Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing a framework for the recovery and resolution of insurance and reinsurance undertakings and amending Directives 2002/47/EC, 2004/25/EC, 2009/138/EC, (EU) 2017/1132 and Regulations (EU) No 1094/2010 and (EU) No 648/2012
Date: 2021-09-22
Institutions: Directorate-General for Financial Stability, Financial Services and Capital Markets Union, European Commission
Subjects: aid to undertakings, company in difficulties, financial risk, financial supervision, holding company, insurance company, insurance law, parent company, reinsurance, risk management

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   EUROPEAN COMMISSION  Brussels, 22.9.2021  COM(2021) 582 final 2021/0296 (COD)  Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing a framework for the recovery and resolution of insurance and reinsurance undertakings and amending Directives 2002/47/EC, 2004/25/EC, 2009/138/EC, (EU) 2017/1132 and Regulations (EU) No 1094/2010 and (EU) No 648/2012 (Text with EEA relevance) {SWD(2021) 260} - {SWD(2021) 261} - {SEC(2021) 620}  
 
EXPLANATORY MEMORANDUM 

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

Insurance policies form an integral part of the daily life of European citizens. For many social 
and economic activities, holding an insurance policy is necessary to protect against potential 
risks. An insurance policy can also be a savings product, which will determine the long-term 
welfare of the holders while insurers channel these savings via financial markets into the real 
economy. The disorderly failure of insurers can therefore have a significant impact on policy 
holders,  beneficiaries,  injured  parties  or  affected  businesses,  especially  where  critical 
insurance services cannot be substituted in a reasonable amount of time and at a reasonable 
cost.  The  management  of  a  near-failure  or  the  failure  of  certain  insurers,  particularly  large 
cross-border  groups,  or  the  simultaneous  failure  of  multiple  insurers  can  also  lead  to  or 
amplify financial instability. 

The  Solvency  II  Directive  reduced  the  likelihood  of  failures  and  improved  the  resilience  of 
the  EU  insurance  industry,  and  will  be  reinforced  by  the  review  adopted  together  with  this 
proposal1.  Nevertheless,  despite  a  sound  and  robust  prudential  framework,  situations  of 
financial distress cannot be completely excluded.  

Yet,  there  are  currently  no  harmonised  procedures  at  European  level  for  resolving  insurers. 
This  results  in  considerable  substantive  and  procedural  differences  between  the  laws, 
regulations  and  administrative  provisions  that  govern  the  failure  of  insurers  in  the  Member 
States. In addition, corporate insolvency procedures may not be appropriate for insurance, as 
they  may  not  always  ensure  an  adequate  continuation  of  critical  functions.  A  regime  is 
therefore  needed  to  provide  authorities  with  a  credible  set  of  resolution  tools  to  intervene 
sufficiently early and quickly if insurers are failing or likely to fail to ensure a better outcome 
for policy holders, while minimising the impact on the economy, the financial system and any 
recourse to taxpayers’ money. 

At  international  level,  in  October  2014  the  Financial  Stability  Board  (FSB)  developed  Key 
Attributes (KA) on effective resolution regimes for the insurance sector targeting any insurer 
that could be systemically significant or critical if it fails. The FSB released complementary 
guidance on developing effective resolution strategies and plans in June 2016 and in its KA 
Assessment  Methodology  in  August  2020.  In  parallel,  in  November  2019  the  International 
Association  of  Insurance  Supervisors  (IAIS)  adopted  Insurance  Core  Principles  for  all 
insurance and reinsurance undertakings as well as a Common Framework for Internationally 
Active  Insurance  Groups  (IAIG)  detailing  standards  for  pre-emptive  recovery  planning  for 
IAIG  and  powers  that  authorities  are  expected  to  have  available  to  manage  an  orderly  exit 
from  the  market.  Resolution  planning  for  individual  insurance  groups  is  expected  as 
necessary. 

This  proposal  reflects  these developments  and implements these international  standards into 
European legislation. It is based on the preparatory work developed by EIOPA, in particular 
its  July  2017  Opinion2,  and  on  EIOPA’s  technical  advice  on  the  review  of  the  Solvency  II 

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COM(2021)581. 
See  EIOPA  Opinion  to  Institutions  of  the  European  Union  on  the  harmonisation  of  recovery  and 
resolution frameworks for (re)insurers across the Member States, July 2017. 

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Directive3.  It also  follows reports prepared by the ESRB in  2017  and 20184 which argue in 
favour of a harmonised recovery and resolution framework in insurance. 

• 

Consistency with existing policy provisions in the policy area 

This  proposal  has  been  developed  in  full  consistency  with  the  Solvency  II  framework, 
particularly,  its  intervention  ladder  for  undertakings  in  the  event  of  deteriorating  financial 
conditions and the recovery measures already available for breaches of capital requirements. 
While  it  adds  certain  elements  of  crisis  preparedness,  the  new  preventive  powers  are 
consistent with the intervention ladder and the supervisory powers already provided for in the 
Solvency II framework; they do not lead to a new pre-defined intervention trigger other than 
the  level  of  the  Solvency  Capital  Requirement.  The  proposal  is  also  consistent  with  the 
corresponding  policies  in  the  field  of  recovery  and  resolution  for  credit  institutions  and 
investment firms5 and central counterparties6. 

• 

Consistency with other Union policies 

By stabilising the critical functions of distressed insurers, this proposal helps to ensure a better 
protection of savers and investors, maintain insurers’ essential functions for the real economy 
and  reinforce  financial  stability.  It  supports  the  essential  conditions  for  facilitating  efficient 
and sustainable flows of capital to where they are needed. 

Overall, this proposal helps to reinforce the role of insurers as long-term investors and actors 
in the economic recovery following the COVID-19 crisis, in line with the political objectives 
of the Capital Markets Union and the European Green Deal. 

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

The  legal  basis  for  the  proposal  is  Article  114  of  the  TFEU.  This  allows  the  adoption  of 
measures  for  the  approximation  of  national  provisions  which  have  as  their  object  the 
establishment and functioning of the internal market. 

The proposal harmonises national laws on recovery and resolution of insurers, or introduces 
such a framework if there is none  yet, to the extent necessary to ensure that Member States 
have the same tools and procedures to address failures. By establishing minimum harmonised 
requirements in the internal market, the proposal would establish a level playing field across 
the Member States. The harmonised framework would also safeguard the interests of policy 
holders and preserve the real economy. It would contribute to financial stability and trust in 
the  internal  market  for  insurance  and  reinsurance  by  ensuring  a  minimum  capacity  for 
resolution  of insurers in  all Member States and by  facilitating  cooperation between national 
authorities when dealing with the failure of cross-border groups. Therefore, the proposal has 
as its object the establishment and functioning of the internal market and Article 114 of the 
TFEU is the appropriate legal base. 

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5 

6 

https://www.eiopa.europa.eu/content/opinion-2020-review-of-solvency-ii_en 
ESRB  report,  “Recovery  and  resolution  for  the  EU  insurance  sector:  a  macroprudential  perspective, 
August  2017.  ESRB  Report  “Macroprudential  provisions,  measures  and  instruments  for  insurance”, 
November 2018. 
Directive  2014/59/EU  of  15  May  2014  establishing  a  framework  for  the  recovery  and  resolution  of 
credit institutions and investment firms 
Regulation  (EU)  2021/23  of  16  December  2020  on  a  framework  for  the  recovery  and  resolution  of 
central counterparties 

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• 

Subsidiarity (for non-exclusive competence)  

Currently,  insurance  recovery  and  resolution  systems  are  national  and  only  in  place  in  a 
handful  of  Member  States.  Many  national  legal  systems  therefore  do  not  confer  the  powers 
necessary  for  authorities  to  deal  adequately  with  failing  insurers.  These  divergent  national 
legislations are also insufficient in cases of cross-border failure, particularly for cross-border 
groups where uncoordinated actions could quickly lead to suboptimal outcomes. Establishing 
adequate  resolution  arrangements  at  Union  level  requires  significant  harmonisation  of 
national  practices  and  procedures,  which  justifies  the  Union  proposing  the  necessary 
legislation. 

The  objective  of  this  proposal,  namely  the  harmonisation  of  the  rules  and  processes  for  the 
recovery  and  resolution  of  insurers,  cannot  be  sufficiently  achieved  by  the  Member  States; 
instead,  due  to  the  effects  of  a  failure  of  any  undertaking  in  the  Union,  it  can  be  better 
achieved  at  Union  level.  Therefore,  the  Union  may  adopt  measures,  in  accordance  with  the 
principle of subsidiarity as set out in Article 5 of the Treaty on European Union. 

• 

Proportionality 

This proposal implements international standards and follows the advice of EIOPA. To ensure 
the  suitability  and  effectiveness  of  the  recovery  and  resolution  framework,  and  to  limit 
excessive administrative burdens and costs on insurers and authorities, the proposal contains 
proportionate requirements that take into consideration the nature, scale and complexity of the 
organisation,  activities  and  services  of  an  insurer.  This  applies  to  the  scope  of  undertakings 
that  would  be  subject  to  pre-emptive  recovery  planning  and  resolution  planning;  authorities 
can also  allow insurers to be subject to a simplified set of obligations when developing and 
maintaining their plans. National insolvency procedures would remain a possible exit from the 
market for a failed insurer and supervisory intervention would remain judgement-based. 

The provisions of the proposal are, therefore, proportionate to what is necessary to achieve its 
objectives. 

• 

Choice of the instrument 

Prudential supervision is based on the Solvency II Directive, and resolution is closely linked 
to  non harmonised areas of national  law, such  as insolvency  and property law. Therefore, a 
directive  is  the  appropriate  legal  instrument  since  transposition  is  necessary  to  ensure  the 
framework is implemented in a way that achieves the intended effect, within the specificities 
of relevant national law. 

3. 

• 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Ex-post evaluations/fitness checks of existing legislation 

This  proposal  shares  its  Impact  Assessment  (IA)  with  the  proposal  on  the  review  of  the 
Solvency II framework7. Annex 10 of the IA evaluates the current Solvency II framework and 
concludes  that  it  has  been  broadly  effective  in  achieving  progress  towards  its  overarching 
objectives  of  facilitating  the  development  of  the  single  market  in  insurance  services  while 
adequately  protecting  policy  holders.  However,  since  its  entry  into  application  in  2016,  the 
Solvency II prudential framework has been implemented in a variety of ways by the national 

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Add reference to impact assessment 

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supervisory  authorities  (NSAs).  This  has  been  the  case,  for  instance,  for  the  intervention 
ladder which aims to restore the financial situation of insurers after a deterioration has been 
observed,  or,  more  broadly,  for  measures  related  to  recovery  and  resolution.  In  addition,  in 
light  of  the  growing  cross-border  activities  and  the  new  challenges  posed  by  the  prevailing 
economic and financial conditions, the Solvency II framework has not yet provided a regime 
that could ensure the coordinated resolution of insurers. 

A majority of Member States do not have an effective recovery and resolution framework in 
place, and when they do, there are substantial  differences between them8. These differences 
include the powers and tools available to authorities, the conditions under which these powers 
can  be  exercised  and  the  objectives  pursued  when  addressing  the  failure  of  insurers.  In 
addition,  as  evidenced  by  the  few  cases  of  failure  and  near-failure  recorded  by  EIOPA,  the 
lack  of  sufficient  preparedness  of  both  insurers  and  public  authorities,  the  lack  of  adequate 
tools  and  powers  or  the  lack  of  cross-border  coordination  may  have  impeded  a  prompt  and 
successful  recovery  or  resolution  of  failing  insurers  in  the  EU.  Consequently,  the  level  of 
protection for policy holders and beneficiaries may have been suboptimal. 

• 

Stakeholder consultations 

In July 2017, EIOPA published an Opinion on the harmonisation of recovery and resolution 
frameworks  for  insurers  across  the  Member  States;  EIOPA  published  a  second  Opinion  in 
December  2020  following  the  Commission’s  “Call  for  Advice”  of  February  2019.  In  both 
cases,  EIOPA  conducted  a  public  consultation.  In  addition,  the  Commission  organised  a 
conference in January 2020, including one session focused on recovery and resolution. 

On 19 February 2020, the Commission consulted Member States through the Expert Group on 
Banking,  Payments  and  Insurance.  Member  States  were  invited  to  comment  on  the 
Commission’s  consultation  strategy  and  on  EIOPA’s  impact  assessment  of  its  proposals.  A 
specific  exchange  of  views  took  place  on  a  possible  approach  to  recovery  and  resolution, 
notably through a targeted survey. 

In July 2020, an Inception Impact Assessment (IIA) provided a detailed analysis of different 
policy options; feedback from stakeholders on the IIA was collected until August 2020. From 
July  to  October  2020,  a  public  consultation  on  the  review  of  the  Solvency  II  framework 
gathered  73  responses  from  a  variety  of  stakeholders,  mostly  from  the  European  Economic 
Area. A “summary report” on the feedback to this consultation was published on 1 February 
20219. 

These consultations showed that while public authorities and civil society broadly supported 
better  alignment  of  recovery  and  resolution  elements,  the  insurance  industry  found  such  a 
harmonisation  largely  unnecessary  and  pointed  to  the  likely  high  compliance  costs.  Some 
participants  stressed  the  need  to  have  a  proportionate  application  of  the  rules.  All 
stakeholders,  however,  stressed  the  need  for  better  coordination  and  information  exchange 
between supervisors in a cross-border context. 

On 10 November 2020, the Commission consulted Member States through the Expert Group 
on Banking, Payments and Insurance on additional elements related to insurance recovery and 

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https://www.eiopa.europa.eu/content/opinion-2020-review-of-solvency-ii_en. 
https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12461-Review-of-measures-on-
taking-up-and-pursuit-of-the-insurance-and-reinsurance-business-Solvency-II-/public-consultation 

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resolution.  Overall,  Member  State  experts  agreed  with  the  policy  orientations  suggested  in 
EIOPA’s 2020 Opinion. 

• 

Collection and use of expertise 

To  support  its  work  on  the  review  of  the  Solvency  II  framework,  the  Commission  sent  a 
comprehensive  “Call  for  Advice”  to  the  EIOPA,  including  on  recovery  and  resolution.  The 
final report from EIOPA was published on 17 December 2020. 

In  addition  to  consulting  stakeholders,  the  Commission  participated  in  the  discussions  and 
exchange of views informing the work of EIOPA, the IAIS and the FSB on the recovery and 
resolution  of  insurers.  In  this  regard,  the  legislative  proposal  is  fully  in  line  with  the  latest 
FSB and IAIS policy orientations. 

• 

Impact assessment 

The IA for this proposal was developed as part of the broader Solvency II review and received 
a  positive  opinion  from  the  Regulatory  Scrutiny  Board  (RSB)  on  23  April  2021.  Costs  and 
benefits  associated  with  this  proposal  were  thoroughly  assessed  and  consulted  upon  on  two 
occasions by EIOPA10; the main insights from EIOPA’s analysis are reflected in the IA and 
summarised below. 

The RSB made a number of recommendations for improvements, which led to the IA being 
further refined.  In particular, the assessment of options and the overall costs and benefits of 
the  Solvency  II  review,  together  with  the  recovery  and  resolution  proposal  were  further 
substantiated. 

The  IA  found  that  the  implementation  of  a  pre-emptive  recovery  and  resolution  framework 
would effectively address the observed lack of preparedness, possibly delayed interventions, 
the  incomplete  toolbox  and  uncoordinated  management  of  cross-border  cases  of  (near-) 
failure.  

However,  the  IA  concluded  that,  in  line  with  international  guidance  and  standards,  it  is 
necessary to introduce specific conditions for entry into resolution to address situations where 
an insurer would have a systemic impact if it fails. In particular, the policy options developed 
in the proposal would provide a credible framework to address the distress of insurers whose 
failure  could  negatively  affect  policy  holders.  A  harmonised  set  of  powers  to  prevent  and 
address failures with consistent design, implementation and enforcement features would foster 
cross-border  cooperation  and  coordination  during  crises  and  help  to  avoid  any  unnecessary 
economic  costs  stemming  from  uncoordinated  decision-making  between  different  public 
authorities and courts. It would also contribute to the level playing-field and avoid regulatory 
arbitrage. 

In  terms  of  costs,  the  IA  demonstrated  that  they  would  stem  mostly  from  the  planning  and 
resolvability assessment  requirements. EIOPA’s impact  assessment provides an  overview of 
the  range  of  costs  estimated  by  the  NSAs  for  drafting  and  maintaining  resolution  plans  and 

10 

See sections 11.6 and 12 in EIOPA’s Impact Assessment and section 12 in the Background Document. 
EIOPA’s Opinion on the review of Solvency II  was preceded by an  Opinion on the  harmonisation of 
recovery  and  resolution  frameworks  for  (re)insurers  across  the  Member  States  (5  July  2017)  and  a 
Discussion  Paper  on  Resolution  Funding  and  National  Insurance  Guarantee  Schemes  (EIOPA,  July 
2018).  

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resolvability  assessments,  and  for  the  supervision  of  pre-emptive  recovery  plans.  Insurers 
would  face  costs  from  drafting  pre-emptive  recovery  plans,  from  making  information 
available  for  resolution  planning  or  from  possible  changes  to  address  impediments  to 
resolvability. No assessment of these costs was available for the IA; however, as pre-emptive 
recovery  plans  would  be  integrated  in  the  ongoing  risk  management  of  insurers,  ORSA 
reports and contingency planning could serve as a source of input. 

The IA also confirmed EIOPA’s assessment that it would not be proportionate to require the 
financing  of  a  resolution  fund  by  the  insurance  industry  or  the  building-up  of  liabilities  by 
individual  insurers  that  could  be  bailed-in  to  absorb  losses  and  recapitalise  failing  insurers. 
The  IA  assessed  that  these  measures  would  inflate  the  balance  sheet  of  insurers  to  create  a 
loss-absorbing  capacity  in  proportion  to  their  technical  provisions;  this  would  entail  higher 
costs for the industry and impose additional servicing risks on the companies that would not 
be justified by materially increased benefits11. 

• 

Regulatory fitness and simplification 

As explained under section 2, no additional intervention ladder is created in Solvency II and 
the  new  planning  requirements  are  subject  to  adequate  proportionality.  The  introduction  of 
these  proportionality  elements  should  help  to  reduce  regulatory  and  administrative  burdens 
associated  with  implementing  the  proposal  and  to  achieve  an  appropriate  balance  with  its 
expected benefits. 

By  fostering  awareness  and  preparedness,  the  proposal  contributes  to  better-informed  and 
timely  remedial  actions  when  needed  by  insurers.  It  would  also  enhance  the  level  playing-
field in the measures taken by authorities to restore their financial conditions or resolve them, 
and thereby contribute to fairer competitive conditions. 

• 

Fundamental rights 

This  proposal  complies  with  fundamental  rights  and  observes  the  principles  recognised  in 
particular by the Charter of Fundamental Rights of the European Union (the Charter), notably 
the rights to property, the freedom to conduct a business, the right to an effective remedy and 
to a fair trial and the right of defence, and has to be applied in accordance with those rights 
and principles. 

Any  interference  with  rights  of  shareholders  and  creditors  which  results  from  resolution 
action should be compatible with the Charter. In particular, where creditors within the  same 
class are treated differently under resolution action, such distinctions should be justified in the 
public  interest  and  proportionate  to  the  risks  being  addressed.  Affected  creditors,  including 
policy holders, should not incur greater losses than those which they would have incurred if 
the  insurer  had  been  wound  up  under  normal  insolvency  proceedings  at  the  time  that  the 
resolution decision is taken. 

4. 

BUDGETARY IMPLICATIONS 

The proposal has no implications for the Union budget. 

11 

EIOPA  considered  and  consulted  upon  these  options  in  the  Discussion  Paper  on  Resolution  Funding 
and National Insurance Guarantee Schemes (EIOPA 30 July 2018). 

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The proposal would require EIOPA to: (i) develop ten technical standards and six guidelines; 
(ii) establish one annual report on the use of simplified obligations; (iii) maintain a database 
on  administrative  sanctions  reported  by  national  authorities;  and  (iv)  take  part  in  resolution 
colleges,  make  decisions  in  case  of  disagreement  between  supervisory  and  resolution 
authorities  and  exercise  binding  mediation.  The  newly  established  resolution  committee 
would also prepare the tasks for EIOPA in the areas covered by the proposal. In this context, 
relevant  competent  authorities  shall  be  invited  to  participate,  as  members,  in  to  these 
developments, thereby maximising use of existing resources. 

The  delivery  of  the  technical  standards  is  due  18  months  after  the  entry  into  force  of  the 
Directive.  This  deadline  should  provide  sufficient  time  for  EIOPA  to  develop  them 
considering  its  current  resources.  The  only  recurrent  deliverable  relates  to  the  report  on  the 
use of simplified obligations.  

The workload associated with creating and maintaining the database on sanctions will likely 
depend on the flow of events reported by national authorities. Occurrences should be limited 
and  would  be  spread  over  time,  allowing  EIOPA  to  manage  its  existing  resources  as 
necessary. 

Considering past and current work on crisis management at EIOPA, it is considered that the 
proposed tasks for EIOPA will not require the establishment of additional positions and can 
be carried out with current resources. 

5. 

• 

OTHER ELEMENTS 

Implementation plans and monitoring, evaluation and reporting arrangements 

The proposal  requires  Member States to  transpose the recovery and  resolution rules in  their 
national  laws  within  18 months  from  the  entry  into  force  of  this  proposal.  As  mentioned  in 
section  5,  national  authorities  should  report  to  EIOPA  on  the  application  of  simplified 
obligations on an annual basis, which EIOPA should in turn disclose. 

• 

Detailed explanation of the specific provisions of the proposal 

Title I – Scope, definitions and authorities 

Subject matter and scope of application (Article 1) 

This  proposal  addresses  crisis  management  (preventive  powers,  pre-emptive  recovery 
planning and resolution) in relation to all insurance and reinsurance undertakings established 
in the EU that are subject to the Solvency II framework.  

In addition,  as the failure of  an  entity  affiliated to  a  group can impact  the solvency  and the 
operations of the whole group, pre-emptive recovery and resolution planning needs to identify 
and  encompass  the  all  material  entities  of  groups  of  which  an  insurer  may  form  part  and 
authorities should possess effective means of action with  respect  to  those entities to  impose 
remedial  actions  that  takes  into  account  the  financial  soundness  of  the  group,  address 
impediments  to  resolvability in  a  group context  and produce  a  consistent resolution  scheme 
for the group as a whole, in particular in a cross-border context. 

Set-up of resolution authorities (Article 3) 

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This  proposal  requires  Member  States  to  set  up  insurance  resolution  authorities,  equipped 
with  a  minimum  harmonised  set  of  powers  to  undertake  all  the  relevant  preparatory  and 
resolution  actions.  The  proposal  does  not  specify  the  particular  authority  that  should  be 
appointed  and  can  therefore  be  for  example  national  central  banks,  competent  ministries, 
public  administrative  authorities  or  other  authorities  entrusted  with  public  administrative 
powers.  In  case  the  powers  are  assigned  to  an  existing  authority,  adequate  structural 
arrangements  should  be  in  place  to  avoid  conflicts  of  interest  between  supervisory  and 
resolution  functions  and  operational  independence,  in  particular  with  regard  to  supervisory 
authorities. 

Title II – Preparation 

Simplified obligations (Article 4) 

In order to comply with the principle of proportionality and to avoid excessive administrative 
burden,  authorities  should,  where  appropriate,  apply  different  or  reduced  pre-emptive 
recovery  and  resolution  planning  and  information  requirements  on  an  undertaking-specific 
basis, and at a lower frequency of updates, taking into account a number of factors related to 
the undertaking. On an annual basis, authorities should report to EIOPA on the application of 
simplified obligations. 

Pre-emptive recovery planning (Articles 5 to 8) 

Groups should draw up and submit to the group supervisor group pre-emptive recovery plans. 
Also  insurers,  which  are  not  part  of  a  group  subject  to  such  planning  requirements  are 
required to prepare and regularly update pre-emptive recovery plans that set out actions to be 
taken  by  those  undertakings  for  the  restoration  of  their  financial  position  where  this  has 
significantly deteriorated. Supervisors should identify the insurers that are obliged to draw up 
pre-emptive recovery plans based on a number of factors. Overall, at least 80% of a Member 
States’  market  should  be  subject  to  such  requirements  and  low  risk  undertaking  would  be 
excluded on an individual basis. 

These  plans  will  improve  the  insurer’s  understanding  of  its  vulnerabilities  and  its  realistic 
options  in  stress  scenarios  should  be  an  integral  part  of  an  undertaking’s  system  of 
governance and existing tools may serve as input when preparing pre-emptive recovery plans. 

Pre-emptive recovery plans are to be assessed by the supervisory authorities to check whether 
the plans are comprehensive and could feasibly restore an undertaking’s viability in a timely 
manner.  

Resolution planning and resolvability assessments (Articles 9 to 16) 

Resolution  authorities  are  required  to  prepare  resolution  plans  setting  out  the  resolution 
actions  which  the  authority  envisages  in  the  event  the  conditions  for  resolution  are  met. 
Overall, 70% of undertakings per Member State should be subject to resolution planning and 
low risk undertaking would be excluded on an individual basis. The relevant insurers should 
be identified based on a number of proportionality criteria, including the expected impact of 
their failure.  

Neither  pre-emptive  recovery  nor  resolution  plans  should  rely  on  any  extraordinary  public 
financial assistance or expose taxpayers to the risk of loss. 

EN 

8 

  EN 

As  part  of  resolution  planning,  resolution  authorities  should  also  assess  the  overall 
resolvability of the insurer and address  any impediments thereto.  The authorities’ discretion 
should be limited to what is necessary in order to simplify the structure and operations of the 
insurance or reinsurance undertaking solely to improve its resolvability.  

Joint decisions (Article 17) 

Group  supervisors,  supervisory  authorities,  group  resolution  authorities  and  resolution 
authorities, as applicable, should endeavour to reach joint decisions, following the procedure 
set out in this Article. 

Title III – Resolution 

Resolution conditions (Article 19) 

The proposal establishes common parameter for triggering the application of resolution tools. 
An insurance or reinsurance undertaking should be placed in resolution when it is failing or 
likely to fail and there is no prospect that private sector alternatives or supervisory measures 
can avert failure. 

At  the  same  time,  it  is  necessary  to  ensure  that  intrusive  measures  are  triggered  only  when 
interference with the rights of stakeholders is justified and resolution action would be in the 
public interest. 

Resolution tools and powers (Articles 26 to 52) 

When the conditions for resolution are satisfied, resolution authorities will have the power to 
apply the following resolution tools: 

(a) 

(b) 

(c) 

(d) 

(e) 

write-down or conversion of capital instruments, debt instruments and other eligible 
liabilities in particular to facilitate the exercise of other resolution tools such as the 
solvent run-off or the transfer tools. A specific hierarchy is created that complements 
and were necessary supersedes the one established in each national insolvency law. 
In  principle,  shareholders  claims  should  be  exhausted  before  those  of  subordinated 
creditors.  It  is  only  when  those  claims  are  exhausted  that  the  resolution  authorities 
can impose losses  on more senior claims.  In certain circumstances, conversion  will 
take place to dilute seriously the remaining shareholders’ claims; 

solvent run-off: the authorisation of an undertaking under resolution to conclude new 
insurance  or  reinsurance  contracts  is  withdrawn  in  order  to  limit  its  activity  to  the 
exclusive administration of its existing portfolio, thereby maximising the coverage of 
insurance claims by existing assets; 

sale of business: all or part of an undertaking’s business can be sold on commercial 
terms, without complying with procedural requirements that would otherwise apply. 

bridge  undertaking:  all  or  part  of  an  undertaking’s  business  can  be  transferred  to  a 
publicly controlled entity. The bridge undertaking must be authorised in accordance 
with the Solvency II Directive. Its operations are temporary in nature, the aim being 
to sell the business to a private purchaser when market conditions are appropriate. 

asset  and  liability  separation:  impaired  or  problem  assets  and/or  liabilities  can  be 
transferred  to  a  management  vehicle  to  allow  them  to  be  managed  and  worked  out 
over  time.  In  order  to  minimise  competitive  distortions  and  risks  of  moral  hazard, 
this tool should only be used in conjunction with another resolution tool. 

EN 

9 

  EN 

Where  available,  insurance  guarantee  schemes  could  contribute  to  funding  the  resolution 
process by absorbing losses to the extent of the net losses that those schemes would have had 
to suffer after protecting policy holders in normal insolvency proceedings. In those cases, the 
application of the write-down or conversion tool would ensure that eligible policy holders are 
protected  up  to  at  least  the  coverage  level  which  is  the  main  reason  why  such  insurance 
guarantee schemes have been established under national law. 

In  order  to  apply  those  tools,  resolution  authorities  will  have  powers  to  take  control  of  an 
institution that has failed or is about to fail, take over the role of shareholders and managers, 
transfer assets and liabilities and enforce contracts. Where applicable, resolution actions will 
need to be consistent with the Union State aid framework. National authorities will be able to 
provide for, in addition to the minimum harmonised toolkit, specific national tools and powers 
if they are compatible with the principles and objectives of the Union resolution framework. 
In particular, national authorities may consider the use of the write-down or conversion tool to 
recapitalise a failing insurer as long as insurance claims are not affected and that appropriate 
reorganisation and restructuring measures are taken. 

Ancillary  provisions  concerning  resolution,  including  valuation,  safeguards,  procedural 
obligations and rights of appeal and exclusion of other actions (Articles 23 to 25 and 53 to 
66) 

In  order  to  ensure  that  resolution  decisions  are  taken  in  accordance  with  key  principles 
regarding  property  rights  and  compliance  with  relevant  securities  and  company  law,  the 
Directive includes the necessary provisions and steps which resolution authorities would have 
to  comply  with  before  and  upon  taking  resolution  decisions.  For  example,  these  include 
ensuring  an  accurate  valuation  of  the  insurer’s  balance  sheet,  safeguards  for  affected 
shareholders and creditors, including policy holders, to receive compensation if they end up 
worse  than  if  the  insurance  or  reinsurance  undertaking  been  wound  up  under  national 
insolvency  proceedings,  the  procedural  steps  by  way  of  which  authorities  should  notify  the 
insurer and other authorities concerned of resolution  decisions and  a right of appeal  against 
crisis prevention or crisis management measures. To facilitate resolution and the objective of 
safeguarding financial stability, the framework also includes a temporary moratorium on the 
payment  of  claims  and  stays  in  the  redemption  rights  of  policy  holders  in  relation  to  life 
insurance contracts. 

Title IV - Cross-border group resolution (Articles 67 to 71) 

To  take  account  of  the  cross  border  nature  of  some  insurance  groups  and  create  a 
comprehensive  and  integrated  framework  for  recovery  and  resolution  actions  in  the  Union, 
resolution colleges will be established under the leadership of the group resolution authority 
and  with  the  participation  of  EIOPA.  The  EIOPA  will  facilitate  cooperation  of  authorities, 
contribute  to  consistency  and  mediate  if  necessary.  The  objective  of  the  colleges  is  to 
coordinate preparatory and resolution measures among national authorities to ensure optimal 
solutions at Union level. 

Title V – Relations with third countries (Articles 72 to 77) 

Insurers in  the Union are active in  third countries and  vice versa, and therefore an effective 
framework for resolution needs to provide for cooperation with third country authorities. The 
proposal provides Union authorities with the necessary powers to support foreign resolution 
actions of a failed foreign insurer by giving effect to transfers of its assets and liabilities that 
are  located  in  or  governed  by  the  law  of  their  jurisdiction,  under  certain  conditions.  Union 
resolution  authorities  should  also  have  the  power  to  apply  resolution  tools  to  national 

EN 

10 

  EN 

branches of third country undertakings where separate resolution is necessary for reasons of 
public interest or the protection of local policy holders. 

The proposal  provides that  cooperation agreements  with  foreign resolution authorities could 
be concluded to facilitate the support for foreign resolution actions. EIOPA could enter into 
framework administrative arrangements with authorities of third countries in accordance with 
Article  33  of  Regulation  No  1094/2010  and  national  authorities  could  conclude  bilateral 
arrangements in line with the EIOPA framework arrangements. 

Title VI – Penalties (Articles 78 to 82) 

In  order  to  ensure  compliance  by  insurers,  those  who  effectively  control  their  business  and 
their administrative, management or supervisory body with the obligations deriving from this 
proposal, Member States should provide for administrative sanctions and other administrative 
measures which are effective, proportionate and dissuasive. EIOPA should maintain a central 
database of all administrative sanctions. 

Title  VII  -  Changes  to  the  Solvency  II  Directive,  Company  Law  Directives  and  the  EIOPA 
Regulation  

Changes to the Solvency II Directive, including on preventive measures (Article 83) 

Without  affecting  the  existing  ladder  of  intervention,  this  proposal  clarifies  supervisory 
authorities’  powers  to  impose  preventive  measures  to  insurers  in  cases  of  deteriorating 
financial  positions  or  breaches  of  regulatory  requirements,  to  avoid  the  escalation  of  the 
problems at a sufficiently early stage of deterioration. 

In order to  achieve an effective resolution,  the provisions on reorganisation  and winding-up 
are amended to extend their application in the event of use of the resolution tools both when 
those instruments are applied to insurers and entities covered by the resolution regime. 

Changes to the Company Law Directives and the EIOPA Regulation (Articles 83 to 88) 

The  Union  Company  Law  Directives  contain  rules  for  the  protection  of  shareholders  and 
creditors. Some of these rules may hinder rapid action by resolution authorities. It is therefore 
proposed to amend these. 

In  order  to  ensure  that  resolution  authorities  are  represented  in  the  European  System  of 
Financial Supervision and to ensure that EIOPA has the necessary expertise, Regulation (EU) 
No 1094/2010 would be amended in order to include resolution authorities in the concept of 
competent authorities. 

EN 

11 

  EN 

2021/0296 (COD) 

Proposal for a 

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

establishing a framework for the recovery and resolution of insurance and reinsurance 
undertakings and amending Directives 2002/47/EC, 2004/25/EC, 2009/138/EC, (EU) 
2017/1132 and Regulations (EU) No 1094/2010 and (EU) No 648/2012 

(Text with EEA relevance) 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 114 thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national parliaments, 
Having regard to the opinion of the European Central Bank12, 
Having regard to the opinion of the European Economic and Social Committee13, 

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

(2) 

Distress of insurance undertakings can have substantial repercussions on the economy 
and  social  welfare  in  Member  States  should  such  distress  lead  to  a  disruption  of  the 
protection  provided  to  policy  holders,  beneficiaries  or  injured  parties.  The  role  of 
reinsurance  undertakings  in  the  economy,  their  interconnectedness  with  primary 
insurance  undertakings  and  financial  markets  more  broadly,  as  well  as  the  relatively 
concentrated  reinsurance  market  require  an  appropriate  framework  to  deal  with  their 
distress or failure in an orderly fashion. The recovery and resolution of both primary 
insurance  undertakings  and  reinsurance  undertakings  should  therefore  be  addressed, 
taking into account their respective specificities. 

The global  financial crisis  of 2008 exposed the vulnerabilities of the financial sector 
and  its  interconnectedness.  Causes  of  distress  and  failure  appeared  to  be  linked, 
amongst  others,  to  the  evolution  of  financial  markets  and  to  the  intrinsic  nature  of 
insurance  or  reinsurance  activities.  In  that  regard,  underwriting  risks,  that  is  under-
provisioned  claims,  mispricing,  that  is  underestimated  premiums,  asset-liability 
mismanagement and investment losses are often referred to as main sources of concern 
for insurance and reinsurance undertakings. In that context, taxpayer money has been 
used to restore the deteriorated financial conditions of several insurance undertakings. 

12 
13 

OJ C , , p. . 
OJ C , , p. . 

EN 

12 

  EN 

                                                 
Although  Directive  2009/138/EC  of  the  European  Parliament  and  of  the  Council  14 
aimed  at  strengthening  the  financial  system  in  the  Union  and  the  resilience  of 
insurance and reinsurance undertakings, it did not completely eliminate the possibility 
of  failures  of  such  insurance  and  reinsurance  undertakings.  High  market  volatilities 
and  prolonged  low  levels  of  interest  rates  could  be  particularly  harmful  for  the 
profitability  and  solvency  position  of  insurance  and  reinsurance  undertakings.  The 
sensitivity  of  insurance  and  reinsurance  undertakings  to  market  and  economic 
developments  therefore  calls  for  particular  caution  and  an  adequate  framework  to 
manage,  including  in  a  pre-emptive  manner,  potential  deteriorations  of  the  financial 
positions of such undertakings. Some recent failures and near-failures, in particular of 
a cross-border nature, illustrated weaknesses of the current framework that need to be 
addressed  to  organise  adequately  the  orderly  exit  from  the  market  of  insurance  or 
reinsurance undertakings. 

Activities, services or operations performed by insurance or reinsurance undertakings 
that cannot be substituted easily within a reasonable timeframe, or at a reasonable cost 
for policy holders, beneficiaries or injured parties, need to be seen as critical functions 
that  need  to  be  continued.  Such  activities,  services  or  operations  can  be  critical  at 
Union, national or regional level. The continuity of insurance or reinsurance protection 
is  often  preferable  to  the  winding  down  of  a  failing  undertaking  as  such  continuity 
delivers  the  most  favourable  outcome  for  policy  holders,  beneficiaries  or  injured 
parties. It is therefore crucial that adequate tools are available to prevent failures and, 
where failures occur, to minimise negative repercussions by preserving the continuity 
of those critical functions. 

Ensuring effective resolution of failing insurance and reinsurance undertakings within 
the Union is an essential element in the completion of the internal market. The failure 
of  such  undertakings  has  an  impact  not  only  on  policy  holders  and  possibly  the  real 
economy  and  financial  stability  of  the  markets  on  which  those  insurance  and 
reinsurance undertakings operate directly, but  also on the trust in the internal market 
for  insurance.  The  completion  of  the  internal  market  in  financial  services  has 
reinforced  the  interplay  between  the  different  national  financial  systems.  Insurance 
and  reinsurance  undertakings  are  active  on  financial  markets  to  manage  their 
investment  portfolio  and  the  risks  related  to  their  activities.  They  are  interrelated 
through their derivative operations with the interbank and other financial markets that 
are,  in  essence,  pan-European.  In  that  context,  the  inability  of  Member  States  to 
address the failure of an insurance or reinsurance undertaking and resolve it in a way 
that  is  predictable  and  harmonised  and  would  effectively  prevent  broader  systemic 
damage,  can  undermine  the  stability  of  financial  markets  and,  consequently,  the 
internal market in the field of financial services. 

The  global  financial  crisis  of  2008  highlighted  the  need  to  develop  an  appropriate 
recovery  and  resolution  framework  for  insurance  and  reinsurance  undertakings.  At 
international level, the Financial Stability Board (‘FSB’) developed, in October 2014, 
15  for  any  insurance  undertaking 
Key Attributes on effective resolution regimes 
that  could  be  systemically  significant  or  critical  if  it  fails.  In  June  2016,  the  FSB 

Directive  2009/138/EC  of  the  European  Parliament  and  of  the  Council  of  25  November  2009  on  the 
taking-up  and  pursuit  of  the  business  of  Insurance  and  Reinsurance  (Solvency  II),  (OJ  L  335, 
17.12.2009, p. 1). 
Financial  Stability  Board,  Key  Attributes  of  Effective  Resolution  Regimes  for  Financial  Institutions, 
2014. 

(3) 

(4) 

(5) 

14 

15 

EN 

13 

  EN 

                                                 
released  complementary  guidance  on  developing  effective  resolution  strategies  and 
plans for systemically important insurers16. In parallel, the International Association of 
Insurance Supervisors (‘IAIS’) adopted in November 2019 Insurance Core Principles 
for  all 
insurance  and  reinsurance  undertakings,  a  Common  Framework  for 
Internationally Active Insurance Groups detailing standards for pre-emptive recovery 
planning,  and  actions  that  authorities  are  expected  to  take  towards  an  insurance  or 
reinsurance undertaking that would exit the market and enter into resolution 17. Those 
developments  should  be  taken  into  account  when  laying  down  a  framework  for  the 
recovery and resolution of failing insurance and reinsurance undertakings. 

(6)  Many insurance and reinsurance undertakings are operating beyond national borders. 
A  lack  of  coordination  and  cooperation  between  public  authorities  to  prepare  and 
manage  the  distress  or  failure  of  an  insurance  or  reinsurance  undertaking  operating 
across borders would undermine Member States’ mutual trust, result in a suboptimal 
outcome for policy holders, beneficiaries and injured parties and affect the credibility 
of the internal market for insurance. 

(7) 

(8) 

(9) 

There  is  currently  no  harmonisation  of  the  procedures  at  European  Union  level  for 
resolving  insurance  or  reinsurance  undertakings  in  a  coordinated  manner.  Instead, 
considerable substantive and procedural differences between national laws, regulations 
and  administrative  provisions  that  govern  the  failure  of  insurance  and  reinsurance 
undertakings  are  observed  across  Member  States.  In  addition,  corporate  insolvency 
procedures may not always be appropriate for insurance or reinsurance undertakings, 
as  those  procedures  may  not  always  ensure  an  adequate  continuation  of  the  critical 
functions for policy holders, beneficiaries and injured parties, the real economy or the 
financial stability as a whole. 

It is necessary to ensure the continuity of the critical functions of failing insurance or 
reinsurance undertakings, or of insurance or reinsurance undertakings that are likely to 
fail, while minimising the impact of such an undertaking’s failure on the economy and 
financial  system.  It  is  therefore  necessary  to  lay  down  a  framework  to  provide 
authorities  with  a  credible  set  of  tools  to  intervene  sufficiently  early  and  quickly  in 
insurance or reinsurance undertakings that are failing or likely to fail. Such framework 
should  ensure  that  shareholders  bear  losses  first  and  that  creditors  bear  losses  after 
shareholders,  provided  that  no  creditor  incurs  greater  losses  than  they  would  have 
incurred if the insurance or reinsurance undertaking had been wound up under normal 
insolvency proceedings in accordance with the no creditor worse off principle. 

The framework to be laid down should enable authorities to ensure the continuity of 
insurance  protection  for  policy  holders,  beneficiaries  and  injured  parties,  transfer 
viable  activities  and  portfolios  of  the  insurance  or  reinsurance  undertaking  where 
appropriate,  and  apportion  losses  in  a  manner  that  is  fair  and  predictable.  Those 
objectives  should  help  avoid  unnecessary  losses  or  social  hardship  falling  on  policy 
holders,  beneficiaries  and  injured  parties,  mitigate  negative  impacts  on  the  real 
economy,  minimise  negative  effects  on  financial  markets  and  minimise  the  costs  for 
taxpayers. 

16 

17 

Financial  Stability  Board,  Developing  Effective  Resolution  Strategies  and  Plans  for  Systemically 
Important Insurers, 2016. 
International Association of Insurance Supervisors, Insurance Core Principles and Common Framework 
for the Supervision of Internationally Active Insurance Groups, 2019. 

EN 

14 

  EN 

                                                 
requirements,  strengthened  supervision,  enhanced 

(10)  The review of Directive 2009/138/EC, and in particular the introduction of more risk-
liquidity 
sensitive  capital 
monitoring  and  better  tools  for  macro-prudential  policies,  should  further  reduce  the 
likelihood  of  failures  of  insurance  or  reinsurance  undertakings  and  enhance  the 
resilience  of  those  undertakings  to  economic  stress,  whether  caused  by  systemic 
disturbances or by events specific to the individual undertaking. Nevertheless, despite 
a  sound  and  robust  prudential  framework,  situations  of  financial  distress  cannot  be 
completely excluded. Member States should therefore be prepared and have adequate 
recovery  and  resolution  tools  in  place  to  handle  situations  involving  both  systemic 
crises and failures of individual undertakings. Such tools should include mechanisms 
that enable authorities to deal effectively with undertakings that are failing or likely to 
fail. The use of such tools and the exercise of such powers should take into account the 
circumstances in which the failure occurs. 

to 

failing 

insurance  or 

(11)  Some  Member  States  have  already  introduced  pre-emptive  recovery  planning 
requirements,  and  mechanisms 
reinsurance 
resolve 
undertakings. However, the absence of common conditions, powers and processes for 
the recovery and resolution of insurance or reinsurance undertakings across the Union 
is likely to constitute barriers to the smooth operation of the internal market and hinder 
cooperation between national authorities when dealing with distressed or failing cross-
border  groups  of  undertakings.  That  is  particularly  true  where  different  approaches 
mean that national authorities do not have the same level of control or the same ability 
to  resolve  insurance  or  reinsurance  undertakings.  Those  differences  in  recovery  and 
resolution regimes may affect the level playing field and potentially create competitive 
distortions  between  undertakings.  Those  barriers  should  be  eliminated  and  rules 
should be adopted to  ensure that the internal  market  is  not  undermined. To that end, 
rules  governing  the  pre-emptive  recovery  and  resolution  of  insurance  or  reinsurance 
undertakings  should  be  made  subject  to  common  minimum  harmonisation  rules.  In 
order  to  ensure  consistency  with  existing  Union  legislation  in  the  area  of  insurance 
services, the pre-emptive recovery and resolution regime should apply to insurance or 
reinsurance undertakings that are subject to the prudential requirements laid down in 
Directive 2009/138/EC. 

