WRITTEN QUESTION E-3245/00 by Neil MacCormick (Verts/ALE) to the Commission. Orphan funds held by life assurance companies.
Date: 2000-10-20
Institutions: European Parliament, Provisional data
Subjects: intra-EU trade, life assurance, orphan

22.5.2001

EN

Official Journal of the European Communities

C 151 E/111

Answer given by Mrs de Palacio on behalf of the Commission

(1 December 2000)

As the Honourable Member is aware, the Commission has been having discussions with the Scottish
Executive on bringing the routes currently operated by CalMac into conformity with Community law and
in particular, Council Regulation (EEC) No 3577/92 of 7 December 1992 applying the principle of
freedom to provide services to maritime transport within Member States (maritime cabotage) (1) and the
Community guidelines on State aid to maritime transport (2). Since two of these routes, Gourock/Dunoon
and Tarbert/Portavadie, are mainland to mainland, the Commission requested detailed information about
the services provided on these routes and the very particular nature of the locations served. As the
Commission(cid:146)s reply to the Honourable Member(cid:146)s Oral Question H-0699/00 given at Parliament(cid:146)s September
2000 Parliament session (3) noted, the evidence provided suggested that these two services could be
regarded, for the purposes of Article 4 of Council Regulation (EEC) No 3577/92, as being in a similar
situation as regular services with (or between) islands due to the overland alternative either not being a
realistic option or being prohibitively long.

Since the service from Gourock to Helensburgh via Kilcreggan is provided by the local authority rather
it has not yet been the subject of close examination by the Commission. However,
than CalMac,
information has been requested from the Scottish Executive on those maritime services not provided by
CalMac, such as Gourock/Kilcreggan/Helensburgh, which may currently operate under public service
obligations. When this information is available, the Commission will be in a position to take a view on
this particular route.

(1) OJ L 364, 12.12.1992.
(2) OJ C 205, 5.7.1997.
(3) Debates of the European Parliament (September 2000).

(2001/C 151 E/124)

WRITTEN QUESTION E-3245/00

by Neil MacCormick (Verts/ALE) to the Commission

Subject: Orphan funds held by life assurance companies

(20 October 2000)

Has the Commission studied the problem of (cid:145)orphan funds(cid:146) held by life assurance companies? Does the
Commission consider that the possible abuse of such funds would be inconsistent with the rights of the
consumers of financial services products throughout the Union?

If so, what action does the Commission propose to take to ensure there is no misappropriation of orphan
funds for the benefit of company shareholders and at the expense of policyholders?

Answer given by Mr Bolkestein on behalf of the Commission

(4 December 2000)

The so-called (cid:145)orphan funds(cid:146) refer to the amount of assets in a life fund in excess of what an insurance
undertaking must set up in order to ensure its contractual commitments. This amount is calculated on
prudent assumptions in order to meet the reasonable expectations of policyholders. National insurance
supervisory authorities monitor the financial soundness of insurance undertakings, in particular whether
the contractual commitments of the insurer are covered by adequate and sufficient technical provisions.
Such technical provisions are represented by investments of the insurer in specific categories of assets.

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 Directive 79/267/EEC and 90/

C 151 E/112

Official Journal of the European Communities

EN

22.5.2001

619/EEC (third life assurance Directive) (1) lays down co-ordinated rules for the calculation of the minimum
amount of technical provisions, including mathematical provisions that an insurance undertaking must set
up to meet its contractual obligations. Directive 92/96/EEC also sets out the list of eligible assets from
among which Member States allow insurance undertakings to invest in order to cover their technical
provisions. From a legal viewpoint, the assets representing technical provisions are owned by the insurance
undertaking.

The Honourable Member refers to the distribution by a life assurance undertaking of the assets covering
the technical provisions which are in excess of the amount which must be set up according to the rules
used to calculate such provisions. It falls to the insurance undertaking, under the supervision of its national
supervisory authority, to determine the amount of such excess as well as the criteria for distribution.

According to information held by the Commission, the British insurance supervisor (Financial Services
Authority) has always considered that any distribution of such assets should be made in such a way that
policyholders would be entitled to obtain 90 % of the assets to be distributed and the remaining 10 %
would be left for shareholders. Some insurance undertakings recently made special offers to policyholders
regarding the distribution of a portion of such (cid:145)orphan assets(cid:146). National courts are being called upon to
analyse such offers and an important test case is to be heard by the High Court in December 2000. This
will clarify the situation.

The Commission has no evidence of misuse of (cid:145)orphan funds(cid:146) held by insurance undertakings. The
Commission considers that it falls to national authorities to verify whether the distribution of assets held
by insurance undertakings in excess of investments covering the minimum required level of technical
provisions complies with the terms of insurance contracts concluded by the insurance undertakings and
other legislative measures or prudential standards set up in the Member States. Should evidence of specific
commercial practices emerge that conflicted with national requirements, the national authorities would be
required to take appropriate measures.

(1) OJ L 360, 9.12.1992.

(2001/C 151 E/125)

WRITTEN QUESTION E-3247/00

by Rosa MiguØlez Ramos (PSE) to the Commission

(20 October 2000)

Subject: Negotiations with Cape Verde for a new fisheries agreement

The Community fisheries sector is concerned at the fact that the existing EU-Cape Verde agreement
expired on 6 September 2000, while no negotiating timetable has yet been set for its renewal.

What contacts has the Commission entered into with the Cape Verde authorities for the renewal of this
agreement? Have the Commission and the Cape Verde government agreed on a negotiating timetable?

Answer given by Mr Fischler on behalf of the Commission

(6 December 2000)

The Commission thanks the Honourable Members for their interest in the renewal of the protocol to the
EU-Cape Verde Fisheries Agreement and is pleased to inform them of the following.

The Commission is aware of the importance of renewing the protocol before its expires and, following a
series of preliminary contacts, took part in three successive rounds of talks in Brussels on 19/20 July 2000,
in Praia on 23-25 August 2000 and in Brussels on 6/7 November 2000.