CELEX: 51992PC0285
Language: en
Date: 1992-06-23
Title: Amended proposal for a THIRD COUNCIL DIRECTIVE ON THE COORDINATION OF LAWS, REGULATIONS AND ADMINISTRATIVE PROVISIONS RELATING TO DIRECT LIFE ASSURANCE AND AMENDING DIRECTIVES 79/267/EEC AND 90/619/EEC

3 . 8 . 92                                    Official Journal of the European Communities                                          No C 196 / 9
                  Amended proposal for a Third Council Directive on the coordination of laws, regulations and
                  administrative provisions relating to direct life assurance and amending Directives 79 / 267/ EEC
                                                             and 90 / 619 / EEC
                                                               ( 92 / C 196 / 02 )
                                                      COM(92 ) 285 final — SYN 329
                  (Submitted by the Commission on 22 June 1992 pursuant to Article 149 (3) of the EEC Treaty)
THE COUNCIL OF THE EUROPEAN COMMUNITIES ,                                             markets into an integrated market and that stage
                                                                                      must be supplemented by other Community
                                                                                      instruments with a view to enabling all
                                                                                      policyholders , irrespective of whether they
 Having regard to the Treaty establishing the European                                themselves take the initiative, to have recourse to
 Economic Community , and in particular Articles 57 ( 2 )                             any assurer with a head office in the Community
 and 66 thereof,                                                                      who carries on business there , under the right of
                                                                                      establishment or the freedom to provide services ,
                                                                                      while guaranteeing them adequate protection ;
 Having regard to the proposal from the Commission ( ! ),
 In cooperation with the European Parliament ( 2 ),
                                                                            4.        Whereas this Directive forms part of the body of
                                                                                      Community legislation already enacted which
 Having regard to the opinion of the Economic and Social                              includes the First Council Directive 79 / 267 / EEC of
 Committee ( 3 ),                                                                     5 March 1979 on the coordination of laws ,
                                                                                      regulations and administrative provisions relating to
                                                                                      the taking up and pursuit of the business of direct
 1.       Whereas it is necessary to complete the internal                            life    assurance ( 5 )      and      Council    Directive
          market in direct life assurance , from the point of                         91 / 674 / EEC of 19 December 1991 on the annual
          view both of the right of establishment and of the                          accounts and consolidated accounts of insurance
          freedom to provide services , to make it easier for                         undertakings ( 6 );
          assurance undertakings with head offices in the
          Community to cover commitments situated within
          the Community ;
                                                                            5.        Whereas the approach adopted consists in bringing
2.        Whereas      the    Second       Council   Directive    of                  about such harmonization as is essential , necessary
          8 November 1990 on the coordination of laws,                                and sufficient to achieve the mutual recognition of
          regulations and administrative provisions relating to                       authorizations and prudential control systems ,
          direct life assurance , laying down provisions to                           thereby making it possible to grant a single
          facilitate the effective exercise of freedom to provide                     authorization valid throughout the Community and
          services and amending Directive 79 / 267 / EEC (4 )                         apply the principle of supervision by the home
                                                                                      Member State ;
          has already contributed substantially to the
          achievement of the internal market in direct life
          assurance by granting policyholders who , by virtue
          of the fact that they take the initiative in entering
          into a commitment with an assurance undertaking in                6.        Whereas , as a result , the taking up and the pursuit of
          another Member State , do not require special                               the business of assurance are henceforth to be
          protection in the Member State of the commitment                            subject to the grant of a single official authorization
          complete freedom to avail themselves of the widest                          issued by the competent authorities of the Member
          possible life assurance market ;                                            State in which an assurance undertaking has its head
                                                                                      office; whereas such authorization enables an
                                                                                      undertaking to carry on business throughout the
3.        Whereas Directive 90 / 61 9 / EEC therefore represents                      Community , under the right of establishment or the
          an important stage in the merging of national
(») OJ No C 99 , 16 . 4 . 1991 , p. 2 .
( 2) Opinion delivered on 10 June 1992 and Decision of . . . ( not          ( 5 ) OJ No L 63 , 13 . 3 . 1979 , p. 1 . Last amended by the Second
      yet published in the Official Journal )                                     Directive ( 90 / 619 / EEC ) ( OJ No L 330 , 29 . 11 . 1990 ,
( 3 ) OJ No C 14 , 20 . 1 . 1992 , p. 11 .                                        p. 50 ).