(12)  The failure of an entity affiliated to a group can rapidly impact the solvency and the 
operations  of  the  whole  group.  It  is  therefore  necessary  to  have  in  place  group  pre-
emptive recovery and resolution planning requirements. In addition, authorities should 
possess  effective  means  of  action  with  respect  to  those  entities  to  impose  remedial 
actions  that  take  into  account  the  financial  soundness  of  all  group  entities,  address 
impediments  to  resolvability  in  a  group  context  and  produce  a  consistent  resolution 
scheme  for  the  group  as  a  whole,  in  particular  in  a  cross-border  context.  The  pre-
emptive  recovery  and  resolution  planning  and  resolvability  requirements  and  the 
resolution  regime  should  therefore  also  apply  to  parent  undertakings,  holding 
companies  and other  group entities,  including branches of insurance and reinsurance 
undertakings that are established outside the Union. 

(13) 

It is necessary to ensure the suitability and effectiveness of the recovery and resolution 
framework  while  avoiding  unnecessary  administrative  burdens  and  costs  on 
undertakings  and  authorities.  The  implementation  of  such  recovery  and  resolution 
framework should therefore be proportionate to the nature, scale and complexity of the 
undertaking concerned,  and of its  activities and  services.  Regarding the  scope of the 
recovery  and  resolution  planning  requirements,  authorities  should  determine,  on  the 
basis of a harmonised set of risk-based criteria, which undertakings are subject to the 

EN 

15 

  EN 

planning requirements. To foster trust in the insurance and reinsurance single market 
and  to  foster  a  level  playing  field,  a  minimum  degree  of  preparedness  should  be 
achieved  through  laying  down  a  minimum  market  coverage  level.  That  minimum 
market  coverage  level  should  however  take  into  account  the  differences  between 
recovery on the one hand and resolution on the other, and the existence or absence of a 
public interest for taking resolution action. 

(14)  For the same reason, authorities should, where appropriate, apply different or reduced 
pre-emptive  recovery  and  resolution  planning  and  information  requirements  on  an 
undertaking-specific  basis,  and  at  a  lower  frequency  of  updates.  Authorities  should, 
when  applying  such  simplified  obligations,  take  into  account  the  nature,  size, 
complexity and substitutability of an undertaking’s business, its shareholding structure 
and  legal  form,  its  risk  profile,  its  degree  of  interconnectedness  to  other  regulated 
undertakings  or  to  the  financial  system  in  general.  Authorities  should  also  take  into 
account whether the failure and subsequent winding up of the insurance or reinsurance 
undertaking  under  normal  insolvency  proceedings  would  be  likely  to  have  a 
significant negative effect on policy holders, financial markets, other undertakings, or 
the  wider  economy.  Authorities  should  report  to  EIOPA  on  the  application  of  such 
simplified obligations on an annual basis. 

(15)  For  an  orderly  resolution  process,  and  to  avoid  conflicts  of  interest,  Member  States 
should  appoint  public  administrative  authorities  or  authorities  entrusted  with  public 
administrative  powers  to  perform  the  functions  and  tasks  in  relation  to  the  recovery 
and  resolution  framework.  Member  States  should  ensure  that  adequate  resources  are 
allocated to those resolution authorities. Where a Member State designates a resolution 
authority  that  has  other  functions,  adequate  structural  arrangements  should  be  put  in 
place to separate those functions from the functions related to resolution and to ensure 
operational independence. Such separation should not prevent the resolution function 
from having access to any information it requires for the exercise of its  duties under 
the  recovery  and  resolution  framework,  or  for  cooperation  between  different 
authorities involved in the application of the recovery and resolution framework. 

(16) 

(17) 

In light of the consequences that the failure of an insurance or reinsurance undertaking 
may have on policy holders, the financial system and the economy of a Member State, 
and  in  light  of  the  possible  need  to  use  public  funds  to  deal  with  such  failure,  the 
Ministries  of  Finance  or  other  relevant  ministries  in  the  Member  States  should  be 
closely involved, at an early stage, in the process of crisis management and resolution. 

It is necessary to deal in an efficient manner with deteriorating financial positions of 
insurance  and  reinsurance  undertakings,  or  breaches  of  regulatory  requirements  by 
those undertakings, and to prevent the escalation of problems. Supervisory authorities 
should  therefore  have  the  power  to  impose  preventive  measures.  Such  preventive 
powers  should,  however,  be  consistent  with  the  ladder  of  intervention  and  the 
supervisory  powers  already  provided  for  in  Directive  2009/138/EC  for  similar 
circumstances, including supervisory powers provided for in the Supervisory Review 
Process  laid  down  in  Article  36  of  Directive  2009/138/EC.  Such  preventive  powers 
should  neither  lead  to  a  new  pre-defined  intervention  trigger  ahead  of  the  Solvency 
Capital  Requirement,  laid  down  in  Title  I,  Chapter  VI,  Section  4  of  that  Directive. 
Supervisory authorities should assess each situation individually and decide upon the 
need  for  preventive  measures  based  on  the  circumstances,  the  situation  of  the 
undertaking and their supervisory judgment. 

EN 

16 

  EN 

(18) 

(19) 

It  is  essential  that  groups,  or  where  applicable,  individual  undertakings,  prepare  and 
regularly update pre-emptive recovery plans that set out actions to be taken by those 
groups  or  undertakings  to  restore  their  financial  position  following  a  significant 
deterioration  of  that  position  that  could  pose  a  risk  to  their  viability.  Insurance  and 
reinsurance undertakings should therefore identify a set of quantitative and qualitative 
indicators that would trigger the activation of remedial actions envisaged in such pre-
emptive  recovery  plans.  Such  indicators  should  help  insurance  and  reinsurance 
undertakings  to  take  remedial  actions  in  the  best  interest  of  their  policy  holders  and 
should  not  lay  down  new  regulatory  prudential  requirements.  Pre-emptive  recovery 
plans  covering  all  material  legal  entities  within  the  group  should  be  detailed  and 
should be based on realistic assumptions that are applicable in  a range of robust and 
severe  scenarios.  Those  pre-emptive  recovery  plans  should  be  an  integral  part  of  an 
undertaking’s  system  of  governance.  Existing  tools  may  serve  as  an  input  when 
preparing  such  pre-emptive  recovery  plans,  including  the  own  risk  and  solvency 
assessment, contingency plans or liquidity risk management plans. The requirement to 
prepare a pre-emptive recovery plan should, however, be applied proportionately and 
should be without prejudice to the development and submission of a realistic recovery 
plan  as  required  by  Article  138(2)  of  Directive  2009/138/EC.  Where  relevant,  the 
elements of the pre-emptive recovery plan could inform or serve as a basis to develop 
the recovery plan required by Article 138(2) of Directive 2009/138/EC. 

It  is  necessary  to  ensure  an  adequate  degree  of  preparedness  for  crisis  situations. 
Ultimate  parent  undertakings  or  individual  insurance  or  reinsurance  undertakings 
should therefore be required to submit their pre-emptive recovery plans to supervisory 
authorities for a complete assessment, including the assessment of whether those plans 
are comprehensive and could feasibly restore an undertaking or group’s viability in a 
timely  manner,  even  in  periods  of  severe  financial  stress.  Where  an  undertaking 
presents  a  pre-emptive  recovery  plan  that  is  not  adequate,  supervisory  authorities 
should be empowered to require that undertaking to take measures necessary to redress 
the material deficiencies of the plan. 

(20)  Resolution  planning  is  an  essential  component  of  effective  resolution.  Resolution 
authorities  should  therefore  have  all  the  information  necessary  to  identify  critical 
functions and ensure their continuation. Insurance and reinsurance undertakings have 
privileged knowledge of their own functioning and any problems arising from it, and 
resolution authorities should therefore draw up resolution plans on the basis of,  inter 
alia,  the  information  provided  by  the  undertakings  concerned.  In  order  to  avoid 
unnecessary  administrative  burdens,  resolution  authorities  should  primarily  retrieve 
the necessary information from the supervisory authorities. 

(21)  Low risk profile undertakings should, due to their low risk profile, not be obliged to 
draw up separate pre-emptive recovery plans, nor should they be subject to resolution 
planning. 

(22) 

In order to anticipate the possible interaction of remedial and resolution measures and 
to enhance the crisis preparedness and the resolvability of groups, any group treatment 
for  pre-emptive  recovery  and  resolution  planning  should  apply  to  all  group  entities 
subject  to  group  supervision.  The  pre-emptive  recovery  and  resolution  plans  should 
take into account the financial, technical and business structure of the group concerned 
and its degree of internal interconnectedness. 

(23)  Group pre-emptive recovery and resolution plans should be prepared for the group as a 
whole and should identify measures in relation to both an ultimate parent undertaking 

EN 

17 

  EN 

and individual subsidiaries that are part of that group. The extent to which subsidiaries 
are  considered  in  the  group  pre-emptive  recovery  and  resolution  plans  should, 
however,  be  proportionate  to  their  relevance  to  the  group  and  to  policy  holders,  the 
real economy and the financial system in the Member States where those subsidiaries 
operate.  The  resolution  authorities  of  the  Member  States  where  a  group  has 
subsidiaries  should  be  involved  in  the  drawing  up  of  any  resolution  plans.  The 
authorities  concerned,  acting  within  the  supervisory  or  resolution  colleges,  should 
make  every  effort  to  reach  a  joint  decision  on  the  assessment  and  adoption  of  those 
plans. However, adequate crisis preparedness should not be affected by an absence of 
a  joint  decision  within  the  supervisory  or  resolution  colleges.  In  such  cases,  each 
supervisory  authority  responsible  for  a  subsidiary  should  have  the  possibility  to 
require a pre-emptive recovery plan for the subsidiaries under its jurisdiction and make 
its  own  assessment  of  the  pre-emptive  recovery  plan.  For  the  same  reasons,  each 
resolution authority responsible for a subsidiary should, for the subsidiaries under its 
jurisdiction, draw up and keep updated a resolution plan. The drawing up of individual 
pre-emptive recovery and resolution plans for undertakings that are a part of a group 
should remain exceptional, duly justified and apply the same standards that are applied 
to  comparable  undertakings  in  the  Member  State  concerned.  Where  individual  pre-
emptive recovery and resolution plans for undertakings that are a part of a group are 
prepared,  the  authorities  concerned  should  aim  to  achieve,  to  the  extent  possible, 
consistency with pre-emptive recovery and resolution plans for the rest of the group. 

(24) 

In order to keep all authorities concerned fully and permanently informed, supervisory 
authorities should transmit any pre-emptive recovery plans and any changes thereto to 
the  resolution  authorities  concerned  and  resolution  authorities  should  transmit  any 
resolution plans and any changes thereto to the supervisory authorities concerned. 

(25)  Based on an assessment of the resolvability of insurance or reinsurance undertakings, 
resolution  authorities  should  have  the  power  to  require,  either  directly  or  indirectly 
through  the  supervisory  authority,  that  insurance  or  reinsurance  undertakings  change 
their  structure  and  organisation.  Resolution  authorities  should  also  be  able  to  take 
necessary but proportionate measures to reduce or  remove any material impediments 
to  the  application  of  resolution  tools  and  to  ensure  the  resolvability  of  the  entities 
concerned.  Resolution  authorities  should  assess  the  resolvability  of  insurance  or 
reinsurance undertakings at the level of those undertakings where it is expected that, in 
accordance  with  the  group  resolution  plan,  resolution  actions  would  be  taken.  The 
resolution authorities’ ability to request changes to the structure and organisation of an 
insurance  or  reinsurance  undertaking,  or  to  take  measures  to  reduce  or  remove  any 
material  impediments  to  the  application  of  resolution  tools  and  to  ensure  the 
resolvability of the undertakings concerned, should not go beyond what is necessary to 
simplify  the  structure  and  operations  of  the  insurance  or  reinsurance  undertaking 
concerned in order to improve that undertaking’s resolvability. 

therefore  contain  procedures  for 

(26)  The implementation of actions outlined in a pre-emptive recovery plan or a resolution 
plan may have effects on staff of insurance or reinsurance undertakings. Those plans 
should 
informing  and  consulting  employee 
representatives  throughout  the  recovery  and  resolution  processes  where  appropriate. 
Those procedures should take into account collective agreements, other arrangements 
provided  for  by  social  partners,  and  national  and  Union  law  on  the  involvement  of 
trade unions and workers’ representatives in company restructuring processes. 

(27)  Effective recovery and resolution of insurance and reinsurance undertakings or group 
entities operating across the Union requires cooperation among supervisory authorities 

EN 

18 

  EN 

and resolution authorities within supervisory and resolution colleges at all stages of the 
process,  from  the  preparation  of  pre-emptive  recovery  and  resolution  plans  to  the 
actual  resolution  of  an  undertaking.  Where  authorities  disagree  on  decisions  to  be 
taken  with  regard  to  groups  and  undertakings,  the  European  Supervisory  Authority 
(European Insurance and Occupational Pensions Authority) (‘EIOPA’), established by 
Regulation  (EU)  No  1094/2010  of  the  European  Parliament  and  of  the  Council18 
should, as a last resort, play a mediation role. 

(28)  During 

the  recovery  and  preventive  phases,  shareholders  should  retain  full 
responsibility and control of the insurance or reinsurance undertaking. They should no 
longer retain such a responsibility once the undertaking has been put under resolution. 
The resolution framework should therefore provide for a timely entry into resolution, 
that  is  before  an  insurance  or  reinsurance  undertaking  is  balance  sheet  or  cash  flow 
insolvent,  before  all  equity  has  been  fully  wiped  out,  or  before  the  insurance  or 
reinsurance undertaking is unable to comply with its payment obligations as they come 
due.  Resolution  should  be  initiated  where  a  supervisory  authority,  after  having 
consulted  a  resolution  authority,  or  after  having  been  consulted  by  a  resolution 
authority, determines that an insurance or reinsurance undertaking is failing or likely 
to fail and alternative measures would not prevent such a failure within a reasonable 
timeframe. An insurance or reinsurance undertaking should be considered to be failing 
or  likely  to  fail  in  any  of  the  following  circumstances:  (i)  where  the  undertaking 
breaches  or  is  likely  to  be  in  breach  of  the  Minimum  Capital  Requirement  (‘MCR’) 
laid down in Title I, Chapter VI, Section 4, of Directive 2009/138/EC and where there 
is no reasonable prospect of compliance being restored; (ii) where the undertaking no 
longer fulfils the conditions for authorisation or where the undertaking fails seriously 
to  comply  with  its  legal  obligations  under  the  laws  and  regulations  to  which  it  is 
subject or is likely to seriously fail to comply with its legal obligations under the laws 
and regulations to which it is subject in the near future in a way that would justify the 
withdrawal of the authorisation; (iii) where the insurance or reinsurance undertaking is 
or is likely to be unable to pay its debts or other liabilities in the near future, including 
payments  to  policy  holders  or  beneficiaries  as  they  fall  due;  or  (iv)  where  the 
insurance or reinsurance undertaking requires extraordinary public financial support. 

(29)  The  use  of  resolution  tools  and  powers  may  disrupt  the  rights  of  shareholders  and 
creditors  of  insurance  and  reinsurance  undertakings.  In  particular,  the  power  of  the 
resolution authorities to transfer the shares or all or part of the assets of an insurance or 
reinsurance  undertaking  to  a  private  purchaser  without  the  consent  of  shareholders 
affects  the  property  rights  of  shareholders.  In  addition,  the  power  to  decide  which 
liabilities  to  transfer  out  of  a  failing  undertaking  to  ensure  the  continuity  of  services 
and  to  avoid  adverse  effects  on  policy  holders,  beneficiaries  and  injured  parties,  the 
real  economy  or  financial  stability  as  a  whole,  may  affect  the  equal  treatment  of 
creditors.  Any  resolution  tool  should  therefore  be  applied  only  to  those  insurance  or 
reinsurance  undertakings  that  are  failing  or  likely  to  fail,  and  only  where  it  is 
necessary  to  pursue  the  resolution  objectives  in  the  general  interest.  In  particular, 
resolution tools should be applied only where the insurance or reinsurance undertaking 
cannot  be  wound  up  under  normal  insolvency  proceedings  without  unduly  affecting 

18 

Regulation (EU) No 1094/2010 of the European Parliament and of the Council of 24 November 2010 
establishing  a  European  Supervisory  Authority  (European  Insurance  and  Occupational  Pensions 
Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/79/EC (OJ 
L 331, 15.12.2010, p. 48). 

EN 

19 

  EN 

                                                 
the  protection  of  policy  holders,  beneficiaries  and  claimants  or  destabilising  the 
financial  system.  In  addition,  resolution  measures  should  be  necessary  to  ensure  the 
rapid transfer and continuation of critical functions and there should be no reasonable 
prospect  for any alternative private solution,  including any increase of capital  by the 
existing shareholders or by any third party sufficient to restore the full viability of the 
entity without having effect  on insurance claims. Any interference with  the rights  of 
shareholders  and  creditors  that  results  from  resolution  action  should  be  compatible 
with  the  Charter  of  Fundamental  Rights  of  the  European  Union  (the  Charter).  In 
particular, where creditors within the same class are treated differently in the context 
of resolution action, such distinctions should be justified in the public interest and be 
proportionate to the risks being addressed and should be neither directly nor indirectly 
discriminatory on the grounds of nationality. 

(30)  When  applying  resolutions  tools  and  exercising  resolution  powers,  resolution 
authorities  should  take  all  appropriate  measures  to  ensure  that  resolution  action  is 
taken  in  accordance  with  the  principle  that  insurance  claims  are  affected  after 
shareholders and that other creditors have borne their share of the losses. In addition, 
resolution  authorities  should  ensure  that  the  costs  of  the  resolution  of  insurance  or 
reinsurance undertakings are minimised and that creditors of the same class are treated 
in an equitable manner. 

(31)  The  write-down  or  conversion  of  capital  instruments,  debt  instruments  and  other 
eligible  liabilities  should  provide  for  an  internal  loss  absorption  mechanism.  That 
mechanism,  combined  with  transfer  tools  that  aim  at  maintaining  continuity  of 
insurance coverage for the benefit of policy holders, beneficiaries and injured parties, 
should  allow  for  the  achievement  of  the  resolution  objectives  and  should  limit  to  a 
great  extent  the  impact  of  a  failure  of  an  insurance  or  reinsurance  undertaking  on 
policy  holders.  There  may  be  extreme  cases,  however,  where  the  resolution  of  an 
insurance or reinsurance undertaking may require the intervention of specific national 
schemes, in particular an insurance guarantee scheme or a resolution fund, to provide 
for  complementary  loss  absorbing  and  restructuring  resources  or,  as  a  last  resort, 
extraordinary public financing. The necessary safeguards that aim to protect creditors 
should also reflect the existence of such specific national schemes, which in turn have 
to  comply  with  the  Union  State  aid  framework.  The  write-down  or  conversion  tool 
should be applied before the use of any extraordinary public financial support. 

(32) 

Interference with property rights should not be disproportionate. Affected shareholders 
and  creditors  of  insurance  and  reinsurance  undertakings,  including  policy  holders 
should  therefore  not  incur  greater  losses  than  they  would  have  incurred  if  the 
insurance or reinsurance undertaking had been wound up at the time that the resolution 
decision  was  taken.  In  the  event  of  a  partial  transfer  of  assets  and  liabilities  of  an 
insurance  or  reinsurance  undertaking  under  resolution  to  a  private  purchaser  or  to  a 
bridge  undertaking,  the  residual  part  of  the  undertaking  under  resolution  should  be 
wound up under normal  insolvency proceedings.  Shareholders and  creditors who are 
left in the winding up proceedings of an insurance or reinsurance undertaking should 
be entitled to receive in payment of, or compensation for, their claims in the winding 
up proceedings not less than what they would have recovered if the whole insurance or 
reinsurance undertaking had been wound up under normal insolvency proceedings. 

(33)  To  protect  the  rights  of  shareholders  and  creditors,  it  is  necessary  to  lay  down  clear 
obligations  concerning  the  valuation  of  the  assets  and  liabilities  of  the  undertaking 
under  resolution  and  concerning  the  valuation  of  the  treatment  that  shareholders  and 
creditors  would  have  received  if  the  undertaking  had  been  wound  up  under  normal 

EN 

20 

  EN 

insolvency  proceedings.  It  is  therefore  necessary  to  lay  down  that,  before  any 
resolution action is taken, a fair and realistic valuation of the assets and liabilities of 
the  insurance  or  reinsurance  undertaking  is  carried  out.  Such  a  valuation  should  be 
subject  to  a  right  of  appeal.  However,  due  to  the  nature  of  resolution  action  and  its 
close  link  with  the  valuation,  such  appeal  should  only  be  possible  where  it  is 
simultaneously directed against the resolution decision. In addition, it is necessary to 
lay down that, after resolution tools have been applied, a comparison is made between 
the treatment that shareholders and creditors have actually received and the treatment 
they  would  have  received  under  normal  insolvency  proceedings.  That  ex-post 
comparison should be challengeable apart from the resolution decision. Shareholders 
and  creditors  that  have  received  less  than  the  amount  that  they  would  have  received 
under  normal  insolvency  proceedings  should  be  entitled  to  the  payment  of  the 
difference. 

It is important that losses are recognised upon failure of the insurance or reinsurance 
undertaking. The valuation of assets and liabilities of failing insurance or reinsurance 
undertakings should be based on fair, prudent and realistic assumptions at the moment 
that  the  resolution  tools  are  applied.  The  value  of  liabilities  should,  however,  not  be 
affected in the valuation by the insurance or reinsurance undertaking’s financial state. 
It should be possible, in exceptional cases of urgency, that resolution authorities make 
a  rapid  valuation  of  the  assets  or  the  liabilities  of  a  failing  insurance  or  reinsurance 
undertaking.  That  valuation  should  be  provisional  and  should  apply  until  an 
independent  valuation  is  carried  out.  EIOPA  should  establish  a  framework  of 
principles  to  be  used  in  conducting  such  valuations  and  should  allow  for  different 
specific  methodologies  to  be  applied  by  resolution  authorities  and  independent 
valuers, as appropriate. 

(34) 

(35)  When  taking  resolution  actions,  resolution  authorities  should  take  into  account  and 
follow the measures provided for in the resolution plans unless resolution authorities 
assess, taking into account circumstances of the case, that resolution objectives will be 
achieved more effectively by taking actions that are not provided for in the resolution 
plans. 

(36)  Resolution  tools  should  be  designed  and  suitable  to  counter  a  broad  set  of  largely 
unpredictable scenarios, taking into account that there could be a difference between a 
single  insurance  or  reinsurance  undertaking  in  crisis  and  a  broader  systemic  crisis. 
Resolution tools should therefore cover each of those scenarios, including the solvent 
run-off  of  the  undertaking  under  resolution  until  its  termination,  the  sale  of  the 
business  or  shares  of  the  undertaking  under  resolution,  the  setting  up  of  a  bridge 
undertaking,  the  separation  of  assets  and  liabilities  from  the  impaired  or  under-
performing portfolios of the failing undertaking, and the write-down or conversion of 
capital instruments and other eligible liabilities of the failing insurance or reinsurance 
undertaking. 

(37)  Where  resolution  tools  have  been  used  to  transfer  insurance  portfolios  to  a  sound 
entity, which could be a private sector purchaser or a bridge undertaking, the residual 
part  of  the  undertaking  should  be  liquidated  within  an  appropriate  time  frame.  The 
length  of  that  time  frame  should  be  based  on  the  need  for  the  failing  insurance  or 
reinsurance  undertaking  to  provide  services  or  support  to  enable  the  private  sector 
purchaser  or  bridge  undertaking  to  carry  out  the  activities  or  services  acquired  by 
virtue of that transfer. 

EN 

21 

  EN 

(38)  The  sale  of  business  tool  should  enable  resolution  authorities  to  effect  a  sale  of  the 
insurance or reinsurance undertaking or parts of its business to one or more purchasers 
without  the  consent  of  shareholders.  When  applying  the  sale  of  business  tool, 
authorities  should  make  arrangements  for  the  marketing  of  that  insurance  or 
reinsurance  undertaking  or  part  of  its  business  in  an  open,  transparent  and  non-
discriminatory process,  while maximising the sale price as much as possible. Where, 
for reasons  of urgency,  such a process  is  impossible, authorities should take steps to 
redress detrimental effects on competition and on the internal market. 

(39)  Any  net  proceeds  from  the  transfer  of  assets  or  liabilities  of  the  undertaking  under 
resolution when applying the sale of business tool should benefit the undertaking left 
in the winding up proceedings. Any net proceeds from the transfer of shares or other 
instruments  of  ownership  issued  by  the  undertaking  under  resolution  when  applying 
the sale of business tool should benefit the owners of those shares or other instruments 
of ownership. Proceeds should be calculated net of the costs arisen from the failure of 
the insurance or reinsurance undertaking and from the resolution process. 

(40) 

Information  concerning  the  marketing  of  a  failing  insurance  or  reinsurance 
undertaking  and  negotiations  with  potential  acquirers  prior  to  the  application  of  the 
sale of business tool are likely to be sensitive and may pose risks for the trust in the 
insurance market. It is therefore important to ensure that the disclosure to the public of 
such information, which is required by Regulation (EU) No 596/2014 of the European 
Parliament  and  of  the  Council19,  can  be  delayed  for  the  time  necessary  to  plan  and 
structure the resolution of the insurance or reinsurance undertaking. 

(41)  A  bridge  undertaking  is  an  insurance  or  reinsurance  undertaking  that  is  wholly  or 
partially  owned  by  one  or  more  public  authorities  or  controlled  by  the  resolution 
authority. The main purpose of a bridge undertaking is to ensure that critical functions 
continue  to  be  provided  to  the  policy  holders  of  the  failing  insurance  or  reinsurance 
undertaking.  A  bridge  undertaking  should  therefore  be  operated  as  a  viable  going 
concern and should be put back on the market as soon as conditions are appropriate, or 
be wound up in case the bridge undertaking is not viable. 

(42)  The  asset  and  liability  separation  tool  should  enable  authorities  to  transfer  assets, 
rights or liabilities of an undertaking under resolution to a separate vehicle in order to 
remove, manage and wind down such assets, rights or liabilities. To prevent an undue 
competitive  advantage  for  the  failing  insurance  or  reinsurance  undertaking,  the  asset 
and liability tool should be used only in conjunction with other tools. 

(43)  An  effective  resolution  regime  should  ensure 

that 

insurance  or  reinsurance 
undertakings can be resolved in a way that minimises the negative impact of a failure 
on policy holders, taxpayers, the real economy and financial stability. The write-down 
or  conversion  should  ensure  that,  before  insurance  claims  are  affected,  shareholders 
and creditors of  a failing insurance or reinsurance undertaking suffer losses first  and 
bear  an  appropriate  part  of  the  costs  arising  from  the  failure  of  the  insurance  or 
reinsurance  undertaking  as  soon  as  a  resolution  power  is  used.  The  write-down  or 
conversion  tool  should  thus  give  shareholders  and  creditors  of  insurance  or 
reinsurance undertakings and, to a certain extent, policy holders, a stronger incentive 

19 

Regulation  (EU)  No  596/2014  of  the  European  Parliament  and  of  the  Council  of  16  April  2014  on 
market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament 
and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC (OJ L 173, 
12.6.2014, p. 1). 

EN 

22 

  EN 

                                                 
(44) 

to  monitor  the  health  of  an  insurance  or  reinsurance  undertaking  during  normal 
circumstances. 

It is necessary to ensure that resolution authorities have the necessary flexibility, in a 
range of circumstances, to place the undertaking in resolution in a solvent run-off, to 
transfer its assets, rights and liabilities in the best conditions for policy holders, or to 
allocate  remaining  losses.  It  is  therefore  appropriate  to  lay  down  that  resolution 
authorities should be able to apply the write-down or conversion tool both where the 
objective  is  to  resolve  the  failing  insurance  or  reinsurance  undertaking  as  an 
undertaking  in  solvent  run-off,  and  where  critical  insurance  services  are  transferred 
while  the  residual  part  of  the  insurance  or  reinsurance  undertaking  ceases  to  operate 
and  is  wound  up.  In  that  context,  the  restructuring  of  insurance  liabilities  may  be 
warranted  to  ensure  the  continuation  of  a  material  portion  of  the  insurance  coverage 
and where that is deemed in the best interest of the policy holders. 

(45)  Where there is a realistic prospect that the undertaking’s viability may be restored and 
policy holders are not suffering any losses in the resolution process, the write-down or 
conversion  tool  could  be  used  to  restore  the  undertaking  under  resolution  to  a  going 
concern.  In  such  case,  the  resolution  through  write-down  or  conversion  should  be 
accompanied by the replacement of the management, except where the retention of the 
management  is  appropriate  and  necessary  for  the  achievement  of  the  resolution 
objectives. 

(46) 

It is not appropriate to apply the write-down or conversion tool to claims as far as they 
are secured, collateralised or otherwise guaranteed as such write-down or conversion 
could  be  ineffective  or  due  to  the  potential  negative  impact  of  such  write-down  or 
conversion on financial stability. However, in order to  ensure that the write-down or 
conversion  tool  is  effective  and  achieves  its  objectives,  it  is  desirable  that  it  can  be 
applied  to  as  wide  a  range  of  the  unsecured  liabilities  of  a  failing  insurance  or 
reinsurance undertaking as possible. Nevertheless, it is appropriate to exclude certain 
kinds  of  unsecured  liabilities  from  the  scope  of  application  of  the  write-down  or 
conversion tool. Thus, to ensure the continuity of critical functions, the write-down or 
conversion tool should not be applied to certain liabilities to employees of the failing 
insurance or reinsurance undertaking or to commercial claims that relate to goods and 
services  critical  to  the daily  functioning  of the insurance or  reinsurance  undertaking. 
To honour pension entitlements and pension amounts owed or owing to pension trusts 
and  pension  trustees,  the  write-down  or  conversion  tool  should  not  be  applied  to  a 
failing  insurance  or  reinsurance  undertaking’s  liabilities  to  a  pension  scheme.  To 
reduce  the  risk  of  systemic  contagion,  the  write-down  or  conversion  tool  should 
neither be applied to liabilities arising from a participation in payment systems which 
have  a  remaining  maturity  of  less  than  seven  days,  or  to  liabilities  to  insurance  or 
reinsurance undertakings, credit institutions and investment firms, with the exception 
of entities that are part of the same group, with an original maturity of less than seven 
days. 

(47)  The  protection  of  policy  holders,  beneficiaries  or  injured  parties  is  one  of  the  main 
objectives  of  resolution.  Insurance  claims  should  therefore  only  be  subject  to  the 
application  of  the  write-down  or  conversion  tool  as  a  last  resort  measure  and 
resolution authorities should carefully consider the consequences of a potential write-
down of insurance claims stemming from insurance contracts held by natural persons 
and micro, small and medium-sized enterprises. 

EN 

23 

  EN 

(48)  Resolution  authorities  should  be  able  to  exclude  or  partially  exclude  liabilities  in  a 
number  of  circumstances  where  it  is  not  possible  to  write-down  or  convert  such 
liabilities within a reasonable timeframe, where the exclusion is strictly necessary and 
proportionate  to  achieve  the  resolution  objectives,  or  where  the  application  of  the 
write-down  or  conversion  tool  would  cause  a  destruction  in  value  such  that  losses 
borne  by  other  creditors  would  be  higher  than  if  those  liabilities  were  not  excluded. 
Where  those  exclusions  are  applied,  the  level  of  write-down  or  conversion  of  other 
eligible liabilities may be increased to take account of such exclusions, subject to the 
‘no  creditor  worse  off  than  under  normal  insolvency  proceedings’  principle  being 
respected.  At  the  same  time,  Member  States  should  not  be  required  to  finance 
resolution from their general budget. 

(49)  As a rule, resolution  authorities should apply the write-down or  conversion tool in  a 
way  that  respects  the  pari  passu  treatment  of  creditors  and  the  statutory  ranking  of 
claims under applicable insolvency law. Losses should therefore first be absorbed by 
regulatory  capital  instruments  and should be  allocated to  shareholders either through 
the  cancellation  or  transfer  of  shares  or  through  severe  dilution.  Where  that  is  not 
sufficient,  subordinated  debt  should  be  converted  or  written  down.  Senior  liabilities 
should  only  be  converted  or  written  down  where  the  subordinate  debt  has  been 
converted or written down entirely. 

(50)  Exemptions of liabilities, inter alia for payment and settlement systems, employee or 
trade creditors, or preferential ranking, should equally apply in third countries and the 
Union. To ensure that liabilities can be written-down or converted in third countries, it 
is  necessary  to  lay  down  that  contractual  provisions  governed  by  the  law  of  third 
countries recognise that possibility. Such contractual terms should not be required for 
liabilities  exempted  from  the  application  of  the  write-down  or  conversion  tool,  or 
where the law of the third country  or  a binding  agreement  concluded  with  that third 
country  allow  the  resolution  authority  of  the  Member  State  concerned  to  apply  the 
write-down or conversion tool. 

(51)  Shareholders  and  creditors  should  contribute,  to  the  extent  necessary,  to  the  loss 
allocation  mechanism  of  a  failing  undertaking.  Therefore,  Member  States  should 
ensure that Tier 1, Tier 2 and Tier 3 capital instruments fully absorb losses at the point 
of  non-viability  of  the  issuing  insurance  or  reinsurance  undertaking.  Accordingly, 
resolution authorities should be required to write-down those instruments in full, or to 
convert them, where applicable, to Tier 1 instruments, at the point of non-viability and 
before  any  resolution  action  is  taken.  For  that  purpose,  the  point  of  non-viability 
should  be  understood  as  either  the  point  at  which  the  resolution  authority  concerned 
determines  that  the  insurance  or  reinsurance  undertaking  meets  the  conditions  for 
resolution,  or  the  point  at  which  the  resolution  authority  concerned  decides  that  the 
insurance  or  reinsurance  undertaking  would  cease  to  be  viable  if  those  capital 
instruments  were  not  written  down  or  converted.  Those  requirements  should  be 
recognised  in  the  terms  governing  the  instrument,  and  in  any  prospectus  or  offering 
documents published or provided in connection with the instruments. 

(52)  Resolution  authorities  should  have  all  the  necessary  legal  powers  that,  in  different 
combinations, may be exercised when applying the resolution tools in order to ensure 
effective  execution  of  resolution.  Those  legal  powers  should  include  the  power  to 
transfer shares in,  or assets,  rights  or liabilities of, a failing insurance or  reinsurance 
undertaking to another entity, including another undertaking or a bridge undertaking, 
the  power  to  write-down  or  cancel  shares,  or  write-down  or  convert  liabilities  of  a 
failing insurance or reinsurance undertaking, the power to replace the management and 

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(53) 

(54) 

the  power  to  impose  a  temporary  moratorium  on  the  payment  of  claims.  Ancillary 
powers are needed, including the power to require continuity of essential services from 
other parts of a group. 

It  is  not  necessary  to  prescribe  the  exact  means  through  which  the  resolution 
authorities  should  intervene  in  the  failing  insurance  or  reinsurance  undertaking. 
Resolution authorities should have the choice between taking control through a direct 
intervention  in  the  insurance  or  reinsurance  undertaking  or  through  executive  order. 
They should decide according to the circumstances of the case. 

It  is  necessary to lay down procedural  requirements to  ensure that  resolution actions 
are properly notified and made public. Information obtained by resolution authorities 
and their professional advisers during the resolution process is, however, likely to be 
sensitive and should therefore be subject to an effective confidentiality regime before 
the  resolution  decision  is  made  public.  Any  information  provided  in  respect  of  a 
decision before it is taken, be it on whether the conditions for resolution are satisfied, 
on the use of a specific tool or of any action during the proceedings, must be presumed 
to  have  effects  on  the  public  and  private  interests  concerned  by  the  action.  It  is 
therefore  necessary  to  ensure  that  there  are  appropriate  mechanisms  for  maintaining 
the  confidentiality  of  such  information,  including  on  the  content  and  details  of 
recovery  and  resolution  plans  and  the  result  of  any  assessment  carried  out  in  that 
context. 

(55)  Resolution authorities should have ancillary powers to ensure the effectiveness of the 
transfer of shares or debt instruments and assets, rights and liabilities to a third party 
purchaser  or  a  bridge  undertaking.  In  particular,  to  facilitate  a  transfer  of  insurance 
claims  without  affecting  the  overall  risk  profile  of  the  related  portfolio  and  of  the 
associated  technical  provisions  and  capital  requirements,  the  economic  benefits 
provided  by  reinsurance  agreements  should  be  preserved.  Resolution  authorities 
should  therefore  have  the  ability  to  transfer  insurance  claims  together  with  their 
corresponding reinsurance rights. That ability should also include the power to remove 
third  parties  rights  from  the  transferred  instruments  or  assets,  the  power  to  enforce 
contracts  and  the  power  to  provide  for  the  continuity  of  arrangements  vis-à-vis  the 
recipient  of  the  transferred  assets  and  shares.  The  right  of  a  party  to  terminate  a 
contract  with  an  undertaking  under  resolution,  or  a  group  entity  thereof,  for  reasons 
other  than  the  resolution  of  the  failing  insurance  or  reinsurance  undertaking  should 
also  remain  unaffected.  In  addition,  resolution  authorities  should  have  the  ancillary 
power to require the residual insurance or reinsurance undertaking that is being wound 
up  under  normal  insolvency  proceedings  to  provide  services  that  are  necessary  to 
enable the undertaking to which assets or shares have been transferred by virtue of the 
application  of  the  sale  of  business  tool  or  the  bridge  undertaking  tool  to  operate  its 
business. 

(56)  According  to  Article  47  of  the  Charter,  everyone  whose  rights  and  freedoms 
guaranteed by the law of the Union are violated has the right to an effective remedy 
before  a  tribunal.  The  decisions  taken  by  resolution  authorities  should  therefore  be 
subject to a right of appeal. 

(57)  Crisis  management  measures  taken  by  resolution  authorities  may  require  complex 
economic  assessments  and  a  large  margin  of  discretion.  Resolution  authorities  are 
specifically equipped with the expertise needed for making such assessments and for 
determining the appropriate use of the margin of discretion. It is therefore important to 
ensure that the complex economic assessments made by resolution authorities in that 

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context are used as a basis by national courts when reviewing the crisis management 
measures  concerned.  However,  the  complex  nature  of  those  assessments  should  not 
prevent  national  courts  from  examining  whether  the  evidence  relied  on  by  the 
resolution authority is factually accurate, reliable and consistent, whether that evidence 
contains all relevant information which should be taken into account in order to assess 
a complex situation and whether it is capable of substantiating the conclusions drawn 
therefrom. 

In order to deal with situations of urgency, it is necessary to provide that the lodging 
of any appeal does not result in automatic suspension of the effects of the challenged 
decision  and  that  the  decision  of  the  resolution  authority  is  immediately  enforceable 
with a presumption that its suspension would be against the public interest. 

It is necessary to protect third parties that have acquired assets, rights and liabilities of 
the institution under resolution in good faith by virtue of the exercise of the resolution 
powers by the authorities. It is equally necessary to ensure the stability of the financial 
markets. A right of appeal against a resolution decision should therefore not affect any 
subsequent  administrative  act  or  transaction  concluded  on  the  basis  of  an  annulled 
decision.  In  such  cases,  remedies  for  a  wrongful  decision  should  be  limited  to  the 
award of compensation for the damages suffered by the affected persons. 

(58) 

(59) 

(60)  Crisis  management  measures  may  be  required  to  be  taken  urgently  due  to  serious 
financial stability risks in the Member State concerned and the Union. Any procedure 
under national law relating to the application for ex-ante judicial approval of a crisis 
management  measure  and  a  court’s  consideration  of  such  an  application  should 
therefore be swift. Member States should ensure that the authority concerned can take 
its decision immediately after a court has given its approval. That possibility should be 
without prejudice to the right of interested parties to make an application to the court 
to  set  aside  the  decision.  However,  such  possibility  should  only  be  granted  for  a 
limited period after the resolution authority has taken the crisis management measure 
in order not to unduly delay the application of the resolution decision. 

(61)  Efficient  resolution  and  the  need  to  avoid  conflicts  of  jurisdiction  require  that  no 
normal  insolvency  proceedings  for  a  failing  insurance  or  reinsurance  undertaking  be 
opened or continued whilst a resolution authority is exercising its resolution powers or 
applying  resolution  tools,  except  at  the  initiative  of,  or  with  the  consent  of,  the 
resolution  authority.  It  is  therefore  necessary  to  lay  down  that  certain  contractual 
obligations  can  be  suspended  for  a  limited  period  to  enable  resolution  authorities  to 
apply the resolution tools. That possibility should not, however, apply to obligations in 
relation to systems designated by a Member State as referred to in Directive 98/26/EC 
of  the  European  Parliament  and  of  the  Council20,  including  central  counterparties. 
Directive  98/26/EC  reduces  the  risk  associated  with  participation  in  payment  and 
securities settlement  systems,  in  particular by reducing disruption in  the event  of the 
insolvency  of  a  participant  in  such  a  system.  It  is  necessary  to  ensure  that  those 
protections  continue  to  apply  in  crisis  situations  and  that  appropriate  certainty  for 
operators  of  payment  and  securities  systems  and  other  market  participants  is 
maintained.  A  crisis  prevention  measure  or  a  crisis  management  measure  should 
therefore  not,  per  se,  be  deemed  to  constitute  insolvency  proceedings  within  the 

20 

Directive  98/26/EC  of  the  European  Parliament  and  of  the  Council  of  19  May  1998  on  settlement 
finality in payment and securities settlement systems (OJ L 166, 11.6.1998, p. 45). 

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(62) 

(63) 

(64) 

meaning  of  Directive  98/26/EC,  provided  that  the  substantive  obligations  under  the 
contract concerned continue to be performed. 

It  is  necessary  to  ensure  that  resolution  authorities,  when  transferring  assets  and 
liabilities  to  a  private  sector  purchaser  or  a  bridge  undertaking,  have  an  adequate 
period of time to identify contracts that need to be transferred. It should therefore be 
possible  for  resolution  authorities  to  restrict  counterparties’  rights  to  close  out, 
accelerate or otherwise terminate financial contracts before the transfer is made. Such 
restrictions should allow resolution authorities to obtain a true picture of the balance 
sheet of the failing insurance or reinsurance undertaking without the changes in value 
and  scope  that  an  extensive  exercise  of  termination  rights  would  entail,  and  should 
help  to  avoid  creating  market  instability.  Interference  with  the  contractual  rights  of 
counterparties  should  however  be  restricted  to  the  minimum  extent  necessary.  Any 
restrictions  on  termination  rights  imposed  by  resolution  authorities  should  therefore 
only apply in relation to crisis management measures or events directly linked to the 
application  of  such  measures.  Rights  to  terminate  arising  from  any  other  default, 
including failure to pay or deliver margin, should thus remain. 

It  is  necessary  to  preserve  legitimate  capital  market  arrangements  in  the  event  of  a 
transfer of some, but not all, of the assets, rights and liabilities of a failing insurance or 
reinsurance undertaking. It is therefore appropriate to lay down safeguards to prevent 
the splitting of linked liabilities or linked rights and contracts, including contracts with 
the  same  counterparty  covered  by  security  arrangements,  title  transfer  financial 
collateral  arrangements,  set-off  arrangements,  close  out  netting  agreements,  and 
structured finance  arrangements. Where such safeguards apply, resolution  authorities 
should  be  bound  to  transfer  all  linked  contracts  within  a  protected  arrangement,  or 
leave  them  all  with  the  residual  failing  insurance  or  reinsurance  undertaking.  Those 
safeguards should ensure that the regulatory capital treatment of exposures covered by 
a netting agreement for the purposes of Directive 2009/138/EC is not affected. 

In order to  provide financial stability to  the insurance and reinsurance  undertaking a 
moratorium  on  surrender  rights  of  policy  holders  should  be  introduced.  Such  a 
moratorium  and  the  ensuing  financial  stability  for  the  undertaking  concerned  should 
provide  the  resolution  authorities  with  sufficient  time  to  valuate  those  undertakings 
and to assess which resolution tools should be applied. Such a moratorium should also 
ensure  equal  treatment  of  policy  holders,  and  thus  avoid  potential  adverse  financial 
impacts  on  policy  holders  that  would  not  be  among  the  first  ones  to  surrender  their 
policy.  Because  one  of  the  objectives  of  resolution  is  the  continuation  of  insurance 
cover,  policy  holders  should  continue  to  make  any  obligatory  payments  under  the 
insurance contracts concerned, including in the case of annuities. 

(65)  Ensuring that resolution authorities have the same resolution tools and powers at their 
disposal  will  facilitate  coordinated  action  in  the  event  of  a  failure  of  a  cross-border 
group.  Further  action,  however,  is  necessary  to  promote  cooperation  and  prevent 
fragmented national responses. To agree to a group resolution scheme when resolving 
group entities, resolution authorities should therefore be required to consult each other 
and  cooperate  in  resolution  colleges.  To  provide  for  a  forum  for  discussion  and 
reaching such agreement, resolution colleges should be established around the core of 
the existing supervisory colleges through the inclusion of resolution authorities and the 
involvement  of  competent  ministries,  EIOPA  and,  where  appropriate,  authorities 
responsible  for  the  insurance  guarantee  schemes.  Resolution  colleges  should  not  be 
decision-making  bodies,  but  platforms  facilitating  decision-making  by  national 

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authorities, while it should be for the national  authorities concerned to  take the joint 
decisions. 

