal of the European Communities

19.12.2000

ANNEX III

INFORMATION FOR POLICY-HOLDERS

The following information, which is to be communicated to the policy-holder before the contract is concluded (A) or
during the term of the contract (B), must be provided in a clear and accurate manner, in writing, in an official language
of the Member State of the commitment.

However, such information may be in another language if the policy-holder so requests and the law of the Member State
so permits or the policy-holder is free to choose the law applicable.

A. Before concluding the contract

Information about the assurance undertaking

Information about the commitment

(a) 1. The name of the undertaking and its legal form

(a) 4. Definition of each benefit and each option

(a) 2. The name of the Member State in which the
head office and, where appropriate, the agency
or branch concluding the contract is situated

(a) 3. The address of

the head office and, where
appropriate, of the agency or branch concluding
the contract

(a) 5. Term of the contract

(a) 6. Means of terminating the contract

(a) 7. Means of payment of premiums and duration

of payments

(a) 8. Means of

calculation and distribution of

bonuses

(a) 9.

Indication of surrender and paid-up values and
the extent to which they are guaranteed

(a) 10.

Information on the premiums for each benefit,
supplementary
both main
benefits, where appropriate

benefits

and

(a) 11. For unit-linked policies, definition of the units

to which the benefits are linked

(a) 12. Indication of

the nature of
assets for unit-linked policies

the underlying

(a) 13. Arrangements

for

application

of

the

cooling-off period

(a) 14. General information on the tax arrangements

applicable to the type of policy

(a) 15. The arrangements

for handling complaints
lives
concerning contracts by policy-holders,
assured
contracts
beneficiaries
including, where appropriate, the existence of
a complaints body, without prejudice to the
right to take legal proceedings

under

or

(a) 16. Law applicable to the contract where the
parties do not have a free choice or, where
law
the parties
to choose
applicable,
the law the assurer proposes to
choose

free

the

are

B. During the term of the contract

In addition to the policy conditions, both general and special, the policy-holder must receive the following information
throughout the term of the contract.

Information about the assurance undertaking

Information about the commitment

(b) 1. Any change in the name of the undertaking, its
legal form or the address of its head office and,
where appropriate, of
the agency or branch
which concluded the contract

(b) 2. All the information listed in points (a) (4) to (a)
(12) of A in the event of a change in the policy
conditions or amendment of the law applicable
to the contract

(b) 3. Every year, information on the state of bonuses

19.12.2000

EN

Official Journal of the European Communities

C 365 E/37

REPEALED DIRECTIVES AND TIME-LIMITS FOR TRANSPOSITION INTO NATIONAL LAW

ANNEX IV

PART A

Repealed Directives

(referred to in Article 72)

1. Council Directive 79/267/EEC,

as amended by European Parliament and Council Directive 95/26/EC

2. Council Directive 90/619/EEC

3. Council Directive 92/96/EEC,

as amended by European Parliament and Council Directive 95/26/EC

PART B

Time-limits for transposition and for application

(referred to in Article 72)

Directive

Time-limits for transposition

Time-limits for application

79/267/EEC
(OJ L 63, 13.3.1979, p. 1)

90/619/EEC
(OJ L 330, 29.11.1990, p. 50)

92/96/EEC
(OJ L 360, 9.12.1992, p. 1)

95/26/EC
(OJ L 168, 18.7.1995, p. 7)

15 September 1980

15 September 1981

20 November 1992

20 May 1993

31 December 1993

1 July 1994

18 July 1996

18 July 1996

C 365 E/38

EN

Official Journal of the European Communities

19.12.2000

ANNEX V

CORRELATION TABLE

This Directive

Directive
79/267/EEC

Directive
90/619/EEC

Directive
92/96/EEC

Directive
95/26/EC

Other Acts

Article 1(1)(a)

Article 1(1)(b)

Article 1(1)(c)

Article 1(1)(d)

Article 1(1)(e)

Article 1(1)(f)

Article 1(1)(g)

Article 1(a)

Article 3

Article 1(b)

Article 2(c)

Article 1(c)

Article 1(d)

Article 1(e)

Article 2(e)

Article 1(1)(h) to (1)

Article 1(f) to (j)

New

Article 1(1)

Article 2(1)

Act of Accession of Austria,
Finland and Sweden, adapted by
Decision 95/1/EC, Euratom, ECSC

Article 1(1)(m)

Article 1(1)(n)

Article 1(1)(o), (p),
(q)

Article 5(b), (c)
and (d)

Article 1(1)(r)

Article 1(2)

Article 5 (a),
second sentence

Article 2

Article 1

Article 3(1) to (4)

Article 2

Article 3(5) and (6)

Article 3

Article 3(7)

Article 4

Article 3(8)

Article 4

Article 6

Article 5

Article 7

Article 6(1)

Article 8(1)

Article 6(2)

Article 8(1a)

Article 6(3)

Article 8(2)

Article 6(4)

Article 8(3)