(4) OJ No L 330 , 29 . 11 . 1990 , p . 50 .                                 ( 6 ) OJ No L 374 , 31 . 12 . 1991 , p. 7 .
 ---pagebreak--- No C 196 / 10                                 Official Journal of the European Communities                                        3 . 8 . 92
         freedom to provide services ; whereas the Member                         that possibility may , however, be subject to certain
         State of the branch or of the provision of services                      conditions as regards compliance with accounting
         may no longer require assurance undertakings which                       rules and rules on winding-up ;
         wish to carry on assurance business there and which
          have already authorized in their home Member State
          to seek fresh authorization ; whereas Directives
          79 / 267 / EEC and 90 / 619 / EEC should therefore be          13 .     Whereas it is necessary from the point of view of the
          amended along those lines ;                                             protection of lives assured that every assurance
                                                                                  undertaking should establish adequate technical
7.        Whereas the competent authorities of home Member                        provisions ; whereas the calculation of such
          States will henceforth be responsible for monitoring                    provisions is based for the most part on actuarial
          the financial health of assurance undertakings ,                        principles ; whereas those principles should be
          including their state of solvency , the establishment of                coordinated in order to facilitate mutual recognition
          adequate technical provisions and the covering of                       of the prudential rules applicable in the various
                                                                                  Member States ;
          those provisions by matching assets ;
8.        Whereas the performance of the operations referred
          to in Article 1 ( 2 ) ( c) of Directive 79 / 267 / EEC         14 .     Whereas it is desirable , in the interests of prudence,
          cannot under any circumstances affect the powers                        to establish a minimum of coordination of rules
          conferred on the respective authorities with regard to                  limiting the rate of interest used in calculating the
          the entities holding the assets with which that                         technical provisions , and whereas , for the purposes
          provision is concerned ;                                                of such limitation , since existing methods are all
                                                                                  equally correct , prudential and equivalent , it seems
9.        Whereas certain provisions of this Directive define                     appropriate to leave Member States a free choice as
          minimum standards ; whereas a home Member State                         to the method to be used ;
          may lay down stricter rules for assurance
          undertakings authorized by its own competent
          authorities ;
                                                                         15 .     Whereas the rules governing the spread, localization
                                                                                  and matching of the assets used to cover technical
10 .      Whereas the competent authorities of the member                         provisions must be coordinated in order to facilitate
          States must have at their disposal such means of                        the mutual recognition of Member States' rules ;
          supervision as are necessary to ensure the orderly                      whereas that coordination must take account of the
          pursuit of business by assurance undertakings
                                                                                  measures on the liberalization of capital movements
          throughout the Community whether carried on
                                                                                  provided for in Council Directive 88 / 361 / EEC of
          under the right of establishment or the freedom to
                                                                                  24 June 1988 for the implementation of Article 67 of
          provide services ; whereas , in particular , they must                  the Treaty ( 2 ) and the progress made by the
          be able to introduce appropriate safeguards or                          Community towards economic and monetary
          impose sanctions aimed at preventing irregularities                     union ;
          and infringements of the provisions on assurance
          supervision ;
11 .      Whereas the provisions on transfers of portfolios              16 .     Whereas , however , the home Member State may not
          must be adapted to bring them into line with the                        require assurance undertakings to invest the assets
          single legal authorization system introduced by this                    covering their technical provisions in particular
          Directive ;                                                             categories of assets , as such a requirement would be
                                                                                  incompatible with the measures on the liberalization
12.       Whereas provision should be made for the                                of capital movements provided for in Directive
                                                                                  88 / 361 / EEC ;
          specialization rule laid down by Directive
          79 / 267 / EEC to be relaxed so that those Member
          States which so wish are able to grant the same
          undertaking authorizations for the classes referred to
          in the Annex to Directive 79 / 267 / EEC and the               17.      Whereas , pending the adoption of a Directive on
          insurance business coming under classes 1 and 2 in                      investment services harmonizing inter alia the
          the Annex to Directive 73 / 239 / EEC f 1 ): whereas                    definition of the concept of a regulated market , for
                                                                                  the purposes of this Directive and without prejudice
                                                                                  to such future harmonization that concept must be
 ') First Council Directive 73 / 239 / EEC of 24 July 1973 on the                 difined provisionally , to be replaced by the definition
     coordination of laws , regulations and administrative provisions
     relating to the taking-up and pursuit of the business of direct
     insurance other than life assurance ( OJ No L 228 , 16 . 8 . 1973 ,
     p. 3 ). Last amended by Directive 90 / 618 / EEC ( OJ No L 330 ,
     29 . 11 . 1990 , p. 44 ).                                           ( 2 ) OJ No L 178 , 8 . 7 . 1988 , p. 5 .