(66)  Resolution of cross-border groups should strike a balance between, on the one hand, 
the need for procedures that take into account the criticality of the situation and allow 
for efficient, fair and timely solutions for the group as a whole and, on the other hand, 
the necessity to protect policy holders, the real economy and financial stability in all 
the  Member  States  where  the  group  operates.  The  different  resolution  authorities 
should therefore share their views in the resolution college and any resolution actions 
proposed by the group resolution authority should be prepared and discussed amongst 
different resolution authorities in the context of the group resolution plans. In order to 
facilitate swift and joint  decisions  wherever possible, resolution  colleges  should  also 
take  into  account  the  views  of  the  resolution  authorities  of  all  the  Member  States  in 
which the group is active. 

(67)  Resolution actions by the group resolution authority should always take into account 
their impact on policy holders, the real economy and financial stability in the Member 
States where the group operates. Resolution authorities of the Member State in which 
a subsidiary undertaking is established should therefore have the possibility to object, 
as  a  last  resort  and  in  duly  justified  cases,  to  the  decisions  of  the  group  resolution 
authority  where  those  resolution  authorities  are  of  the  opinion  that  the  resolution 
actions and measures are not appropriate, either because of the need to protect policy 
holders, the real economy and financial stability in that Member State, or because of 
obligations that comparable undertakings in that Member States are subject to. 

(68)  Group  resolution  schemes  should  facilitate  coordinated  resolution,  which  is  more 
likely  to  deliver  the  best  result  for  all  undertakings  of  a  group.  Group  resolution 
authorities  should  therefore  propose  group  resolution  schemes  and  submit  those 
schemes  to  the  resolution  college.  Resolution  authorities  that  disagree  with  a  group 
resolution scheme or decide to take independent resolution action should explain to the 
group  resolution  authority  and  other  resolution  authorities  covered  by  the  group 
resolution scheme the reasons for their disagreement and notify those reasons, together 
with  details  of any independent  resolution  action they intend to  take. Any resolution 
authority that decides to depart from the group resolution scheme should duly consider 
the  potential  impact  of  such  departure  on  policy  holders,  the  real  economy  and 
financial  stability  in  the  Member  States  where  the  other  resolution  authorities  are 
located and the potential effects of such departure on other parts of the group. 

(69)  To ensure coordinated action at group level, resolution authorities should be invited to 
apply,  within  a  group  resolution  scheme,  the  same  tool  to  entities  belonging  to  the 
group that meet the conditions for resolution. Group resolution authorities should thus 
have the power to apply the bridge undertaking tool at group level to stabilise a group 
as a whole and to transfer ownership of subsidiaries to the bridge undertaking with a 
view to the onward sale of such subsidiaries, either as a package or individually, when 
market  conditions  are  appropriate.  In  addition,  the  group-level  resolution  authority 
should have the power to apply the write-down or conversion tool at parent level. 

(70)  Effective  resolution  of  internationally  active  insurance  and  reinsurance  undertakings 
and groups requires cooperation between Member States and third-country resolution 
authorities.  For  that  purpose,  where  it  is  justified  by  the  situation  at  hand,  EIOPA 
should  be  empowered  to  develop  and  enter  into  non-binding  framework  cooperation 
arrangements  with  authorities  of  third  countries  in  accordance  with  Article  33  of 
Regulation  (EU)  No  1094/2010.  For  the  same  reason,  national  authorities  should  be 

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permitted to conclude bilateral arrangements with third country authorities in line with 
EIOPA’s  framework  cooperation  agreements.  The  development  of  such  bilateral 
arrangements  should  ensure  effective  planning,  decision-making  and  coordination  in 
respect of such internationally active insurance and reinsurance undertakings. In order 
to create a level playing field, such bilateral  arrangements should be reciprocal, with 
resolution authorities recognising and enforcing each other’s proceedings, unless any 
exception  that  allows  for  rejection  of  recognition  of  third  country  resolution 
proceedings applies. 

(71)  Cooperation  between  resolution  authorities  should  take  place  both  with  regard  to 
subsidiaries of Union or third-country groups as with regard to branches of Union or 
third-country  insurance  and  reinsurance  undertakings.  Subsidiaries  of  third-country 
groups  are  undertakings  established  in  the  Union  and  are  therefore  fully  subject  to 
Union law, including the application of any resolution tools. It is necessary, however, 
that  Member  States  retain  the  right  to  act  in  relation  to  branches  of  insurance  and 
reinsurance  undertakings  having  their  head  office  in  third  countries,  where  the 
recognition  and  application  of  third-country  resolution  proceedings  relating  to  a 
branch would endanger the real economy or financial stability in the Union, or where 
Union  policy  holders  would  not  receive  equal  treatment  with  third-country  policy 
holders.  In  those  circumstances,  Member  States  should  have  the  right,  after  having 
consulted their resolution authorities, to refuse recognition of third-country resolution 
proceedings. 

(72)  EIOPA should promote convergence of the practices of resolution authorities through 
guidelines  that  are  issued  in  accordance  with  Article  16  of  Regulation  (EU)  No 
1094/2010.  More  in  particular,  EIOPA  should  specify  all  of  the  following:  (a)  the 
application  of  simplified  obligations  for  certain  undertakings;  (b)  the  methods  to  be 
used when determining the market shares and the criteria for the scope of pre-emptive 
recovery planning; (c) a minimum list of qualitative and quantitative indicators and a 
range of scenarios for pre-emptive recovery plans; (d) the criteria for the identification 
of critical functions; (e) the details on the measures to address or remove impediments 
to resolvability and the circumstances in which each measure may be applied; and (f) 
how information should be provided in summary or collective form for the purpose of 
confidentiality requirements. 

(73)  Technical standards in financial services should facilitate consistent harmonisation and 
adequate protection of policy holders, investors and consumers across the Union. As a 
body with highly specialised expertise, it would be efficient and appropriate, to entrust 
EIOPA with the development of draft regulatory and implementing technical standards 
which do not involve policy choices, for submission to the Commission. 

(74)  The Commission should, where provided for in this Directive, adopt draft regulatory 
technical  standards  developed  by  EIOPA  by  means  of  delegated  acts  pursuant  to 
Article  290  TFEU,  in  accordance  with  Articles  10  to  14  of  Regulation  (EU)  No 
1094/2010 to specify the following elements: (a) the information to be contained in the 
pre-emptive  recovery  plans;  (b)  the  content  of  resolution  plans  and  the  content  of 
group resolution plans; (c) the matters and criteria for the assessment for resolvability; 
(d)  different  elements  on  valuation,  including  the  methodology  for  calculating  the 
buffer  for  additional  losses  to  be  included  in  provisional  valuations  and  the 
methodology for carrying out the valuation of difference in treatment; (e) the contents 
of the contractual term to be included in financial contract governed by third-country 
law;  (f)  the  operational  functioning  of  resolution  colleges.  The  Commission  should, 
where  provided  for  in  this  Directive,  adopt  draft  implementing  technical  standards 

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developed by EIOPA by means of implementing acts pursuant to Article 291 TFEU, in 
accordance  with  Article  15  of  Regulation  (EU)  No  1094/2010  to  specify  the 
procedures,  content  and  minimum  set  of  standard  forms  and  templates  for  the 
provision of information for the purpose of resolution plans and cooperation from the 
insurance or reinsurance undertaking. 

(75)  Directive  2009/138/EC  provides  for  the  mutual  recognition  and  enforcement  in  all 
Member States of decisions concerning the reorganisation or winding up of insurance 
undertakings.  That  Directive ensures that all assets  and liabilities of the undertaking, 
regardless of the country in which they are situated, are dealt with in a single process 
in the home Member State and that creditors in the host Member States are treated in 
the same way as creditors in the home Member State. In order to achieve an effective 
resolution,  the  provisions  on  reorganisation  and  winding-up  laid  down  in  Directive 
2009/138/EC should apply in the event of use of the resolution tools, both where those 
instruments are applied to insurance and reinsurance undertakings and where they are 
applied  to  other  entities  covered  by  the  resolution  regime.  Those  provisions  should 
therefore be amended accordingly. 

(76)  Directive  2004/25/EC  of  the  European  Parliament  and  of  the  Council21,  Directive 
2007/36/EC  of  the  European  Parliament  and  of  the  Council22  and  Directive  (EU) 
2017/1132  of  the  European  Parliament  and  of  the  Council23,  contain  rules  on  the 
protection of shareholders and  creditors of undertakings that fall within the scope of 
those Directives. In a situation where resolution authorities need to act rapidly, those 
rules  might  hinder  effective  resolution  action  and  application  of  resolution  tools  and 
powers  by  resolution  authorities.  Derogations  under  Directive  2014/59/EU  of  the 
European  Parliament  and  of  the  Council24  and  Regulation  (EU)  2021/23  of  the 
European  Parliament  and  of  the  Council25  should  therefore  be  extended  to  actions 
taken  in  the  context  of  the  resolution  of  insurance  and  reinsurance  undertakings.  In 
order  to  guarantee  the  maximum  degree  of  legal  certainty  for  stakeholders,  such 
derogations should be set out clearly, should be narrow, and should only be used in the 
public interest and when resolution triggers are met. 

(77)  To provide adequate information sharing and access to all concerned authorities, it is 
necessary to ensure that resolution authorities are represented in all relevant fora and 
that EIOPA benefits from the expertise necessary to carry out the tasks related to the 
recovery  and  resolution  of  insurance  and  reinsurance  undertakings.  Therefore, 
Regulation (EU) No 1094/2010 should be amended to designate resolution authorities 

21 

22 

23 

24 

25 

Directive 2004/25/EC of the European Parliament and of the Council of 21 April 2004 on takeover bids, 
(OJ L 142, 30.4.2004, p. 12). 
Directive 2007/36/EC of the European Parliament and of the Council of 11 July 2007 on the exercise of 
certain rights of shareholders in listed companies (OJ L 184, 14.7.2007, p. 17). 
Directive (EU) 2017/1132 of the European Parliament and of the Council of 14 June 2017 relating to 
certain aspects of company law (OJ L 169, 30.6.2017, p. 46). 
Directive  2014/59/EU  of  the  European  Parliament  and  of  the  Council  of  15  May  2014 establishing  a 
framework  for  the  recovery  and  resolution  of  credit  institutions  and  investment  firms  and  amending 
Council  Directive  82/891/EEC,  and  Directives  2001/24/EC,  2002/47/EC,  2004/25/EC,  2005/56/EC, 
2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No 1093/2010 and (EU) 
No 648/2012, of the European Parliament and of the Council (OJ L 173, 12.6.2014, p. 190). 
Regulation  (EU)  2021/23  of  the  European  Parliament  and  of  the  Council  of  16  December  2020  on  a 
framework for the recovery and resolution of central counterparties and amending Regulations (EU) No 
1095/2010,  (EU)  No  648/2012,  (EU)  No  600/2014,  (EU)  No  806/2014  and  (EU)  2015/2365  and 
Directives  2002/47/EC,  2004/25/EC,  2007/36/EC,  2014/59/EU  and  (EU)  2017/1132  (OJ  L  22, 
22.1.2021, p. 1). 

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(78) 

as competent  authorities as referred to in that Regulation. Such assimilation between 
resolution  authorities  and  competent  authorities  is  consistent  with  the  functions 
attributed  to  EIOPA  pursuant  to  Article  25  of  Regulation  (EU)  No  1094/2010  to 
contribute  and  participate  actively  in  the  development  and  coordination  of  recovery 
and resolution plans. 

It  is  necessary  ensure  that  insurance  and  reinsurance  undertakings,  those  who 
effectively control their business, and their administrative, management or supervisory 
body comply with their obligations in relation to the resolution of such undertakings. It 
is  equally  necessary  to  ensure  that  those  undertakings,  those  who  effectively  control 
their business,  and their administrative, management or supervisory body  are subject 
to similar treatment across the Union. Member States should therefore be required to 
provide  for  administrative  sanctions  and  other  administrative  measures  which  are 
effective,  proportionate  and  dissuasive.  Such  administrative  sanctions  and  other 
administrative  measures  should  satisfy  certain  essential  requirements  in  relation  to 
addressees, criteria to be taken into account when applying an administrative sanction 
or  other  administrative  measure,  publication  of  administrative  sanctions  or  other 
administrative  measures,  key  penalising  powers  and  levels  of  administrative  fines. 
Subject to strict professional secrecy, EIOPA should maintain a central database of all 
administrative  sanctions  or  other  administrative  measures  and  information  on  the 
appeals reported to it by supervisory authorities and resolution authorities. 

(79)  Member States should not be required to lay down rules for administrative sanctions 
or other administrative measures for infringements of this Directive which are subject 
to national criminal law. However, the maintenance of criminal sanctions rather than 
administrative sanctions or other administrative measures for infringements should not 
reduce  or  otherwise  affect  the  ability  of  resolution  authorities  and  supervisory 
authorities  to  cooperate,  access  and  exchange  information  in  a  timely  manner  with 
resolution  authorities  and  supervisory  authorities  in  other  Member  States,  including 
after any referral of the infringements concerned to the competent judicial authorities 
for prosecution. 

(80)  Since  the  objective  of  this  Directive,  namely  the  harmonisation  of  the  rules  and 
processes  for  the  resolution  of  insurance  and  reinsurance  undertakings,  cannot  be 
sufficiently achieved by the Member States, but can rather, by reason of the effects of 
a failure of any undertaking in the whole Union, be better achieved at Union level, the 
Union may adopt measures, in accordance with the principle of subsidiarity as set out 
in  Article  5  of  the  Treaty  on  European  Union.  In  accordance  with  the  principle  of 
proportionality,  as  set  out  in  that  Article,  this  Directive  does  not  go  beyond  what  is 
necessary in order to achieve that objective. 

(81)  When  taking  decisions  or  actions  under  this  Directive,  supervisory  authorities  and 
resolution  authorities should always  have due regard to  the impact  of their decisions 
and  actions  on  policy  holders,  the  real  economy  and  financial  stability  in  other 
Member  States  and  should  give  consideration  to  the  significance  of  any  subsidiary 
undertaking or of cross-border activities for policy holders, the financial sector and the 
economy of the Member State where such a subsidiary undertaking is  established or 
the  activities  are  carried  out,  even  in  cases  where  the  subsidiary  undertaking  or  the 
cross-border activities concerned are of lesser importance for the group. 

HAVE ADOPTED THIS DIRECTIVE: 

EN 

31 

  EN 

TITLE I 
SUBJECT MATTER AND SCOPE, DEFINITIONS AND 
DESIGNATION OF RESOLUTION AUTHORITIES 

Article 1 

Subject matter and scope 

1. 

This Directive lays down rules and procedures for the recovery and resolution of the 
following entities:  

(a) 

insurance  and  reinsurance  undertakings  that  are  established  in  the  Union  and 
fall within the scope of Article 2 of Directive 2009/138/EC; 

(b)  parent insurance and reinsurance undertakings established in the Union; 

(c) 

insurance  holding  companies  and  mixed  financial  holding  companies  that  are 
established in the Union; 

(d)  parent  insurance  holding  companies  and  parent  mixed  financial  holding 

companies established in a Member State; 

(e)  Union  parent  insurance  holding  companies  and  Union  parent  mixed  financial 

holding companies; 

(f) 

branches of insurance and reinsurance undertakings that are established outside 
the Union and that fulfil the conditions laid down in Articles 72 to 77. 

Resolution  authorities  and  supervisory  authorities  shall,  when  establishing  and 
applying the  requirements  laid down in  this Directive and when using the different 
tools at their disposal in relation to an entity referred to in the first subparagraph, take 
account  of the nature of the business  of that entity, its shareholding structure, legal 
form, risk profile, size, legal status, interconnectedness to other institutions or to the 
financial system in general, and the scope and complexity of the entity’s activities. 

Member States may adopt or maintain rules that are stricter or additional to those laid 
down  in  this  Directive  and  in  the  delegated  and  implementing  acts  adopted  on  the 
basis of this Directive, provided that those rule are of general application and do not 
conflict with this Directive and with the delegated and implementing acts adopted on 
its basis. 

Article 2 

Definitions 

For the purposes of this Directive, the definitions laid down in Article 212, points (a) 
to (d) and (f) to (h), of Directive 2009/138/EC shall apply. 

For the purposes of this Directive, the following definitions shall apply: 

(1) 

‘resolution’  means  the  application  of  a  resolution  tool  or  a tool  referred  to  in 
Article 26(3) to achieve one or more of the resolution objectives referred to in 
Article 18(2); 

2. 

1. 

2. 

EN 

32 

  EN 

(2) 

(3) 

(4) 

(5) 

(6) 

(7) 

(8) 

‘parent  insurance  holding  company  in  a  Member  State’  means  an  insurance 
holding  company  as  defined  in  Article  212(1),  point  (f),  of  Directive 
2009/138/EC  which  is  established  in  a  Member  State  and  which  is  not  a 
subsidiary  undertaking  of  an  insurance  or  reinsurance  undertaking,  insurance 
holding company or mixed financial holding company authorised or set  up in 
the same Member State; 

‘Union  parent  insurance  holding  company’  means  a  parent  insurance  holding 
company  in  a  Member  State  which  is  not  a  subsidiary  undertaking  of  an 
insurance  or  reinsurance  undertaking,  another  insurance  holding  company  or 
mixed financial holding company authorised or set up in any Member State; 

‘parent mixed financial  holding company in  a  Member State’ means a  mixed 
financial holding company as defined in Article 212(1), point (h), of Directive 
2009/138/EC  which  is  established  in  a  Member  State,  which  is  not  itself  a 
subsidiary  undertaking  of  an  insurance  or  reinsurance  undertaking,  an 
insurance holding company or mixed financial holding company authorised or 
set up in that same Member State; 

‘Union  parent  mixed  financial  holding  company’  means  a  parent  mixed 
financial  holding  company  in  a  Member  State  that  is  not  a  subsidiary 
undertaking  of  an  undertaking  authorised  in  any  Member  State  or  of  another 
insurance holding company or mixed financial holding company set up in any 
Member State; 

‘resolution  objectives’  means  the  resolution  objectives  referred  to  in  Article 
18(2); 

‘resolution  authority’  means  an  authority  designated  by  a  Member  State  in 
accordance with Article 3; 

‘supervisory authority’ means a supervisory authority as defined in Article 13, 
point (10), of Directive 2009/138/EC; 

(9) 

‘resolution tool’ means a resolution tool referred to in Article 26(3); 

(10)  ‘resolution power’ means a power referred to in Articles 40 to 52; 

(11)  ‘competent  ministries’  means  finance  ministries  or  other  ministries  of  the 
Member  States  which  are  responsible  for  economic,  financial  and  budgetary 
decisions  at  the  national  level  in  accordance  with  national  competencies  and 
which have been designated pursuant to Article 3(7); 

(12)  ‘senior  management’  means  those  natural  persons  who  exercise  executive 
functions  within  an  undertaking  and  who  are  responsible,  and  accountable  to 
the  administrative,  management  or  supervisory  body,  for  the  day-to-day 
management of the undertaking; 

(13)  ‘cross-border group’ means a group having group entities established in more 

than one Member State; 

(14)  ‘extraordinary public financial support’ means State aid within the meaning of 
Article  107(1)  TFEU,  or  any  other  public  financial  support  at  supra-national 
level, which, if provided for at national level, would constitute State aid that is 
provided  to  preserve  or  restore  the  viability,  liquidity  or  solvency  of  an 
insurance or reinsurance undertaking or entity referred to in Article 1(1), points 
(b) to (e), or of a group of which such an undertaking or entity forms part; 

EN 

33 

  EN 

(15)  ‘group entity’ means a legal person that is part of a group; 

(16)  ‘pre-emptive recovery plan’ means a pre-emptive recovery plan drawn up and 
maintained  by  an  insurance  or  reinsurance  undertaking  in  accordance  with 
Article 5; 

(17)  ‘group  pre-emptive  recovery  plan’  means  a  group  pre-emptive  recovery  plan 

drawn up and maintained in accordance with Article 7; 

(18)  ‘significant cross-border activities’ means insurance and reinsurance activities 
carried  out  under  the  right  of  establishment  and  those  carried  out  under  the 
freedom to provide services in a given host Member State for which the annual 
gross written premium exceeds 5 % of the annual gross written premium of the 
undertaking,  measured  with  reference  to  the  last  available  financial  statement 
of the undertaking; 

(19)  ‘critical  functions’  means  activities,  services  or  operations  performed  by  an 
insurance or reinsurance undertaking for third parties that cannot be substituted 
within a reasonable time or at a reasonable cost, and where the inability of the 
insurance  and  reinsurance  undertaking  to  perform  the  activities,  services  or 
operations would be likely to have a significant impact on the financial system 
and the real economy in one or more Member States, including by affecting the 
social  welfare  of  a  large  number  of  policy  holders,  beneficiaries  or  injured 
parties  or  by  giving  rise  to  systemic  disruption  or  by  undermining  general 
confidence in the provision of insurance services; 

(20)  ‘core  business  lines’  means  business  lines  and  associated  services  which 
represent material sources of revenue, profit or franchise value for an insurance 
or reinsurance undertaking or for a group of which an insurance or reinsurance 
undertaking forms part; 

(21)  ‘financing  arrangement’  means  an  arrangement  officially  recognised  by  a 
Member  State  providing  financing  through  contributions  from  insurance  and 
reinsurance  undertakings  in  the  territory  of  that  Member  State  to  ensure  the 
effective application by the resolution authority of the resolution tools referred 
to in Article 26(3) and the powers referred to in Articles 40 to 52; 

(22)  ‘own  funds’  means  own  funds  as  defined  in  Article  87  of  Directive 

2009/138/EC; 

(23)  ‘resolution  action’  means  the  decision  to  place  an  insurance  or  reinsurance 
undertaking or an entity as referred to in Article 1(1), points (b) to (e), under 
resolution pursuant to Article 19 or 20, the application of a resolution tool as 
referred to in Article 26(3), or the exercise of one or more resolution powers as 
referred to in Articles 40 to 52; 

(24)  ‘resolution  plan’  means  a  resolution  plan  for  an  insurance  or  reinsurance 

undertaking drawn up in accordance with Article 9; 

(25)  ‘group resolution’ means either of the following: 

(a) 

(b) 

the taking of resolution  action at the level of a parent undertaking or of 
an insurance or reinsurance undertaking subject to group supervision, or 

the  coordination  of  the  application  of  the  resolution  tools  referred  to  in 
Article  26(3)  and  the  exercise  of  the  resolution  powers  referred  to  in 
Articles 40 to 52 by resolution authorities in relation to group entities that 

EN 

34 

  EN 

meet the conditions for resolution referred to in  Article 19(1) or Article 
20(3); 

(26)  ‘group  resolution  plan’  means  a  plan  for  group  resolution  drawn  up  in 

accordance with Articles 10 and 11; 

(27)  ‘group resolution authority’ means the resolution authority in the Member State 

in which the group supervisor is situated; 

(28)  ‘group  resolution  scheme’  means  a  plan  drawn  up  for  the  purposes  of  group 

resolution in accordance with Article 70; 

(29)  ‘resolution college’ means a college established in accordance with Article 68 

to carry out the tasks referred to in paragraph 1 of that Article; 

(30)  ‘normal  insolvency  proceedings’  means  collective  insolvency  proceedings 
which entail the partial or total divestment of a debtor and the appointment of a 
liquidator or an administrator normally applicable to insurance and reinsurance 
undertakings  under  national  law  and  either  specific  to  those  undertakings  or 
generally applicable to any natural or legal person; 

(31)  ‘debt  instruments’  means  bonds  and  other  forms  of  transferrable  debt, 
instruments creating or acknowledging a debt, and instruments giving rights to 
acquire debt instruments; 

(32)  ‘insurance claims’ means insurance claims as defined in Article 268(1), point 

(g), of Directive 2009/138/EC; 

(33)  ‘parent undertaking in a Member State’ means a parent undertaking as defined 
in  Article  13,  point  (15),  of  Directive  2009/138/EC  established  in  a  Member 
State; 

(34)  ‘college  of  supervisors’  means  a  college  of  supervisors  as  defined  in  Article 
212(1) point (e), of Directive 2009/138/EC and established in accordance with 
Article 248 of Directive 2009/138/EC; 

(35)  ‘Union State aid framework’ means the framework established by Articles 107, 
108  and  109  TFEU  and  regulations  and  all  Union  acts,  including  guidelines, 
communications  and  notices,  made  or  adopted  pursuant  to  Article  108(4)  or 
Article 109 TFEU; 

(36)  ‘winding-up’  means  the  realisation  of  assets  of  an  insurance  or  reinsurance 

undertaking or entity referred to in Article 1(1), points (b) to (e); 

(37)  ‘asset  and  liability  separation  tool’  means  the  mechanism  for  effecting  a 
transfer  by  a  resolution  authority  of  assets,  rights  or  liabilities  of  an 
undertaking  under  resolution  to  an  asset  and  liability  management  vehicle  in 
accordance with Article 30; 

(38)  ‘asset  and  liability  management  vehicle’  means  a  legal  person  that  meets  the 

requirements laid down in Article 30(2); 

(39)  ‘write-down  or  conversion  tool’  means  the  mechanism  for  effecting  the 
exercise  by  a  resolution  authority  of  the  write-down  or  conversion  powers  in 
relation  to  liabilities  of  an  undertaking  under  resolution  in  accordance  with 
Article 34; 

(40)  ‘sale  of  business  tool’  means  the  mechanism  for  effecting  a  transfer  by  a 
resolution  authority  of  shares  or  other  instruments  of  ownership  issued  by  an 

EN 

35 

  EN 

undertaking under resolution, or assets,  rights or  liabilities, of an undertaking 
under resolution to a purchaser that is not a bridge undertaking, in accordance 
with Article 31; 

(41)  ‘bridge  undertaking’  means  a  legal  person  that  meets  the  requirements  laid 

down in Article 32(2); 

(42)  ‘bridge undertaking tool’ means the mechanism for transferring shares or other 
instruments of ownership issued by an undertaking under resolution or assets, 
rights or liabilities of an undertaking under resolution to a bridge undertaking, 
in accordance with Article 32; 

(43)  ‘solvent run-off tool’ means the mechanism for withdrawing the authorisation 
of  an  undertaking  under  resolution  to  conclude  new  insurance  or  reinsurance 
contracts  and  for  limiting  its  activity  to  the  exclusive  administration  of  its 
existing portfolio until its termination and liquidation under normal insolvency 
proceedings in accordance with Article 27; 

(44)  ‘instruments  of  ownership’  means  shares,  other  instruments  that  confer 
ownership,  instruments  that  are  convertible  into  or  give  the  right  to  acquire 
shares  or  other  instruments  of  ownership,  and  instruments  representing 
interests in shares or other instruments of ownership; 

(45)  ‘shareholders’  means  shareholders  or  holders  of  other  instruments  of 

ownership; 

(46)  ‘transfer powers’ means the powers specified in Article 40(1), points (d) or (e), 
to  transfer  shares,  other  instruments  of  ownership,  debt  instruments,  assets, 
rights  or  liabilities,  or  any  combination  of  those  items  from  an  undertaking 
under resolution to a recipient; 

(47)  CCP  a  CCP  as  defined  in  Article  2,  point  (1),  of  Regulation  (EU)  No 

648/201226; 

(48)  ‘write-down  or  conversion  powers’  means  the  powers  referred  to  in  Article 

34(2) and in Article 40(1), points (f) to (j); 

(49)  ‘secured liability’ means a liability where the right of the creditor to payment 
or  other  form  of  performance  is  secured  by  a  charge,  pledge  or  lien,  or 
repurchase 
liabilities  arising 
collateral  arrangements 
transactions and other title transfer collateral arrangements; 

including 

from 

(50)  ‘Tier 1 instruments’ means basic own-fund items that meet the conditions laid 

down in Article 94(1) of Directive 2009/138/EC; 

(51)  ‘Tier  2  instruments’  means  basic  and  ancillary  own-fund  items  that  meet  the 

conditions laid down in Article 94(2) of Directive 2009/38/EC; 

(52)  ‘Tier  3  instruments’  means  basic  and  ancillary  own-fund  items  that  meet  the 

conditions laid down in Article 94(3) of Directive 2009/38/EC; 

(53)  ‘eligible  liabilities’  means  the  liabilities  and  capital  instruments  that  do  not 
qualify as Tier 1, Tier 2 or Tier 3 instruments of an insurance and reinsurance 
undertaking or entity referred to in Article 1(1), points (b) to (e), and that are 

26 

Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC 
derivatives, central counterparties and trade repositories, OJ L 201, 27.7.2012, p. 1. 

EN 

36 

  EN 

                                                 
not excluded from the scope of the write-down or conversion tool pursuant to 
Article 34, paragraphs 5 or 6; 

(54)  ‘insurance  guarantee  scheme’  means  a  scheme  officially  recognised  by  a 
Member  State  and  financed  through  contributions  from  insurance  and 
reinsurance  undertakings  guaranteeing  the  payment  of  eligible  insurance 
claims,  in  part  or  in  full,  to  eligible  policy  holders,  insured  parties  and 
beneficiaries  where  an  insurance  undertaking  is  unable  or  likely  to  become 
unable  to  fulfil  its  obligations  and  commitments  resulting  from  its  insurance 
contracts; 

(55)  ‘relevant capital instruments’ means Tier 1, Tier 2 and Tier 3 instruments; 

(56)  ‘conversion  rate’  means  the  factor  that  determines  the  number  of  shares  or 
other instruments of ownership into which a liability of a specific class will be 
converted, by reference either to a single instrument of the class in question or 
to a specified unit of value of a debt claim; 

(57)  ‘affected  creditor’  means  a  creditor  whose  claim  relates  to  a  liability  that  is 
reduced  or  converted  to  shares  or  other  instruments  of  ownership  by  the 
exercise  of  the  write-down  or  conversion  power  pursuant  to  the  use  of  the 
write-down or conversion tool; 

(58)  ‘recipient’  means  the  entity  to  which  shares,  other  instruments  of  ownership, 
debt instruments, assets, rights or liabilities, or any combination of those items 
are transferred from an undertaking under resolution; 

(59)  ‘business day’ means a day other than a Saturday, a Sunday or a public holiday 

in the Member State concerned; 

(60)  ‘termination right’ means a right to terminate a contract, a right to accelerate, 
close  out,  set-off  or  net  obligations  or  any  similar  provision  that  suspends, 
modifies or extinguishes an obligation of a party to the contract or a provision 
that  prevents  an  obligation  under  the  contract  from  arising  that  would 
otherwise arise; 

(61)  ‘undertaking under resolution’ means any of the entities referred to in Article 

1, points (a) to (e), in respect of which a resolution action is taken; 

(62)  ‘Union subsidiary undertaking’ means an insurance or reinsurance undertaking 
which  has  its  head  office  in  a  Member  State  and  which  is  a  subsidiary 
undertaking of a third-country insurance or reinsurance undertaking or a third-
country parent undertaking; 

(63)  ‘ultimate parent undertaking’ means a parent undertaking in a Member State of 
a  group  which  is  subject  to  group  supervision  in  accordance  with  Article 
213(2), points (a) or (b), of Directive 2009/138/EC, which is not a subsidiary 
undertaking  of  another  insurance  or  reinsurance  undertaking,  an  insurance 
holding company or a mixed financial holding company that is authorised and 
set up in any Member State; 

(64)  ‘third-country  insurance  or  reinsurance  undertaking’  means  a  third-country 
insurance undertaking or a third-country reinsurance undertaking as defined in 
Article 13, points (3) and (6), of Directive 2009/138/EC; 

(65)  ‘third-country resolution proceedings’ means an action under the law of a third 
country  to  manage  the  failure  of  a  third-country  insurance  or  reinsurance 

EN 

37 

  EN 

undertaking or a third-country parent undertaking that is comparable, in terms 
of objectives and anticipated results, to resolution actions under this Directive; 

(66)  ‘Union  branch’ means  a branch located in  a Member State of a third-country 

insurance or reinsurance undertaking; 

(67)  ‘relevant  third-country  authority’  means  a  third-country  authority  responsible 
for  carrying  out  functions  comparable  to  those  of  resolution  authorities  or 
supervisory authorities pursuant to this Directive; 

(68)  ‘title  transfer  financial  collateral  arrangement’  means  a  title  transfer  financial 
collateral  arrangement  as  defined  in  Article  2(1),  point  (b),  of  Directive 
2002/47/EC of the European Parliament and of the Council27; 

(69)  ‘netting arrangement’ means an arrangement under which a number of claims 
or  obligations  can  be  converted  into  a  single  net  claim,  including  close-out 
netting arrangements under which, on the occurrence of an enforcement event 
(however or wherever defined) the obligations of the parties are accelerated so 
as  to  become  immediately  due  or  are  terminated,  and  in  either  case  are 
converted  into  or  replaced  by  a  single  net  claim,  including  ‘close-out  netting 
provisions’ as defined in Article 2(1), point (n)(i), of Directive 2002/47/EC and 
‘netting’ as defined in Article 2, point (k), of Directive 98/26/EC; 

(70)  ‘set-off arrangement’ means an arrangement under which two or more claims 
or  obligations  owed  between  the  undertaking  under  resolution  and  a 
counterparty can be set off against each other; 

(71)  ‘financial contracts’ means financial contracts as defined in Article 1(1), point 

(100), of Directive 2014/59/EU; 

(72)  ‘crisis prevention measure’ means the exercise of powers to direct the removal 
of  deficiencies  or  impediments  to  recoverability  under  Article  6(5)  of  this 
Directive,  the  exercise  of  powers  to  address  or  remove  impediments  to 
resolvability  under  Article  15  or  16  of  this  Directive,  the  application  of  any 
measures  under  Article  137,  Article  138,  paragraphs  3  and  5,  Article  139(3) 
and Article 140 of Directive 2009/138/EC and the application of a preventive 
measure under Article 141 of Directive 2009/138/EC; 

(73)  ‘crisis  management measure’ means  a resolution  action, the appointment of a 
special manager under Article 42 or the appointment of a person under Article 
52(1); 

(74)  ‘designated  national  macroprudential  authority’  means  the  authority  entrusted 
with the conduct of macroprudential policy referred to in Recommendation B1 
of the Recommendation of the European Systemic Risk Board of 22 December 
2011 on the macroprudential mandate of national authorities (ESRB/2011/3); 

(75)  ‘regulated market’ means a regulated market  as  defined in  Article 4(1),  point 
(21),  of  Directive  2014/65/EU  of  the  European  Parliament  and  of  the 
Council28. 

27 

28 

Directive  2002/47/EC  of  the  European  Parliament  and  of  the  Council  of  6  June  2002  on  financial 
collateral arrangements (OJ L 168, 27.6.2002, p. 43). 
Directive  2014/65/EU  of  the European  Parliament  and  of  the  Council  of  15  May  2014 on  markets  in 
financial  instruments  and  amending  Directive  2002/92/EC  and  Directive  2011/61/EU  (OJ  L  173, 
12.6.2014, p. 349). 

EN 

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(76)  ‘insurance undertaking’  means an insurance undertaking as defined in  Article 

13, point (1), of Directive 2009/138/EC; 

(77)  ‘reinsurance undertaking’ means reinsurance undertaking as defined in Article 

13, point (4), of Directive 2009/138/EC; 

(78)  ‘credit  institution’  means  a  credit  institution  as  defined  in  Article  4(1),  point 
(1),  of  Regulation  (EU)  No  575/2013  of  the  European  Parliament  and  of  the 
Council29; 

(79)  ‘investment  firm’  means  an  investment  firm  as  defined  in  Article  4(1),  point 

(2), of Regulation (EU) No 575/2013; 

(80)  ‘low risk profile undertaking’ means a low risk profile undertaking as defined 

in Article 13, point (10a), of Directive 2009/138/EC; 

(81)  ‘subsidiary undertaking’ means a ‘subsidiary undertaking’ as defined in Article 

13, point (16), of Directive 2009/138/EC; 

(82)  ‘parent  undertaking’  means  a  parent  undertaking  as  defined  Article  13,  point 

(15), of Directive 2009/138/EC; 

(83)  ‘branch’  means  a  branch  as  defined  in  Article  13,  point  (11),  of  Directive 

2009/138/EC; 

(84)  ‘administrative,  management  or  supervisory  body’  means  an  administrative, 
management  or  supervisory  body  as  defined  in  Article  1,  point  (43),  of 
Commission Delegated Regulation (EU) 2015/3530. 

Article 3 

Designation of resolution authorities and competent ministries 

Each Member State shall designate one or, exceptionally, more resolution authorities 
that are empowered to apply the resolution tools and exercise the resolution powers. 

Resolution  authorities  shall  be  national  central  banks,  competent  ministries,  public 
administrative authorities or authorities entrusted with public administrative powers. 

Where  a  resolution  authority  is  entrusted  with  other  functions,  adequate  structural 
arrangements  shall  be  in  place  to  avoid  conflicts  of  interest  between  the  functions 
entrusted to the resolution authority pursuant to this Directive and all other functions 
entrusted  to  that  authority,  without  prejudice  to  the  exchange  of  information  and 
cooperation obligations required by paragraph 6.  

In order to achieve the goals referred to in subparagraph 1, arrangements shall be put 
in  place  to  ensure  effective  operational  independence,  including  separate  staff, 
reporting  lines  and  decision  making  processes  of  the  resolution  authority  from  any 
supervisory or other functions of that resolution authority. 

Regulation  (EU)  No  575/2013  of  the  European  Parliament  and  of  the  Council  of  26  June  2013  on 
prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 
648/2012 (OJ L 176, 27.6.2013, p. 1). 
Commission  Delegated  Regulation  (EU)  2015/35  of  10  October  2014  supplementing  Directive 
2009/138/EC  of  the  European  Parliament  and  of  the  Council  on  the  taking-up  and  pursuit  of  the 
business of Insurance and Reinsurance (Solvency II), (OJ L 012 17.1.2015, p. 1). 

1. 

2. 

3. 

29 

30 

EN 

39 

  EN 

                                                 
4. 

The requirements laid down in paragraph 3 shall not preclude that: 

(a) 

(b) 

reporting lines converge at the highest level of an organisation that subsumes 
different functions or authorities; 

staff may, under predefined conditions, be shared between the other functions 
entrusted to the resolution authority to meet temporarily high workloads, or for 
the resolution authority to be able to avail itself of the expertise of shared staff.  

Resolution  authorities  shall  adopt  and  make  public  the  internal  rules  they  have  in 
place  to  ensure  compliance  with  the  requirements  set  out  in  paragraphs  3  and  4, 
including  rules  regarding  professional  secrecy  and  information  exchanges  between 
the different functional areas. 

Member  States  shall  require  that  authorities  exercising  supervision  and  resolution 
functions and persons exercising those functions on their behalf cooperate closely in 
the  preparation,  planning  and  application  of  resolution  decisions,  both  where  the 
resolution authority and the supervisory authority are separate entities and where the 
functions are carried out in the same entity. 

Each  Member  State  shall  designate  a  single  ministry  which  is  responsible  for 
exercising the functions entrusted to the competent ministry under this Directive. 

Where the resolution authority in a Member State is not the competent ministry, the 
resolution  authority  shall  inform  the  competent  ministry  of  the  decisions  taken 
pursuant  to  this  Directive  without  undue  delay  and,  unless  otherwise  laid  down  in 
national  law,  not  implement  any  decisions  that  have  a  direct  fiscal  impact  without 
having obtained the approval of that competent ministry. 

A  Member  State  that  designates  more  than  one  resolution  authority  shall  provide 
EIOPA  with  a  fully  reasoned  notification  for  doing  so  and  shall  clearly  allocate 
functions  and 
those  authorities,  ensure  adequate 
coordination between them and designate a single authority as a contact authority for 
the  purposes  of  cooperation  and  coordination  with  the  relevant  authorities  of  other 
Member States. 

responsibilities  between 

Member  States  shall  inform  EIOPA  of  the  national  authority  or  authorities 
designated  as  resolution  authorities  and,  where  relevant,  the  contact  authority  and, 
where relevant, their specific functions and responsibilities. EIOPA shall publish the 
list of those resolution authorities and contact authorities. 

Without  prejudice  to  Article  65,  Member  States  may  limit  the  liability  of  the 
resolution authority, the supervisory authority and their respective staff in accordance 
with  national  law  for  their  acts  and  omissions  in  the  course  of  discharging  their 
functions under this Directive. 

5. 

6. 

7. 

8. 

9. 

10. 

11. 

EN 

40 

  EN 

TITLE II 
PREPARATION 

CHAPTER I 
Pre-emptive recovery and resolution planning 

SECTION 1 
GENERAL PROVISIONS 

Article 4 

1. 

2. 

3. 

Simplified obligations for certain undertakings 

Taking  into  account  the  impact  that  the  failure  of  the  insurance  or  reinsurance 
undertaking could have, due to the nature of its business, its shareholding structure, 
its  legal  form,  its  risk  profile,  size  and  legal  status,  its  interconnectedness  to  other 
regulated  undertakings  or  to  the  financial  system  in  general,  the  scope  and  the 
complexity of its activities, and whether its failure and subsequent winding up under 
normal insolvency proceedings would be likely to have a significant negative effect 
on  financial  markets,  on  other  undertakings,  on  policy  holders,  on  funding 
conditions,  or  on  the  wider  economy,  supervisory  and  resolution  authorities  shall 
determine  whether  simplified  obligations  can  apply  for  certain  insurance  and 
reinsurance undertakings and groups with respect to: 

(a) 

(b) 

(c) 

(d) 

the contents and details of pre-emptive recovery and resolution plans provided 
for in Articles 5 to 7; 

the date by which the first pre-emptive recovery and resolution plans are to be 
drawn up and the frequency for updating recovery and resolution plans, which 
may  be  lower  than  the  frequency  provided  for  in  Article  5(4),  Article  7(5), 
Article 9(5) and Article 11(3); 

the  content  and  level  of  detail  of  the  information  required  from  undertakings 
pursuant to Article 5(6), Article 10(2) and Article 12(1); 

the level of detail for the assessment of resolvability provided for in Articles 13 
and 14. 

EIOPA  shall,  by  [PO  –  add  18  months  after  entry  into  force],  issue  guidelines  in 
accordance  with  Article  16  of  Regulation  (EU)  No  1094/2010  to  specify  the 
eligibility criteria referred to in paragraph 1. 

Member States shall require the supervisory authorities or the resolution authorities, 
as  applicable,  to  provide  EIOPA,  on  an  annual  basis  and  for  each  Member  State 
separately, with all of the following information: 

(a) 

the  number  of  insurance  and  reinsurance  undertakings  and  groups  subject  to 
pre-emptive recovery planning and resolution planning pursuant to Articles 5, 
7, 9 and 10; 

(b) 

the  number  of  insurance  and  reinsurance  undertakings  and  groups  benefitting 
from simplified obligations referred to in paragraph 1 of this Article; 

EN 

41 

  EN 

(c) 

(d) 

quantitative  information  on  the  application  of  the  criteria  referred  to  in 
paragraph 1; 

a  description  of  the  simplified  obligations  applied  on  the  basis  of  the  criteria 
referred to in paragraph 1 as compared to the full obligations, together with the 
volume  of  capital  requirements,  premiums,  technical  provisions  and  assets, 
respectively  measured  as  percentages  of 
total  volume  of  capital 
requirements,  premiums,  technical  provisions  and  assets  of  the  insurance  and 
reinsurance  undertakings  of  the  Member  States  or  of  all  the  groups,  as 
applicable. 

the 

4. 

EIOPA  shall  publicly  disclose,  on  an  annual  basis  and  for  each  Member  State 
separately, all of the following information: 

(a) 

(b) 

(c) 

(d) 

the  number  of  insurance  and  reinsurance  undertakings  and  groups  subject  to 
pre-emptive recovery planning and resolution planning pursuant to Articles 5, 
7, 9 and 10; 

the  number  of  insurance  and  reinsurance  undertakings  and  groups  benefitting 
from simplified obligations referred to in paragraph 1 of this Article; 

quantitative  information  on  the  application  of  the  criteria  referred  to  in 
paragraph 1 of this Article; 

a description of the simplified obligations applied on the basis of the eligibility 
criteria referred to in paragraph 1 as compared to the full obligations, together 
with  the  volume  of  capital  requirements,  premiums,  technical  provisions  and 
assets,  respectively  measured  as  percentages  of  the  total  volume  of  capital 
requirements,  premiums,  technical  provisions  and  assets  of  the  insurance  and 
reinsurance  undertakings  of  the  Member  States  or  of  all  the  groups,  as 
applicable; 

(e) 

and  an  assessment  of  any  divergences  regarding  the  implementation  of 
paragraph 1 of this Article at national level. 

SECTION 2 
PRE-EMPTIVE RECOVERY PLANNING 

Article 5 

Pre-emptive recovery plans 

1. 

Member States shall ensure that insurance and reinsurance undertakings that are not 
part  of  a  group  subject  to  pre-emptive  recovery  planning  pursuant  to  Article  7  and 
that  meet  the  criteria  laid  down  in  paragraphs  2  or  3,  draw  up  and  keep  updated  a 
pre-emptive recovery plan. Such pre-emptive recovery plan shall contain measures to 
be  taken  by  the  undertaking  concerned  to  restore  its  financial  position  where  that 
position has significantly deteriorated. 

The  drawing  up,  the  keeping  up-to-date  and  application  of  pre-emptive  recovery 
plans shall be considered to be part of the system of governance within the meaning 
of Article 41 of Directive 2009/138/EC. 

2. 

The  supervisory  authority  shall  subject  insurance  and  reinsurance  undertakings  to 
pre-emptive  recovery  planning  requirements  on  the  basis  of  their  size,  business 

EN 

42 

  EN 

model,  risk  profile,  interconnectedness,  substitutability  and,  in  particular,  cross-
border activity. 