19.12.2000

EN

Official Journal of the European Communities

C 365 E/39

This Directive

Directive
79/267/EEC

Directive
90/619/EEC

Directive
92/96/EEC

Directive
95/26/EC

Other Acts

Article 6(5)

Article 8(4)

Article 7

Article 8

Article 9

Article 9

Article 12

Article 10

Article 15

Article 11

Article 16

Article 12

Article 22(1)

Article 13

Article 23

Article 14(1) to (5)

Article 15

Article 16(1) to (5)

Article 16(6)

Article 16(7)

Article 16(8)

Article 16(9)

Article 17

Article 18(1) to (2)

Article 13(1)
to (2)

Article 18(3)

Article 18(4) to (7)

Article 13(3)
to (7)

Article 19

Article 14

Article 20

Article 17

Article 21

Article 22

Article 23(1)

Article 23(2)

Article 23(3) first
subparagraph

Article 23(3) second
subparagraph

Article 7

Article 11(2)
to (6)

Article 14

Article 15(1)
to (5)

Article 15(5a)

Article 15(5b)

Article 15(5c)

Article 15(6)

Article 15 a

Article 19

Article 20

Article 21(1),
first
subparagraph

Article 21(1),
second
subparagraph

Article 21(1),
third
subparagraph

Article 21(1),
fourth
subparagraph

New

C 365 E/40

EN

Official Journal of the European Communities

19.12.2000

This Directive

Directive
79/267/EEC

Directive
90/619/EEC

Directive
92/96/EEC

Directive
95/26/EC

Other Acts

New

Article 23(4)

Article 24

Article 25

Article 26

Article 27(1-2)

Article 18(1-2)

Article 27(3)(a),
first
subparagraph

Article 27(3)(a),
second
subparagraph,
first sentence

Article 27(3)(a),
second
subparagraph,
second sentence

Article 27(3)(a),
third
subparagraph

Article 18(3)(a)

Article 18(3)(a),
second
subparagraph
first sentence

Article 18(3)(a)

Article 27(3)
(b) and (c)

Article 18(3)
(b) and (c)

Article 19

Article 20

Article 21

Article 24

Article 26

Article 10

Article 28

Article 29

Article 30

Article 31

Article 32

Article 33

Article 34

Article 35

Article 36

Article 37

Article 38

Article 39

Article 40

Article 41

Article 42

Article 43

Article 44(1) to (9)

Article 45

Article 46

Article 21(2)

Article 22

Article 23

Article 24

Article 4

Article 15

Article 11

Article 14

Article 17

Article 28

Article 29

Article 31

Article 38

Article 39(2)

Article 40 (2)
to (10)

Article 41

Article 42(2)

19.12.2000

EN

Official Journal of the European Communities

C 365 E/41

This Directive

Directive
79/267/EEC

Directive
90/619/EEC

Directive
92/96/EEC

Directive
95/26/EC

Other Acts

Article 43(2)

Article 44(2),
first
subparagraph

Article 44(2),
second
subparagraph

Article 44(2),
third
subparagraph

Article 47

Article 48(1)

Article 48(2)

Article 48(3)

Article 49(1) to
(2)(f)

Article 27(1)
to (2)(f)

Article 49(2)(g)

Article 49(3) and (4)

Article 50

Article 31

Article 51

Article 31(a)

Article 52

Article 28

Article 53

Article 29

Article 54

Article 30

Article 55

Article 32

Article 56

Article 32(a)

Article 57(1)

Article 32(b)(1)

Article 57(2)

Article 32(b)(2)

Article 57(3)

Article 32(b)(3)

Article 57(4)

Article 32(b)(4)

Article 57(5)

Article 32(b)(5)

Article 57(6)

Article 32(b)(7)

Article 58

Article 32(b)(6)

Article 59(1)

Article 33(4)

Article 59(2)

Article 60

Article 37

Article 61

Article 45

New

New

New

C 365 E/42

EN

Official Journal of the European Communities

19.12.2000

This Directive

Directive
79/267/EEC

Directive
90/619/EEC

Directive
92/96/EEC

Directive
95/26/EC

Other Acts

Act of Accession of Austria,
Finland and Sweden, adapted by
Decision 95/1/EC, Euratom, ECSC

New

New

Article 62

Article 63,
first
subparagraph

Article 63,
second to fourth
subparagraph

Article 64

Article 65

Article 66

Article 67(1),
first
subparagraph

Article 67(1),
second
subparagraph

Article 67(2)

Article 68

Article 38

Article 28,
first
subparagraph

Article 28,
second to fourth
subparagraph

Article 29

Article 47

Article 47

Article 48(1)

Article 48(2)

Article 50

Article 69(1)

Article 39(1)

Article 69(2)

Article 39(3)

Article 70

Article 71

Article 72

Article 73

Article 74

Annex I

Annex II

Annex III

Annex IV

Annex V

Article 41

Article 31

Article 51(2)

Article 6(2)

Annex

Annex I

Annex II