Supervisory authorities shall ensure that at least 80% of the Member State’s life and 
non-life  and  reinsurance  market  respectively,  where  the  non-life  market  share  is 
based  on  gross  written  premiums  and  the  life  market  share  is  based  on  gross 
technical provisions, shall be subject to pre-emptive recovery planning requirements 
pursuant to this Article. 

In  the  calculation  of  the  market  coverage  level  referred  to  in  subparagraph  2,  the 
subsidiary  insurance  or  reinsurance  undertakings  of  a  group  may  be  taken  into 
account  where  those  subsidiary  insurance  or  reinsurance  undertakings  are  part  of  a 
group  for  which  the  ultimate  parent  undertaking  is  drawing  up  and  maintaining  a 
group pre-emptive recovery plan referred to in Article 7. 

Any  insurance  or  reinsurance  undertaking  which  is  subject  to  a  resolution  plan 
pursuant to Article 9 shall be subject to pre-emptive recovery planning requirements. 

Low risk profile undertakings, however, shall not be subject to pre-emptive recovery 
planning requirements on an individual basis. 

EIOPA shall issue guidelines in accordance with Article 16 of Regulation (EU) No 
1094/2010  to  further  specify  the  methods  to  be  used  when  determining  the  market 
shares  referred  to  in  paragraph  2,  and  the  criteria,  in  particular  as  regards  cross-
border activity, referred to in paragraph 2, first subparagraph. 

Supervisory  authorities  shall  ensure  that  insurance  and  reinsurance  undertakings 
update  their  pre-emptive  recovery  plans  at  least  annually  and  after  a  change  to  the 
legal or organisational structure of the undertaking concerned, or to its business or its 
financial situation, which could have a material effect on, or necessitates a material 
change to, the pre-emptive recovery plan. 

Pre-emptive recovery plans shall not assume any access to or receipt of extraordinary 
public financial support. 

Member  States  shall  require  that  pre-emptive  recovery  plans  contain  all  of  the 
following: 

(a) 

a summary of key elements of the plan, including material changes to the most 
recently filed plan; 

(b) 

a description of the undertaking or the group; 

(c) 

(d) 

(e) 

(f) 

a framework of indicators referred to in paragraph 8; 

a description of how the pre-emptive recovery plan has been drawn-up, how it 
will be updated and how it will be applied; 

a range of remedial actions; 

a communication strategy. 

Member States shall require that insurance and reinsurance undertakings as referred 
to in paragraph 1 assess the credibility and feasibility of pre-emptive recovery plans, 
in particular the framework of indicators referred to in paragraph 8 and the remedial 
actions,  against  a  range  of  scenarios  of  severe  macroeconomic  and  financial  stress 
relevant to the insurance or reinsurance undertaking’s specific conditions, including 
system-wide events, idiosyncratic stress events likely to materially affect their asset 
and liability profile, and combinations of such stress events. 

3. 

4. 

5. 

6. 

7. 

8. 

EN 

43 

  EN 

9. 

10. 

11. 

12. 

Member States shall require that insurance and reinsurance undertakings ensure that 
their pre-emptive recovery plans contain a framework of qualitative and quantitative 
indicators  that  identify  the  points  at  which  remedial  actions  should  be  considered. 
Those  indicators  may  include  criteria  relating  to,  inter  alia,  capital,  liquidity,  asset 
quality, profitability, market conditions, macro-economic conditions and operational 
events.  Indicators  relating  to  the  capital  position  shall  as  a  minimum  contain  any 
breach of the Solvency Capital Requirement laid down in Title I, Chapter VI, Section 
4, of Directive 2009/138/EC. 

Member  States  shall  require  that  supervisory  authorities  ensure  that  insurance  and 
reinsurance  undertakings  put  in  place  appropriate  arrangements  for  the  regular 
monitoring of the indicators referred to in the first subparagraph. 

An insurance or reinsurance undertaking as referred to in paragraph 1 that decides to 
take  a  remedial  action  contained  in  the  pre-emptive  recovery  plan  or  decides  to 
refrain  from taking such remedial action  although an indicator as referred to  in  the 
first  subparagraph  has  been  met,  shall  notify  such  decision  to  the  supervisory 
authority without delay. 

The  administrative,  management  or  supervisory  body  of  an  insurance  and 
reinsurance  undertaking  as  referred  to  in  paragraph  1  shall  assess  and  approve  the 
pre-emptive  recovery  plan  before  submitting  it  to  the  supervisory  authority  for 
review. 

EIOPA  shall,  by  [PO  –  add  18  months  after  entry  into  force],  issue  guidelines  in 
accordance with Article 16 of Regulation (EU) No 1094/2010 to specify further the 
minimum  list  of  qualitative  and  quantitative  indicators  referred  to  in  paragraph  7, 
first  subparagraph,  point  (c)  and,  in  cooperation  with  the  European  Systemic  Risk 
Board (ESRB), the range of scenarios referred to in paragraph 8. 

EIOPA shall develop draft regulatory technical standards further specifying, without 
prejudice to Article 4, the information that an insurance or reinsurance undertaking 
as referred to in paragraph 1 is to include in the pre-emptive recovery plan, including 
the remedial actions referred to in paragraph 7, first subparagraph, point (e) and their 
implementation. 

EIOPA shall submit those draft regulatory technical standards to the Commission by 
[PO – add 18 months after entry into force]. 

Power  is  delegated  to  the  Commission  to  adopt  the  regulatory  technical  standards 
referred  to  in  the  first  subparagraph  in  accordance  with  Articles  10  to  14  of 
Regulation (EU) No 1094/2010. 

Article 6 

Review and assessment by supervisory authorities of pre-emptive recovery plans 

1. 

Supervisory  authorities  shall,  within  six  months  of  the  submission  of  each  pre-
emptive recovery plan as referred to in Article 5 and Article 7, review that plan and 
assess  the  extent  to  which  it  satisfies  the  requirements  laid  down  in  Article  5  and, 
where applicable, Article 7, and all of the following : 

(a)  whether  the  implementation  of  the  arrangements  proposed  in  the  plan  is 
reasonably likely  to  maintain or restore the viability and financial position of 
the insurance or reinsurance undertaking or of the group; 

EN 

44 

  EN 

2. 

3. 

4. 

5. 

(b)  whether the plan and specific options within the plan are reasonably likely to 
be implemented quickly and effectively in situations of financial stress; 

(c)  whether the plan and specific options within the plan are reasonably likely to 
avoid  to  the  maximum  extent  possible  any  significant  adverse  effect  on  the 
financial system, including in scenarios which would lead other insurance and 
reinsurance  undertakings  to  implement  pre-emptive  recovery  plans  within  the 
same period. 

Supervisory  authorities  shall  provide  resolution  authorities  with  all  pre-emptive 
recovery  plans  they  have  received.  Resolution  authorities  may  examine  the  pre-
emptive recovery plan to identify any actions in the pre-emptive recovery plan which 
may adversely impact the resolvability of the insurance or reinsurance undertakings 
concerned  and  make  recommendations  to  the  supervisory  authority  with  regard  to 
those matters. 

Where  an  insurance  or  reinsurance  undertaking  carries  out  significant  cross-border 
activities,  the  home  supervisory  authority  shall,  upon  the  request  of  a  host 
supervisory authority, provide the pre-emptive recovery plan to that host supervisory 
authority. The host supervisory authority may examine the pre-emptive recovery plan 
to identify any actions in the pre-emptive recovery plan which may adversely impact 
policy  holders,  the  real  economy  or  the  financial  stability  in  its  Member  State  and 
make  recommendations  to  the  home  supervisory  authority  with  regard  to  those 
matters. 

Supervisory  authorities  that,  after  having  assessed  the  pre-emptive  recovery  plan, 
conclude that there are material deficiencies in that plan, or material impediments to 
its implementation  shall notify the insurance or reinsurance undertaking concerned, 
or the ultimate parent undertaking concerned, of the content of their assessment and 
require  the  undertaking  concerned  to  submit,  within  two  months,  a  revised  plan 
demonstrating  how  those  deficiencies  or  impediments  are  addressed.  The  period  of 
two  months  may  be  extended  by  one  month  where  the  supervisory  authority  so 
agrees. 

Before requiring an insurance or reinsurance undertaking to resubmit a pre-emptive 
recovery plan, the supervisory authority shall give the undertaking the opportunity to 
state its opinion on that requirement. 

A  supervisory  authority  that  finds  that  the  deficiencies  and  impediments  have  not 
been adequately addressed in the revised plan may instruct the undertaking to make 
specific changes to the plan. 

Where the insurance or reinsurance undertaking fails to submit a revised pre-emptive 
recovery  plan,  or  where  the  supervisory  authority  comes  to  the  conclusion  that  the 
revised  pre-emptive  recovery  plan  does  not  adequately  remedy  the  deficiencies  or 
potential  impediments  identified  in  its  original  assessment,  and  where  it  is  not 
possible to adequately remedy the deficiencies or impediments through a direction to 
make  specific  changes  to  the  plan,  the  supervisory  authority  shall  require  the 
undertaking  to  identify  within  a  reasonable  timeframe  changes  the  undertaking  can 
make to its business in order to address the deficiencies in the pre-emptive recovery 
plan or impediments to the implementation of that plan. 

Where the insurance or reinsurance undertaking fails to identify such changes within 
the  timeframe  set  by  the  supervisory  authority,  or  where  the  supervisory  authority 
concludes that the actions proposed by the undertaking would not adequately address 

EN 

45 

  EN 

the  deficiencies  or  impediments,  the  supervisory  authority  may  take  a  reasoned 
decision to direct the undertaking to take any measures it considers to be necessary 
and  proportionate,  taking  into  account  the  seriousness  of  the  deficiencies  and 
impediments and the effect of the measures on the undertaking’s business. 

The  reasoned  decision  referred  to  in  the  second  subparagraph  shall  be  notified  in 
writing to the insurance or reinsurance undertaking and shall be subject to a right of 
appeal. 

Article 7 

Group pre-emptive recovery plans 

1. 

Member States shall ensure that ultimate parent undertakings draw up and submit to 
the group supervisor a group pre-emptive recovery plan. 

2. 

3. 

4. 

Group  pre-emptive  recovery  plans  shall  consist  of  a  pre-emptive  recovery  plan  for 
the  group  headed  by  the  ultimate  parent  undertaking.  The  group  pre-emptive 
recovery plan shall identify remedial actions that may be required to be implemented 
at the level of that ultimate parent undertaking and individual subsidiaries. 

The  group  pre-emptive  recovery  plan  contain  remedial  actions  to  achieve  the 
stabilisation  of  the  group,  or  of  any  insurance  or  reinsurance  undertaking  of  the 
group,  when  the  group  or  any  of  its  insurance  or  reinsurance  undertakings  is  in  a 
situation of stress so as to address or remove the causes of the distress and restore the 
financial position of the group or the undertaking that is part of the group in question, 
at the same time taking into account the financial position of other group entities. 

The  group  pre-emptive  recovery  plan  shall  contain  arrangements  to  ensure  the 
coordination and consistency of proportionate measures to be taken at the level of the 
group and the group entities. 

The  group  pre-emptive  recovery  plan,  and  any  plan  drawn  up  for  an  individual 
subsidiary insurance or reinsurance undertaking, shall contain the elements specified 
in Article 5. 

The group pre-emptive recovery plan shall identify whether there are obstacles to the 
implementation  of  remedial  actions  within  the  group,  including  at  the  level  of 
individual entities covered by the plan, and whether there are substantial practical or 
legal impediments to the prompt transfer of own funds or the repayment of liabilities 
or assets within the group. 

Supervisory authorities may require subsidiary insurance or reinsurance undertakings 
or the entities referred to  in  Article 1(1), points (c) and (d), to  draw up  and submit 
pre-emptive recovery plans in the following situations: 

(a) 

(b) 

no group pre-emptive recovery plan exists; 

the  supervisory  authority  concerned  demonstrates  that  the  concerned  entity  is 
not sufficiently considered by a group pre-emptive recovery plan in light of the 
significance  of  the  entity  in  question  in  the  Member  State  concerned  and  in 
light of the obligations that comparable undertakings in that Member State are 
subject to. 

5. 

The group supervisor shall, provided that the confidentiality requirements laid down 
in Articles 64 are in place, transmit the group pre-emptive recovery plans to: 

EN 

46 

  EN 

(a)  EIOPA; 

(b) 

the relevant supervisory authorities which are members of or participate in the 
supervisory college as referred to in Article 248(3) of Directive 2009/138/EC; 

(c) 

the group resolution authority; 

(d) 

the resolution authorities of the subsidiaries. 

6. 

The  administrative,  management  or  supervisory  body  of  the  entity  drawing  up  the 
group pre-emptive recovery plan pursuant to paragraph 1 or paragraph 4 shall assess 
and  approve  the  group  pre-emptive  recovery  plan  before  submitting  it  to  the  group 
supervisor for review. 

Article 8 

Review and assessment by the group supervisor of group pre-emptive recovery plans 

1. 

The  group  supervisor  shall,  after  having  consulted  the  relevant  supervisory 
authorities which are members of or participate in the supervisory college as referred 
to  in  Article  248(3)  of  Directive  2009/138/EC,  review  the  group  pre-emptive 
recovery plan and assess the extent to which it satisfies the requirements and criteria 
laid down in Articles 6 and this Article. That assessment shall be made in accordance 
with the procedure established in Article 6 and with this Article and shall take into 
account  the  potential  impact  of  the  remedial  actions  on  policy  holders,  the  real 
economy and financial stability in all the Member States where the group operates. 

2. 

The  group  supervisor  shall  endeavour  to  reach  a  joint  decision,  as  referred  to  in 
Article 17, within the college of supervisors on: 

(a) 

the review and assessment of the group pre-emptive recovery plan and whether 
a  recovery  plan  on  an  individual  basis  is  to  be  drawn  up  for  insurance  and 
reinsurance  undertakings  that  are  part  of  the  group,  as  laid  down  in  Article 
7(3); 

(b) 

the application of the measures referred to in Article 6, paragraphs (3) and (4). 

SECTION 3 
RESOLUTION PLANNING 

Article 9 

Resolution plans 

1. 

2. 

Member  States  shall  ensure  that  resolution  authorities,  after  having  consulted  the 
supervisory authority, draw up a resolution plan for each insurance and reinsurance 
undertaking  that  meets  the  criteria  laid  down  in  paragraph  2,  that  is  not  part  of  a 
group subject  to  resolution  planning pursuant  to  Articles 10 and 11. The  resolution 
plan shall provide for the resolution actions which the resolution authority may take 
where  the  insurance  or  reinsurance  undertaking  meets  the  conditions  for  resolution 
referred to in Article 19(1) or Article 20(3). 

Resolution  authorities  shall  draw  up  resolution  plans  for  insurance  and  reinsurance 
undertakings  to  be  selected  on  the  basis  of  their  size,  business  model,  risk  profile, 
interconnectedness,  substitutability  and  the  likely  impact  of  the  failure  on  policy 

EN 

47 

  EN 

holders.  When  selecting  the  insurance  and  reinsurance  undertakings  subject  to 
resolution planning, the resolution authority shall in particular take into account the 
cross-border activity of the insurance or reinsurance undertaking and the existence of 
critical functions. 

Resolution authorities shall ensure that at least 70% of the Member State’s life and 
non-life  and  reinsurance  market  respectively,  where  the  non-life  market  share  is 
based  on  gross  written  premiums  and  the  life  market  share  is  based  on  gross 
technical provisions, shall be subject to resolution planning. In the calculation of the 
market coverage level, the subsidiaries of a group may be taken into account where 
those subsidiaries are covered in the group resolution plan referred to in Article 10. 

Low  risk  profile  undertakings  shall  not  be  subject  to  resolution  planning 
requirements on an individual basis. 

Where  the  insurance  or  reinsurance  undertaking  concerned  carries  out  significant 
cross-border activities, home resolution authorities shall, upon the request of a host 
supervisory  or  resolution  authority,  provide  the  draft  resolution  plan  to  that  host 
supervisory or resolution authority. The host supervisory or resolution authority may 
examine the draft resolution plan to identify any actions in the draft resolution plan 
which  may  adversely  impact  policy  holders,  the  real  economy  or  the  financial 
stability  in  its  Member  State  and  make  recommendations  to  the  home  resolution 
authority with regard to those matters. 

When  specifying  the  options  for  application  of  resolution  tools  and  powers, 
resolution plans shall take into consideration relevant resolution scenarios, including 
the  scenario  where  the  failure  of  the  insurance  and  reinsurance  undertaking  is 
idiosyncratic  or  occurs  at  a  time  of  broader  financial  instability  or  system  wide 
events.  

Resolution plans shall not assume any extraordinary public financial support besides, 
where  available,  the  use  of  insurance  guarantee  schemes  or  of  any  financing 
arrangements. 

Resolution authorities shall review, and where necessary update, resolution plans at 
least annually and after any material change to the legal or organisational structure of 
the  insurance  or  reinsurance  undertaking  or  to  its  business  or  its  financial  position 
that  could  have  a  material  effect  on  the  effectiveness  of  the  plan  or  otherwise 
necessitate a revision of the resolution plan. 

Insurance  and  reinsurance  undertakings  and  supervisory  authorities  shall  promptly 
communicate  to  the  resolution  authorities  any  event  that  necessitates  a  revision  or 
update of the resolution plan.  

Without prejudice to Article 4, resolution plans shall set out options for applying the 
resolution  tools  and  resolution  powers  to  the  insurance  or  reinsurance  undertaking. 
Resolution plans shall contain, quantified whenever appropriate and possible, all of 
the following: 

(a) 

(b) 

(c) 

a summary of the key elements of the plan; 

a summary of the material changes to the undertaking that have occurred after 
the latest resolution-related information was filed; 

a  demonstration  of  how  critical  functions  and  core  business  lines  could  be 
legally  and  economically  separated,  to  the  extent  necessary,  from  other 
functions so as to ensure continuity upon the failure of the undertaking; 

3. 

4. 

5. 

6. 

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48 

  EN 

(d) 

(e) 

(f) 

(g) 

(h) 

(i) 

(j) 

(k) 

an  identification  of  those  assets  which  would  be  expected  to  qualify  as 
collateral; 

an estimation of the timeframe for executing each material aspect of the plan; 

a  detailed  description  of  the  assessment  of  resolvability  carried  out  in 
accordance with Article 13; 

a  description  of  any  measures  required  pursuant  to  Article  15  to  address  or 
remove  impediments  to  resolvability  identified  as  a  result  of  the  assessment 
carried out in accordance with Article 13; 

an explanation as to how the resolution options could be financed without the 
assumption  of  any  extraordinary  public  financial  support  besides,  where 
available,  the  use  of  insurance  guarantee  schemes  or  of  any  financing 
arrangements; 

a detailed description of the different resolution strategies that could be applied 
in light of the different possible scenarios and the applicable timescales; 

a description of critical interdependencies; 

an  analysis  of  the  impact  of  the  resolution  plan  on  the  employees  of  the 
undertaking, including an assessment of any associated costs, and a description 
of  envisaged  procedures  to  consult  staff  during  the  resolution  process,  taking 
into  account  national  systems  for  dialogue  with  social  partners  where 
applicable; 

(l) 

a plan for communicating with the media and the public; 

(m)  a description of essential operations and systems necessary for maintaining the 

continuous functioning of the undertaking’s operational processes; 

(n)  where applicable, any opinion expressed by the  undertaking in  relation  to  the 

resolution plan. 

Information  referred  to  in  point  (a)  shall  be  disclosed  to  the  insurance  and 
reinsurance undertaking concerned. 

The resolution authority shall transmit the resolution plans and any changes thereto 
to the supervisory authorities concerned. 

EIOPA shall develop draft regulatory technical standards further specifying, without 
prejudice to Article 4, the contents of the resolution plan. 

EIOPA shall submit those draft regulatory technical standards to the Commission by 
[PO – add 18 months after entry into force]. 

Power  is  delegated  to  the  Commission  to  adopt  the  regulatory  technical  standards 
referred  to  in  the  first  subparagraph  in  accordance  with  Articles  10  to  14  of 
Regulation (EU) No 1094/2010. 

EIOPA  shall,  by  [PO  –  add  18  months  after  entry  into  force],  issue  guidelines  in 
accordance  with  Article  16  of  Regulation  (EU)  No  1094/2010  to  specify  further 
criteria for the identification of critical functions. 

7. 

8. 

9. 

EN 

49 

  EN 

1. 

2. 

3. 

4. 

1. 

Article 10 

Group resolution plans 

Member  States  shall  ensure  that  group  resolution  authorities  draw  up  group 
resolution plans. 

The group resolution plan shall: 

(a) 

(b) 

set out the resolution actions that are to be taken in respect of each entity where 
measures will be necessary to ensure the continuity of critical functions; 

examine  the  extent  to  which  the  resolution  tools  referred  to  in  Article  26(3) 
could be applied and the resolution powers exercised in a coordinated manner 
and identify any potential impediments to a coordinated resolution; 

(c)  where  a  group  contains  entities  incorporated  in  third  countries,  identify 
appropriate  arrangements  for  cooperation  and  coordination  with  the  relevant 
authorities  of  those  third  countries  and  the  implications  for  resolution  within 
the Union; 

(d) 

(e) 

identify  measures,  including  the  legal  and  economic  separation  of  particular 
functions  or  business  lines,  that  are  necessary  to  facilitate  group  resolution, 
taking into account intra-group interdependencies; 

identify  available  sources  of  funding  to  finance  the  group  resolution  actions 
and,  where  the  use  of  insurance  guarantee  schemes  or  of  any  financing 
arrangement would be required, set out principles for sharing responsibility for 
that  financing  between  sources  of  funding  in  different  Member  States.  The 
group  resolution  plan  shall  not  assume  any  extraordinary  public  financial 
support; 

(f) 

contain the elements laid down in Article 9(6). 

The group resolution authority shall transmit group resolution plans and any changes 
thereto to the supervisory authorities concerned. 

EIOPA shall develop draft regulatory technical standards specifying the contents of 
group resolution plans, taking into account the diversity of business models of groups 
in the internal market. 

EIOPA shall submit those draft regulatory technical standards to the Commission by 
[PO – add 18 months after entry into force]. 

Power  is  delegated  to  the  Commission  to  adopt  the  regulatory  technical  standards 
referred  to  in  the  first  subparagraph  in  accordance  with  Articles  10  to  14  of 
Regulation (EU) No 1094/2010. 

Article 11 

Requirements and procedure for group resolution plans 

Member  States  shall  ensure  that  ultimate  parent  undertakings  shall  submit  to  the 
group resolution authority the information that may be required by Article 12. That 
information shall concern the ultimate parent undertaking and to the extent required 
each of the group entities including the entities referred to in Article 1(1), points (b) 
to (e). 

EN 

50 

  EN 

The  group  resolution  authority  shall,  provided  that  the  confidentiality  requirements 
laid down in this Directive are in place, transmit the relevant information provided in 
accordance with this paragraph to: 

(a)  EIOPA; 

(b) 

the resolution authorities which are members of the resolution college; 

(c) 

the relevant supervisory authorities which are members of or participate in the 
supervisory college as referred to in Article 248(3) of Directive 2009/138/EC. 

Member States shall ensure that in resolution colleges, group resolution authorities, 
acting  jointly  with  the  resolution  authorities  referred  to  in  paragraph  1,  second 
subparagraph,  point  (b),  and  after  having  consulted  the  supervisory  authorities 
concerned which are members of or participate in the supervisory college as referred 
to  in  Article  248(3)  of  Directive  2009/138/EC,  draw  up  and  maintain  group 
resolution plans. Group resolution authorities may, at their discretion, and subject to 
them  meeting  the  confidentiality  requirements  laid  down  in  Article  77  of  this 
Directive, involve in the drawing up and maintenance of group resolution plans third-
country  resolution  authorities  of  jurisdictions  in  which  the  group  has  established 
subsidiary insurance or reinsurance undertakings or insurance holding companies or 
significant branches. 

Member  States  shall  ensure  that  group  resolution  plans  are  reviewed,  and  where 
appropriate  updated,  at  least  annually,  and  after  any  change  to  the  legal  or 
organisational  structure,  to  the  business  or  to  the  financial  position  of  the  group 
including any group entity, that could have a material effect on or require a change to 
the plan. 

The adoption of the group resolution plan shall take the form of a joint decision, as 
referred  to  in  Article  17,  of  the  group  resolution  authority  and  the  resolution 
authorities  of  the  subsidiary  insurance  and  reinsurance  undertakings  and  of  the 
entities referred to in Article 1(1), points (b) to (e). 

Article 12 

2. 

3. 

4. 

Information for the purpose of resolution plans and cooperation from the insurance or 
reinsurance undertaking 

1. 

2. 

Member  States  shall  ensure  that  resolution  authorities  have  the  power  to  require 
insurance  and  reinsurance  undertakings  or  the  ultimate  parent  undertaking,  as 
applicable, to: 

(a) 

cooperate as much as necessary in the drawing up of resolution plans or group 
resolution plans; 

(b)  provide  them,  either  directly  or  through  the  supervisory  authority,  with  all  of 
the information necessary to draw up and implement resolution plans or group 
resolution plans. 

Supervisory  authorities  in  the  Member  States  concerned  shall  cooperate  with 
resolution authorities to verify whether some or all of the information referred to in 
paragraph 1 is already available and shall provide that information to those resolution 
authorities.  Resolution  authorities  shall  obtain  all  relevant  information  from 
supervisory authorities before requesting information from insurance and reinsurance 
undertakings. 

EN 

51 

  EN 

3. 

EIOPA  shall  develop  draft  implementing  technical  standards  to  specify  procedures 
and  a  minimum  set  of  standard  forms  and  templates  for  the  provision  of  the 
information referred to in this Article, and to specify the content of such information. 

EIOPA shall submit those draft implementing technical standards to the Commission 
by [PO – add 18 months after entry into force]. 

Power is conferred on the Commission to adopt the implementing technical standards 
referred to in the first subparagraph in accordance with Article 15 of Regulation (EU) 
No 1094/2010. 

CHAPTER II 
Resolvability 

Article 13 

Assessment of resolvability 

1. 

2. 

3. 

Member  States  shall  ensure  that  resolution  authorities,  after  having  consulted  the 
supervisory  authority,  assess  the  extent  to  which  insurance  or  reinsurance 
undertakings  that  are  not  part  of  a  group  are  resolvable  without  the  assumption  of 
any  extraordinary  public  financial  support  besides,  where  available,  the  use  of 
insurance guarantee schemes or of any financing arrangements. 

An  insurance  or  reinsurance  undertaking  shall  be  deemed  resolvable  where  it  is 
feasible  and credible for that undertaking to  be liquidated under normal  insolvency 
proceedings, or for the resolution authority to resolve that undertaking by applying to 
it  the  different  resolution  tools  referred  to  in  Article  26(3)  and  resolution  powers 
referred to in Articles 40 to 52. 

Resolution  authorities  shall  make  the  resolvability  assessment  referred  to  in 
paragraph  1  at  the  same  time  as,  and  for  the  purposes  of,  the  drawing  up  and 
updating of the resolution plan in accordance with Article 9. 

EIOPA shall develop draft regulatory technical standards to specify the matters and 
criteria  for  the  assessment  of  the  resolvability  of  insurance  and  reinsurance 
undertakings or groups provided for in paragraph 1 and in Article 14. 

EIOPA shall submit those draft regulatory technical standards to the Commission by 
[PO – add 18 months after entry into force]. 

Power  is  conferred  on  the  Commission  to  adopt  the  draft  regulatory  technical 
standards referred to in the first subparagraph in accordance with Articles 10 to 14 of 
Regulation (EU) No 1094/2010. 

Article 14 

Assessment of resolvability for groups 

1. 

Member  States  shall  ensure  that  group  resolution  authorities,  together  with  the 
resolution authorities of subsidiaries, after having consulted the group supervisor and 
the supervisory authorities of such subsidiaries, assess the extent to which groups are 
resolvable  without  the  assumption  of  any  extraordinary  public  financial  support 

EN 

52 

  EN 

2. 

3. 

1. 

2. 

3. 

4. 

besides, where available, the use of insurance guarantee schemes or of any financing 
arrangements. 

A  group  shall  be  deemed  resolvable  where  it  is  feasible  and  credible  for  the 
resolution  authorities  either  to  wind  up  group  entities  under  normal  insolvency 
proceedings,  to  resolve  that  group  by  applying  resolution  tools  to,  and  exercising 
resolution powers with respect to, group entities where they can be easily separated 
in a timely manner, or by any other means provided for under national law. 

The  resolution  colleges  referred  to  in  Article  68  shall  take  into  account  the 
assessment of group resolvability when discharging their functions. 

Group resolution authorities shall make the resolvability assessment of groups at the 
same  time  as,  and  for  the  purposes  of,  the  drawing  up  and  updating  of  the  group 
resolution plans in accordance with Article 10. The assessment shall be made under 
the decision-making procedure laid down in Article 11. 

Article 15 

Power to address or remove impediments to resolvability 

Member States shall ensure that where the assessment carried out in accordance with 
Articles 13 or 14 reveals that there are substantive impediments to the resolvability 
of the insurance or reinsurance undertaking concerned, the resolution authority shall 
notify  that  insurance  or  reinsurance  undertaking  and  the  supervisory  authority 
concerned thereof in writing. 

The  requirement  for  resolution  authorities  to  draw  up  resolution  plans  and  for  the 
relevant resolution authorities to reach a joint decision in accordance with Article 17 
on  group  resolution  plans  referred  to  in  Article  9(1)  and  Article  11(4)  respectively 
shall be suspended following the notification referred to in paragraph 1 of this Article 
until the measures to remove the substantive impediments to resolvability have been 
accepted  by  the  resolution  authority  pursuant  to  paragraph  3  of  this  Article  or 
decided upon pursuant to paragraph 4 of this Article. 

Within four months of the date of receipt of a notification referred to in paragraph 1, 
the  insurance  or  reinsurance  undertaking  shall  propose  to  the  resolution  authority 
possible measures to address or remove the substantive impediments identified in the 
notification. 

The  timeline  for  the  implementation  of  the  measures  referred  to  in  the  first 
subparagraph  prepared  by  the  undertaking  concerned  shall  take  into  account  the 
reasons for the substantive impediment. 

The  resolution  authority,  after  having  consulted  the  supervisory  authority,  shall 
assess whether the measures referred to in the first subparagraph effectively address 
or remove the substantive impediment concerned. 

Resolution  authorities  that  find  that  the  measures  proposed  by  an  insurance  or 
reinsurance undertaking  in  accordance  with  paragraph 3, first  subparagraph, do not 
effectively  reduce  or  remove  the  impediments  concerned,  shall,  either  directly,  or 
indirectly  through  the  supervisory  authority,  require  the  insurance  or  reinsurance 
undertaking  concerned  to  take  any  of  the  alternative  measures  referred  to  in 
paragraph 5, and notify such measures in writing to that entity, which shall propose a 

EN 

53 

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plan to comply with those requirements within one month after having received such 
notification. 

When identifying alternative measures, resolution authorities shall demonstrate how 
the  measures  proposed  by  the  insurance  or  reinsurance  undertaking  would  not  be 
able  to  remove  the  impediments  to  resolvability  and  how  the  alternative  measures 
proposed  are  proportionate  in  removing  those  impediments.  Resolution  authorities 
shall take into account the effect of the measures on the business of the insurance or 
reinsurance undertaking, its stability and its ability to contribute to the economy. 

5. 

The alternative measures referred to in paragraph 4 shall be any of the following: 

(a) 

(b) 

(c) 

(d) 

(e) 

(f) 

(g) 

(h) 

require  the  insurance  or  reinsurance  undertaking  to  revise  any  intra-group 
financing  agreements  or  review  the  absence  thereof,  or  draw  up  service 
agreements, whether intra-group or with third parties; 

require  the  insurance  or  reinsurance  undertaking  to  limit  its  maximum 
individual and aggregate exposures; 

impose  specific  or  regular  additional  information  requirements  relevant  for 
resolution purposes; 

require the insurance or reinsurance undertaking to divest specific assets or to 
restructure liabilities; 

require  the  insurance  or  reinsurance  undertaking  to  limit  or  cease  specific 
existing or proposed activities; 

restrict or prevent the development of new or existing business lines or sale of 
new or existing products; 

require  the  insurance  or  reinsurance  undertaking  to  change  the  reinsurance 
strategy; 

require  changes  to  legal  or  operational  structures  of  the  insurance  or 
reinsurance undertaking or any group entity, either directly or indirectly under 
its control, so as to reduce complexity to ensure that critical functions may be 
legally  and  operationally  separated  from  other  functions 
the 
application of the resolution tools; 

through 

(i) 

require an insurance or reinsurance undertaking or a parent undertaking to set 
up a parent  insurance holding company in  a Member State or a Union parent 
insurance holding company; 

(j)  where  an  insurance  or  reinsurance  undertaking  is  the  subsidiary  of  a  mixed-
activity  insurance  holding  company,  require  that  the  mixed-activity  insurance 
holding company sets up a separate insurance holding company to control the 
insurance  or  reinsurance  undertaking,  where  necessary  to  facilitate  the 
resolution  of  the  insurance  or  reinsurance  undertaking  and  to  avoid  that  the 
application  of  resolution  tools  and  the  exercise  of  resolution  powers  has  an 
adverse effect on the non-financial part of the group. 

6. 

Before identifying any alternative measure referred to in paragraph 5, the resolution 
authority,  after  having  consulted  the  supervisory  authority,  shall  duly  consider  the 
potential  effect  of  such  measure  on  the  soundness  and  stability  of  that  particular 
insurance or reinsurance undertaking’s ongoing business and on the internal market. 

7. 

A notification or decision made pursuant to paragraph 1 or 4: 

EN 

54 

  EN 

8. 

1. 

2. 

3. 

4. 

(a) 

(b) 

shall contain the reasons for the assessment or determination in question; 

shall  indicate  how  the  notification  or  decision  complies  with  the  requirement 
for proportionate application laid down in paragraph 4, second subparagraph; 

(c) 

shall be subject to a right of appeal. 

EIOPA  shall,  by  [PO  –  add  18  months  after  entry  into  force],  issue  guidelines  in 
accordance  with  Article  16  of  Regulation  (EU)  No  1094/2010  to  specify  further 
details on the measures provided for in paragraph 5 and the circumstances in which 
each measure may be applied. 

Article 16 

Power to address or remove impediments to resolvability: group treatment 

A group resolution authority, together with the resolution authorities of subsidiaries, 
after having consulted the supervisory college, shall consider the assessment referred 
to  in  Article  14  within  the  resolution  college  and  shall  take  all  reasonable  steps  to 
reach  a  joint  decision  as  referred  to  in  Article  17  on  the  application  of  measures 
identified in accordance with Article 15(4) in relation to all relevant group entities. 

The  group  resolution  authority,  in  cooperation  with  the  group  supervisor  and  with 
EIOPA,  in  accordance  with  Article  25(1)  of  Regulation  (EU)  No  1094/2010,  shall 
prepare and submit a report to the ultimate parent undertaking and to the resolution 
authorities of subsidiaries, which shall provide that report to the subsidiaries within 
their  remit.  The  report  shall  be  prepared  after  having  consulted  the  supervisory 
authorities, and shall analyse the substantive impediments to the effective application 
of the resolution tools referred to in Article 26(3) and the exercise of the resolution 
powers  referred  to  in  Articles  40  to  52  in  relation  to  the  group.  The  report  shall 
recommend  any proportionate and targeted measures that, in  the view of the  group 
resolution  authority,  are  necessary  or  appropriate  to  remove  those  impediments, 
considering the impact of those measures on the group's business model. 

Within  four  months  of  the  date  of  receipt  of  the  report,  the  ultimate  parent 
undertaking may submit observations and propose to the group resolution authority 
alternative measures to remedy the impediments identified in the report. 

The  resolution  authority,  after  having  consulted  the  supervisory  authority,  shall 
assess  whether  those  measures  effectively  address  or  remove  the  substantive 
impediment. 

The  group  resolution  authority  shall  communicate  any  measure  proposed  by  the 
ultimate  parent  undertaking  to  the  authorities  that  are  members  of  or  participate  in 
the resolution college. The group resolution authorities and the resolution authorities 
of  the  subsidiaries,  after  having  consulted  the  supervisory  authorities,  shall  do 
everything within their power to reach a joint decision, as referred to in Article 17, 
within the resolution college regarding the identification of substantive impediments, 
and  where  necessary,  regarding  the  assessment  of  the  measures  proposed  by  the 
ultimate parent undertaking and the measures required by the authorities in order to 
address or remove the impediments. When doing so, they shall take into account the 
potential impact of the measures in all Member States where the group operates. 

EN 

55 

  EN 

CHAPTER III 
Joint decisions 

Article 17 

Joint decisions 

1. 

Group  supervisors,  supervisory  authorities,  group  resolution  authorities  and 
resolution  authorities  shall  endeavour  to  reach  the  joint  decisions  referred  to  in 
Article  8(2),  Article  11(4)  and  Article  16(4),  as  applicable,  within  4  months  of  the 
date of: 

(a) 

(b) 

(c) 

the  transmission  by  the  group  supervisor  of  the  group  pre-emptive  recovery 
plan in accordance with Article 7(4); 

the transmission by the  group  resolution  authority  of the information  referred 
to in the Article 11(1), second subparagraph; 

the submission of any observations by the ultimate parent undertaking or at the 
expiry  of  the  four-month  period  referred  to  in  Article  16(3),  whichever  the 
earlier. 

EIOPA may, at the request of a supervisory authority or a resolution authority, assist 
the  group  supervisors,  supervisory  authorities,  group  resolution  authorities  and 
resolution  authorities  in  reaching  a  joint  decision  in  accordance  with  Article  31(2), 
point (c), of Regulation (EU) No 1094/2010. 

2. 

In the absence of a joint decision within the period referred to in paragraph 1 on any 
of the matters  listed in  the second subparagraph, the group supervisor or the group 
resolution authority, as applicable, shall make its own decision on those matters. 

The matters referred to in the first subparagraph are the following: 

(a) 

(b) 

the review and assessment of the group pre-emptive recovery plan referred to 
in Article 8; 

any measures the ultimate parent undertaking is required to take in accordance 
with Article 6, paragraphs 3 and 4; 

(c) 

the group resolution plan referred to in Article 10; 

(d) 

the measures referred to in Article 16. 

The  decision  made  by  the  group  supervisor  or  the  group  resolution  authority,  as 
applicable,  shall  be  fully  reasoned  and  shall  take  into  account  the  views  and 
reservations of other supervisory authorities or  resolution  authorities, as applicable, 
expressed  during  the  four-month  period.  The  decision  shall  be  provided  to  the 
ultimate parent undertaking and to the other authorities concerned. 

3. 

In  the  absence  of  a  joint  decision  within  the  period  referred  to  in  paragraph  1 
between  the  supervisory  authorities  or  resolution  authorities  on  any  of  the  matters 
listed in the second subparagraph, each supervisory authority or resolution authority, 
as applicable, of a subsidiary shall make its own decision on those matters. 

The matters referred to in the first subparagraph are the following: 

EN 

56 

  EN 

(a)  whether  a  recovery  plan  on  an  individual  basis  is  to  be  drawn  up  for  the 
insurance  or  reinsurance  undertakings  under  its  jurisdiction  as  referred  to  in 
Article 8(2); 

(b) 

(c) 

the  application  at  subsidiary  level  of  the  measures  referred  to  in  Article  6, 
paragraphs 3 and 4; 

the  identification  of  the  material  impediments,  and  where  necessary,  the 
assessment  of  the  measures  proposed  by  the  ultimate  parent  undertaking  and 
the  measures  required  by  the  authorities  in  order  to  address  or  remove  the 
impediments, as referred to in Article 16(1). 

In the absence of a joint decision between the resolution authorities on the adoption 
of  the  group  resolution  plan,  as  referred  to  Article  11(4),  within  the  four  month 
period  referred  to  in  paragraph  1,  each  resolution  authority  responsible  for  a 
subsidiary  shall  make  its  own  decision  and  shall  draw  up  and  keep  updated  a 
resolution plan for the entities under its jurisdiction. Each resolution authority shall 
notify its decision to the other members of the resolution college. 

Each  of  the  decisions  of  supervisory  or  resolution  authorities  in  accordance  with 
paragraphs 3 or 4 shall be fully reasoned and shall take into account the views and 
reservations  of  the  other  supervisory  authorities,  resolution  authorities  or  group 
authorities, as applicable. 

The  supervisory  authorities  or  resolution  authorities  that  do  not  disagree  with  a 
decision as referred to in paragraphs 3 and 4 may reach a joint decision on a group 
pre-emptive  recovery  plan  or  group  resolution  plan  covering  group  entities  under 
their jurisdictions.  

Where,  by  the  end  of  the  four-month  period  referred  to  in  paragraph  1,  any  of  the 
supervisory  authorities  or  resolution  authorities  concerned  has  referred  a  matter  to 
EIOPA in accordance with Article 19 of Regulation (EU) No 1094/2010, the group 
supervisor, the group resolution authority, the supervisory authority or the resolution 
authority concerned, as applicable, shall defer its decision under paragraphs 2, 3 and 
4, await any decision that EIOPA may take in accordance with Article 19(3) of that 
Regulation,  and  take  its  decision  in  accordance  with  the  decision  of  EIOPA.  The 
four-month period referred to in paragraph 1 shall be deemed to be the conciliation 
phase as referred to in Article 19(2) of that Regulation. EIOPA shall take its decision 
within  one  month.  The  matter  shall  not  be  referred  to  EIOPA  after  the  end  of  the 
four-month  period  referred  to  in  paragraph  1  or  after  a  joint  decision  has  been 
reached. In the absence of an EIOPA decision within one month after the referral to 
EIOPA was made, the decision of the group supervisor, group resolution  authority, 
supervisory  authority  or  resolution  authority  for  the  group  or  the  subsidiary  at  an 
individual level, as applicable, shall apply. 

The  joint  decision  referred  to  in  Articles  8(2),  Article  11(4),  Article  16(4)  and 
paragraph 6 of this Article and the decisions referred to in paragraphs 2, 3 and 4 of 
this  Article  shall  be  recognised  as  conclusive  and  applied  by  the  other  supervisory 
authorities or resolution authorities concerned in the Member States concerned. 

Where  joint  decisions  are  taken  pursuant  to  Article  11(4)  and,  in  respect  of  group 
resolution plans, paragraph 6 of this Article and where a resolution authority assesses 
that the subject matter of a disagreement regarding group resolution plans impinges 
on the fiscal responsibilities of its Member State, the group resolution authority shall 
initiate a reassessment of the group resolution plan. 

4. 

5. 

6. 

7. 

8. 

9. 

EN 

57 

  EN 

TITLE III 
RESOLUTION 

CHAPTER I 
Resolution objectives, conditions for resolution and general 
principles 

Article 18 

Resolution objectives 

1. 

Member States shall ensure that resolution authorities, when applying the resolution 
tools referred to in Article 26(3) and exercising the resolution powers referred to in 
Articles 40 to 52, have regard to the resolution objectives listed in paragraph 2, and 
choose the tools and powers that best achieve the objectives that are relevant in the 
circumstances of the case. 

2. 

The resolution objectives referred to in paragraph 1 are: 

(a) 

protecting policy holders, beneficiaries and claimants; 

3. 

1. 

(b)  maintaining  financial  stability,  in  particular,  by  preventing  contagion  and  by 

maintaining market discipline; 

(c) 

ensuring the continuity of critical functions; 

(d)  protecting  public  funds  by  minimising  reliance  on  extraordinary  public 

financial support. 

Member States shall ensure that resolution authorities, when pursuing the resolution 
objectives,  seek  to  minimise  the  cost  of  resolution  and  avoid  destruction  of  value 
unless necessary to achieve those resolution objectives. 

The  resolution  objectives  referred  to  in  paragraph  2  are  of  equal  significance,  and 
Member States shall ensure that resolution authorities balance them as appropriate to 
the nature and circumstances of each case. 

Article 19 

Conditions for resolution 

Member  States  shall  ensure  that  resolution  authorities  take  a  resolution  action  in 
relation  to  an  insurance  or  reinsurance  undertaking  only  where  all  of  the  following 
conditions are met: 

(a) 

(b) 

the  supervisory  authority,  after  having  consulted  the  resolution  authority,  or 
subject  to  the  conditions  laid  down  in  paragraph  2,  the  resolution  authority 
after  having  consulted  the  supervisory  authority,  has  determined  that  the 
insurance or reinsurance undertaking is failing or likely to fail; 

there is no reasonable prospect that any alternative private sector measures or 
supervisory  action,  including  preventive  and  corrective  measures,  would 
prevent the failure of the undertaking within a reasonable timeframe; 

EN 

58 

  EN 

2. 

3. 

(c) 

resolution action is necessary in the public interest. 

Member  States  shall  provide  that  resolution  authorities,  after  having  consulted  the 
supervisory  authority,  have  the  necessary  tools  for  making  the  determination  under 
paragraph  1,  point  (a)  including,  in  particular,  adequate  access  to  any  relevant 
information. The supervisory authority shall provide the resolution authority without 
delay  with  any  relevant  information  that  the  latter  requests  in  order  to  perform  its 
assessment. 

For the purposes of paragraph 1, point (a), an insurance or reinsurance undertaking 
shall be failing or likely to fail in any of the following circumstances: 

(a) 

(b) 

(c) 

the insurance or reinsurance undertaking is in breach or likely to be in breach 
of the Minimum Capital Requirement referred to in Title I, Chapter VI, Section 
5, of Directive 2009/138/EC and there is no reasonable prospect of compliance 
being restored; 

the  insurance  or  reinsurance  undertaking  no  longer  fulfils  the  conditions  for 
authorisation or fails seriously in its obligations under the laws and regulations 
to  which  it  is  subject,  or  there  are  objective  elements  to  support  that  the 
undertaking will, in the near future, seriously fail its obligations in a way that 
would justify the withdrawal of the authorisation; 

the  insurance  or  reinsurance  undertaking  is  unable  to  pay  its  debts  or  other 
liabilities,  including  payments  to  policy  holders  or  beneficiaries,  as  they  fall 
due,  or  there  are  objective  elements  to  support  a  determination  that  the 
undertaking will, in the near future, be in such a situation; 

(d) 

extraordinary public financial support is required. 

4. 

For the purposes of paragraph 1, point (c), a resolution action shall be in the public 
interest where such action is necessary for the achievement of, and is proportionate 
to, one or more of the resolution objectives listed in Article 18(2) and winding up the 
institution under normal insolvency proceedings would not meet those objectives to 
the same extent. 

Article 20 

Conditions for resolution with regard to parent undertakings and holding companies 

1. 

2. 

3. 

Member States shall ensure that resolution authorities may take resolution action in 
relation  to  an  entity  referred  to  in  Article  1(1),  points  (b)  to  (e),  where  that  entity 
meets the conditions laid down in Article 19(1). 

Where  the  subsidiary  insurance  or  reinsurance  undertakings  of  a  mixed-activity 
insurance  holding  company  are  held  directly  or  indirectly  by  an  intermediate 
insurance  holding  company,  Member  States  shall  ensure  that  resolution  actions  for 
the  purposes  of  group  resolution  are  taken  in  relation  to  the intermediate  insurance 
holding  company,  and  shall  not  take  resolution  actions  for  the  purposes  of  group 
resolution in relation to the mixed-activity insurance holding company. 

Subject to paragraph 2, resolution authorities may take resolution action with regard 
to  any of the entities referred to  in  Article 1(1),  points (c) to  (e), even where those 
entities  do  not  meet  the  conditions  laid  down  in  paragraph  1,  where  all  of  the 
following conditions apply: 

EN 

59 

  EN 

(a) 

(b) 

(c) 

one  or  more  of  the  subsidiary  insurance  or  reinsurance  undertakings  comply 
with the conditions established in Article 19(1); 

the assets and liabilities of the subsidiary insurance or reinsurance undertakings 
are  such  that  their  failure  threatens  another  insurance  or  reinsurance 
undertaking of the group or the group as a whole, or the insolvency law of the 
Member State requires that groups be treated as a whole; 

resolution action with regard to the entities referred to in Article 1(1), points (c) 
to (e) is necessary for the resolution of the subsidiary insurance or reinsurance 
undertakings or for the resolution of the group as a whole. 

Article 21 

Insolvency proceedings in respect of undertakings that are not subject to resolution 
action 

Member  States  shall  ensure  that  insurance  or  reinsurance  undertakings  that  meet  the 
conditions laid down in Article 19(1), points (a) and (b), but not the condition laid down in 
Article 19(1), point (c), and that meet the Minimum Capital Requirement laid down in Title I, 
Chapter  VI,  Section  5,  of  Directive  2009/138/EC,  are  wound  up  in  an  orderly  manner  in 
accordance  with  normal  insolvency  proceedings  which  ensure  an  orderly  exit  from  the 
market. 

Article 22 

General principles governing resolution 

1. 

Member  States  shall  ensure  that  resolution  authorities,  when  they  apply  resolution 
tools  referred  to  in  Article  26(3)  and  exercise  resolution  powers  referred  to  in 
Articles 40 to 52, take all appropriate measures to ensure that the resolution action is 
taken in accordance with the following principles: 

(a) 

(b) 

(c) 

(d) 

(e) 

(f) 

the shareholders of the undertaking under resolution bear first losses; 

creditors of the undertaking under resolution bear losses after the shareholders 
in  accordance  with  the  order  of  priority  of  their  claims  under  normal 
insolvency  proceedings,  save  as  expressly  provided  for  otherwise  in  this 
Directive; 

the  senior 
the  administrative,  management  or  supervisory  body  and 
management of the undertaking under resolution are replaced, except where the 
retention,  in  whole  or  in  part,  of  that  body  or  the  senior  management  is 
considered necessary for the achievement of the resolution objectives; 

the  administrative,  management  or  supervisory  body  and 
the  senior 
management  of  the  undertaking  under  resolution  provide  all  assistance 
necessary for the achievement of the resolution objectives; 

natural and legal persons are made liable under civil or criminal law for their 
responsibility for the failure of the undertaking under resolution; 

except  where  otherwise  provided  for  in  this  Directive,  creditors  of  the  same 
class are treated in an equitable manner; 

EN 

60 

  EN 

(g)  no shareholder or creditor incurs greater losses than they would have incurred 
if the insurance or reinsurance undertaking had  been wound up under normal 
insolvency proceedings in accordance with the safeguards in Articles 53 to 55; 

(h) 

resolution action is taken in accordance with the safeguards in this Directive. 

Where  the  insurance  or  reinsurance  undertaking  is  part  of  a  group,  resolution 
authorities  shall  apply  the  resolution  tools  referred  to  in  Article  26(3)  and  exercise 
the  resolution  powers  referred  to  in  Articles  40  to  52  in  a  way  that  minimises,  in 
particular in the countries where the group operates: 

(a) 

(b) 

the impact on other group entities and on the group as a whole; 

the adverse effects on policy holders, the real economy and financial stability 
in the Union and in its Member States.. 

When  applying  the  resolution  tools  referred  to  in  Article  26(3)  and  exercising  the 
resolution  powers  referred  to  in  Articles  40  to  52,  Member  States  shall  ensure  that 
they comply with the Union State aid framework, where applicable. 

Where the resolution tools referred to in Article 26(3) are applied, the entity to which 
those tools are applied shall be considered the subject of bankruptcy proceedings or 
analogous  insolvency  proceedings  for  the  purposes  of  Article  5(1)  of  Council 
Directive 2001/23/EC31. 

When  applying  the  resolution  tools  referred  to  in  Article  26(3)  and  exercising  the 
resolution powers referred to in Articles 40 to 52, resolution authorities shall inform 
the  undertaking  concerned  where 
and  consult  employee  representatives  of 
appropriate. 

Resolution authorities shall apply the resolution tools referred to in Article 26(3) and 
exercise  the  resolution  powers  referred  to  in  Articles  40  to  52  without  prejudice  to 
provisions on the representation of employees in management bodies as provided for 
in national law or practice. 

CHAPTER II 
Valuation 

Article 23 

Valuation for the purposes of resolution 

Resolution authorities shall ensure that any resolution action is taken on the basis of 
a valuation ensuring a fair, prudent and realistic assessment of the assets, liabilities, 
rights and obligations of insurance or reinsurance undertakings. 

Before the resolution authority places an insurance or reinsurance undertaking under 
resolution, it shall ensure that a first valuation is carried out to determine whether the 
conditions for resolution under Article 19(1) or Article 20(3) are met. 

After  the  resolution  authority  has  decided  to  place  an  insurance  or  reinsurance 
undertaking under resolution, it shall ensure that a second valuation is carried out to: 

Council  Directive  2001/23/EC  of  12  March  2001  on  the  approximation  of  the  laws  of  the  Member 
States  relating  to  the  safeguarding  of  employees'  rights  in  the  event  of  transfers  of  undertakings, 
businesses or parts of undertakings or businesses (OJ L 82, 22.3.2001, p. 16). 

2. 

3. 

4. 

5. 

6. 

1. 

2. 

3. 

31 

EN 

61 

  EN 

                                                 
(a) 

(b) 

(c) 

(d) 

inform the decision on the appropriate resolution action to be taken; 

ensure  that  any  losses  of  the  insurance  or  reinsurance  undertaking  are  fully 
recognised at the moment the resolution tools are applied; 

inform the decision on the extent of the cancellation or dilution of instruments 
of ownership; 

inform  the  decision  on  the  extent  of  the  write-down  or  conversion  of  any 
unsecured liabilities, including debt instruments; 

(e)  where  the  bridge  undertaking  tool  referred  to  in  Article  32  is  applied,  inform 
the  decision  on  the  assets,  liabilities,  rights  and  obligations  or  instruments  of 
ownership  that  may  be  transferred  to  the  bridge  undertaking,  and  inform  the 
decision on the value of any consideration that may be paid to the insurance or 
reinsurance undertaking  under resolution  or, where relevant,  to  the holders of 
the instruments of ownership; 

(f)  where the sale of business tool referred to in Article 31 is applied, inform the 
decision  on  the  assets,  liabilities,  rights  and  obligations  or  instruments  of 
ownership  that  may  be  transferred  to  the  third  party  purchaser  and  to  inform 
the resolution authority’s understanding of what constitutes commercial terms 
for the purposes of Article 31. 

4. 

The valuations referred to in paragraphs 2 and 3 of this Article may be subject to an 
appeal  in  accordance  with  Article  65  only  together  with  the  decision  to  apply  a 
resolution tool or to exercise a resolution power. 

Article 24 

Requirements for valuation 

1. 

Member  States  shall  ensure  that  the  valuations  referred  to  in  Article  23  are  carried 
out by any of the following: 

(a) 

(b) 

a  person  independent  from  any  public  authority  and  from  the  insurance  or 
reinsurance undertaking; 

the  resolution  authority,  where  those  valuations  cannot  be  carried  out  by  a 
person as referred to in point (a). 

The  valuations  referred  to  in  Article  23  shall  be  considered  definitive  where  they 
have  been  carried  out  by  the  person  referred  to  in  paragraph  1,  point  (a),  of  this 
Article  and  all  the  requirements  laid  down  in  paragraphs  3  to  5  of  this  Article  are 
fulfilled. 

Without  prejudice to  the Union State aid  framework, where applicable, a  definitive 
valuation shall be based on prudent assumptions and shall not assume any potential 
provision  of  extraordinary  public  financial  support  from  the  point  in  time  at  which 
resolution action is taken. 

A  definitive  valuation  shall  be  supplemented  by  the  following  information  held  by 
the insurance or reinsurance undertaking or entity referred to in Article 1(1), points 
(b) to (e): 

2. 

3. 

4. 

EN 

62 

  EN 

(a) 

(b) 

(c) 

an updated financial statement and an updated Solvency II economic valuation 
of  the  balance  sheet  of  the  insurance  or  reinsurance  undertaking  or  entity 
referred to in Article 1(1), points (b) to (e); 

a report on the financial position of the insurance or reinsurance undertaking, 
including  an  evaluation  by  an  independent  actuarial  function  of  the  technical 
provisions  referred  to  in  Title  I,  Chapter  VI,  Section  2  of  Directive 
2009/138/EC  of  insurance  or  reinsurance  undertaking  or  entity  referred  to  in 
Article 1(1), points (b) to (e); 

any additional information on the market and accounting values of the assets, 
technical  provisions, referred to  in  Title  I, Chapter VI, Section 2 of Directive 
2009/138/EC,  and  other  liabilities  of  insurance  or  reinsurance  undertaking  or 
entity referred to in Article 1(1), points (b) to (e). 

A  definitive  valuation  shall  indicate  the  subdivision  of  the  creditors  in  classes  in 
accordance  with  their  priority  levels  under  the  applicable  insolvency  law.  The 
definitive valuation shall also contain an estimation of the treatment that each class 
of shareholders and creditors would have been expected to receive if the insurance or 
reinsurance  undertaking  or  entity  referred  to  in  Article  1(1),  points  (b)  to  (e),  were 
wound up under normal insolvency proceedings. 

The  estimate  referred  to  in  the  first  subparagraph  shall  not  prejudice  the  valuation 
referred to in Article 54. 

5. 

6. 

EIOPA shall develop draft regulatory technical standards to specify: 

(a) 

the circumstances in which a person is deemed to be independent from both the 
resolution  authority  and  the  insurance  or  reinsurance  undertaking  for  the 
purposes of paragraph 1 of this Article; 

(b) 

the  methodology  for  assessing  the  value  of  the  assets  and  liabilities  of  the 
insurance or reinsurance undertaking in the context of resolution; 

(c) 

the separation of the valuations under Articles 23 and 54 of this Directive. 

EIOPA shall submit those draft regulatory technical standards to the Commission by 
[PO – add 18 months after entry into force]. 

Power  is  delegated  to  the  Commission  to  adopt  the  regulatory  technical  standards 
referred  to  in  the  first  subparagraph  in  accordance  with  Articles  10  to  14  of 
Regulation (EU) No 1094/2010. 

Article 25 

Provisional and definitive valuations 

1. 

2. 

Valuations as referred to in Article 23 that do not meet the requirements laid down in 
Article 24(2) shall be considered provisional valuations. 

Provisional valuations shall contain a buffer for additional losses and an appropriate 
justification for that buffer. 

Resolution  authorities  that  take  resolution  action  on  the  basis  of  a  provisional 
valuation shall ensure that a definitive valuation is carried out as soon as possible. 

The  resolution  authority  shall  ensure  that  the  definitive  valuation  referred  to  in  the 
first subparagraph: 

EN 

63 

  EN 

(a) 

(b) 

allows  for  full  recognition  of  any  losses  of  the  insurance  or  reinsurance 
undertaking in its books; 

informs a decision to write back creditors’ claims or to increase the value of the 
consideration paid, in accordance with paragraph 3. 

3. 

Where  the  definitive  valuation’s  estimate  of  the  net  asset  value  of  the  insurance  or 
reinsurance undertaking is higher than the provisional valuation’s estimate of the net 
asset value of the insurance or reinsurance undertaking, the resolution authority may: 

(a) 

(b) 

increase the value of the claims of affected creditors which have been written 
down or restructured; 

require  a  bridge  undertaking  to  make  a  further  payment  of  consideration  in 
respect  of  the  assets,  liabilities,  rights  and  obligations  to  the  insurance  or 
reinsurance undertaking under resolution or, as the case may be, to the owners 
of the instruments of ownership. 

4. 

EIOPA shall develop draft regulatory technical standards to specify, for the purposes 
of  paragraph  1  of  this  Article,  the  methodology  for  calculating  the  buffer  for 
additional losses to be included in provisional valuations. 

EIOPA shall submit those draft regulatory technical standards to the Commission by 
[PO – add 18 months after entry into force].  

Power  is  delegated  to  the  Commission  to  adopt  the  regulatory  technical  standards 
referred  to  in  the  first  subparagraph  in  accordance  with  Articles  10  to  14  of 
Regulation (EU) No 1094/2010. 

CHAPTER III 
Resolution tools 

SECTION 1 
GENERAL PRINCIPLES 

Article 26 

1. 

2. 

General provisions on resolution tools 

Member States shall ensure that resolution authorities have the necessary powers to 
apply  the  resolution  tools  to  insurance  and  reinsurance  undertakings  and  to  entities 
referred  to  in  Article  1(1),  points  (b)  to  (e),  that  meet  the  conditions  for  resolution 
referred to in Article 19(1) or Article 20(3). 

Where  a  resolution  authority  decides  to  apply  a  resolution  tool  to  an  insurance  or 
reinsurance undertaking or an entity referred to in Article 1(1), points (b) to (e), and 
that  resolution  action  would  result  in  losses  being  borne  by  creditors,  in  particular 
policy  holders,  or  would  result  in  their  claims  being  restructured  or  converted,  the 
resolution  authority  shall  exercise  the  power  to  write  down  or  convert  capital 
instruments and eligible liabilities in accordance with Article 34 immediately before 
or together with the application of the resolution tool. 

The  conversion  of  eligible  liabilities  into  capital  instruments  shall  not  apply  to 
insurance claims. 

EN 

64 

  EN 

3. 

The resolution tools referred to in paragraph 1 are the following: 

(a) 

the solvent run-off tool; 

(b) 

the sale of business tool; 

(c) 

the bridge undertaking tool; 

(d) 

the asset and liability separation tool; 

(e) 

the write-down or conversion tool. 

4. 

Subject  to  paragraph  5,  resolution  authorities  may  apply  the  resolution  tools 
individually or in any combination, except for the asset and liability separation tool, 
which may only be used together with another resolution tool. 

Where only the sale of business and the bridge undertaking tool are used, and where 
those  tools  are  used  to  transfer  only  part  of  the  assets,  rights  or  liabilities  of  the 
undertaking  under  resolution,  the  residual  insurance  or  reinsurance  undertaking  or 
entity  referred  to  in  Article  1(1),  points  (b)  to  (e),  from  which  the  assets,  rights  or 
liabilities  have  been  transferred,  shall  be  wound  up  under  normal  insolvency 
proceedings. Such winding up shall be done within a reasonable timeframe, having 
regard  to  any  need  for  that  residual  insurance  or  reinsurance  undertaking  or  entity 
referred to in Article 1(1), points (b) to (e), to provide services or support pursuant to 
Article 43 to  enable the  recipient  to  carry  out  the activities or services acquired by 
virtue  of  that  transfer,  and  any  other  reason  that  the  continuation  of  the  residual 
insurance or reinsurance undertaking or entity referred to in Article 1(1), points (b) to 
(e),  is  necessary  to  achieve  the  resolution  objectives  referred  to  in  Article  18  or 
comply with the principles referred to in Article 22. 

Where  the  solvent  run-off  tool  is  used  and  where  the  net  asset  value  of  the 
undertaking  under  resolution  in  solvent  run-off  has  become  negative,  the  residual 
insurance  or  reinsurance  undertaking  shall  be  wound  up  under  normal  insolvency 
proceedings. 

5. 

The resolution  authority  may  recover any  reasonable expenses properly incurred in 
connection with the use of the resolution tools or exercising the resolution powers in 
one or more of the following ways: 

(a) 

as  a  deduction  from  any  consideration  paid  by  a  recipient  to  the  undertaking 
under  resolution  or,  as  the  case  may  be,  to  the  owners  of  the  shares  or  other 
instruments of ownership; 

(b) 

from the undertaking under resolution, as a preferred creditor; 

(c) 

from any proceeds generated as a result of the termination of the operation of 
the  bridge  undertaking,  the  asset  and  liability  management  vehicle  or  the 
insurance or reinsurance undertaking in solvent run-off, as a preferred creditor. 

Member States shall ensure that rules of national insolvency law on the voidability or 
unenforceability  of  legal  acts  detrimental  to  creditors  do  not  apply  to  transfers  of 
assets, rights or liabilities from an undertaking under resolution to another entity by 
virtue of the application of a resolution tool or the exercise of a resolution power. 

Member  States  may  confer  upon  resolution  authorities  additional  tools  and  powers 
exercisable  where  an  insurance  or  reinsurance  undertaking  or  entity  referred  to  in 
Article  1(1),  points  (b)  to  (e),  meets  the  conditions  for  resolution  referred  to  in 
Article 19(1) or Article 20(3), provided that: 

6. 

7. 

EN 

65 

  EN 

(a)  when applied to a cross-border group, those additional tools and powers do not 

pose obstacles to effective group resolution; 

(b) 

those tools and powers are consistent with the resolution objectives referred to 
in  Article  18  and  the  general  principles  governing  resolution  laid  down  in 
Articles 18 and 22. 

SECTION 2 
THE SOLVENT RUN-OFF TOOL 

Article 27 

The solvent run-off tool 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

Member  States  shall  ensure  that  resolution  authorities  have  the  power  to  withdraw 
the  authorisation  of  the  undertaking  under  resolution  to  write  new  insurance  or 
reinsurance contracts and place the undertaking under resolution in a solvent run-off 
procedure to terminate the activities of that undertaking. 

Resolution  authorities  shall  ensure  that  an  insurance  or  reinsurance  undertaking 
under  resolution  in  a  solvent  run-off  is  capable  of  retaining  adequately  trained  and 
competent  staff to  ensure the orderly  continuation of its insurance activities in  run-
off until its liquidation. 

Resolution  authorities  shall  monitor,  in  close  cooperation  with  supervisory 
authorities, the costs and expenses of an insurance or reinsurance undertaking under 
resolution to preserve its value and marketability. 

Resolution authorities shall, in close cooperation with supervisory authorities, assess 
intended  changes  to  the  composition  of  assets,  monitor  closely  reinsurance 
arrangements and require, at least on a quarterly basis, independent actuarial reviews 
of the technical provisions and reserves. 

In  application  of  the  solvent  run-off  tool,  resolution  authorities  shall  restrict  or 
prohibit  any  remuneration  of  equity  and  instruments  treated  as  equity,  including 
dividend  payments,  and  shall  restrict  or  prohibit  any  payments  of  variable 
remuneration and discretionary pension benefits. 

Resolution  authorities  shall  take  a  decision  that  an  undertaking  under  resolution  in 
solvent run-off has to be liquidated in any of the following cases, whichever occurs 
first: 

(a) 

(b) 

(c) 

(d) 

the undertaking under resolution in solvent run-off merges with another entity; 

all or substantially all of the assets, rights or liabilities of the undertaking under 
resolution in solvent run-off are sold to a third party purchaser; 

the assets of the undertaking under resolution in solvent run-off are completely 
wound down and its liabilities are completely discharged; 

the  net  asset  value  of  the  undertaking  under  resolution  in  solvent  run-off  has 
become negative. 

Where  the  operations  of  an  undertaking  under  resolution  in  solvent  run-off  are 
terminated  in  the  circumstances  referred  to  in  paragraph  6,  point  (b),  the  residual 
insurance  or  reinsurance  undertaking  shall  be  wound  up  under  normal  insolvency 
proceedings. 

EN 

66 

  EN 

Subject to Article 26(6), any proceeds generated as a result of the termination of the 
operation  of  the  insurance  or  reinsurance  undertaking  in  run-off  shall  benefit  its 
shareholders. 

SECTION 3 
THE ASSET AND LIABILITY SEPARATION TOOL, THE SALE OF BUSINESS TOOL, 
AND THE BRIDGE UNDERTAKING TOOL 

Article 28 

Principles for the application of the asset and liability separation tool, the sale of 
business tool, and the bridge undertaking tool 

1. 

Member States shall ensure that, subject to Article 31, paragraphs 5 and 6 and Article 
65  ,  resolution  authorities  have  the  power  to  use  the  asset  and  liability  separation 
tool, the sale of business tool, and the bridge undertaking tool without obtaining the 
consent  of  the  shareholders  of  the  undertaking  under  resolution  or  any  third  party, 
other than the purchaser or the bridge undertaking, and without complying with any 
procedural requirements under company or securities law, other than those laid down 
in Article 29. 

2. 

Subject  to  Article  26(7),  any  consideration  paid  by  the  purchaser  or  the  bridge 
undertaking shall benefit: 

(a) 

(b) 

the  owners  of  the  shares  or  of  other  instruments  of  ownership,  where  such 
shares or such other instruments of ownership issued by the undertaking under 
resolution  have  been  transferred  from  the  holders  of  those  shares  or 
instruments to the purchaser or the bridge undertaking; 

the undertaking under resolution, where some or all of the assets or liabilities 
of  the  undertaking  under  resolution  have  been  transferred  to  the  purchaser  or 
the bridge undertaking. 

Subject to Article 26(7), any consideration paid by an asset and liability management 
vehicle  as  referred  to  in  Article  30(2)  in  respect  of  the  assets,  rights  or  liabilities 
acquired directly from the undertaking under resolution shall benefit the undertaking 
under resolution. Consideration may be paid in the form of debt issued by the asset 
and liability management vehicle. 

Transfers made by using the asset and liability tool, the sale of business tool or the 
bridge  undertaking  tool  shall  be  subject  to  the  safeguards  referred  to  in  Title  III, 
Chapter V. 

Resolution  authorities  may  use  the  asset  and  liability  separation  tool,  the  sale  of 
business tool and the bridge undertaking tool more than once to make supplemental 
transfers where necessary  to  achieve the  resolution  objectives referred to  in  Article 
18. 

Member States shall ensure that the purchaser or the bridge undertaking referred to in 
paragraph 1 may continue to exercise the rights of membership and access to, where 
relevant,  payment,  clearing  and  settlement  systems,  stock  exchanges  and  insurance 
guarantee  schemes  of  the  undertaking  under  resolution,  provided  that  it  meets  the 
membership and participation criteria for participation in such systems. 

3. 

4. 

5. 

6. 

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7. 

1. 

2. 

In cases where not all criteria listed in the first subparagraph are met, Member States 
shall ensure that: 

(a)  membership or participation in payment, clearing and settlement systems, stock 
exchanges  and  insurance  guarantee  schemes  is  not  denied  on  the  ground  that 
the purchaser or the bridge undertaking does not possess a rating from a credit 
rating  agency,  or  that  such  rating  is  not  commensurate  with  the  rating  levels 
required to be granted access to such systems or schemes; 

(b)  where the purchaser or the bridge undertaking does not meet the  membership 
or  participation  criteria  of  a  payment,  clearing  or  settlement  system,  stock 
exchange  or  insurance  guarantee  scheme,  the  rights  referred  to  in  the  first 
subparagraph  are  exercised  for  a  period  of  time  specified  by  resolution 
authorities,  not  exceeding  24  months,  and  renewable  on  application  by  the 
purchaser or the bridge undertaking to the resolution authority. 

Without  prejudice  to  Title  III,  Chapter  V,  shareholders  or  creditors  of  the 
undertaking under resolution and other third parties whose assets, rights or liabilities 
are not transferred by using the asset and liability tool, the sale of business tool or the 
bridge undertaking tool, shall not have any rights or claims over or in relation to the 
assets, rights or liabilities transferred or over or in the administrative, management or 
supervisory body or senior management of the bridge undertaking or the assets and 
liabilities management vehicle. 

Article 29 

Procedural requirements regarding sales of business, assets, rights or liabilities in 
resolution 

Subject  to  paragraph  3  of  this  Article,  Member  States  shall  ensure  that,  where 
resolution  authorities  seek  to  apply  the  sale  of  business  tool,  or  sell  a  bridge 
undertaking,  or  its  assets,  rights  or  liabilities,  the  undertaking  under  resolution,  the 
bridge  undertaking  or  the  assets,  rights,  liabilities,  shares  or  other  instruments  of 
ownership  concerned  are  marketed  in  accordance  with  the  criteria  set  out  in 
paragraph 2. Pools of rights, assets, and liabilities may be marketed separately.  

Without prejudice to the Union State aid framework, where applicable, the marketing 
criteria referred to in paragraph 1 are the following: 

(a)  marketing  shall  be  as  transparent  as  possible  and  shall  not  materially 
misrepresent  the  assets,  rights,  liabilities,  shares  or  other  instruments  of 
ownership of the undertaking or bridge undertaking that a resolution authority 
intends to transfer; 

(b)  marketing  shall  not  unduly  favour,  or  discriminate  between,  potential 

purchasers; 

(c)  marketing shall be free from any conflict of interest; 

(d)  marketing shall not confer any unfair advantage on a potential purchaser; 

(e)  marketing shall take account of the need to effect a rapid resolution action; 

(f)  marketing  shall  aim  at  maximising,  as  far  as  possible,  the  sale  price  for  the 

shares or other instruments of ownership, assets, rights or liabilities involved. 

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3. 

1. 

2. 

3. 

4. 

The  principles  referred  to  in  this  paragraph  shall  not  prevent  resolution  authorities 
from soliciting particular potential purchasers. 

Any public disclosure of the marketing of the undertaking under resolution or entity 
referred to in Article 1(1), points (b) to (e), or of the bridge undertaking that would 
otherwise  be  required  in  accordance  with  Article  17(1)  of  Regulation  (EU)  No 
596/2014  may  be  delayed  in  accordance  with  Article  17,  paragraph  4  or  5  of  that 
Regulation. 

Resolution  authorities  may  decide  not  to  comply  with  the  requirement  to  market  a 
sale  where  they  determine  that  compliance  with  the  requirements  laid  down  in 
paragraph 2 would be likely to  undermine one or more of the resolution  objectives 
referred to in Article 18. 

Article 30 

The asset and liability separation tool 

Member  States  shall  ensure  that  resolution  authorities  have  the  power  to  transfer 
assets, rights or liabilities of an undertaking under resolution or a bridge undertaking 
to one or more asset and liability management vehicles. 

For  the  purposes  of  the  asset  and  liability  separation  tool,  an  asset  and  liability 
management  vehicle  shall  be  a  legal  person  that  meets  all  of  the  following 
requirements: 

(a) 

(b) 

it  is  wholly  or  partially  owned  by  one  or  more  public  authorities  which  may 
include the resolution authority and is controlled by the resolution authority; 

it has been created for the purpose of receiving some or all of the assets, rights 
and  liabilities  of  one  or  more  undertakings  under  resolution  or  a  bridge 
undertaking. 

The asset and liability management vehicle shall manage the portfolios transferred to 
it with a view to maximise their value through a sale of those portfolios or an orderly 
wind down. 

Member States shall ensure that the operation of an asset and liability management 
vehicle respects the following requirements: 

(a) 

(b) 

(c) 

the  resolution  authority  concerned  has  approved  the  asset  and  liability 
management vehicle’s constitutional documents; 

subject to the asset and liability management vehicle’s ownership structure, the 
resolution  authority  concerned  either  appoints  or  approves  the  vehicle’s 
administrative, management or supervisory body; 

the resolution authority  concerned approves the remuneration of the members 
of  the  administrative,  management  or  supervisory  body  and  specifies  their 
responsibilities; 

(d) 

the resolution authority concerned approves the strategy and risk profile of the 
asset and liability management vehicle. 

5. 

Resolution  authorities  may  exercise  the  power  specified  in  paragraph  1  to  transfer 
assets, rights or liabilities only in conjunction with other resolution tools as referred 
to in Article 26(3) and where any of the following situations occurs: 

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6. 

7. 

8. 

9. 

(a) 

(b) 

the situation of the particular market for those assets, rights or liabilities is such 
that the liquidation of those assets, rights or liabilities under normal insolvency 
proceedings could have an adverse effect on one or more financial markets; 

such a transfer is necessary to facilitate the use of the solvent run-off tool or to 
ensure the proper functioning of the undertaking  under resolution  or a bridge 
undertaking; 

(c) 

such a transfer is necessary to maximise liquidation proceeds. 

When applying the asset and liability separation tool, resolution authorities shall, in 
accordance with Article 23 and in  accordance with the Union State aid framework, 
determine the consideration for which assets, rights and liabilities are transferred to 
the  asset  and  liability  management  vehicle.  This  paragraph  shall  not  prevent  the 
consideration having nominal or negative value. 

Where  resolution  authorities  have  applied  the  bridge  undertaking  tool,  asset  and 
liability  management  vehicles  may,  subsequent  to  the  application  of  the  bridge 
undertaking tool, acquire assets, rights or liabilities from the bridge undertaking. 

Resolution  authorities  may  transfer  assets,  rights  or  liabilities  from  the  undertaking 
under  resolution  to  one  or  more  asset  and  liability  management  vehicles  on  more 
than one occasion and transfer assets, rights or liabilities back from one or more asset 
and liability management vehicles to the undertaking under resolution in any of the 
following situations:  

(a) 

(b) 

the possibility that the  assets, rights  or liabilities might  be transferred back is 
stated expressly in the instrument under which the transfer was made; 

the  assets,  rights  or  liabilities  do  not  fall  within  the  classes  of,  or  meet  the 
conditions for transfer of, assets, rights or liabilities specified in the instrument 
under which the transfer was made. 

In  either of the  cases  referred in  points (a)  and (b), the transfer back may  be made 
within  any  period,  and  shall  comply  with  any  other  conditions,  stated  in  that 
instrument for the relevant purpose. 

The undertaking under resolution shall be obliged to take back any assets, rights or 
liabilities transferred in accordance with points (a) and (b). 

The objectives of an asset and liability management vehicle shall not imply any duty 
or responsibility to shareholders or creditors of the undertaking under resolution. The 
members  of  the  administrative,  management  or  supervisory  body  or  senior 
management of the asset and liability management vehicle shall have no liability to 
such shareholders or creditors for acts and omissions in the discharge of their duties, 
unless such acts or omissions implied gross negligence or serious misconduct under 
national law which have directly affected the rights of such shareholders or creditors. 

Member  States  may  further  limit  the  liability  of  an  asset  and  liability  management 
vehicle, and of the members of its administrative, management or supervisory body 
or senior management for acts and omissions in the discharge of their duties. 

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1. 

2. 

3. 

4. 

5. 

6. 

Article 31 

The sale of business tool 

Member States shall ensure that resolution authorities have the power to transfer to a 
purchaser other than a bridge undertaking: 

(a) 

shares  or  other  instruments  of  ownership  issued  by  an  undertaking  under 
resolution; 

(b) 

all or any assets, rights or liabilities of an undertaking under resolution. 

A transfer made pursuant to paragraph 1 shall be made on commercial terms, having 
regard to the circumstances, and in accordance with the Union State aid framework. 

Resolution authorities shall take all reasonable steps to obtain commercial terms for 
the transfer that are conform with the valuation conducted under Article 23, having 
regard to the circumstances of the case. 

Resolution  authorities  may,  with  the  consent  of  the  purchaser,  revert  the  executed 
transfers  where  justified  by  the  circumstances  of  the  case.  The  undertaking  under 
resolution or the original owners shall be obliged to take back any transferred shares 
or other instruments of ownership, or assets, rights or liabilities. 

Purchasers  shall  be  required  to  have  the  appropriate  authorisation  to  carry  out  the 
business  they  acquire  when  a  transfer  as  referred  to  in  paragraph  1  is  made. 
Supervisory authorities shall ensure that any application for such authorisation shall 
be considered, in conjunction with the transfer, in a timely manner. 

By  way  of  derogation  from  Articles  57  to  62  of  Directive  2009/138/EC,  where  a 
transfer of shares or of other instruments of ownership by virtue of an application of 
the sale of business tool would result in the acquisition of or increase in a qualifying 
holding in an insurance or reinsurance undertaking as referred to in Article 57(1) of 
Directive  2009/138/EC,  the  supervisory  authority  of  that  insurance  or  reinsurance 
undertaking shall carry out the assessment required under those Articles in a timely 
manner that does not delay the application of the sale of business tool and prevent the 
resolution action from achieving the resolution objectives referred to in Article 18 of 
this Directive. 

Member States shall ensure that where the supervisory authority has not  completed 
the assessment referred to in paragraph 5 from the date of the transfer, the following 
shall apply: 

(a) 

such a transfer of shares or other instruments of ownership to the acquirer shall 
have immediate legal effect; 

(b)  during the assessment period and during any divestment period provided for in 
point  (f),  the  acquirer’s  voting  rights  attached  to  such  shares  or  other 
instruments of ownership shall be suspended and vested solely in the resolution 
authority, which shall have no obligation to exercise any such voting rights and 
which  shall  have  no  liability  whatsoever  for  exercising  or  refraining  from 
exercising any such voting rights; 

(c) 

during the assessment period and during any divestment period provided for in 
point (f), the penalties and other measures for infringing the requirements for 
acquisitions  or  disposals  of  qualifying  holdings  laid  down  in  Article  62  of 

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Directive  2009/138/EC  shall  not  apply  to  such  a  transfer  of  shares  or  other 
instruments of ownership; 

(d)  promptly  upon  completion  of  its  assessment,  the  supervisory  authority  shall 
notify  the  resolution  authority  and  the  acquirer  in  writing  of  whether  it 
approves  or,  in  accordance  with  Article  58(4)  of  Directive  2009/138/EC, 
opposes  such  a  transfer  of  shares  or  other  instruments  of  ownership  to  the 
acquirer; 

(e)  where  the  supervisory  authority  approves  such  a  transfer  of  shares  or  other 
instruments  of  ownership  to  the  acquirer,  the  voting  rights  attached  to  such 
shares or other instruments of ownership shall be deemed to be fully vested in 
the  acquirer  immediately  upon  receipt  by  the  resolution  authority  and  the 
acquirer of such an approval from the supervisory authority; 

(f)  where  the  supervisory  authority  opposes  such  a  transfer  of  shares  or  other 

instruments of ownership to the acquirer: 

(i) 

(ii) 

the  voting  rights  attached  to  such  shares  or  other  instruments  of 
ownership  as  provided  for  in  point  (b)  shall  remain  in  full  force  and 
effect; 

the resolution authority may require the acquirer to divest such shares or 
other instruments of ownership within a divestment period determined by 
the  resolution  authority  having  taken  into  account  prevailing  market 
conditions;(iii)  where  the  acquirer  does  not  comply  with  the  request 
provided for in  point (ii), the supervisory  authority, with  the  consent  of 
the resolution authority, may impose on the acquirer penalties and other 
measures for infringing the requirements for acquisitions or disposals of 
qualifying holdings laid down in Article 62 of Directive 2009/138/EC. 

7. 

For the purposes of exercising the rights to provide services or to establish itself in 
another Member State in accordance with Directive 2009/138/EC, the purchaser shall 
be  considered  to  be  a  continuation  of  the  undertaking  under  resolution,  and  may 
continue  to  exercise  any  such  right  that  was  exercised  by  the  undertaking  under 
resolution in respect of the assets, rights or liabilities transferred. 

Article 32 

Bridge undertaking tool 

1. 

Member States shall ensure that resolution authorities have the power to transfer to a 
bridge undertaking: 

(a) 

(b) 

shares or other instruments  of ownership issued by one or more undertakings 
under resolution; 

all  or  any  assets,  rights  or  liabilities  of  one  or  more  undertakings  under 
resolution. 

2. 

The  bridge  undertaking  shall  be  a  legal  person  that  meets  all  of  the  following 
requirements: 

(a) 

it  is  wholly  or  partially  owned  by  one  or  more  public  authorities  which  may 
include  the  resolution  authority  or,  where  applicable,  an  insurance  guarantee 
scheme and is controlled by the resolution authority; 

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3. 

4. 

5. 

6. 

7. 

(b) 

it is created for the purpose of receiving and holding some or all of the shares 
or other instruments of ownership issued by an undertaking under resolution or 
some  or  all  of  the  assets,  rights  and  liabilities  of  one  or  more  undertakings 
under resolution with a view to achieve the resolution objectives and selling the 
undertaking or entity referred to in Article 1(1), points (b) to (e). 

When  applying  the  bridge  undertaking  tool,  resolution  authorities  shall  ensure  that 
the total value of liabilities transferred to the bridge undertaking does not exceed the 
total value of the rights and assets transferred from the undertaking under resolution. 

Following an application of the bridge undertaking tool, resolution authorities may, 
where  justified  by  the  circumstances,  revert  the  executed  transfers,  and  the 
undertaking under resolution or the original owners shall be obliged to take back any 
transferred  assets,  rights  or  liabilities,  or  shares  or  other  instruments  of  ownership, 
where justified by the circumstances of the case, in any of the following situations: 

(a) 

(b) 

the possibility that the specific shares or other instruments of ownership, assets, 
rights  or  liabilities  might  be  transferred  back  is  stated  expressly  in  the 
instrument by which the transfer was made; 

the specific shares or other instruments of ownership, assets, rights or liabilities 
do not fall within the classes of, or meet the conditions for transfer of shares or 
other  instruments  of  ownership,  assets,  rights  or  liabilities  specified  in  the 
instrument by which the transfer was made. 

A  transfer  back  as  referred  to  in  the  first  subparagraph  may  be  made  within  any 
period and shall comply with any other conditions stated in the instrument by which 
the transfer was made. 

Following  an  application  of  the  bridge  undertaking  tool,  resolution  authorities  may 
transfer shares or other instruments of ownership, or assets, rights or liabilities from 
the bridge undertaking to a third party purchaser. 

A  bridge  undertaking  shall  be  considered  to  be  a  continuation  of  the  undertaking 
under resolution, and be able to continue to exercise any right that was exercised by 
the  undertaking  under  resolution  in  respect  of  the  assets,  rights  or  liabilities 
transferred. 

A  bridge  institution  shall  not  conclude  new  insurance  contracts  or  change  existing 
insurance  contracts  in  a  way  that  could  increase  the  insurance  claims  of  the  bridge 
undertaking. 

The objectives of a bridge undertaking shall not imply any duty or responsibility to 
shareholders or creditors of the undertaking under resolution, and the members of the 
administrative, management or supervisory body or senior management shall have no 
liability  to  such  shareholders  or  creditors  for  acts  or  omissions  in  the  discharge  of 
their  duties,  unless  the  act  or  omission  implies  gross  negligence  or  serious 
misconduct  in  accordance with  national  law which have directly  affected  the rights 
of such shareholders or creditors. 

Member  States  may  further  limit  the  liability  of  a  bridge  undertaking  and  of  the 
members  of  its  administrative,  management  or  supervisory  body  or  senior 
management in accordance with national law for acts and omissions in the discharge 
of their duties. 

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Article 33 

Operation of a bridge undertaking 

1. 

Member  States  shall  ensure  that  the  operation  of  a  bridge  undertaking  respects  the 
following requirements: 

(a) 

(b) 

(c) 

(d) 

(e) 

(f) 

(g) 

the  resolution  authority  has  approved  the  bridge  undertaking’s  constitutional 
documents; 

subject to the bridge undertaking’s ownership structure, the resolution authority 
either  appoints  or  approves 
the  bridge  undertaking’s  administrative, 
management or supervisory body; 

the  resolution  authority  approves  the  remuneration  of  the  members  of  the 
administrative,  management  or  supervisory  body  and  determines 
their 
responsibilities; 

the  resolution  authority  approves  the  strategy  and  risk  profile  of  the  bridge 
undertaking; 

the bridge undertaking is authorised in accordance with Directive 2009/138/EC 
and has the necessary authorisation under the applicable national law to carry 
out  the  activities  or  services  that  it  acquires  by  virtue  of  a  transfer  made 
pursuant to Article 40 of this Directive; 

the  bridge  undertaking  complies  with  the  requirements  of,  and  is  subject  to 
supervision in accordance with Directive 2009/138/EC; 

the  operation  of  the  bridge  undertaking  complies  with  the  Union  State  aid 
framework  and  the  resolution  authority  may  specify  restrictions  on  its 
operations accordingly. 

Notwithstanding  the  provisions  referred  to  in  points  (d)  and  (e)  of  the  first 
subparagraph  and  where  necessary  to  meet  the  resolution  objectives  referred  to  in 
Article  18,  a  bridge  undertaking  may  be  established  and  authorised  without 
complying with Directive 2009/138/EC for a short period of time at the beginning of 
its operation. To that end, the resolution authority shall submit a request in that sense 
to  the supervisory authority. Where the supervisory  authority decides to  grant  such 
an  authorisation,  it  shall  indicate  the  period  for  which  the  bridge  undertaking  is 
waived from complying with the requirements of Directive 2009/138/EC. 

2. 

3. 

Subject  to  any  restrictions  imposed  by  Union  or  national  competition  rules,  the 
management  of  the  bridge  undertaking  shall  operate  the  bridge  undertaking  to 
achieve the resolution objectives referred to in Article 18 and to sell the undertaking 
under  resolution  and  its  assets,  rights  or  liabilities  to  one  or  more  private  sector 
purchasers as soon as market conditions are appropriate. 

Resolution authorities shall decide that an entity is no longer a bridge undertaking in 
any of the following situations, whichever occurs first: 

(a) 

the bridge undertaking merges with another entity; 

(b) 

the bridge undertaking ceases to meet the requirements of Article 32(2); 

(c) 

all or substantially all of the bridge undertaking’s assets, rights or liabilities are 
sold to a third party purchaser; 

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(d) 

the  bridge  undertaking’s  assets  are  completely  wound  down  and  its  liabilities 
are completely discharged. 

4. 

Where the operations of a bridge undertaking are terminated in the situation referred 
to in paragraph 3, point (c), the bridge undertaking shall be wound up under normal 
insolvency proceedings. 

Subject to Article 26(7), any proceeds generated as a result of the termination of the 
operation  of  the  bridge  undertaking  shall  benefit  the  shareholders  of  the  bridge 
undertaking. 

SECTION 4 
THE WRITE-DOWN OR CONVERSION TOOL  

Article 34 

Objective and scope of the write-down or conversion tool 

1. 

Member States shall ensure that resolution authorities may apply the write-down or 
conversion tool to meet the resolution objectives referred to in Article 18 for any of 
the following purposes: 

(a) 

to recapitalise an insurance or reinsurance undertaking or an entity as referred 
to  in  Article  1(1),  points  (b)  to  (e),  that  meets  the  conditions  for  resolution 
referred  to  in  Articles  19(1)  and  20(3)  to  the  extent  sufficient  to  apply  the 
solvent run-off tool referred to  in  Article 27  and  to  maintain its authorisation 
under Directive 2009/138/EC; 

(b) 

to  convert  to  equity  or  reduce  the  principal  amount  of  claims,  including 
insurance claims, or debt instruments that are transferred: 

(i) 

to a bridge undertaking to provide capital for that bridge institution; or 

(ii)  under the asset and liability separation tool referred to in Article 30 or the 

sale of business tool referred to in Article 31. 

When  applying  the  write-down  or  conversion  tool  to  insurance  claims,  resolution 
authorities  may  also  restructure  the  terms  of  the  related  insurance  contracts  to 
achieve the resolution objectives referred to in Article 18 more effectively. 

Member  States  shall  ensure  that  resolution  authorities  determine  the  amount  by 
which  capital  instruments,  debt  instruments  and  other  eligible  liabilities  must  be 
written  down  or  converted  for  the  purposes  in  paragraph  1  on  the  basis  of  the 
valuation carried out in accordance with Article 23. 

Member States shall ensure that resolution authorities may apply the write-down or 
conversion tool to  all liabilities of insurance or reinsurance undertakings  or entities 
referred to  in  Article 1(1), points (b) to  (e), maintaining their  current  legal  form  or 
considering a change of their legal form where necessary. 

Member States shall ensure that the write-down or conversion tool may be applied to 
all capital instruments and all liabilities of an insurance or reinsurance undertaking or 
entity  referred  to  in  Article  1(1),  points  (b)  to  (e),  that  are  not  excluded  from  the 
scope of that tool pursuant to paragraphs 5 or 6 of this Article. 

2. 

3. 

4. 

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5. 

Resolution authorities shall not apply the write-down or conversion tool in relation to 
the following liabilities whether they are governed by the law of a Member State or 
of a third country: 

(a) 

(b) 

(c) 

secured liabilities; 

liabilities  to  credit  institutions,  investment  firms  and  insurance  or  reinsurance 
undertakings,  except  for  entities  that  are  part  of  the  same  group,  with  an 
original maturity of less than seven days; 

liabilities  with  a  remaining  maturity  of  less  than  seven  days,  owed  to  either 
systems  or  operators  of  systems  designated  in  accordance  with  Directive 
98/26/EC  or  to  their  participants  and  arising  from  the  participation  in  such  a 
system,  or  to  CCPs  authorised  in  the  Union  pursuant  to  Article  14  of 
Regulation (EU) No 648/2012 of the European Parliament and of the Council32 
and  third-country  CCPs  recognised  by  ESMA  pursuant  to  Article  25  of  that 
Regulation; 

(d) 

a liability to any one of the following: 

(i) 

(ii) 

(iii) 

(iv) 

an employee, in relation to accrued salary, pension benefits or other fixed 
remuneration, except for the variable component of remuneration that is 
not regulated by a collective bargaining agreement; 

a commercial or trade creditor arising from the provision to the insurance 
or reinsurance undertaking or entity referred to in Article 1(1), points (b) 
to (e), of goods or services that are critical to the daily functioning of its 
operations,  including  IT  services,  utilities  and  the  rental,  servicing  and 
upkeep of premises; 

tax  and  social  security  authorities,  provided  that  those  liabilities  are 
preferred under the applicable law; 

insurance  guarantee  schemes  arising  from  contributions  due 
accordance with applicable national laws. 

in 

Point  (a)  of  the  first  subparagraph  shall  not  prevent  resolution  authorities,  where 
appropriate, from applying the write-down or conversion tool to any part of a secured 
liability or a liability for which collateral has been pledged that exceeds the value of 
the assets, pledge, lien or collateral against which it is secured. 

6. 

In  exceptional  circumstances,  where  the  write-down  or  conversion  tool  is  applied, 
resolution  authorities  may  exclude  or  partially  exclude  certain  liabilities  from  the 
application of the write-down or conversion tool in any of the following situations: 

(a) 

(b) 

it  is  not  possible  to  write  down  or  convert  that  liability  within  a  reasonable 
time, notwithstanding the good faith efforts of the resolution authority; 

the exclusion is strictly necessary and is proportionate to achieve the continuity 
of  critical  functions  and  core  business  lines  in  a  manner  that  maintains  the 
ability of the undertaking under resolution to continue key operations, services 
and transactions; 

32 

Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC 
derivatives, central counterparties and trade repositories (OJ L 201, 27.7.2012, p. 1). 

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(c) 

(d) 

the  exclusion  is  strictly  necessary  and  proportionate  to  avoid  giving  rise  to 
widespread contagion, in a manner that could cause a serious disturbance to the 
economy of a Member State or of the Union; or 

the application of the write-down or conversion tool to those liabilities would 
cause a destruction in value such that the losses borne by other creditors would 
be  higher  than  if  those  liabilities  were  excluded  from  the  application  of  the 
write-down or conversion tool. 

Article 35 

Treatment of shareholders and holders of other instruments of ownership when 
applying the write-down or conversion tool 

1. 

Member  States  shall  ensure  that,  when  applying  the  write-down  or  conversion  tool 
referred  to  in  Article  34,  resolution  authorities  take,  in  respect  of  shareholders  and 
holders of other instruments of ownership, one or both of the following actions: 

(a) 

cancel  existing  shares  or  other  instruments  of  ownership,  or  transfer  them  to 
creditors whose claims have been converted; 

(b)  provided  that  the  valuation  carried  out  under  Article  23  shows  that  the 
undertaking  under  resolution  has  a  positive  net  value,  dilute  existing 
shareholders  and  holders  of  other  instruments  of  ownership  by  converting 
relevant  capital  instruments  or  debt  instruments  issued  by  the  undertaking 
under resolution, or other eligible liabilities of the undertaking under resolution 
,into shares or other instruments of ownership pursuant to the application of the 
write-down or conversion tool. 

With regard to point (b) of the first subparagraph, the conversion shall be conducted 
at  a  rate  of  conversion  that  severely  dilutes  existing  holdings  of  shares  or  other 
instruments of ownership. 

2. 

When considering which of the actions referred to in paragraph 1 to take, resolution 
authorities shall have regard to: 

(a) 

(b) 

the valuation carried out in accordance with Article 23; 

the  amount  by  which  the  resolution  authority  has  assessed  that  Tier  1  items 
must  be  reduced  and  relevant  capital  instruments  must  be  written  down  or 
converted pursuant to Article 37(1). 

By  way  of  derogation  from  Articles  57  to  62  of Directive  2009/138/EC,  where  the 
conversion of capital instruments, debt instruments issued by the undertaking under 
resolution,  or  other  eligible  liabilities  of  the  undertaking  under  resolution,  would 
result  in  the  acquisition  of  or  increase  in  a  qualifying  holding  in  an  insurance  or 
reinsurance  undertaking  as  referred  to  in  Article  57(1)  of  Directive  2009/138/EC, 
supervisory authorities shall carry out the assessment required under those Articles in 
a timely manner that does not delay the conversion of capital instruments, or prevent 
resolution  action  from  achieving  the  relevant  resolution  objectives  referred  to  in 
Article 18. 

Where  the  supervisory  authority  of  the  that  undertaking  has  not  completed  the 
assessment  required  under  paragraph  3  on  the  date  of  the  conversion  of  the  capital 
instruments, Article 31(6) shall apply to any acquisition of or increase in a qualifying 
holding by an acquirer resulting from the conversion of capital instruments. 

3. 

4. 

EN 

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Article 36 

Rate of conversion of debt to equity 

Member  States  shall  ensure  that,  when  resolution  authorities  exercise  the  tools  specified  in 
Article 34(1) and the powers specified in Article 40(1), point (g), they may apply a different 
conversion  rate  to  different  classes  of  capital  instruments  and  liabilities  in  accordance  with 
one or both of the following principles: 

(a) 

(b) 

the conversion  rate represents  appropriate  compensation to  the affected creditor for 
any loss incurred by virtue of the exercise of the write-down or conversion powers; 

the  conversion  rate  applicable  to  liabilities  that  are  considered  to  be  senior  under 
applicable  insolvency  law  are  higher  than  the  conversion  rate  applicable  to 
subordinated liabilities. 

Article 37 

Additional provisions governing the write-down or conversion tool 

1. 

Resolution  authorities  shall  apply  the  write-down  or  conversion  tool  in  accordance 
with the priority of claims applicable under normal insolvency proceedings, in a way 
that produces the following results: 

(a)  Tier  1  items  are  reduced  first  in  proportion  to  the  losses  and  to  the  extent  of 
their  capacity  and  the  resolution  authority  takes  one  or  both  of  the  actions 
specified in Article 35(1) in respect of holders of Tier 1 instruments; 

(b) 

(c) 

(d) 

the  principal  amount  of  Tier  2  instruments  is  written  down  or  converted  into 
Tier  1  instruments  or  both,  to  the  extent  required  to  achieve  the  resolution 
objectives  referred  to  in  Article  18  or  to  the  extent  of  the  capacity  of  the 
relevant capital instruments, whichever is lower; 

the  principal  amount  of  Tier  3  instruments  is  written  down  or  converted  into 
Tier  1  instruments  or  both,  to  the  extent  required  to  achieve  the  resolution 
objectives  referred  to  in  Article  18  or  to  the  extent  of  the  capacity  of  the 
relevant capital instruments, whichever is lower; 

the principal amount of, or outstanding amount payable in respect of, the rest 
of  eligible  liabilities  in  accordance  with  the  hierarchy  of  claims  in  normal 
insolvency proceedings, including the ranking of insurance claims provided for 
in Article 275(1) of Directive 2009/138/EC, is written down or converted into 
Tier  1  instruments  or  both,  to  the  extent  required  to  achieve  the  resolution 
objectives referred to in Article 18. 

Where  the  level  of  write-down  based  on  the  provisional  valuation  as  referred  to  in 
Article 25  is  found  to  exceed  requirements  when  assessed  against  the  definitive 
valuation  as  referred  to  in  Article  24(2),  a  write-up  mechanism  may  be  applied  to 
reimburse creditors and, subsequently, shareholders to the extent necessary. 

When deciding on whether liabilities are to be written down or converted into equity, 
resolution  authorities  shall  not  convert  one  class  of  liabilities,  while  a  class  of 
liabilities  that  is  subordinated  to  the  class  remains  unconverted  into  equity  or  not 
written down. 

EN 

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Member States shall ensure that all claims resulting from own funds items have, in 
national  laws  governing  normal  insolvency  proceedings,  a  lower  priority  ranking 
than any claim that does not result from an own funds item. For the purposes of this 
subparagraph,  to  the  extent  that  an  instrument  is  only  partly  recognised  as  an  own 
funds item,  the whole instrument  shall be treated as a claim  resulting from  an own 
funds  items  and  shall  rank  lower  than  any  claim  that  does  not  result  from  an  own 
funds item. 

2. 

Where the principal amount of a relevant capital instrument or the principal amount 
of  a  debt  instrument  or  other  eligible  liability  is  written  down,  the  following  shall 
apply: 

(a) 

the  reduction  resulting  from  the  application  of  the  write-down  or  conversion 
tool  shall  be  permanent,  subject  to  any  write  up  in  accordance  with  the 
reimbursement mechanism referred to in paragraph 1; 

(b)  no liability to the holder of the relevant capital instrument, the debt instrument 
or other eligible liability shall remain under or in connection with that amount 
of the instrument, which has been written down, except for any liability already 
accrued, and any liability  for damages that may  arise as a result of an appeal 
challenging the legality of the exercise of the write-down power; 

(c) 

no compensation shall be paid to any holder of the relevant capital instrument, 
the  debt  instrument  or  other  eligible  liability  other  than  in  accordance  with 
paragraph 3. 

3. 

In order to  effect  a conversion of the capital  instruments,  debt  instruments  or other 
eligible  liabilities  concerned  in  accordance  with  paragraph  1,  points  (b)  and  (c), 
resolution authorities may require insurance or reinsurance undertakings and entities 
referred to in Article 1(1), points (b) to (e), to issue Tier 1 instruments to the holders 
of the capital instruments, debt instruments or other eligible liabilities concerned. 

The capital instruments, debt instruments or other eligible liabilities concerned may 
only be converted where all of the following conditions are met: 

(a) 

(b) 

(c) 

(d) 

the Tier 1 instruments are issued by the insurance or reinsurance undertaking, 
by  the  entity  referred  to  Article  1(1),  points  (b)  to  (e),  or  by  the  parent 
undertaking with the agreement of the relevant resolution authority; 

the  Tier  1  instruments  are  issued  prior  to  any  issuance  of  shares  or  other 
instruments of ownership by that insurance or reinsurance undertaking or that 
entity referred to in Article 1(1), points (b) to (e), for the purposes of provision 
of own funds by the State or a government entity; 

the Tier 1 instruments are awarded and transferred without delay following the 
exercise of the conversion power; 

the conversion rate that  determines the number of Tier 1 instruments  that are 
provided in respect of each relevant capital instrument, debt instrument or other 
eligible liability complies with Article 36. 

4. 

For the purposes of the provision of Tier 1 instruments in accordance with paragraph 
3,  the  resolution  authority  may  require  insurance  or  reinsurance  undertakings  and 
entities  referred  to  in  Article  1(1),  points  (b)  to  (e),  to  maintain  at  all  times  the 
necessary prior authorisation to issue the relevant number of Tier 1 instruments. 

EN 

79 

  EN 

1. 

2. 

3. 

4. 

Article 38 

Effect of write-down or conversion 

Member States shall ensure that, where a resolution authority applies the write-down 
or  conversion  tool  and  powers  in  accordance  with  Article  34(1)  and  Article  40(1), 
points (f) to (j), the reduction of principal or outstanding amount due, conversion or 
cancellation  takes  effect  and  is  immediately  binding  on  the  undertaking  under 
resolution and affected creditors and shareholders. 

The  resolution  authority  shall  complete  or  require  the  completion  of  all  the 
administrative and procedural tasks necessary to give effect to the application of the 
write-down or conversion tool, including: 

(a) 

(b) 

(c) 

(d) 

the amendment of all registers concerned; 

the  delisting,  or  removal  from  trading  of  shares  or  other  instruments  of 
ownership or debt instruments; 

the  listing,  or  admission  to  trading  of  new  shares  or  other  instruments  of 
ownership; 

the  relisting  or  readmission  of  any  debt  instruments  which  have  been  written 
down,  without  having  to  issue  a  prospectus  as  required  by  Regulation  (EU) 
2017/1129 of the European Parliament and of the Council33. 

Where a resolution authority reduces to zero the principal amount of, or outstanding 
amount  payable  in  respect  of,  a  liability  by  means  of  the  power  referred  to  Article 
40(1), point (f), that liability and any obligations or claims arising in relation to it that 
are not accrued at the time when the power is exercised shall be treated as discharged 
for all purposes, and shall not be provable in any subsequent proceedings in relation 
to  the  undertaking  under  resolution  or  any  successor  entity  in  any  subsequent 
winding up. 

Where a resolution authority reduces in part, but not in full, the principal amount of, 
or  outstanding  amount  payable  in  respect  of,  a  liability  by  means  of  the  power 
referred to in Article 40(1), point (f): 

(a) 

(b) 

the liability shall be discharged to the extent of the amount reduced; 

the  instrument  concerned  or  the  agreement  that  created  the  original  liability 
shall  continue  to  apply  in  relation  to  the  residual  principal  amount  of,  or 
outstanding  amount  payable  in  respect  of  the  liability,  subject  to  any 
modification  of  the  amount  of  interest  payable  to  reflect  the  reduction  of  the 
principal amount, and any further modification of the terms that the resolution 
authority might make by means of the power referred to in Article 40(1), point 
(k). 

33 

Regulation  (EU)  2017/1129  of  the  European  Parliament  and  of  the  Council  of  14  June  2017  on  the 
prospectus  to  be  published  when  securities  are  offered  to  the  public  or  admitted  to  trading  on  a 
regulated market, and repealing Directive 2003/71/EC (OJ L 168, 30.6.2017, p. 12). 

EN 

80 

  EN 

                                                 
1. 

2. 

1. 

Article 39 

Removal of procedural obstacles for write-down or conversion 

Where  the  write-down  or  conversion  tool  is  applied,  Member  States  shall,  where 
applicable, require the insurance and reinsurance undertakings and entities referred to 
in  Article  1(1),  points  (b)  to  (e),  to  maintain  at  all  times  a  sufficient  amount  of 
authorised  share  capital  or  of  other  Tier  1  instruments  to  ensure  that  those 
undertakings  and  entities  are  not  prevented  from  issuing  sufficient  new  shares  or 
other instruments of ownership to ensure that the conversion of liabilities into shares 
or other instruments of ownership can be carried out effectively. 

Resolution  authorities  shall  assess  compliance  with  the  requirement  laid  down  in 
paragraph  1  in  the  context  of  the  development  and  maintenance  of  the  resolution 
plans in accordance with Article 9 and Article 10. 

Member  States  shall  ensure  that  there  are  no  procedural  impediments  to  the 
conversion  of  liabilities  to  shares  or  other  instruments  of  ownership  that  exist  by 
virtue of their instruments of incorporation or statutes, including pre-emption rights 
for  shareholders  or  requirements  for  the  consent  of  shareholders  to  an  increase  in 
capital. 

CHAPTER IV 
Resolution powers 

Article 40 

General powers 

Member States shall ensure that resolution authorities have all the powers necessary 
to apply the resolution tools referred to in Article 26(3) to insurance and reinsurance 
undertakings and to entities referred to in Article 1(1), points (b) to (e), that meet the 
conditions  for  resolution  laid  down  in  Articles  19(1)  or  20(3),  as  applicable.  In 
particular,  resolution  authorities  shall  have  the  following  resolution  powers,  which 
they may exercise individually or in any combination: 

(a) 

(b) 

(c) 

(d) 

(e) 

the  power  to  require  any  person  to  provide  any  information  required  for  the 
resolution  authority  to  decide upon and prepare  a resolution  action, including 
updates  and  supplements  of  information  provided  in  the  resolution  plans  and 
including information to be provided through on-site inspections; 

the  power  to  take  control  of  an  undertaking  under  resolution  and  exercise  all 
the  rights  and  powers  conferred  upon  the  shareholders,  other  owners  and  the 
administrative,  management  or  supervisory  body  of  the  undertaking  under 
resolution; 

the power to withdraw the authorisation to write new insurance or reinsurance 
contracts and to place an undertaking under resolution into an orderly solvent 
run-off procedure and terminate its activities; 

the  power  to  transfer  shares  or  other  instruments  of  ownership  issued  by  an 
undertaking under resolution; 

the power to  transfer to  another  entity,  with  the  consent  of that  entity, rights, 
assets or liabilities of an undertaking under resolution; 

EN 

81 

  EN 

(f) 

the  power  to  restructure  insurance  claims  or  reduce,  including  to  reduce  to 
zero,  the  principal  amount  of  or  outstanding  amount  due  in  respect  of  debt 
instruments  and  eligible 
insurance  claims,  of  an 
undertaking under resolution; 

liabilities, 

including 

(g)  with the exception of insurance claims, the power to convert debt instruments 
and eligible liabilities of an undertaking under resolution  into  ordinary shares 
or  other  instruments  of  ownership  of  that  undertaking  or  entity  referred  to  in 
Article  1(1),  points  (b)  to  (e),  of  a  relevant  parent  undertaking  or  of  a  bridge 
undertaking to which assets, rights or liabilities of the insurance or reinsurance 
undertaking  or  the  entity  referred  to  in  Article  1(1),  points  (b)  to  (e),  are 
transferred; 

(h) 

(i) 

(j) 

(k) 

(l) 

(m) 

(n) 

the  power  to  cancel  debt  instruments  issued  by  an  undertaking  under 
resolution, except for secured liabilities subject to Article 34(5); 

the power to reduce, including to reduce to zero, the nominal amount of shares 
or  other  instruments  of  ownership  of  an  undertaking  under  resolution  and  to 
cancel such shares or other instruments of ownership; 

the  power  to  require  an  undertaking  under  resolution  or  a  relevant  parent 
undertaking  to  issue  new  shares  or  other  instruments  of  ownership  or  other 
capital  instruments,  including  preference  shares  and  contingent  convertible 
instruments; 

the power to amend or alter the maturity of debt instruments and other eligible 
liabilities  issued  by  an  undertaking  under  resolution  or  amend  the  amount  of 
interest payable under such instruments and other eligible liabilities, or the date 
on which the interest becomes payable, including by suspending payment for a 
temporary period; 

the  power  to  close  out  and  terminate  financial  contracts,  or  derivatives  as 
defined in Article 2 point (5), of Regulation (EU) No 648/2012 of the European 
Parliament and of the Council; 

the power to remove or replace the administrative, management or supervisory 
body and senior management of an undertaking under resolution; 

the  power  to  require  the  supervisory  authority  to  assess  the  buyer  of  a 
qualifying  holding  in  a  timely  manner  by  way  of  derogation  from  the  time-
limits laid down in Article 58 of Directive 2009/138/EC. 

2. 

Member  States  shall  take  all  necessary  measures  to  ensure  that,  when  applying  the 
resolution  tools  referred  to  in  Article  26(3)  and  exercising  the  resolution  powers 
referred to in paragraph 1 of this Article, resolution authorities are not subject to any 
of the following requirements that would otherwise apply by virtue of national law or 
contract or otherwise: 

(a) 

subject  to  Article  3(8)  and  Article  65(1),  requirements  to  obtain  approval  or 
consent  from  any  person  either  public  or  private,  including  the  shareholders, 
the creditors or the policy holders of the undertaking under resolution; 

(b)  prior  to  the  exercise  of  the  power,  procedural  requirements  to  notify  any 
person, including any requirement to publish any notice or prospectus or to file 
or register any document with any other authority. 

EN 

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  EN 

3. 

4. 

Point (b) of the first subparagraph is without prejudice to the requirements laid down 
in  Articles  61  and  63  and  any  notification  requirements  under  the  Union  State  aid 
framework. 

Member  States  shall  ensure  that,  to  the  extent  that  any  of  the  powers  listed  in 
paragraph 1 of this Article are not applicable to an entity within the scope of Article 
1(1) of this Directive as a result of its specific legal form, resolution authorities shall 
have powers which are as similar as possible, including in terms of their effects. 

Member States shall ensure that, when resolution authorities exercise the powers laid 
down in paragraph 3, the safeguards provided for in Chapter V of this Directive, or 
safeguards  that  deliver  the  same  effect,  shall  be  applied  to  the  persons  affected, 
including shareholders, creditors, policy holders and counterparties. 

Article 41 

Ancillary powers 

1. 

Member States shall ensure that resolution authorities, when exercising a resolution 
power, have the power to do all of the following: 

(a) 

(b) 

(c) 

subject to Article 58, provide for a transfer to take effect, free from any liability 
or encumbrance affecting the financial  instruments,  rights,  assets or liabilities 
transferred;; 

remove  rights  to  acquire  any  additional  shares  or  other  instruments  of 
ownership; 

require  the  authority  concerned  to  discontinue  or  suspend  the  admission  to 
trading  on  a  regulated  market  or  the  official  listing  of  financial  instruments 
pursuant  to  Directive  2001/34/EC  of  the  European  Parliament  and  of  the 
Council34; 

(d)  provide for the recipient to be treated as if that recipient were the undertaking 
under  resolution  for  the  purposes  of  any  rights  or  obligations  of,  or  actions 
taken by, the undertaking under resolution, including, subject to the application 
of  the  sale  of  business  tool  and  the  bridge  undertaking  tool  referred  to  in 
Articles  31  and  32,  any  rights  or  obligations  relating  to  participation  in  a 
market infrastructure; 

(e) 

(f) 

(g) 

require the undertaking under resolution or the recipient to provide each other 
with information and assistance; 

cancel  or  modify  the  terms  of  a  contract  to  which  the  undertaking  under 
resolution is a party, or substitute a recipient as a party; 

transfer  any  reinsurance  rights  covering  transferred  insurance  claims  without 
the  consent  of  the  reinsurance  undertaking  where  the  resolution  authority 
transfers assets and liabilities of the undertaking under resolution in whole or in 
part to another entity. 

34 

Directive 2001/34/EC of the European Parliament and of the Council of 28 May 2001 on the admission 
of  securities  to  official  stock  exchange  listing  and  on  information  to  be  published  on  those  securities 
(OJ L 184, 6.7.2001, p. 1). 

EN 

83 

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2. 

3. 

For the purposes of point (a), any right of compensation provided in accordance with 
this Directive shall not be considered to be a liability or an encumbrance. 

Resolution authorities shall exercise the powers specified in paragraph 1 where they 
consider such exercise to be appropriate to ensure that a resolution action is effective 
or to achieve one or more resolution objectives. 

Member States shall ensure that resolution authorities exercising a resolution power 
have the power to  provide for  continuity arrangements necessary to  ensure  that the 
resolution  action  is  effective  and,  where  relevant,  to  ensure  that  the  business 
transferred  may  be  operated  by  the  recipient.  Such  continuity  arrangements  shall 
include, in particular: 

(a) 

the continuity of contracts entered into by the undertaking under resolution, so 
that  the  recipient  assumes  the  rights  and  liabilities  of  the  undertaking  under 
resolution relating to any financial instrument, right, asset or liability that has 
been  transferred  and  is  substituted  for  the  undertaking  under  resolution, 
expressly or implicitly in all relevant contractual documents; 

(b) 

the  substitution  of  the  recipient  for  the  undertaking  under  resolution  in  any 
legal  proceedings  relating  to  any  financial  instrument,  right,  asset  or  liability 
that has been transferred. 

4. 

The powers referred to in paragraph 1, point (d), and paragraph 3, point (b), shall not 
affect the following: 

(a) 

(b) 

the  right  of  an  employee  of  the  undertaking  under  resolution  to  terminate  a 
contract of employment; 

subject to Articles 47, 48 and 49, any right of a party to a contract to exercise 
rights under the contract, including the right to terminate, where entitled to do 
so in accordance with the terms of the contract by virtue of an act or omission 
by  the  undertaking  under  resolution  prior  to  the  relevant  transfer,  or  by  the 
recipient after the completion of the transfer concerned. 

Article 42 

Special management 

1. 

2. 

3. 

Member States shall ensure that resolution authorities may appoint a special manager 
to  replace  the  administrative,  management  or  supervisory  body  of  the  undertaking 
under resolution. Member States shall further ensure that the special manager has the 
qualifications, ability and knowledge to carry out his or her functions. 

The  special  manager  shall  have  all  the  powers  of  the  shareholders  and  of  the 
administrative,  management  or  supervisory  body  of  the  insurance  or  reinsurance 
undertaking. The special manager shall only exercise those powers under the control 
of  the  resolution  authority.  The  resolution  authority  may  limit  the  actions  of  the 
special manager or require prior consent for certain acts. 

The resolution authority shall make public the appointment referred to in paragraph 1 
and the terms and conditions attached to that appointment. 

The special manager shall have the statutory duty to take all the measures necessary 
to  promote  the  resolution  objectives  referred  to  in  Article  18  and  implement 
resolution actions taken by the resolution authority. In the event of inconsistency or 

EN 

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conflict  with  any  other  duty  of  management  laid  down  in  the  statutes  of  the 
undertaking or in national law, that statutory duty shall override such other duty. 

4. 

Member  States  shall  require  that  the  special  manager  shall  draw  up  reports  for  the 
appointing  resolution  authority  that  appointed  them  at  regular  intervals  set  by  the 
resolution authority and at the beginning and the end of their mandate. Those reports 
shall describe in detail the financial situation of the undertaking under resolution and 
state the reasons for the measures taken. 

5. 

The resolution authority may remove the special manager at any time. 

1. 

2. 

3. 

1. 

2. 

3. 

Article 43 

Power to require the provision of operational services and facilities 

Member States shall ensure that resolution authorities have the power to  require an 
undertaking under resolution, or any of its group entities, to provide any operational 
services or facilities that are necessary to enable a recipient to operate effectively the 
business  transferred  to  it  effectively,  including  where  the  undertaking  under 
resolution or relevant group entity has entered into normal insolvency proceedings. 

Member States shall  ensure that their resolution  authorities have powers  to  enforce 
obligations  imposed,  pursuant  to  paragraph  1,  on  group  entities  established  in  their 
territory by resolution authorities established in other Member States. 

The operational services and facilities provided in accordance with paragraphs 1 and 
2 shall be on the following terms: 

(a)  where the operational services and facilities were provided to the undertaking 
under resolution under an agreement before resolution action was taken and for 
the duration of that agreement, on the same terms; 

(b)  where there is no agreement or where the agreement has expired, on reasonable 

terms. 

Article 44 

Power to enforce crisis management measures by other Member States 

Member  States  shall  ensure  that,  where  a  transfer  of  shares,  other  instruments  of 
ownership, or assets, rights or liabilities includes assets that are located in a Member 
State other than the State of the resolution authority, or includes rights or liabilities 
under the law of a Member State other than the State of the resolution authority, the 
transfer has effect in or under the law of that other Member State. 

Member  States  shall  provide  the  resolution  authority  that  has  made,  or  intends  to 
make,  the  transfer,  with  all  reasonable  assistance  to  ensure  that  the  shares  or  other 
instruments of ownership or assets, rights or liabilities are transferred to the recipient 
in accordance with any applicable requirements of national law. 

Member  States  shall  ensure  that  shareholders,  creditors  and  third  parties  that  are 
affected  by  a  transfer  of  shares,  other  instruments  of  ownership,  assets,  rights  or 
liabilities as referred to in paragraph 1, are not entitled to prevent, challenge, or set 
aside the transfer under any provision of law of the Member State where the assets 

EN 

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4. 

5. 

6. 

are located or of the law governing the shares, other instruments of ownership, rights 
or liabilities. 

Member  States  shall  ensure  that  the  principal  amount  of  capital  instruments,  debt 
instruments  or  other  eligible  liabilities  is  reduced,  or  that  such  liabilities  or 
instruments  are  converted,  in  accordance  with  the  exercise  of  write-down  or 
conversion  powers  by  a  resolution  authority  of  another  Member  State  to  an 
undertaking under resolution, where the relevant liabilities or instruments: 

(a) 

(b) 

are governed by the law of the Member State other than the Member State of 
the resolution authority that exercised the write-down or conversion powers; 

are owed to creditors located in the Member State other than the Member State 
of the resolution authority that exercised the write-down or conversion powers. 

Member States shall ensure that creditors that are affected by the exercise of write-
down or  conversion powers referred to  in  paragraph 4  are not  entitled to challenge 
the reduction of the principal amount of the instrument or liability or its conversion, 
as the case may be, under any provision of law of the Member State other than the 
Member State of the resolution authority that exercised the write-down or conversion 
powers. 

Each Member State shall ensure that all of the following is determined in accordance 
with the law of the Member State of the resolution authority: 

(a) 

(b) 

the  right  for  shareholders,  creditors  and  third  parties  to  challenge,  by  way  of 
appeal  as  laid  down  in  Article  65,  a  transfer  of  shares,  other  instruments  of 
ownership, assets, rights or liabilities referred to in paragraph 1 of this Article; 

the right for creditors to challenge, by way of appeal as laid down in Article 65, 
the  reduction  of  the  principal  amount,  or  the  conversion,  of  an  instrument  or 
liability covered by paragraph 4 points (a) or (b), of this Article; 

(c) 

the  safeguards  for  partial  transfers,  as  referred  to  in  Chapter  V,  in  relation  to 
the assets, rights or liabilities referred to in paragraph 1. 

Article 45 

Power in respect of assets, rights, liabilities, shares and other instruments of ownership 
located in or governed by the law of third countries 

1. 

Member States shall provide that, in cases in which resolution action involves action 
taken  in  respect  of  assets  located  in  a  third  country  or  shares,  other  instruments  of 
ownership,  rights  or  liabilities  governed  by  the  law  of  a  third  country,  resolution 
authorities may require that: 

(a) 

(b) 

the  person  exercising  control  over  the  undertaking  under  resolution  and  the 
recipient take all steps necessary to  ensure that the resolution action becomes 
effective; 

the  person  exercising  control  over  the  undertaking  under  resolution  hold  the 
shares,  other  instruments  of  ownership,  assets  or  rights  or  discharge  the 
liabilities  on  behalf  of  the  recipient  until  the  resolution  action  becomes 
effective; 

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2. 

3. 

1. 

(c) 

the reasonable expenses of the recipient properly incurred in carrying out any 
action required under points (a) and (b) are met in any of the ways referred to 
in Article 26(5). 

In order to facilitate potential action pursuant to paragraph 1 of this Article, Member 
States shall require insurance or reinsurance undertakings and entities referred to in 
Article 1(1), points (b) to (e), to include into the related agreements contractual terms 
by  which  shareholders,  creditors  or  parties  to  the  agreement  creating  the  liability 
recognise that the liability may be subject  to  write-down or conversion powers and 
agree  to  be  bound  by  any  reduction  of  the  principal  or  outstanding  amount  due, 
conversion  or  cancellation  that  is  effected  by  the  exercise  of  those  powers  by  a 
resolution authority. 

Member  States  shall  ensure  that  resolution  authorities  may  require  insurance  or 
reinsurance undertakings and entities as referred to in Article 1(1), points (b) to (e), 
to  provide  those  resolution  authorities  with  a  reasoned  legal  opinion  by  an 
independent  legal  expert  confirming  the  legal  enforceability  and  effectiveness  of 
such contractual terms. 

Where a resolution authority assesses that, in spite of all the necessary steps taken by 
the  person  exercising  control  over  the  undertaking  under  resolution  in  accordance 
with  paragraph  1,  point  (a),  it  is  highly  unlikely  that  the  resolution  action  will 
become  effective  in  relation  to  certain  assets  located  in  a  third  country  or  certain 
shares, other instruments of ownership, rights or liabilities governed by the law of a 
third  country,  the  resolution  authority  shall  not  proceed  with  the  resolution  action. 
Where  the  resolution  authority  has  already  ordered  the  resolution  action,  that  order 
shall  be  void  in  relation  to  the  assets,  shares,  instruments  of  ownership,  rights  or 
liabilities concerned. 

Article 46 

Exclusion of certain contractual terms 

A crisis prevention measure or a crisis management measure taken in relation to an 
entity,  including  the  occurrence  of  any  event  directly  linked  to  the  application  of 
such  a  measure,  shall  not,  per  se,  under  a  contract  entered  into  by  the  entity 
concerned, be deemed to be an enforcement event  within the meaning of Directive 
2002/47/EC  or  insolvency  proceedings  within  the  meaning  of  Directive  98/26/EC, 
provided that the substantive obligations under that contract, including payment and 
delivery obligations and the provision of collateral, continue to be performed. 

In  addition,  a  crisis  prevention  measure  or  a  crisis  management  measure  shall  not, 
per  se,  be  deemed  to  be  an  enforcement  event  within  the  meaning  of  Directive 
2002/47/EC  or  insolvency  proceedings  within  the  meaning  of  Directive  98/26/EC 
under a contract entered into by: 

(a) 

a  subsidiary,  where  the  parent  undertaking  or  any  group  entity  guarantees  or 
otherwise supports the obligations under that contract; or 

(b) 

any entity of a group, where the contract contains cross-default provisions. 

2. 

Where third country resolution proceedings are recognised pursuant to Article 73, or, 
in  the  absence  of  such  recognition,  where  a  resolution  authority  so  decides,  third 

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country resolution proceedings shall for the purposes of this Article constitute a crisis 
management measure. 

3. 

Provided that the substantive obligations under the contract, including payment and 
delivery  obligations,  and  provision  of  collateral,  continue  to  be  performed,  a  crisis 
prevention  measure,  or  a  crisis  management  measure,  including  any  event  directly 
linked  to  the  application  of  such  a  measure,  shall  not,  per  se,  make  it  possible  for 
anyone to: 

(a) 

exercise  any  termination,  suspension,  modification,  netting  or  set-off  rights, 
including in relation to a contract entered into by: 

(i) 

a subsidiary, where the obligations under the contract  are  guaranteed or 
otherwise supported by a group entity; 

(ii) 

any group entity, where the contract contains cross-default provisions; 

(b)  obtain possession, exercise control or enforce any security over any property of 
the  insurance  or  reinsurance  undertaking  or  the  entity  referred  to  in  Article 
1(1), points (b) to  (e), concerned or any  group  entity in  relation  to  a  contract 
which contains cross-default provisions; 

(c) 

affect any contractual rights of the insurance or reinsurance undertaking or the 
entity  referred  to  in  Article  1(1),  points  (b)  to  (e),  concerned  or  any  group 
entity in relation to a contract which contains cross-default provisions. 

Paragraphs  1,  2  and  3  shall  not  affect  the  right  of  a  person  to  take  an  action  as 
referred to in paragraph 3, points (a), (b) or (c) where that right arises by virtue of an 
event other than the crisis prevention measure, the crisis management measure, or by 
virtue of any event directly linked to the application of such a measure. 

A  suspension  or  restriction  under  Articles  47  or  48  shall  not  constitute  non-
performance of a contractual obligation for the purposes of paragraphs 1 and 3 of this 
Article and of Article 49(1). 

The  provisions  contained  in  this  Article  shall  be  considered  to  be  overriding 
mandatory  provisions  within  the  meaning  of  Article  9  of  Regulation  (EC)  No 
593/2008 of the European Parliament and of the Council35. 

Article 47 

Power to suspend certain obligations 

Member States shall ensure that resolution authorities have the power to suspend any 
payment  or  delivery  obligations  pursuant  to  any  contract  to  which  an  undertaking 
under  resolution  is  a  party  from  the  publication  of  a  notice  of  the  suspension  in 
accordance with  Article 63(3) until  midnight  in the Member State of the resolution 
authority of the undertaking under resolution at the end of the business day following 
that publication. 

4. 

5. 

6. 

1. 

35 

Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the 
law applicable to contractual obligations (Rome I) (OJ L 177, 4.7.2008, p. 6). 

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2. 

3. 

4. 

A  payment  or  delivery  obligation  that  would  have  been  due  during  the  suspension 
period  referred  to  in  paragraph  1  shall  be  due  immediately  upon  expiry  of  the 
suspension period. 

Where  an  undertaking  under  resolution’s  payment  or  delivery  obligations  under  a 
contract  are  suspended  in  accordance  with  paragraph  1,  the  payment  or  delivery 
obligations  of  the  undertaking  under  resolution’s  counterparties  under  that  contract 
shall be suspended for the same period of time. 

Any  suspension  under  paragraph  1  shall  not  apply  to  payment  and  delivery 
obligations owed to the following:  

(a) 

systems  and  operators  of  systems  designated  in  accordance  with  Directive 
98/26/EC; 

(b)  CCPs  authorised  in  the  Union  pursuant  to  Article  14  of  Regulation  (EU)  No 
648/2012 and third-country CCPs recognised by ESMA pursuant to Article 25 
of that Regulation. 

5. 

When exercising a power under this Article, resolution authorities shall have regard 
to the impact the exercise of that power might have. 

The  resolution  authorities  shall  set  the  scope  of  that  power  having  regard  to  the 
circumstances of each case. 

Article 48 

Power to restrict the enforcement of security interests 

1. 

Member  States  shall  ensure  that  resolution  authorities  have  the  power  to  restrict 
secured creditors of an undertaking under resolution from enforcing security interests 
in  relation  to  any  assets  of that undertaking  from the publication of  a notice of the 
restriction in accordance with Article 63(3) until midnight in the Member State of the 
resolution authority of the undertaking under resolution at the end of the business day 
following that publication. 

2. 

Any restriction under paragraph 1 shall not apply to: 

(a) 

security interest of systems or operators of systems designated for the purposes 
of Directive 98/26/EC; 

(b)  CCPs  authorised  in  the  Union  pursuant  to  Article  14  of  Regulation  (EU)  No 
648/2012  and  third-country  central  counterparties  recognised  by  ESMA 
pursuant to Article 25 of that Regulation. 

Where  Article  60  applies,  resolution  authorities  shall  ensure  that  any  restrictions 
imposed  pursuant  to  the  power  referred  to  in  paragraph  1  of  this  Article  are 
consistent for all group entities in relation to which a resolution action is taken. 

Article 49 

Power to temporarily suspend termination rights 

Member States shall ensure that resolution authorities have the power to suspend the 
termination  rights  of  any  party  to  a  contract  with  an  undertaking  under  resolution 
from the publication of the notice in accordance with Article 63(3) until midnight in 

3. 

1. 

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the Member State of the resolution  authority of the undertaking under resolution  at 
the end of the business day following that publication, provided that the payment and 
delivery obligations and the provision of collateral continue to be performed. 

2. 

Member States shall ensure that resolution authorities have the power to suspend the 
termination  rights  of  any  party  to  a  contract  with  a  subsidiary  of  an  undertaking 
under resolution where any of the following applies: 

(a) 

(b) 

(c) 

the  obligations  under  that  contract  are  guaranteed  or  are  otherwise  supported 
by the undertaking under resolution; 

the termination rights under that contract are based solely on the insolvency or 
financial condition of the undertaking under resolution; 

in the case of a transfer power that has been or may be exercised in relation to 
the undertaking under resolution, either: 

(i) 

(ii) 

all the assets and liabilities of the subsidiary relating to that contract have 
been or may be transferred to and assumed by the recipient; or 

the resolution authority provides in any other way adequate protection for 
such obligations. 

The suspension of the termination rights shall take effect from the publication of the 
notice in accordance with Article 63(3) until midnight in the Member State where the 
subsidiary  of  the  undertaking  under  resolution  is  established  on  the  business  day 
following that publication. 

3. 

Any suspension under paragraph 1 or 2 shall not apply to: 

4. 

5. 

(a) 

systems  or  operators  of  systems  designated  for  the  purposes  of  Directive 
98/26/EC; or 

(b)  CCPs  authorised  in  the  Union  pursuant  to  Article  14  of  Regulation  (EU)  No 
648/2012  and  third-country  central  counterparties  recognised  by  ESMA 
pursuant to Article 25 of that Regulation. 

A  person  may  exercise  a  termination  right  under  a  contract  before  the  end  of  the 
period  referred  to  in  paragraph  1  or  2  where  that  person  receives  notice  from  the 
resolution authority that the rights and liabilities covered by the contract shall not be: 

(a) 

transferred to another entity; or 

(b) 

subject to write-down or conversion in accordance with Article 34(1), point (a). 

Where a resolution authority exercises the power specified in paragraph 1 or 2 of this 
Article to suspend termination rights, and where no notice has been given pursuant to 
paragraph 4 of this Article, those termination rights may be exercised on the expiry 
of the period of suspension, subject to Article 46, as follows: 

(a)  where the rights and liabilities covered by the contract have been transferred to 
another  entity,  a  counterparty  may  exercise  those  termination  rights  in 
accordance  with  the  terms  of  that  contract  only  on  the  occurrence  of  any 
continuing or subsequent enforcement event by the recipient; 

(b)  where  the  rights  and  liabilities  covered  by  the  contract  remain  with  the 
undertaking  under  resolution  and  the  resolution  authority  has  not  applied  the 
write-down  or  conversion  tool  to  that  contract  for  the  purpose  laid  down  in 
Article 34(1), point (a) , a counterparty may exercise those termination rights in 

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accordance  with  the  terms  of  that  contract  on  the  expiry  of  a  suspension 
referred to in paragraph 1 of this Article. 

Article 50 

1. 

2. 

Contractual recognition of resolution stay powers 

Member  States  shall  require  insurance  and  reinsurance  undertakings  and  entities 
referred to in Article 1(1), points (b) to (e), to include in any financial contract which 
they  enter  into  and  which  is  governed  by  third-country  law,  terms  by  which  the 
parties recognise that the financial contract may be subject to the exercise of powers 
by the resolution authority to suspend or restrict rights and obligations under Articles 
47, 48, and 49, and recognise that they are bound by the requirements of Article 46. 

Member  States  may  also  require  that  ultimate  parent  undertakings  ensure  that  their 
third-country  subsidiaries  which  are  insurance  and  reinsurance  undertakings  or 
entities referred to in Article 1(1) points (b) to (e), include, in the financial contracts 
referred  to  in  paragraph  1,  terms  to  exclude  that  the  exercise  of  the  power  of  the 
resolution authority to suspend or restrict rights and obligations of the ultimate parent 
undertaking,  in  accordance  with  paragraph  1,  constitutes  a  valid  ground  for  early 
termination,  suspension,  modification,  netting,  exercise  of  set-off  rights  or 
enforcement of security interests on those contracts. 

3. 

Paragraph 1 shall apply to any financial contract which: 

4. 

5. 

(a) 

creates a new obligation, or materially amends an existing obligation after the 
entry  into  force  of  the  provisions  adopted  at  national  level  to  transpose  this 
Article; 

(b)  provides for the exercise of one or more termination rights or rights to enforce 
security interests to which Article 46, 47, 48 or 49 would apply if the financial 
contract were governed by the laws of a Member State. 

The  fact  that  an  insurance  or  reinsurance  undertaking  or  an  entity  as  referred  to  in 
Article  1(1),  points  (b)  to  (e),  does  not  include  in  its  financial  contracts  the 
contractual  terms  referred  to  in  paragraph  1  of  this  Article  shall  not  prevent  the 
resolution authority from applying the powers referred to in Articles 46, 47, 48 or 49 
in relation to that financial contract. 

EIOPA shall develop  draft regulatory technical  standards to  specify the contents of 
the  contractual  term  referred  to  in  paragraph  1,  taking  into  account  the  different 
business models of insurance and reinsurance undertakings and entities. 

EIOPA shall submit those draft regulatory technical standards to the Commission by 
[PO – add 18 months after entry into force]. 

Power  is  delegated  to  the  Commission  to  adopt  the  regulatory  technical  standards 
referred  to  in  the  first  subparagraph  in  accordance  with  Articles  10  to  14  of 
Regulation (EU) No 1094/2010. 

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Article 51 

Power to temporarily suspend redemption rights 

1. 

2. 

Member States shall ensure that resolution authorities have the power to temporarily 
restrict  or  suspend  redemption  rights  of  policy  holders  in  relation  to  life  insurance 
contracts  written by the  undertaking under resolution, provided that the substantive 
obligations under the contracts, and in particular payment obligations for the benefit 
of policy holders, beneficiaries or injured parties, continue to be performed. 

The  power  referred  to  in  paragraph  1  shall  only  be  used  as  long  as  necessary  to 
facilitate the application of one or more of the resolution tools referred to in Article 
26(3).  That  power  shall  be  valid  for  the  period  of  time  specified  in  the  notice  of 
suspension published in accordance with Article 63(3). 

Article 52 

Exercise of the resolution powers 

1. 

Member  States  shall  ensure  that  resolution  authorities  are  able  to  exercise  control 
over the undertaking under resolution, so as to: 

(a) 

operate  and  conduct  the  activities  and  services  of  the  undertaking  under 
resolution  with  all  the  powers  of  its  shareholders  and  administrative, 
management or supervisory body; 

(b)  manage  and  dispose  of  the  assets  and  property  of  the  undertaking  under 

resolution. 

The  control  referred  to  in  the  first  subparagraph  may  be  exercised  directly  by  the 
resolution authority or indirectly by a person or persons appointed by the resolution 
authority. Member States shall ensure that voting rights conferred by shares or other 
instruments  of  ownership  of  the  undertaking  under  resolution  cannot  be  exercised 
during the period of resolution. 

Member States shall ensure that resolution authorities, subject to the right of appeal 
referred  to  in  Article  65(1),  are  able  to  take  a  resolution  action  through  executive 
order  in  accordance  with  national  administrative  competences  and  procedures, 
without exercising control over the undertaking under resolution. 

Resolution authorities shall decide in each particular case whether it is appropriate to 
carry  out  the  resolution  action  through  the  means  specified  in  paragraph  1  or  in 
paragraph 2, having regard to the resolution objectives referred to in Article 18 and 
the  general  principles  governing  resolution  referred  to  in  Article  22,  the  specific 
circumstances  of  the  undertaking  under  resolution  in  question  and  the  need  to 
facilitate the effective resolution of cross-border groups. 

Resolution  authorities  shall  not  be  deemed  to  be  shadow  directors  or  de  facto 
directors under national law. 

2. 

3. 

4. 

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CHAPTER V 
Safeguards 

Article 53 

Treatment of shareholders and creditors in the case of partial transfers and application 
of the write-down or conversion tool 

1. 

2. 

1. 

Member States shall ensure that, where one or more resolution tools as referred to in 
Article  26(3)  have  been  applied,  except  in  a  situation  described  in  the  second 
subparagraph, and where resolution authorities transfer only parts of the rights, assets 
and liabilities of the undertaking under resolution, the shareholders and the creditors 
whose claims have not been transferred, receive in satisfaction of their claims at least 
as much  as  what  they would  have  received if the undertaking  under resolution  had 
been wound up under normal insolvency proceedings at the time when the decision 
referred to in Article 62 was taken. 

Member States shall ensure that, where one or more resolution tools as referred to in 
Article  26(3)  have  been  applied  and  where  resolution  authorities  apply  the  write-
down  or  conversion  tool,  the  shareholders  and  creditors  whose  claims  have  been 
written down or converted to equity do not incur greater losses than they would have 
incurred  if  the  undertaking  under  resolution  had  been  wound  up  under  normal 
insolvency  proceedings  immediately  at  the  time  when  the  decision  referred  to  in 
Article 62 was taken. 

Article 54 

Valuation of difference in treatment 

For  the  purposes  of  assessing  whether  shareholders  and  creditors  would  have 
received better treatment if the undertaking under resolution had entered into normal 
insolvency  proceedings,  Member  States  shall  ensure  that  an  independent  person 
caries out a valuation as soon as possible after the resolution action or actions have 
been  effected.  That  valuation  shall  be  distinct  from  the  valuation  carried  out  under 
Article 23. 

2. 

The valuation in paragraph 1 shall determine: 

(a) 

the  treatment  that  shareholders  and  creditors,  or  the  relevant  insurance 
guarantee  schemes,  would  have  received  if  the  undertaking  under  resolution 
with  respect  to  which  the  resolution  action  or  actions  have  been  effected  had 
entered normal insolvency proceedings at the time when the decision referred 
to in Article 62 was taken; 

(b) 

the  actual  treatment  that  shareholders  and  creditors  have  received,  in  the 
resolution of the undertaking under resolution; 

(c)  whether  there  is  any  difference  between  the  treatment  referred  to  in  point  (a) 

and the treatment referred to in point (b). 

3. 

The valuation shall: 

(a) 

assume  that  the  undertaking  under  resolution  with  respect  to  which  the 
resolution  action  or  actions  have  been  effected,  would  have  entered  normal 

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insolvency proceedings at the time when the decision referred to in Article 62 
was taken; 

(b) 

assume that the resolution action or actions had not been effected; 

(c) 

disregard  any  provision  of  extraordinary  public  financial  support  to  the 
undertaking under resolution. 

4. 

regulatory 

EIOPA  shall  develop  draft 
the 
methodology  for  carrying  out  the  valuation  in  this  Article,  in  particular  the 
methodology for assessing the treatment that shareholders and creditors would have 
received  if  the  undertaking  under  resolution  had  entered  insolvency  proceedings  at 
the time when the decision referred to in Article 62 was taken. 

technical  standards  specifying 

Power  is  delegated  to  the  Commission  to  adopt  the  regulatory  technical  standards 
referred  to  in  the  first  subparagraph  in  accordance  with  Articles  10  to  14  of 
Regulation (EU) No 1094/2010. 

Article 55 

Safeguard for shareholders and creditors 

Member States shall ensure that where the valuation carried out under Article 54 determines 
that  any  shareholder  or  creditor  referred  to  in  Article  53,  or,  where  relevant,  the  insurance 
guarantee scheme in accordance with the applicable national law, has incurred greater losses 
than  it  would  have  incurred  in  a  winding  up  under  normal  insolvency  proceedings,  it  is 
entitled to payment of the difference. 

Article 56 

Safeguard for counterparties in partial transfers 

1. 

Member States shall ensure appropriate protection of the following arrangements and 
of the counterparties to the following arrangements: 

(a) 

(b) 

security arrangements, under which a person has by way of security an actual 
or  contingent  interest  in  the  assets  or  rights  that  are  subject  to  transfer, 
irrespective of whether that interest is secured by specific assets or rights or by 
way of a floating charge or similar arrangement; 

title transfer financial collateral arrangements, under which collateral to secure 
or cover the performance of specified obligations is provided by a transfer of 
full ownership of assets from the collateral provider to the collateral taker, on 
terms providing for the collateral taker to transfer assets where those specified 
obligations are performed; 

(c) 

set-off  arrangements,  under  which  two  or  more  claims  or  obligations  owed 
between  the  undertaking  under  resolution  and  a  counterparty  can  be  set  off 
against each other; 

(d)  netting arrangements; 

(e) 

(f) 

unit-linked policies or other ring-fenced portfolios; 

reinsurance agreements; 

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(g) 

structured finance arrangements, including securitisations and instruments used 
for hedging purposes which form an integral part of the cover pool and which 
according to national law are secured, and involve the granting and holding of 
security by a party to the arrangement or a trustee, agent or nominee. 

The form of protection that is appropriate, for the classes of arrangements specified 
in points (a) to (g) of this paragraph and shall be chosen in accordance with Articles 
57 to 60. 

2. 

Member States shall ensure that the protections specified in paragraph 1 apply in the 
following circumstances: 

(a) 

a resolution authority transfers some but not all of the assets, rights or liabilities 
of  an  undertaking  under  resolution  to  another  entity  or,  in  the  exercise  of  a 
resolution  tool  as  referred  to  in  Article  26(3),  from  a  bridge  undertaking  or 
asset and liability management vehicle to another person; 

(b) 

a resolution authority exercises the powers specified in Article 41(1), point (f). 

3. 

The requirement under paragraph 1 shall apply irrespective of the number of parties 
involved in the arrangements and of whether the arrangements: 

(a) 

(b) 

are  created  by  contract,  trusts  or  other  means,  or  arise  automatically  by 
operation of law; 

arise under or are governed in whole or in part by the law of another Member 
State or of a third country. 

Article 57 

Protection for financial collateral, set off and netting agreements, and reinsurance 
agreements 

1. 

2. 

Member  States  shall  ensure  that  there  is  appropriate  protection  for  title  transfer 
financial  collateral  arrangements,  set-off  and  netting  arrangements,  and  reinsurance 
agreements  so  as  to  prevent  the  transfer  of  some,  but  not  all,  of  the  rights  and 
liabilities that are protected under a title transfer financial collateral  arrangement,  a 
set-off  arrangement,  a  netting  arrangement  or  a  reinsurance  agreement  between  the 
undertaking under resolution and another person and the modification or termination 
of  rights  and  liabilities  that  are  protected  under  such  a  title  transfer  financial 
collateral arrangement, a set-off arrangement, a netting arrangement or a reinsurance 
agreement through the use of ancillary powers. 

For the purposes  of the first  subparagraph, rights and liabilities are to  be treated as 
protected under a title transfer financial collateral arrangement, a set-off and netting 
arrangement  and  a  reinsurance  agreement  where  the  parties  to  the  arrangement  or 
arrangement are entitled to set-off or net those rights and liabilities. 

Notwithstanding  paragraph  1,  where  necessary  to  better  achieve  the  resolution 
objectives referred to in Article 18 and in particular to ensure a better protection of 
policy holders, resolution authorities may transfer, modify or terminate assets, rights 
or liabilities that are part of a title transfer financial collateral arrangement, a set-off 
and netting arrangement, or a reinsurance agreement. 

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Article 58 

Protection for security arrangements 

1. 

Member States shall ensure that there is appropriate protection for liabilities secured 
under a security arrangement to prevent one or more of the following: 

(a) 

(b) 

(c) 

(d) 

the transfer of assets against which the liability is secured, unless that liability 
and benefit of the security are also transferred; 

the  transfer  of  a  secured  liability,  unless  the  benefit  of  the  security  are  also 
transferred; 

the  transfer  of  the  benefit  of  the  security,  unless  the  secured  liability  is  also 
transferred; 

the  modification  or  termination  of  a  security  arrangement  through  the  use  of 
ancillary powers, where the effect of that modification or termination would be 
that the liability ceases to be secured. 

Notwithstanding  paragraph  1,  where  necessary  in  order  to  better  achieve  the 
resolution  objectives  referred  to  in  Article  18  and  in  particular  ensure  a  better 
protection of policy holders, resolution  authority  may transfer, modify  or  terminate 
assets, rights or liabilities that are part of the same arrangement. 

Article 59 

Protection for structured finance arrangements and other ring-fenced portfolios 

Member States shall ensure that there is appropriate protection for structured finance 
arrangements  or  other  ring-fenced  portfolios,  including  arrangements  referred  to  in 
Article 56(1), points (e) and (g), to prevent either of the following: 

(a) 

(b) 

the  transfer  of  some,  but  not  all,  of  the  assets,  rights  and  liabilities  which 
constitute or form part of a structured finance arrangement or other ring-fenced 
portfolios,  including  the  arrangements  referred  to  in  Article  56(1),  points  (e) 
and (g), to which the undertaking under resolution is a party; 

the  termination  or  modification  through  the  use  of  ancillary  powers  of  the 
assets,  rights  and  liabilities  which  constitute  or  form  part  of  a  structured 
finance  arrangement  or  other  ring-fenced  portfolios,  including  arrangements 
referred to in Article 56(1), points (e) and (g), to which the undertaking under 
resolution is a party. 

Notwithstanding  paragraph  1,  where  necessary  to  better  achieve  the  resolution 
objectives referred to in Article 18 and in particular to ensure a better protection of 
policy holders, resolution authorities may transfer, modify or terminate assets, rights 
or liabilities that are part of the same arrangement. 

2. 

1. 

2. 

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Article 60 

Partial transfers: protection of trading, clearing and settlement systems 

1. 

Member States shall ensure that the application of a resolution tool as referred to in 
Article 26(3) does not affect the operation of systems and rules of systems covered 
by Directive 98/26/EC, where the resolution authority does either of the following: 

(a) 

transfers some, but  not  all of the assets, rights  or liabilities of an undertaking 
under resolution to another entity; 

(b)  uses the ancillary powers referred to in Article 41 to cancel or amend the terms 
of  a  contract  to  which  the  undertaking  under  resolution  is  a  party  or  to 
substitute a recipient as a party. 

2. 

A  transfer,  cancellation  or  amendment  as  referred  to  in  paragraph  1  of  this  Article 
shall not: 

(a) 

revoke a transfer order in contravention of Article 5 of Directive 98/26/EC; 

(b)  modify or negate the enforceability of transfer orders and netting as required by 
Articles  3  and  5  of  Directive  98/26/EC,  the  use  of  funds,  securities  or  credit 
facilities as required by Article 4 of that Directive or the protection of collateral 
security as required by Article 9 of that Directive. 

CHAPTER VI 
Procedural obligations 

Article 61 

Notification requirements 

1. 

Member States shall require the administrative, management or supervisory body of 
an insurance or reinsurance undertaking or any entity as referred to in  Article 1(1), 
points (b) to (e), to notify the supervisory authority where those bodies consider that 
the  insurance  or  reinsurance  undertaking  or  the  entity  referred  to  in  Article  1(1), 
points  (b)  to  (e),  is  failing  or  likely  to  fail,  within  the  meaning  specified  in  Article 
19(3). 

2. 

Supervisory authorities shall inform the resolution authorities concerned of: 

(a) 

(b) 

any notifications received under paragraph 1 of this Article, under Articles 136, 
138(1) and 139(1) of Directive 2009/138/EC; 

any  actions  the  supervisory  authority  requires  the  insurance  or  reinsurance 
undertaking or any  entity  referred to  in Article  1(1), points (b) to  (e), to  take 
pursuant  to  the  exercise  of  the  powers  it  has  under  Article  15  or  16  of  this 
Directive,  and  under  Article  137,  Article  138,  paragraphs  3  and  5,  Article 
139(3), and Articles 140, 141 and 144 of Directive 2009/138/EC; 

(c) 

any  extension  of  the  recovery  period  pursuant  to  Article  138(4)  of  Directive 
2009/138/EC. 

The supervisory authorities shall also provide the resolution authorities with a copy 
of  the  recovery  plan  that  the  insurance  or  reinsurance  undertaking  or  any  entity 
referred to in Article 1(1), points (b) to (e), has submitted pursuant to Article 138(2) 

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of Directive 2009/138/EC, a copy of the finance scheme submitted by the insurance 
or reinsurance undertaking, or any entity referred to in Article 1(1), points (b) to (e), 
pursuant to Article 139(2) of Directive 2009/138/EC and the supervisory authorities’ 
opinion on those documents, as applicable. 

3. 

A  supervisory  authority  or  resolution  authority  that  determines  that  the  conditions 
referred to in Article 19(1), points (a) and (b), are met in relation to an insurance or 
reinsurance undertaking or an entity referred to in Article 1(1), points (b) to (e), shall 
communicate  that  determination  without  delay  to  the  following  authorities,  if 
different: 

(a) 

the resolution authority for that undertaking or entity; 

(b) 

the supervisory authority for that undertaking or entity; 

(c) 

(d) 

(e) 

the supervisory authority of any Member State where that undertaking or entity 
carries out significant cross border activities ; 

the resolution authority of any Member State where that undertaking or entity 
carries out significant cross border activities; 

the insurance guarantee scheme to which an insurance undertaking is affiliated, 
where applicable and where necessary to enable the functions of the insurance 
guarantee scheme to be discharged; 

(f)  where applicable, the group resolution authority; 

(g) 

the competent ministry; 

(h)  where applicable, the group supervisor; 

(i) 

the  European  Systemic  Risk  Board  and 
macroprudential authority. 

the  designated  national 

Article 62 

Decision of the resolution authority 

1. 

2. 

On  receiving  a  communication  from  the  supervisory  authority  pursuant  to  Article 
61(3),  or  on  its  own  initiative,  the  resolution  authority  shall  determine  whether  the 
conditions  of  Article  19(1)  or  Article  20(3)  are  met  in  respect  of  the  insurance  or 
reinsurance undertaking or the entity referred to in Article 1(1), points (b) to (e), in 
question. 

A  decision  to  take  or  not  to  take  resolution  action  in  relation  to  an  insurance  or 
reinsurance undertaking or an entity as referred to in Article 1(1), points (b) to  (e), 
shall contain the following information: 

(a) 

(b) 

the reasons for that decision; 

the  resolution  action  that  the  resolution  authority  intends  to  take,  including, 
where appropriate, the determination to apply for winding up, the appointment 
of  an  administrator  or  any  other  measure  under  applicable  normal  insolvency 
proceedings or, subject to Article 26(8), under national law. 

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Article 63 

Procedural obligations of resolution authorities 

1. 

2. 

Member  States  shall  ensure  that,  as  soon  as  reasonably  practicable  after  taking  a 
resolution  action,  resolution  authorities  comply  with  the  requirements  laid  down  in 
paragraphs 2 and 3. 

Resolution authorities shall notify the undertaking under resolution and the following 
authorities, if different, of the resolution action referred to in paragraph 1: 

(a) 

the supervisory authority for the undertaking under resolution; 

(b) 

the supervisory authority of any branch of the undertaking under resolution; 

(c) 

the central bank of the Member State in which the undertaking under resolution 
is established; 

(d)  where  applicable,  the  insurance  guarantee  scheme  to  which  the  undertaking 

under resolution is affiliated; 

(e)  where applicable, the group resolution authority; 

(f) 

the competent ministry; 

(g)  where applicable, the group supervisory authority; 

(h) 

the  designated  national  macroprudential  authority  and  the  European  Systemic 
Risk Board ; 

(i) 

the Commission, the European Central Bank, EIOPA, ESMA and EBA; 

(j)  where the undertaking under resolution is an institution as defined in Article 2, 
point  (b),  of  Directive  98/26/EC,  the  operators  of  the  systems  in  which  it 
participates. 

3. 

The resolution authority shall publish or ensure the publication of a copy of the order 
or  instrument  by  which  the  resolution  action  is  taken,  or  a  notice  summarising  the 
effects  of  the  resolution  action,  including  the  effects  on  policy  holders  and,  where 
applicable,  the  terms  and  period  of  suspension  or  restriction  referred  to  in  Articles 
47, 48 and 49, by the following means: 

(a) 

on its official website; 

(b)  on  the  website  of  the  supervisory  authority,  if  different  from  the  resolution 

authority, and on the website of EIOPA; 

(c) 

on the website of the undertaking under resolution; 

(d)  where  the  shares,  other  instruments  of  ownership  or  debt  instruments  of  the 
undertaking under resolution are admitted to trading on a regulated market, the 
means  used  for  the  disclosure  of  regulated  information  concerning  the 
undertaking  under  resolution  in  accordance  with  Article  21(1)  of  Directive 
2004/109/EC of the European Parliament and of the Council36. 

36 

Directive  2004/109/EC  of  the  European  Parliament  and  of  the  Council  of  15  December  2004  on  the 
harmonisation of transparency requirements in relation to information about issuers whose securities are 
admitted to trading on a regulated market and amending Directive 2001/34/EC (OJ L 390, 31.12.2004, 
p. 38). 

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4. 

Where the shares, instruments of ownership or debt instruments are not admitted to 
trading  on  a  regulated  market,  the  resolution  authority  shall  ensure  that  the 
documents providing proof of the instruments referred to in paragraph 3 are sent to 
the  shareholders  and  creditors  of  the  undertaking  under  resolution  that  are  known 
through the registers or databases of the undertaking under resolution and which are 
available to the resolution authority. 

Article 64 

Confidentiality 

1. 

Member  States  shall  ensure  that  the  requirements  of  professional  secrecy  shall  be 
binding  in  respect  of  the  following  persons,  authorities  and  bodies  and  that  no 
confidential information is disclosed by any of them: 

(a) 

resolution authorities; 

(b) 

supervisory authorities and EIOPA; 

(c) 

competent ministries; 

(d) 

special managers appointed in accordance with Article 42 of this Directive; 

(e) 

(f) 

potential  acquirers  that  have  been  contacted  by  the  supervisory  authorities  or 
solicited  by  the  resolution  authorities,  irrespective  of  whether  that  contact  or 
solicitation was made as a preparation for the use of the sale of business tool, 
and irrespective of whether the solicitation resulted in an acquisition; 

auditors, accountants, legal and professional advisors, valuers and other experts 
directly  or  indirectly  engaged  by  the  resolution  authorities,  supervisory 
authorities,  competent  ministries  or  by  the  potential  acquirers  referred  to  in 
point (e); 

(g)  bodies which administer insurance guarantee schemes; 

(h) 

the body in charge of the financing arrangements; 

(i) 

(j) 

(k) 

(l) 

central banks and other authorities involved in the resolution process; 

a bridge institution or an asset management vehicle; 

any other person who provides or has provided services directly or indirectly, 
permanently or occasionally, to persons referred to in points (a) to (j); 

the  administrative,  management  and 
senior  management,  members  of 
supervisory body, and employees of the bodies or entities referred to in points 
(a) to (j) before, during and after their appointment. 

2. 

Without prejudice to the generality of the requirements under paragraph 1, Member 
States  shall  ensure  that  the  persons  referred  to  in  paragraph  1  shall  be  prohibited 
from  disclosing  confidential  information  received  during  the  course  of  their 
professional  activities,  or  received  from  a  supervisory  authority  or  resolution 
authority  in  connection  with  that  authority’s  functions  ,  to  any  person  or  authority, 
unless in the following situations: 

(a) 

the disclosure is made in the exercise of their functions under this Directive; 

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(b) 

(c) 

the  disclosure  is  made  in  summary  or  collective  form  in  such  a  way  that 
individual insurance or reinsurance undertakings or any of the entities referred 
to in Article 1(1), points (b) to (e), cannot be identified; 

the disclosure is made with the express and prior consent of the authority, the 
insurance  or  reinsurance  undertaking  or  the  entity  referred  to  in  Article  1(1), 
points (b) to (e),which provided the information. 

Member  States  shall  ensure  that  the  persons  referred  to  in  paragraph  1  assess  the 
possible  effects  of  disclosing  information  on  the  public  interest  in  relation  to 
financial,  monetary  or  economic  policy,  on  the  commercial  interests  of  natural  and 
legal persons, on the purpose of inspections, on investigations and on audits.  

The procedure for assessing the effects referred to in the second subparagraph shall 
include  a  specific  assessment  of  the  effects  of  any  disclosure  of  the  contents  and 
details of recovery and resolution plan as referred to in Articles 5, 7, 9, 10 and 12 and 
the result of any assessment carried out under Articles 6, 8 and 13. 

Member States shall ensure that any person or entity referred to in paragraph 1 shall 
be subject to civil liability in the event of an infringement of this Article. 

3. 

Member States shall ensure that the persons referred to in paragraph 1, points (a), (b), 
(c),  (g),  (i)  and  (j)  have  internal  rules  in  place  to  ensure  compliance  with  the 
confidentiality  requirements  laid  down  in  paragraphs  1  and  2,  including  rules  to 
secure  secrecy  of  information  between  persons  directly  involved  in  the  resolution 
process. 

4. 

Paragraphs 1 to 3 of this Article shall not prevent: 

(a) 

(b) 

employees and experts of the bodies or entities referred to in points paragraph 
1,  points  (a)  to  (i),  from  sharing  information  among  themselves  within  each 
body or entity; 

resolution  authorities  and  supervisory  authorities,  including  their  employees 
and  experts,  from  sharing  information  with  each  other  and  with  other  Union 
resolution  authorities,  other  Union  supervisory  authorities,  competent 
ministries, central banks, insurance guarantee schemes, authorities responsible 
for normal insolvency proceedings, authorities responsible for maintaining the 
stability  of  the  financial  system  in  Member  States  through  the  use  of 
macroprudential  rules,  persons  charged  with  carrying  out  statutory  audits  of 
accounts, EIOPA, or, subject to Article 77, third-country authorities that carry 
out  functions  that  are  equivalent  to  the  functions  carried  out  by  resolution 
authorities,  or,  subject  to  strict  confidentiality  requirements,  to  a  potential 
acquirer for the purposes of planning or carrying out a resolution action. 

5. 

Member States may authorise the exchange of information with any of the following: 

(a) 

subject to strict confidentiality requirements, any other person where necessary 
for the purposes of planning or carrying out a resolution action; 

(b)  parliamentary enquiry committees in their Member State, courts of auditors in 
their  Member  State  and  other  entities  in  charge  of  enquiries  in  their  Member 
State, under appropriate conditions; 

(c) 

national authorities responsible for overseeing payment systems, the authorities 
responsible  for  normal  insolvency  proceedings,  the  authorities  entrusted  with 
the  public  duty  of  supervising  other  financial  sector  entities,  the  authorities 

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6. 

7. 

1. 

2. 

3. 

4. 

responsible  for  the  supervision  of  financial  markets,  credit  institutions  and 
investment  firms  and  inspectors  acting  on  their  behalf,  the  authorities  of 
Member States responsible for maintaining the stability of the financial system 
in  Member  States  through  the  use  of  macroprudential  rules,  the  authorities 
responsible  for  protecting  the  stability  of  the  financial  system,  and  persons 
charged carrying out statutory audits. 

Paragraphs  1  to  5  of  this  Article  shall  be  without  prejudice  to  national  law 
concerning  the  disclosure  of  information  for  the  purpose  of  legal  proceedings  in 
criminal or civil cases. 

EIOPA  shall,  by  [PO  –  add  18  months  after  entry  into  force],  issue  guidelines  in 
accordance  with  Article  16  of  Regulation  (EU)  No  1094/2010  to  specify  how 
information  should  be  provided  in  summary  or  collective  form  for  the  purposes  of 
paragraph 2. 

CHAPTER VII 
Right of appeal and exclusion of other actions 

Article 65 

Ex-ante judicial approval and rights to challenge decisions 

Member States may require that a decision to take a crisis  prevention measure or a 
crisis  management measure is  subject  to  ex-ante judicial approval,  provided that in 
respect  of  a  decision  to  take  a  crisis  management  measure,  in  accordance  with 
national  law,  the  procedure  relating  to  the  application  for  approval  and  the  court’s 
consideration is expeditious. 

Member States shall provide in national law for a right of appeal against a decision to 
take  a  crisis  prevention  measure  or  a  decision  to  exercise  any  power,  other  than  a 
crisis management measure, under this Directive. 

Member  States  shall  ensure  that  all  persons  affected  by  a  decision  to  take  a  crisis 
management measure, have the right to appeal against that decision.  

Member  States  shall  ensure  that  the  review  of  a  crisis  management  measure  is 
expeditious and that national courts use the economic assessments of the facts carried 
out by the resolution authority as a basis for their own assessment. 

The  right  to  appeal  referred  to  in  paragraph  3,  shall  be  subject  to  the  following 
requirements: 

(a) 

(b) 

the lodging of an appeal shall not entail any automatic suspension of the effects 
of the challenged decision; 

the  decision  of  the  resolution  authority  shall  be  immediately  enforceable  and 
shall give rise to a rebuttable presumption that a suspension of its enforcement 
would be against the public interest. 

Where it is necessary to protect the interests of third parties acting in good faith who 
have acquired shares, other instruments of ownership, assets, rights or liabilities of an 
undertaking under resolution by virtue of the use of resolution tools as referred to in 
Article 26(3) or through the exercise of resolution powers by a resolution authority, 
the annulment of a decision of a resolution authority shall not affect any subsequent 

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administrative  acts  or  transactions  concluded  by  the  resolution  authority  concerned 
which  were  based  on  the  annulled  decision.  In  that  case,  remedies  for  a  wrongful 
decision or action by the resolution authorities shall be limited to compensation for 
the loss suffered by the applicant as a result of the annulled decision or act. 

Article 66 

Restrictions on other proceedings 

1. 

Without  prejudice  to  Article  62(2),  point  (b),  Member  States  shall  ensure  with 
respect to an undertaking under resolution or an insurance or reinsurance undertaking 
or  an  entity  referred  to  in  Article  1(1),  points  (b)  to  (e),  in  relation  to  which  the 
conditions  for  resolution  referred  to  in  Article  19(1)  or  Article  20(3)  have  been 
determined to  be met, that  normal  insolvency proceedings shall not  be commenced 
except  at  the  initiative  of  the  resolution  authority  and  that  a  decision  placing  an 
insurance  or  reinsurance  undertaking  or  an  entity  referred  to  in  Article  1(1),  points 
(b) to (e), into normal insolvency proceedings shall be taken only with the consent of 
the resolution authority. 

2. 

For the purposes of paragraph 1, Member States shall ensure that: 

(a) 

supervisory authorities and resolution authorities are notified without delay of 
any application for the opening of normal insolvency proceedings in relation to 
an insurance or reinsurance undertaking or an entity referred to in Article 1(1), 
points  (b)  to  (e),  irrespective  of  whether  that  undertaking  or  entity  is  under 
resolution  or  whether  a  decision  has  been  made  public  in  accordance  with 
Article 63, paragraphs 3 and 4; 

(b) 

the  application  for  the  opening  of  normal  insolvency  proceedings  is  not 
determined unless the notifications referred to in point (a) have been made and 
either of the following occurs: 

(i) 

the resolution authority has notified the authorities responsible for normal 
insolvency  proceedings  that  it  does  not  intend  to  take  any  resolution 
action in relation to the insurance or reinsurance undertaking or the entity 
referred to in Article 1(1), points (b) to (e); 

(ii) 

a period of seven days beginning with the date on which the notifications 
referred to in point (a) were made has expired. 

3. 

Without prejudice to any restriction on the enforcement of security interests imposed 
pursuant to Article 48, Member States shall ensure that, if necessary for the effective 
application  of  the  resolution  tools  referred  to  in  Article  26(3)  and  the  resolution 
powers  referred  to  in  Chapter  IV  of  Title  III,  resolution  authorities  may  request  a 
court  to  apply  a  stay  for  an  appropriate  period  of  time  in  accordance  with  the 
objective  pursued,  on  any  judicial  action  or  proceeding  in  which  an  undertaking 
under resolution is or becomes a party. 

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TITLE IV 
CROSS-BORDER GROUP RESOLUTION 

Article 67 

General principles regarding decision-making involving more than one Member State 

Member  States  shall  ensure  that,  when  making  decisions  or  taking  action  pursuant  to  this 
Directive  which  may  have  an  impact  in  one  or  more  other  Member  States,  their  authorities 
have regard to the following general principles: 

(a) 

(b) 

(c) 

(d) 

(e) 

(f) 

(g) 

(h) 

when taking resolution action, decision-making shall be efficient and resolution costs 
shall be kept as low as possible; 

decisions shall be made and action shall be taken in  a timely manner  and with  due 
urgency when required; 

resolution  authorities,  supervisory  authorities  and  other  authorities  shall  cooperate 
with each other to ensure that decisions are made and action is taken in a coordinated 
and efficient manner; 

the  roles  and  responsibilities  of  relevant  authorities  within  each  Member  State  are 
defined clearly; 

due  consideration  shall  be  given  to  the  interests,  potential  impact  of  any  decisions, 
actions or inactions and negative effects on policy holders, financial stability, fiscal 
resources, insurance guarantee schemes and negative economic and social effects in 
all  the  Member  States  where  the  ultimate  parent  undertaking  and  its  subsidiaries 
operate or where they carry out significant cross-border activities; 

due  consideration  shall  be  given  to  the  objectives  of  balancing  the  interests  of  the 
various  Member  States  involved  and  of  avoiding  unfairly  prejudicing  or  unfairly 
protecting the interests of particular Member States; 

resolution  authorities,  when  taking  resolution  actions,  shall  take  into  account  and 
follow  the  group  resolution  plans  referred  to  in  Article  11,  unless  the  resolution 
authorities  consider,  taking  into  account  the  circumstances  of  the  case,  that  the 
resolution  objectives  referred  to  in  Article  18  will  be  achieved  more  effectively  by 
taking actions which are not provided for in the resolution plans; 

a proposed decision or action shall be transparent whenever that decision or action is 
likely  to  have  implications  on  the  policy  holders,  real  economy,  financial  stability, 
fiscal  resources,  and,  where  relevant,  insurance  guarantee  schemes  and  financing 
arrangements of any Member State concerned. 

Article 68 

Resolution colleges 

1. 

Group resolution authorities shall establish resolution colleges to carry out the tasks 
referred  to  in  Articles  10,  11,  14,  16,  70  and  71,  and,  where  appropriate,  to  ensure 
cooperation and coordination with third-country resolution authorities. 

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In particular, resolution colleges shall provide a framework for the group resolution 
authority,  the  other  resolution  authorities  and,  where  appropriate,  supervisory 
authorities and group supervisors concerned, to perform the following tasks: 

(a) 

exchanging  information  that  is  relevant  for  the  development  of  group 
resolution plans and for the application to groups of resolution powers; 

(b)  developing group resolution plans pursuant to Articles 10 and 11; 

(c) 

(d) 

(e) 

(f) 

(g) 

(h) 

assessing the resolvability of groups pursuant to Article 14; 

exercising  powers  to  address  or  remove  impediments  to  the  resolvability  of 
groups pursuant to Article 16; 

deciding  on  the  need  to  establish  a  group  resolution  scheme  as  referred  to  in 
Article 70 or 71; 

reaching the agreement on a group resolution scheme proposed in accordance 
with Article 70 or 71; 

coordinating public communication of group resolution strategies and schemes; 

coordinating  the  use  of  any  insurance  guarantee  schemes  or  financing 
arrangements. 

In addition, resolution colleges may be used as a forum to discuss any issues relating 
to cross-border group resolution. 

2. 

The following shall be members of the resolution college: 

(a) 

(b) 

(c) 

(d) 

(e) 

the group resolution authority; 

the resolution authorities of each Member State in which a subsidiary covered 
by group supervision is established; 

the resolution authorities of Member States where a parent undertaking of one 
or more undertakings of the group that is an entity as referred to in Article 1(1), 
points (b), (d) or (e), are established; 

the  group  supervisor  and  the  supervisory  authorities  of  the  Member  States 
where the resolution authority is a member of the resolution college; 

the competent ministries, where the resolution authorities which are members 
of the resolution college are not the competent ministries; 

(f)  where  relevant,  the  authority  that  is  responsible  for  the  insurance  guarantee 
scheme  of  a  Member  State,  where  the  resolution  authority  of  that  Member 
State is a member of the resolution college; 

(g)  EIOPA, subject to paragraph 4. 

(h) 

the resolution authorities in Member States where the insurance or reinsurance 
undertakings of the group carry out significant cross-border activities. 

For the purposes of point (g), EIOPA shall contribute to promoting and monitoring 
the  efficient,  effective  and  consistent  functioning  of  resolution  colleges  and 
convergence  across  resolution  colleges.  EIOPA  shall  be  invited  to  attend  the 
meetings of the resolution college for that purpose. EIOPA shall not have any voting 
rights. 

For the purposes of point (h), the participation of the resolution authorities shall be 
limited to achieving the objectives of an efficient exchange of information. 

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3. 

The  resolution  authorities  of  third  countries  where  a  parent  undertaking  or  an 
undertaking  established  in  the  Union  has  a  subsidiary  insurance  or  reinsurance 
undertaking or a branch that would be considered to be significant were it located in 
the  Union  may  be  invited  to  participate  in  the  resolution  college  as  observers, 
provided that those authorities are subject to confidentiality requirements that are, in 
the opinion of the group resolution authority, equivalent to those laid down in Article 
77. 

4. 

The  group  resolution  authority  shall  be  the  chair  of  the  resolution  college.  In  that 
capacity it shall: 

(a) 

establish  written  arrangements  and  procedures  for  the  functioning  of  the 
resolution college, after having consulted the other members of the resolution 
college; 

(b) 

coordinate all activities of the resolution college; 

(c) 

convene  and  chair  all  the  meetings  of  the  resolution  college  and  keep  all 
members  of  the  resolution  college  fully  informed  in  advance  of  the 
organisation  of  meetings  of  the  resolution  college,  of  the  main  issues  to  be 
discussed and of the items to be considered; 

(d)  notify the members of the resolution  college of  any  planned meetings so that 

they can request to participate; 

(e) 

decide  which  members  and  observers  shall  be  invited  to  attend  particular 
meetings  of  the  resolution  college,  on  the  basis  of  specific  needs,  taking  into 
account  the  relevance  of  the  issue  to  be  discussed  for  those  members  and 
observers; 

(f) 

keep  all  of  the  members  of  the  college  informed,  in  a  timely  manner,  of  the 
decisions and outcomes of those meetings. 

Notwithstanding  point  (e),  resolution  authorities  shall  be  entitled  to  participate  in 
resolution  college  meetings  whenever  matters  subject  to  joint  decision-making  or 
relating to a group entity located in their Member State are on the agenda. 

Group resolution  authorities shall not be obliged to  establish a resolution college if 
other  groups  or  colleges  perform  the  same  functions  and  carry  out  the  same  tasks 
specified  in  paragraph  1  and  comply  with  all  the  conditions  and  procedures, 
including  those  covering  membership  and  participation  in  resolution  colleges,  laid 
down  in  this  Article  and  in  Article  69.  In  such  a  case,  all  references  to  resolution 
colleges in this Directive shall be understood as references to those other groups or 
colleges. 

EIOPA  shall  develop  draft  regulatory  standards  to  specify  the  operational 
functioning of the resolution colleges for the performance of the tasks referred to in 
paragraph 1. 

EIOPA shall submit those draft regulatory technical standards to the Commission by 
[PO – add 18 months after entry into force]. 

Power is delegated to the Commission to adopt the regulatory standards referred to in 
the first  subparagraph in accordance  with  Articles 10 to  14 of Regulation (EU) No 
1094/2010. 

5. 

6. 

EN 

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  EN 

1. 

2. 

3. 

1. 

2. 

3. 

Article 69 

Information exchange 

Subject to Article 64, resolution authorities and supervisory authorities shall provide 
one another on request with all the information relevant for the exercise of the other 
authorities’ tasks under this Directive. 

The group resolution  authority shall coordinate the flow of all relevant  information 
between  resolution  authorities.  In  particular,  the  group  resolution  authority  shall 
provide  the  resolution  authorities  in  other  Member  States  with  all  the  relevant 
information  in  a  timely  manner  to  facilitate  the  exercise  of  the  tasks  referred  to  in 
Article 68(1), second subparagraph, points (b) to (h). 

A  resolution  authority  shall  not  transmit  information  that  has  been  provided  by  a 
third-country  supervisory  or 
third-country 
that 
supervisory or resolution authority has consented to such transmission. 

resolution  authority  unless 

Resolution authorities shall not be obliged to transmit such information if the third-
country  supervisory  or  resolution  authority  has  not  consented  to  its  onward 
transmission. 

Article 70 

Group resolution involving a subsidiary of the group 

A  resolution  authority  that  decides  that  an  insurance  or  reinsurance  undertaking  or 
any  entity  as  referred  to  in  Article  1(1),  points  (b)  to  (e),  that  is  a  subsidiary  of  a 
group, meets the conditions for resolution laid down in Article 19(1) or Article 20(3), 
shall  notify  the  following  information  without  delay  to  the  group  resolution 
authority, if different, to the group supervisor, and to the members of the  resolution 
college for the group in question: 

(a) 

(b) 

the decision that the insurance or reinsurance undertaking or any entity referred 
to in Article 1(1), points (b) to (e), meets the conditions laid down in Article 19 
or 20; 

the  resolution  actions  or  insolvency  measures  that  the  resolution  authority 
considers to be appropriate for that insurance or reinsurance undertaking or that 
entity referred to in Article 1(1), points (b) to (e). 

On  receiving  the  notification  referred  to  in  paragraph  1,  the  group  resolution 
authority,  after  having  consulted  the  other  members  of  the  resolution  college 
concerned, shall assess the likely impact of the resolution actions or other measures 
notified in accordance with paragraph 1, point (b), on the group and on group entities 
in other Member States, and whether the resolution actions or other measures would 
make it likely that the conditions for resolution referred to in Article 19(1) or Article 
20(3) would be satisfied in relation to a group entity in another Member State. 

Where  the  group  resolution  authority  assesses  that  the  resolution  actions  or  other 
measures notified in accordance with paragraph 1, point (b), would not make it likely 
that the conditions laid down in Article 19(1) or Article 20(3) would be satisfied in 
relation  to  a  group  entity  in  another  Member  State,  the  resolution  authority 
responsible for the insurance or reinsurance undertaking or the  entity  referred to  in 

EN 

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4. 

5. 

Article 1(1), points (b) to (e), may take the resolution actions or other measures that 
it notified in accordance with paragraph 1, point (b), of this Article. 

Where  the  group  resolution  authority  assesses  that  the  resolution  actions  or  other 
measures  notified  in  accordance  with  paragraph  1,  point  (b),  would  make  it  likely 
that the conditions laid down in Article 19(1) or 20(3) would be satisfied in relation 
to  a  group  entity  in  another  Member  State,  the  group  resolution  authority  shall,  no 
later than 24 hours after receiving the notification referred to in paragraph 1, propose 
a group resolution scheme and submit that scheme to the resolution college. That 24-
hour period may be extended with the consent of the resolution authority which made 
the notification referred to in paragraph 1. 

In the absence of an assessment by the group resolution authority within 24 hours, or 
a longer period that has been agreed, after having received the notification referred to 
in  paragraph  1,  the  resolution  authority  which  made  the  notification  referred  to  in 
paragraph  1  may  take  the  resolution  actions  or  other  measures  that  it  notified  in 
accordance with point (b) of that paragraph. 

6. 

The group resolution scheme referred to in paragraph 4 shall: 

7. 

8. 

(a) 

(b) 

(c) 

outline  the  resolution  actions  that  the  resolution  authorities  concerned  should 
take in relation to the ultimate parent undertaking or particular group entities to 
meet the resolution objectives referred to in Article 18 and to comply with the 
general principles governing resolution referred to in Article 22; 

specify  how  the  resolution  actions  referred  to  in  point  (a)  should  be 
coordinated; 

establish  a  financing  plan  which  takes  into  account  the  group  resolution  plan 
and the principles for sharing responsibility laid down in that group resolution 
plan in accordance with Article 10(2), point (e). 

Subject  to  paragraph  8,  the  group  resolution  scheme  shall  take  the  form  of  a  joint 
decision of the group resolution  authority and the resolution  authorities responsible 
for the subsidiaries that are covered by the group resolution scheme. 

EIOPA may, at the request of a resolution authority, assist the resolution authorities 
in reaching a joint decision in accordance with Article 31(2), point (c) of Regulation 
(EU) No 1094/2010. 

A resolution authority that disagrees with the group resolution scheme proposed by 
the  group  resolution  authority  or  that  considers  that,  for  reasons  of  protection  of 
policy holders, the real economy and financial stability, it needs to take independent 
resolution  actions  or  measures  other  than  those  proposed  in  the  group  resolution 
scheme in relation to an insurance or reinsurance undertaking or an entity referred to 
in of Article 1(1), points (b) to (e), shall: 

(a) 

set out in detail the reasons for the disagreement or the reasons to depart from 
the group resolution scheme; 

(b)  notify  the  group  resolution  authority  and  the  other  resolution  authorities  that 
are covered by the group resolution scheme of the reasons referred to in point 
(a); 

(c) 

inform  the  group  resolution  authority  and  the  other  resolution  authorities  that 
are concerned by the  group resolution  scheme  about  the resolution  actions or 
measures it will take. 

EN 

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  EN 

9. 

10. 

11. 

12. 

13. 

1. 

When  setting  out  the  reasons  for  its  disagreement,  a  resolution  authority  shall  take 
into consideration the group resolution  plans referred to  in  Article 11, the potential 
impact of the actions or measures it will take on policy holders, the real economy and 
financial stability in the Member States concerned, and the potential effect of these 
resolution actions or measures on other parts of the group. 

Resolution  authorities  that  do  agree  with  the  group  resolution  scheme  proposed  by 
the  group  resolution  authority  may  reach  a  joint  decision  on  a  group  resolution 
scheme  covering  group  entities  in  their  respective  Member  States  without  the 
participation of the disagreeing resolution authorities. 

The  joint  decisions  referred  to  in  paragraph  7  and  9  and  the  resolution  actions  or 
measures taken in accordance with paragraph 8 shall be recognised as conclusive and 
applied by the resolution authorities in the Member States concerned. 

Authorities  shall  take  all  actions  and  measures  referred  to  in  this  Article  without 
delay, and with due regard to the urgency of the situation. 

Where  a  group  resolution  scheme  is  not  implemented,  resolution  authorities  shall, 
when  taking  resolution  actions  in  relation  to  any  group  entity,  cooperate  closely 
within the resolution college to achieve a coordinated resolution strategy for all the 
group entities that are failing or likely to fail. 

Resolution authorities that take any resolution action in relation to any group entity 
shall  inform  the  members  of  the  resolution  college  regularly  and  fully  about  those 
actions or measures and their on-going progress. 

Article 71 

Group resolution involving an ultimate parent undertaking 

A  group  resolution  authority  that  decides  that  an  ultimate  parent  undertaking  for 
which  it  is  responsible  meets  the  conditions  referred  to  in  Article  19(1)  or  Article 
20(3) shall notify the information referred to in Article 70(1), points (a) and (b), to 
the group supervisor and to the other members of the resolution college of the group 
in question without delay. 

The resolution actions or insolvency measures referred to in Article 70(1), point (b), 
may  include  the  implementation  of  a  group  resolution  scheme  drawn  up  in 
accordance with Article 70(6) in any of the following circumstances: 

(a) 

(b) 

(c) 

the resolution actions or other measures at parent level notified in accordance 
with  Article  70(1),  point  (b),  make  it  likely  that  the  conditions  laid  down  in 
Article 19(1) or Article 20(3) would be fulfilled in relation to a group entity in 
another Member State; 

resolution  actions  or  other  measures  at  parent  level  only  are  not  sufficient  to 
stabilise the situation or are not likely to provide an optimum outcome; 

the  resolution  authorities  have  determined  that  one  or  more  subsidiaries  for 
which they are responsible meet the conditions  referred to in Article 19(1) or 
Article 20(3); 

(d) 

resolution actions or other measures at group level will benefit the subsidiaries 
of the group in a way that makes a group resolution scheme appropriate. 

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2. 

3. 

4. 

5. 

6. 

7. 

8. 

9. 

Where  the  actions  or  measures  proposed  by  the  group  resolution  authority  under 
paragraph 1 do not contain a group resolution scheme, the group resolution authority 
shall take its decision after having consulted the members of the resolution college. 

Where  the  actions  or  measures  proposed  by  the  group  resolution  authority  under 
paragraph 1 do contain a group resolution scheme, the group resolution scheme shall 
take the form of a joint decision of the group resolution authority and the resolution 
authorities  responsible  for  the  subsidiaries  that  are  covered  by  the  group  resolution 
scheme. 

EIOPA may, at the request of a resolution authority, assist the resolution authorities 
in reaching a joint decision in accordance with Article 31(2), point (c) of Regulation 
(EU) No 1094/2010. 

A  resolution  authority  that  disagrees  with  or  departs  from  the  group  resolution 
scheme proposed by the group resolution authority or considers that, for reasons of 
financial stability, it needs to take independent resolution actions or measures other 
than  those  proposed  in  the  group  resolution  scheme  in  relation  to  an  insurance  or 
reinsurance undertaking or entity as referred to in Article 1(1), points (b) to (e) shall: 

(a) 

set out in detail the reasons for the disagreement or the reasons to depart from 
the group resolution scheme; 

(b)  notify  the  group  resolution  authority  and  the  other  resolution  authorities  that 
are covered by the group resolution scheme of the reasons referred to in point 
(a); 

(c) 

inform  the  group  resolution  authority  and  the  other  resolution  authorities  that 
are  covered  by  the  group  resolution  scheme  about  the  actions  or  measures  it 
intends to take. 

When setting out the reasons for its disagreement, the resolution authority concerned 
shall  give  consideration  to  the  group  resolution  plans  referred  to  in  Article  11,  the 
potential  impact  of  the  actions  or  measures  it  will  take  on  financial  stability  in  the 
Member  States  concerned  and  the  potential  effect  of  the  resolution  actions  or 
measures on other parts of the group. 

Resolution  authorities  that  do  agree  with  the  group  resolution  scheme  proposed  by 
the  group  resolution  authority  may  reach  a  joint  decision  on  a  group  resolution 
scheme  covering  group  entities  in  their  respective  Member  States  without  the 
participation of the disagreeing resolution authorities. 

The  joint  decision  referred  to  in  paragraph  3  or  5  and  the  actions  and  measures 
referred  to  in  paragraph  4  shall  be  recognised  as  conclusive  and  applied  by  the 
resolution authorities in the Member States concerned. 

Authorities  shall  perform  all  actions  and  measures  referred  to  in  paragraphs  1  to  6 
without delay, and with due regard to the urgency of the situation. 

Where  a  group  resolution  scheme  is  not  implemented,  resolution  authorities  shall, 
when  taking  resolution  action  in  relation  to  any  group  entity,  cooperate  closely 
within  the  resolution  college  to  achieve  a  coordinated  resolution  strategy  for  all 
affected group entities. 

Resolution authorities that take resolution action in relation to any group entity shall 
inform the members of the resolution college regularly and fully about those actions 
or measures and their on-going progress. 

EN 

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1. 

2. 

3. 

1. 

2. 

TITLE V 
RELATIONS WITH THIRD COUNTRIES 

Article 72 

Agreements with third countries 

In accordance  with  Article 218 TFEU, the Commission may submit to  the Council 
proposals  for  the  negotiation  of  agreements  with  one  or  more  third  countries 
regarding the means of cooperation between the resolution authorities and the third 
country  authorities  concerned,  amongst  others  to  share  information  sharing  in 
connection  with  recovery  and  resolution  planning  in  relation  to  insurance  and 
reinsurance undertakings, third country insurance and reinsurance undertakings, and 
groups. 

The agreements referred to in paragraph 1 shall seek to ensure the establishment of 
processes  and  arrangements  between  resolution  authorities  and  the  third  country 
authorities  concerned  for  cooperation  in  carrying  out  some  or  all  of  the  tasks  and 
exercising some or all of the powers referred to in Article 76. 

Member States may enter into bilateral agreements with a third country regarding the 
matters referred to in paragraphs 1 and 2 until the entry into force of an agreement 
referred  to  in  paragraph  1  with  the  relevant  third  country  to  the  extent  that  such 
bilateral agreements are not inconsistent with this Title. 

Article 73 

Recognition and enforcement of third-country resolution proceedings 

This Article shall apply in respect of third-country resolution proceedings unless and 
until an international agreement as referred to in Article 72(1) enters into force with 
the third country  concerned.  It  shall also  apply following the entry into force of an 
international  agreement  as  referred  to  in  Article  72(1)  with  the  third  country 
concerned to the extent that recognition and enforcement of third-country resolution 
proceedings is not governed by that agreement. 

The  resolution  authority  concerned  shall  decide  whether  to  recognise  and  enforce, 
except as provided for in Article 74, third-country resolution proceedings relating to 
a  Union  subsidiary  or  a  Union  branch  of  a  third-country  insurance  or  reinsurance 
undertaking or a parent undertaking. 

The  decision  shall  give  due  consideration  to  the  interests  of  each  Member  State 
where  a  third-country  insurance  or  reinsurance  undertaking  or  parent  undertaking 
operates, and in particular on the other parts of the group and on the policy holders, 
the real economy and the financial stability in those Member States. 

3. 

Member  States  shall  ensure  that  resolution  authorities  are,  as  a  minimum, 
empowered to do the following: 

(a) 

exercise the resolution powers in relation to the following: 

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(i) 

(ii) 

assets  of  a  third-country  insurance  or  reinsurance  undertaking  or  parent 
undertaking  that  are  located  in  their  Member  State  or  governed  by  the 
law of their Member State; 

liabilities  of  a 

rights  or 
insurance  or  reinsurance 
third-country 
undertaking that are booked by the Union branch in their Member State 
or governed by the law of their Member State, or where claims in relation 
to such rights and liabilities are enforceable in their Member State; 

(b)  perfect, including to require another person to take action to perfect, a transfer 
of shares or other instruments of ownership in a Union subsidiary established 
in that Member State; 

(c) 

(d) 

exercise the powers in Article 47, 48 or 49 in relation to the rights of any party 
to  a  contract  with  an  entity  referred  to  in  paragraph  1  of  this  Article,  where 
such  powers  are  necessary  in  order  to  enforce  third-country  resolution 
proceedings; and 

render unenforceable any right to terminate, liquidate or accelerate contracts, or 
affect  the  contractual  rights,  of  entities  referred  to  in  paragraph  1  and  other 
group entities, where such a right arises from resolution action taken in respect 
of  the  third-country  insurance  or  reinsurance  undertaking,  parent  undertaking 
of such entities or other group entities, whether by the third-country resolution 
authority itself or otherwise pursuant to legal or regulatory requirements as to 
resolution  arrangements  in  that  country,  provided  that  the  substantive 
obligations under the contract, including payment and delivery obligations, and 
provision of collateral, continue to be performed. 

Resolution  authorities  may  take,  where  necessary  in  the  public  interest,  resolution 
action with respect to a parent undertaking where the relevant third-country authority 
determines  that  an  insurance  or  reinsurance  undertaking  that  is  a  subsidiary  of  that 
parent undertaking and that is incorporated in that third country meets the conditions 
for resolution under the law of that third country. To that end, Member States shall 
ensure  that  resolution  authorities  are  empowered  to  use  any  resolution  power  in 
respect of that parent undertaking, and Article 46 shall apply. 

The  recognition  and  enforcement  of  third-country  resolution  proceedings  shall  be 
without  prejudice  to  any  normal  insolvency  proceedings  under  national  law 
applicable, where appropriate, in accordance with this Directive. 

Article 74 

4. 

5. 

Right to refuse recognition or enforcement of third-country resolution proceedings 

The  resolution  authority  may  refuse  to  recognise  or  to  enforce  third-country  resolution 
proceedings pursuant to Article 73 if it considers: 

(a) 

(b) 

that the third-country resolution proceedings would have adverse effects on financial 
stability  in  the  Member  State  in  which  the  resolution  authority  is  based  or  that  the 
proceedings  would  have  adverse  effects  on  financial  stability  in  another  Member 
State; 

that independent resolution action under Article 75 in relation to a Union branch is 
necessary to  achieve one or more of the  resolution  objectives  referred to  in Article 
18; 

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(c) 

(d) 

(e) 

1. 

2. 

that  creditors  would  not  receive  the  same  treatment  as  third-country  creditors  with 
similar legal rights under the third-country home resolution proceedings; 

that  recognition  or  enforcement  of  the  third-country  resolution  proceedings  would 
have material fiscal implications for the Member State; or 

that the effects of such recognition or enforcement would be contrary to the national 
law. 

Article 75 

Resolution of Union branches 

Member States shall ensure that resolution authorities have the powers necessary to 
act  in  relation  to  a  Union  branch  that  is  not  subject  to  any  third-country  resolution 
proceedings  or  that  is  subject  to  third-country  proceedings  and  one  of  the 
circumstances referred to in Article 74 applies. 

Member States shall ensure that Article 46 applies to the exercise of such powers. 

Member States shall ensure that the powers required in paragraph 1 may be exercised 
by  resolution  authorities  where  the  resolution  authority  considers  that  action  is 
necessary in the public interest and one or more of the following conditions is met: 

(a) 

(b) 

(c) 

the  Union  branch  no  longer  meets,  or  is  likely  not  to  meet,  the  conditions 
imposed by national law for its authorisation and operation within that Member 
State  and  there  is  no  prospect  that  any  private  sector,  supervisory  or  relevant 
third-country action would restore the branch to compliance or prevent failure 
in a reasonable timeframe; 

the third-country insurance or reinsurance undertaking is, in the opinion of the 
resolution  authority,  unable  or  unwilling,  or  is  likely  to  be  unable,  to  pay  its 
obligations to Union creditors, or obligations that have been created or booked 
through the branch, such as payments to policy holders or beneficiaries, as they 
fall due and the resolution authority is satisfied that no third-country resolution 
proceedings or insolvency proceedings have been or will be initiated in relation 
to  that  third-country  insurance  or  reinsurance  undertaking  in  a  reasonable 
timeframe; 

the  relevant  third-country  authority  has  initiated  third-country  resolution 
proceedings 
insurance  or  reinsurance 
undertaking,  or  has  notified  to  the  resolution  authority  its  intention  to  initiate 
such a proceeding. 

third-country 

in  relation 

the 

to 

3. 

Where  a  resolution  authority  takes  an  independent  action  in  relation  to  a  Union 
branch, it shall have regard to the resolution objectives referred to in Article 18 and 
take the action in accordance with the following principles and requirements, insofar 
as they are relevant: 

(a) 

(b) 

the principles set out in Article 22; 

the requirements relating to the application of the resolution tools in Title III, 
Chapter II. 

EN 

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1. 

2. 

3. 

4. 

1. 

Article 76 

Cooperation with third-country authorities 

This  Article  shall  apply  in  respect  of  cooperation  with  a  third  country  unless  and 
until an international agreement as referred to in Article 72(1) enters into force with 
the  relevant  third  country.  It  shall  also  apply  following  the  entry  into  force  of  an 
international agreement provided for in Article 72(1) with the relevant third country 
to the extent that the subject matter of this Article is not governed by that agreement. 

EIOPA  may  conclude  non-binding  framework  cooperation  arrangements  with 
relevant  third-country  authorities.  The  framework  cooperation  agreements  shall 
establish  processes  and  arrangements  between  the  participating  authorities  for 
sharing information necessary for and cooperation in carrying out some or all or the 
following  tasks  and  exercising  some  or  all  of  the  following  powers  in  relation  to 
insurance or reinsurance undertakings or groups: 

(a) 

(b) 

(c) 

(d) 

(e) 

the  development  of  resolution  plans  in  accordance  with  Articles  9  to  12  and 
similar requirements under the law of the relevant third countries; 

the  assessment  of  the  resolvability  of  such  insurance  and  reinsurance 
undertakings  and  groups,  in  accordance  with  Articles  13  and  14  and  similar 
requirements under the law of the relevant third countries; 

the  application  of  powers  to  address  or  remove  impediments  to  resolvability 
pursuant  to  Articles  15  and  16  and  any  similar  powers  under  the  law  of  the 
relevant third countries; 

the  application  of  preventive  measures  pursuant  to  Article  141  of  Directive 
2009/138/EC and similar powers under the law of the relevant third countries; 

the application of resolution tools as referred to in Article 26(3) and exercise of 
resolution powers and similar powers exercisable by the relevant third-country 
authorities. 

Supervisory  or resolution  authorities, where  appropriate, may  conclude cooperation 
arrangements  in  line  with  the  EIOPA  framework  arrangement  referred  to  in 
paragraph 2 with relevant third country authorities. 

Member States shall notify EIOPA of any cooperation arrangements that resolution 
authorities  and  supervisory  authorities  have  concluded  in  accordance  with  this 
Article. 

Article 77 

Exchange of confidential information 

Member  States  shall  ensure  that  resolution  authorities,  supervisory  authorities  and 
competent  ministries  exchange  confidential  information,  including  pre-emptive 
recovery plans drawn up and maintained in  accordance with  Articles 5 and 7, with 
relevant third-country authorities only if the following conditions are met: 

(a) 

those  third-country  authorities  are  subject  to  requirements  and  standards  of 
professional secrecy at least considered to be equivalent, in the opinion of all 
the authorities concerned, to those imposed by Article 64. 

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(b) 

the information is necessary for the performance by the relevant third-country 
authorities of their resolution functions under national law that are comparable 
to those under this Directive and, subject to point (a), is not used for any other 
purposes. 

For  the  purposes  of  point  (a),  in  so  far  as  the  exchange  of  information  relates  to 
personal  data,  the  handling  and  transmission  of  such  personal  data  to  third-country 
authorities  shall  be  governed  by  the  applicable  Union  and  national  data  protection 
law. 

2. 

Where  confidential  information  originates  in  another  Member  State,  resolution 
authorities,  supervisory  authorities  and  competent  ministries  shall  not  disclose  that 
information to relevant third-country authorities unless the following conditions are 
met: 

(a) 

(b) 

the  relevant  authority  of  the  Member  State  where  the  information  originated 
(the originating authority) agrees to that disclosure; 

the information is disclosed only for the purposes permitted by the originating 
authority. 

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TITLE VI 
PENALTIES 

Article 78 

1. 

2. 

3. 

Administrative penalties and other administrative measures 

Without prejudice to the powers of resolution and supervisory authorities laid down 
in  this  Directive  and  Directive  2009/138/EC  and  the  right  of  Member  States  to 
provide  for  and  impose  criminal  penalties  referred  to  in  the  second  subparagraph, 
Member  States  shall  lay  down  rules  on  administrative  penalties  and  other 
administrative  measures  applicable  where  the  national  provisions  transposing  this 
Directive  have  not  been  complied  with,  and  shall  take  all  measures  necessary  to 
ensure that they are implemented. 

Member States that decide not to lay down rules for administrative penalties or other 
administrative measures for infringements which are subject to national criminal law 
shall communicate to the Commission the criminal law provisions concerned. 

The  administrative  penalties  and  other  administrative  measures  shall  be  effective, 
proportionate and dissuasive. 

Member  States  shall  ensure  that  in  the  event  of  an  infringement,  administrative 
penalties or other  administrative measures  can be applied, subject  to  the  conditions 
laid  down  in  national  law,  to  the  members  of  the  administrative,  management  or 
supervisory  body,  and  to  other  natural  persons  who  under  national  law  are 
responsible for the infringement. 

The  powers  to  impose  administrative  penalties  and  other  administrative  measures 
provided  for  in  this  Directive  shall  be  attributed  to  resolution  authorities  or  to 
supervisory  authorities,  depending  on  the  type  of  infringement.  Resolution 
authorities  and  supervisory  authorities  shall  have  all  information-gathering  and 
investigatory powers that are necessary for the exercise of their respective functions. 
In  the  exercise  of  their  powers  to  impose  administrative  penalties  or  other 
administrative  measures,  resolution  authorities  and  supervisory  authorities  shall 
cooperate  closely  to  ensure  that  administrative  penalties  or  other  administrative 
measures produce the desired results and coordinate their action when dealing with 
cross-border cases. 

4. 

Resolution authorities and supervisory authorities shall exercise their administrative 
powers  to  impose  penalties  and  other  administrative  measures  in  accordance  with 
this Directive and national law in any of the following ways: 

(a) 

directly; 

(b) 

in collaboration with other authorities; 

(c) 

under their responsibility by delegation to other authorities; 

(d)  by application to the competent judicial authorities. 

5. 

Member  States  shall  ensure  that  decisions  taken  by  the  resolution  authorities  and 
supervisory authorities in accordance with this Title are subject to a right of appeal. 

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Article 79 

Specific provisions on administrative penalties and other administrative measures 

1. 

Member States shall ensure that their laws, regulations and administrative provisions 
provide  for  administrative  penalties  and  other  administrative  measures  at  least  in 
respect of the following situations: 

(a) 

(b) 

(c) 

an infringement of Articles 5 or 7 by failing to draw up, maintain and update 
pre-emptive recovery plans and group pre-emptive recovery plans; 

an  infringement  of  Article  12  by  failing  to  provide  all  the  information 
necessary for the development of resolution plans; 

an  infringement  of  Article  61(1)  by  the  failure  of  the  administrative, 
management or supervisory body of an insurance or reinsurance undertaking or 
an  entity  as  referred  to  in  Article  1(1),  points  (b)  to  (e),  to  notify  the 
supervisory authority when that undertaking or that entity is failing or likely to 
fail. 

2. 

Member  States  shall  ensure  that,  in  the  cases  referred  to  in  paragraph  1,  the 
administrative  penalties  and  other  administrative  measures  that  can  be  applied 
include at least the following: 

(a) 

(b) 

(c) 

(d) 

(e) 

a  public  statement  indicating  the  natural  person,  insurance  or  reinsurance 
undertaking,  the  entity  as  referred  to  in  Article  1(1),  points  (b)  to  (e),  an 
ultimate  parent  undertaking  or  other  legal  person  responsible  for  the 
infringement and the nature of the infringement; 

an order requiring the natural or legal person responsible to cease the conduct 
and to desist from a repetition of that conduct; 

a  temporary  ban  on  any  member  of  the  administrative,  management  or 
supervisory  body  or  senior  management  of  the  insurance  or  reinsurance 
undertaking or an entity as referred to in Article 1(1), points (b) to (e), or any 
other  natural  person  who  is  held  responsible,  to  exercise  functions  in  an 
insurance or reinsurance undertaking or an entity as referred to in Article 1(1), 
points (b) to (e); 

in  the  case  of  a  legal  person,  administrative  fines  of  up  to  10  %  of  the  total 
annual turnover of that legal person in the preceding business year; 

in the case of a natural person, administrative fines of up to EUR 5 000 000, or 
in  the  Member  States  where  the  Euro  is  not  the  official  currency,  the 
corresponding value in the national currency on [PO – please add date of entry 
into force of this Directive]; 

(f) 

administrative fines of up to twice the amount of the benefit derived from the 
infringement where that benefit can be determined. 

For  the  purposes  of  point  (d),  where  the  legal  person  is  a  subsidiary  of  a  parent 
undertaking,  the  relevant  turnover  shall  be  the  total  annual  turnover  resulting  from 
the  consolidated  accounts  of  the  ultimate  parent  undertaking  in  the  preceding 
business year. 

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Article 80 

1. 

2. 

Publication of administrative penalties and other administrative measures 

Member  States  shall  ensure  that  resolution  authorities  and  supervisory  authorities 
publish  on  their  official  website  at  least  any  administrative  penalties  and  other 
administrative  measures  imposed  by  those  authorities  for  infringing  the  national 
provisions  transposing  this  Directive  where  such  administrative  penalties  or  other 
administrative measures have not been the subject of an appeal or where the right of 
appeal has been exhausted. Such publication shall be made without undue delay after 
the  natural  or  legal  person  is  informed  of  that  administrative  penalty  or  other 
administrative  measure.  The  publication  shall  contain  information  on  the  type  and 
nature of the infringement and the identity of the natural or legal person on whom the 
administrative penalty or other administrative measure is imposed. 

Where  Member  States  permit  publication  of  administrative  penalties  and  other 
administrative measures against which there is an appeal, resolution authorities and 
supervisory authorities shall, without undue delay, publish on their official websites 
information on the status of that appeal and the outcome thereof. 

Where the resolution authority or supervisory authority considers that the publication 
of  the  identity  of  the  legal  persons,  or  identity  or  personal  data  of  natural  persons 
would  be  disproportionate  following  a  case-by-case  assessment  conducted  on  the 
proportionality  of  the  publication  of  such  data,  or  where  such  a  publication  would 
jeopardise  the  stability  of  financial  markets  or  an  ongoing  investigation,  the 
resolution authority or supervisory authority shall do any of the following: 

(a) 

defer  the  publication  of  the  decision  imposing  the  administrative  penalty  or 
other administrative measures until the reasons for that deferral cease to exist; 

(b)  publish 

the  decision 

the  administrative  penalty  or  other 
administrative  measures  on  an  anonymous  basis  in  accordance  with  national 
law where such anonymous publication would ensure the  effective protection 
of the personal data concerned; 

imposing 

(c) 

not  publish  the  decision  imposing  the  administrative  penalty  or  other 
administrative measures where the resolution authority or supervisory authority 
is of the opinion that publication in accordance with point (a) or (b) would be 
insufficient to ensure either of the following: 

(i) 

that the stability of financial markets is not jeopardised; 

(ii) 

the  proportionality  of  the  publication  of  such  data  with  regard  to 
measures which are deemed to be of a minor nature. 

Resolution authorities and supervisory authorities shall ensure that any publication in 
accordance with this Article shall remain on their official website for a period of at 
least five years after its publication. Personal data contained in the publication shall 
only  be  kept  on  the  official  website  of  the  resolution  authority  or  the  supervisory 
authority  for  the  period  which  is  necessary  according  to  applicable  data  protection 
rules. 

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Article 81 

Maintenance of central database by EIOPA 

1. 

Subject to the professional secrecy requirements referred to in Article 64, resolution 
authorities  and  supervisory  authorities  shall  inform  EIOPA  of  all  administrative 
penalties and other administrative measures imposed by them under Article 79 and of 
the status of that appeal and outcome thereof. 

EIOPA  shall  maintain  and  keep  updated  a  central  database  of  penalties  and  other 
administrative measures reported to it by resolution authorities, solely to enable those 
resolution  authorities  to  exchange  information,  which  shall  be  accessible  to  those 
resolution authorities only. 

EIOPA  shall  maintain  and  keep  updated  a  central  database  of  penalties  and  other 
administrative  measures  reported  to  it  by  supervisory  authorities,  solely  to  enable 
those  supervisory  authorities  to  exchange  information,  which  shall  be  accessible  to 
those supervisory authorities only. 

2. 

EIOPA shall maintain and keep updated a webpage with  the following information 
or links to that information: 

(a) 

each resolution authority’s publication of penalties; 

(b) 

each supervisory authority’s publication of penalties under Article 80; 

(c) 

the period for which each Member State publishes penalties. 

Article 82 

Effective application of penalties and exercise of powers to impose penalties by 
supervisory authorities and resolution authorities 

Member  States  shall  ensure  that  when  determining  the  type  of  administrative  penalties  or 
other administrative measures and the level of administrative fines, the supervisory authorities 
and  resolution  authorities  take  into  account  all  relevant  circumstances,  including  where 
appropriate: 

(a) 

(b) 

(c) 

(d) 

(e) 

(f) 

the gravity and the duration of the infringement; 

the degree of responsibility of the natural or legal person responsible; 

the financial strength of the natural or legal person responsible; 

the  amount  of  profits  gained  or  losses  avoided  by  the  natural  or  legal  person 
responsible, insofar as those profits or losses can be determined; 

the  losses  for  third  parties,  including  policy  holders,  caused  by  the  infringement, 
insofar those losses can be determined; 

the  level  of  cooperation  of  the  natural  or  legal  person  responsible  with  the 
supervisory authority and the resolution authority; 

(g) 

previous infringements by the natural or legal person responsible. 

For the purposes of point (c), the indicators of financial strength of a natural or legal person 
shall  include  the  total  turnover  of  the  responsible  legal  person  or  the  annual  income  of  the 
responsible natural person. 

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TITLE VII 
AMENDMENTS TO DIRECTIVES 2002/47/EC, 
2004/25/EC, 2009/138/EC, (EU) 2017/1132 AND TO 
REGULATIONS (EU) No 1094/2010 AND (EU) No 
648/2012 

Article 83 

Amendments to Directive 2009/138/EC 

Directive 2009/138/EC is amended as follows: 

(1) 

Article 141 is replaced by the following: 

Supervisory powers in deteriorating financial conditions 

‘Article 141 

1. 
Following a notification pursuant to Article 136 or following the identification 
of deteriorating financial conditions pursuant to Article 36(3), where the insurance or 
reinsurance  undertaking’s  decisions,  including  financial  ones,  would  result  in  the 
following  three  months  or  already  result  in  non-compliance  with  any  of  the  items 
referred to in Article 36(2), points (a) to (e), the supervisory authorities shall have the 
power to take the necessary measures to restore compliance. 

2. 
The measures referred to in paragraph 1 shall be proportionate to the risk and 
to  the extent of non-compliance with  regulatory  requirements, and may  contain the 
following: 

(a) 

(b) 

(c) 

requiring  the  administrative,  management,  or  supervisory  body  of  the 
undertaking  to  update  the  pre-emptive  recovery  plan  drawn  up  in  accordance 
with Article 5 of Directive (EU) xx/xx of the European Parliament and of the 
Council*1, where the circumstances are different from the assumptions set out 
in that plan; 

requiring  the  administrative,  management,  or  supervisory  body  of  the 
undertaking to take measures set out in the pre-emptive recovery plan drawn up 
in  accordance  with  Article  5  of  Directive  (EU)  xx/xx  [PO,  please  insert  the 
number  of  the  IRRD].  Where  the  plan  is  updated  pursuant  to  point  (a),  the 
measures taken shall contain any updated measures; 

requiring  the  administrative,  management,  or  supervisory  body  of  an 
undertaking that does not have in place a pre-emptive recovery plan as referred 
to  in  Article  5  of  Directive  (EU)  xx/xx  [PO,  please  insert  the  number  of  the 
IRRD] , to identify the causes of the non-compliance or likely non-compliance 
with regulatory requirements and to identify suitable measures and a timeframe 
for the implementation of those regulatory requirements; 

(d) 

requiring  the  administrative,  management,  or  supervisory  body  of  the 
undertaking  to  suspend  or  restrict  variable  remuneration  and  bonuses, 
distributions on own fund instruments or repayment or repurchase of own fund 
items. 

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3.  Where  the  solvency  position  of  the  undertaking  continues  to  deteriorate 
following  a  notification  as  referred  to  in  Articles  138(1)  or  139(1),  the  supervisory 
authorities shall have the power to  take all measures, including those referred to  in 
paragraph 2, which are necessary to safeguard the interests of policy holders in the 
case of insurance contracts, or the obligations arising out of reinsurance contracts. 

Those measures shall be proportionate and thus reflect the level of the deterioration 
of the solvency position of the insurance or reinsurance undertaking concerned. 

_________________________________________________________________ 

*1 

Directive (EU) xx/xx of the European Parliament and of the Council [PO, please insert reference to the IRRD].’; 

(2) 

in Article 267, the following subparagraphs are added: 

‘In the event of an application of the resolution tools referred to in Article 26(3) of 
Directive (EU) xx/xx [PO, please insert the number of the IRRD] and exercise of the 
resolution  powers  referred  to  in  Chapter  IV,  Title  III,  of  that  Directive  ,  this  Title 
shall  also  apply  to  reinsurance  undertakings  and  the  entities  referred  to  in  Article 
1(1), points (b) to (e), of that Directive. 

Articles 270 and 272 of this Directive shall not apply where Article 63 of Directive 
(EU) xx/xx [PO, please insert the number of the IRRD] applies. 

Article 295 of this Directive shall not apply where Article 64 of Directive (EU) xx/xx 
[PO, please insert the number of the IRRD] applies.’; 

(3) 

Article 268(1) is amended as follows: 

(a) 

point (a) is replaced by the following: 

‘(a) 
‘competent  authorities’  means  either  the  administrative  or  judicial 
authorities  of  the  Member  States  that  are  competent  for  reorganisation 
measures  or  for  the  winding-up  proceedings,  or  a  resolution  authority  as 
defined in Article 2(2), point (7), of Directive (EU) xx/xx [PO, please insert the 
number of the  IRRD] in respect of reorganisation measures taken pursuant to 
that Directive;’; 

(b)  point (c) is replaced by the following: 

‘(c) 
‘reorganisation  measures’  means  measures  involving  any  intervention 
by  the  competent  authorities  which  are  intended  to  preserve  or  restore  the 
financial  situation  of  an  insurance  undertaking  and  which  affect  pre-existing 
rights  of  parties  other  than  the  insurance  undertaking  itself,  including  the 
suspension  of  payments  or  enforcement  measures  or  the  reduction  of  claims, 
the application of the resolution tools referred to in Article 26(3) of Directive 
(EU)  xx/xx  [PO,  please  insert  the  number  of  the  IRRD]  and  the  exercise  of 
resolution powers referred to in Chapter IV, Title III, of Directive (EU) xx/xx 
[PO, please insert the number of the IRRD];’. 

Article 84 

Amendments to Directive 2002/47/EC 

Directive 2002/47/EC is amended as follows: 

(1) 

in Article 1, paragraph 6 is replaced by the following: 

EN 

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‘6.  Articles  4  to  7  of  this  Directive  shall  not  apply  to  any  restriction  on  the 
enforcement of financial collateral arrangements or any restriction on the effect of a 
security  financial  collateral  arrangement,  any  close  out  netting  or  set-off  provision 
that is imposed by virtue of Title IV, Chapter V or VI of Directive 2014/59/EU of the 
European  Parliament  and  of  the  Council*2,  or  of  Title  V,  Chapter  III,  Section  3,  or 
Chapter  IV  of  Regulation  (EU)  2021/23  of  the  European  Parliament  and  of  the 
Council*3,  or  of  Title  III,  Chapter  III,  Section  4,  or  Chapter  IV  of  Directive  (EU) 
xx/xx of the European Parliament and of the Council*4, or to any such restriction that 
is imposed by virtue of similar powers in the law of a Member State to facilitate the 
orderly resolution of any entity as referred to in paragraph 2, point (d), of this Article 
which is subject to safeguards at least equivalent to those set out in Title IV, Chapter 
VII of Directive 2014/59/EU and in Title V, Chapter V of Regulation (EU) 2021/23; 

______________________________________________________________ 

*2 

*3 

*4 

Directive  2014/59/EU  of  the  European  Parliament and  of  the  Council  of  15 May  2014  establishing  a  framework  for  the 
recovery  and  resolution  of  credit  institutions  and  investment  firms  and  amending  Council  Directive  82/891/EEC  and 
Directives  2001/24/EC,  2002/47/EC,  2004/25/EC,  2005/56/EC,  2007/36/EC,  2011/35/EU,  2012/30/EU  and  2013/36/EU, 
and Regulations (EU) No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council (OJ  L 173, 
12.6.2014, p. 190). 
Regulation  (EU)  2021/23  of  the  European  Parliament  and  of  the  Council  of  16  December  2020  on  a  framework  for  the 
recovery and resolution of central counterparties and amending Regulations (EU) No 1095/2010, (EU) No 648/2012, (EU) 
No 600/2014, (EU) No 806/2014 and (EU) 2015/2365 and Directives 2002/47/EC, 2004/25/EC, 2007/36/EC, 2014/59/EU 
and (EU) 2017/1132 (OJ L 22, 22.1.2021, p. 1). 
[PO, please insert reference to the IRRD].’; 

(2) 

Article 9a is replaced by the following: 

‘Article 9a 

Directive 2008/48/EC, Directive 2014/59/EU, Directive (EU) xx/xx and Regulation (EU) 
2021/23 

This  Directive  shall  be  without  prejudice  to  Directive  2008/48/EC,  Directive 
2014/59/EU, Directive (EU) xx/xx of the European Parliament and of the Council*5 
[PO, please insert the number of the IRRD] and Regulation (EU) 2021/23. 

_______________________________________________________ 

Directive xx/xx/EU of the European Parliament and of the Council [PO, please insert reference 

*5 
to the IRRD]’. 

Article 85 

In Article 4(5) of Directive 2004/25/EC, the following subparagraph is added: 

Amendment to Directive 2004/25/EC 

‘Member States shall ensure that Article 5(1) of this Directive does not apply in the 
case of application of resolution tools, powers and mechanisms provided for in Title 
IV of Directive 2014/59/EU, in Title V of Regulation (EU) 2021/23 of the European 
Parliament  and  of  the  Council*6  or  in  Title  III  of  Directive  (EU)  xx/xx  of  the 
European  Parliament  and  of  the  Council*7  [PO,  please  insert  the  number  of  the 
IRRD]. 

___________________________________________________________ 

*6 

*7 

Regulation  (EU)  2021/23  of  the  European  Parliament  and  of  the  Council  of  16  December  2020  on  a  framework  for  the 
recovery and resolution of central counterparties and amending Regulations (EU) No 1095/2010, (EU) No 648/2012, (EU) 
No 600/2014, (EU) No 806/2014 and (EU) 2015/2365 and Directives 2002/47/EC, 2004/25/EC, 2007/36/EC, 2014/59/EU 
and (EU) 2017/1132 (OJ L 22, 22.1.2021, p. 1). 
Directive xx/xx/EU of the European Parliament and of the Council [PO, please insert reference to the IRRD]’. 

EN 

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Article 86 

In Article 1 of Directive 2007/36/EC, paragraph 4 is replaced by the following: 

Amendments to Directive 2007/36/EC 

‘4.  Member States shall ensure that this Directive does not apply in the case of the 
use of resolution tools, powers and mechanisms provided for in Title IV of Directive 
2014/59/EU  of  the  European  Parliament  and  of  the  Council*8,  in  Title  V  of 
Regulation (EU) 2021/23 of the European Parliament and of the Council*9 or in Title 
III  of  Directive  (EU)  xx/xx  of  the  European  Parliament  and  of  the  Council*10  [PO, 
please insert the number of the IRRD]. 

______________________________________________________ 

*8 

*9 

*10 

Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework 
for  the  recovery  and  resolution  of  credit  institutions  and  investment  firms  and  amending  Council  Directive 
82/891/EEC  and  Directives  2001/24/EC,  2002/47/EC,  2004/25/EC,  2005/56/EC,  2007/36/EC,  2011/35/EU, 
2012/30/EU  and  2013/36/EU,  and  Regulations  (EU)  No  1093/2010  and  (EU)  No  648/2012,  of  the  European 
Parliament and of the Council (OJ L 173, 12.6.2014, p. 190). 
Regulation (EU) 2021/23 of the European Parliament and of the Council of 16 December 2020 on a framework for 
the  recovery  and  resolution  of  central  counterparties  and  amending  Regulations  (EU)  No  1095/2010,  (EU)  No 
648/2012, (EU) No 600/2014, (EU) No 806/2014 and (EU) 2015/2365 and Directives 2002/47/EC, 2004/25/EC, 
2007/36/EC, 2014/59/EU and (EU) 2017/1132 (OJ L 22, 22.1.2021, p. 1). 
Directive XX/XX/EU of the European Parliament and of the Council [PO, please insert reference to the IRRD]’.’ 

Article 87 

Amendment to Directive (EU) 2017/1132 

Directive (EU) 2017/1132 is amended as follows: 

(1) 

in Article 84, paragraph 3 is replaced by the following: 

‘3.  Member States shall ensure that Article 49, Article 58(1), Article 68(1), (2) and 
(3), the first subparagraph of Article 70(2), Articles 72 to 75, 79, 80 and  81 of this 
Directive do not apply in the case of application of the resolution tools, powers and 
mechanisms  provided  for  in  Title  IV  of  Directive  2014/59/EU  of  the  European 
Parliament  and  of  the  Council*11,  in  Title  V  of  Regulation  (EU)  2021/23  of  the 
European Parliament and of the Council*12 or in Title III of Directive (EU) xx/xx of 
the European Parliament and of the Council*13. 

______________________________________________________ 

*11 

*12 

*13 

Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework 
for  the  recovery  and  resolution  of  credit  institutions  and  investment  firms  and  amending  Council  Directive 
82/891/EEC  and  Directives  2001/24/EC,  2002/47/EC,  2004/25/EC,  2005/56/EC,  2007/36/EC,  2011/35/EU, 
2012/30/EU  and  2013/36/EU,  and  Regulations  (EU)  No  1093/2010  and  (EU)  No  648/2012,  of  the  European 
Parliament and of the Council (OJ L 173, 12.6.2014, p. 190). 
Regulation (EU) 2021/23 of the European Parliament and of the Council of 16 December 2020 on a framework for 
the  recovery  and  resolution  of  central  counterparties  and  amending  Regulations  (EU)  No  1095/2010,  (EU)  No 
648/2012, (EU) No 600/2014, (EU) No 806/2014 and (EU) 2015/2365 and Directives 2002/47/EC, 2004/25/EC, 
2007/36/EC, 2014/59/EU and (EU) 2017/1132 (OJ L 22, 22.1.2021, p. 1). 
Directive (EU) XX/XX of the European Parliament and of the Council [PO, please insert reference to the IRRD].’; 

(2) 

Article 86a is amended as follows: 

(a) 

in paragraph 3, point (b) is replaced by the following: 

‘(b) 
the  company  is  subject  to  resolution  tools,  powers  and  mechanisms 
provided  for  in  Title  IV  of  Directive  2014/59/EU,  in  Title  V  of  Regulation 
(EU)  2021/23  or  in  Title  III  of  Directive  (EU)  xx/xx  [PO,  please  insert  the 
number of the IRRD].’; 

EN 

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(b) 

in paragraph 4, point (c) is replaced by the following: 

the  subject  of  crisis  prevention  measures  as  defined  in  point  (101)  of 
‘(c) 
Article 2(1) of Directive 2014/59/EU, in point (48) of Article 2 of Regulation 
(EU)  2021/23  or  in  point  (75)  of  Article  2(2)  of  Directive  (EU)  xx/xx  [PO, 
please insert the number of the IRRD].’; 

(3) 

in Article 87, paragraph 4 is replaced by the following: 

‘4.  Member  States  shall  ensure  that  this  Chapter  does  not  apply  to  companies 
which are the subject of the application of resolution tools, powers and mechanisms 
provided  for  in  Title  IV  of  Directive  2014/59/EU,  in  Title  V  of  Regulation  (EU) 
2021/23 or in Title III of Directive (EU) xx/xx [PO, please insert the number of the 
IRRD].’; 

(4) 

Article 120 is amended as follows: 

(a) 

in paragraph 4, point (b) is replaced by the following: 

the  company  is  subject  to  resolution  tools,  powers  and  mechanisms 
‘(b) 
provided  for  in  Title  IV  of  Directive  2014/59/EU,  in  Title  V  of  Regulation 
(EU)  2021/23  or  in  Title  III  of  Directive  (EU)  xx/xx  [PO,  please  insert  the 
number of the IRRD].’; 

(b) 

in paragraph 5, point (c) is replaced by the following: 

‘(c) 
the  subject  of  crisis  prevention  measures  as  defined  in  point  (101)  of 
Article 2(1) of Directive 2014/59/EU, in point (48) of Article 2 of Regulation 
(EU)  2021/23  or  in  point  (75)  of  Article  2(2)  of  Directive  (EU)  xx/xx  [PO, 
please insert the number of the IRRD].’; 

(5) 

Article 160a is amended as follows: 

(a) 

in paragraph 4, point (b) is replaced by the following: 

‘(b) 
the  company  is  subject  to  resolution  tools,  powers  and  mechanisms 
provided  for  in  Title  IV  of  Directive  2014/59/EU,  in  Title  V  of  Regulation 
(EU)  2021/23  or  in  Title  III  of  Directive  (EU)  xx/xx  [PO,  please  insert 
reference to the IRRD].’; 

(b) 

in paragraph 5, point (c) is replaced by the following: 

‘(c) 
the  subject  of  crisis  prevention  measures  as  defined  in  point  (101)  of 
Article 2(1) of Directive 2014/59/EU, in point (48) of Article 2 of Regulation 
(EU)  2021/23  or  in  point  (75)  of  Article  2(2)  of  Directive  (EU)  xx/xx  [PO, 
please insert reference to the IRRD].’. 

Article 88 

Amendment to Regulation (EU) No 1094/2010 

Regulation (EU) No 1094/2010 is amended as follows: 

(1) 

in Article 4, in point (2), point (i) is replaced by the following: 

‘(i) 
supervisory  authorities  as  defined  in  Article  13,  point  (10)  of  Directive 
2009/138/EC,  resolution  authorities  as  defined  in  Article  2,  point  (7),  of  Directive 
(EU)  xx/xx  of  the  European  Parliament  and  of  the  Council*14,  and  competent 
authorities  as  defined  in  Article  6,  point  (8),  of  Directive  (EU)  2016/2341  of  the 

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European  Parliament  and  of  the  Council*15  and  as  referred  to  in  Directive  (EU) 
2016/97 of the European Parliament and of the Council*16;’ 

(2) 

in Article 40(6), the following subparagraph is added: 

‘For  the  purposes  of  acting  within  the  scope  of  Directive  (EU)  xx/xx  [PO,  please 
insert the number of the IRRD], the member of the Board of Supervisors referred to 
in  point  (b)  of  paragraph  1  may,  where  appropriate,  be  accompanied  by  a 
representative from the resolution authority in each Member State, who shall be non-
voting. 

_________________________________________________________________ 

*14 
*15 

*16 

[PO, please insert the reference to the IRRD]. 
Directive (EU) 2016/2341 of the European Parliament and of the Council of 14 December 2016 on the activities 
and supervision of institutions for occupational retirement provision (IORPs) (OJ L 354, 23.12.2016, p. 37). 
Directive  (EU)  2016/97  of  the  European  Parliament  and  of  the  Council  of  20  January  2016  on  insurance 
distribution (OJ L 26, 2.2.2016, p. 19).’. 

Article 89 

Amendment to Regulation (EU) No 648/2012 

In Article 81(3) of Regulation (EU) No 648/2012, the following point is added: 

the resolution authorities designated under Article 3 of Directive (EU) xx/xx of 

‘(r) 
the European Parliament and of the Council*17. 

_______________________________________________________________ 

*17 

[PO, please insert the reference to the IRRD].’. 

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TITLE VIII 
FINAL PROVISIONS 

Article 90 

EIOPA Resolution Committee 

1. 

2. 

3. 

1. 

2. 

1. 

EIOPA  shall  create  a  permanent  internal  committee  pursuant  to  Article  41  of 
Regulation (EU) No 1094/2010 to prepare EIOPA decisions as referred to in Article 
44 of that Regulation, including decisions about draft regulatory technical standards 
and  draft  implementing  technical  standards  concerning  tasks  that  have  been 
conferred  on  resolution  authorities  in  accordance  with  this  Directive.  That  internal 
committee shall be composed of the resolution authorities referred to in Article 3 of 
this Directive. 

For  the  purposes  of  this  Directive,  EIOPA  shall  cooperate  with  EBA  and  ESMA 
within  the  framework  of  the  Joint  Committee  of  the  European  Supervisory 
Authorities  established  in  Article  54  of  Regulation  (EU)  No  1093/2010,  of 
Regulation (EU) No 1094/2010 and of Regulation (EU) No 1095/2010. 

For the purposes of this Directive, EIOPA shall ensure structural separation between 
the  resolution  committee  and  other  functions  referred  to  in  Regulation  (EU)  No 
1094/2010.  The  resolution  committee  shall  promote 
the  development  and 
coordination of resolution plans and develop methods for the resolution of entities as 
referred to in Article 1(1) of this Directive that are failing. 

Article 91 

Cooperation with EIOPA 

Member States shall ensure that the supervisory and resolution authorities cooperate 
with  EIOPA for the purposes of this Directive in  accordance with  Regulation (EU) 
No 1094/2010. 

Member  States  shall  ensure  that  the  supervisory  and  resolution  authorities,  without 
delay,  provide  EIOPA  with  all  the  information  necessary  to  carry  out  its  duties  in 
accordance with Article 35 of Regulation (EU) No 1094/2010. 

Article 92 

Transposition 

Member  States  shall  adopt  and  publish,  by  [PO  –  add  18  months  after  entry  into 
force] at  the latest,  the laws, regulations  and administrative provisions necessary to 
comply  with  Articles  1  to  87,  90  and  91  of  this  Directive.  They  shall  forthwith 
communicate  to  the  Commission  the  text  of  those  provisions.  Articles  88  and  89 
shall,  however,  be  binding  in  their  entirety  and  directly  applicable  in  all  Member 
States. 

They shall apply Articles 1 to 87, 90 and 91 from [PO – add 18 months and one day 
after entry into force]. 

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When Member States adopt Articles 1 to 87, 90 and 91, they shall include 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. 

2. 

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

Article 93 

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 Union. 

Article 94 

Addressees 

This Directive is addressed to the Member States. 

Done at Brussels, 

For the European Parliament 
The President 

For the Council 
The President 

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