 ---pagebreak--- 3 . 8 . 92                                   Official Journal of the European Communities                              No C 196 / 11
         harmonized at Community level , which will give                      an internal market which enable every Member State
         the    home     Member      State of   the   market   the            to guarantee policyholders adequate protection ;
          responsibilities for these matters which this Directive
          transitionally gives to the assurance undertaking's
         home Member State :
                                                                        22 .  Whereas , for the purposes of implementing actuarial
                                                                             principles in conformity with this Directive , the
                                                                              home Member State may nevertheless require
                                                                              systematic notification of the technical bases used for
18 .      Whereas the list of items of which the solvency                     calculating scales of premiums and technical
          margin required by Directive 79 / 267 / EEC may be                  provisions , with such notification of technical bases
          made up must be supplemented to take account of                     excluding notification of the general and special
          new financial     instruments and of the facilities                 policy conditions and the undertaking's commercial
         granted to other financial institutions for the                      rates ;
          constitution of their own funds ;
                                                                        23 . Whereas in a single assurance market the consumer
                                                                             will have a wider and more varied choice of
19 .     Whereas the harmonization of assurance contract                     contracts ; whereas , if he is to profit fully from this
         law is not a prior condition for the achievement of                 diversity and from increased competition , he must be
         the internal market in assurance ; whereas , therefore ,            provided with whatever information is necessary to
         the opportunity afforded to the Member States of                    enable him to choose the contract best suited to his
         imposing the application of their law to assurance                  needs ; whereas this information requirement is all
         contracts covering commitments within their                         the more important as the duration of commitments
         territories is likely to provide adequate safeguards                can be very long; whereas the minimum provisions
         for policyholders ;                                                 must therefore be coordinated in order for the
                                                                             consumer to receive clear and accurate information
                                                                             on the essential characteristics of the products
                                                                             proposed to him as well as the particulars of the
                                                                             bodies to which any complaints of policyholders ,
20 .     Whereas within the framework of an internal market
                                                                             assured persons or beneficiaries of contracts may be
         it is in the policyholder's interest that he should have            addressed ;
         access to the widest possible range of assurance
         products available in the Community so that he can
         choose that which is best suited to his needs;
         whereas      it is  for   the   Member     State of  the       24.  Whereas publicity for assurance products is an
         commitment to ensure that there is nothing to                       essential means of enabling assurance business to be
         prevent the marketing within its territory of all the               carried on effectively within the Community ;
         assurance products offered for sale in the                          whereas it is necessary to leave open to assurance
         Community as long as they do not conflict with the                  undertakings the use of all normal means of
         legal provisions protecting the general good in force               advertising in the Member State of the branch or of
         in the Member State of the commitment and in so far                 provision of services ; whereas Member States may
         as the general good is not safeguarded by the rules of              nevertheless require compliance with their national
         the home Member State , provided that such                          rules on the form and content of advertising,
         provisions must be applied without discrimination to                whether laid down pursuant to Community
         all undertakings operating in that Member State and                 legislation on advertising or adopted by Member
         be objectively necessary and in proportion to the                   States for reasons of the general good ;
         subjective pursued ;
                                                                       25 .  Whereas , within the framework of the internal
                                                                             market , no Member State may continue to prohibit
21 .    Whereas the Member States must be able to ensure                     the simultaneous carrying on of assurance business
         that the assurance products and contract documents                  within its territory under the right of establishment
         used , under the right of establishment or the                      and the freedom to provide services ; whereas the
         freedom to provide services , to cover commitments                  option granted to member States in this connection
        within their territories comply with such specific                   by Directive 90 / 619 / EEC should therefore be
                                                                             abolished ;
         legal provisions protecting the general good as are
         applicable; whereas the systems of supervision to be
        employed must meet the requirements of an internal
        market but their employment may not constitute a               26 .  Whereas provision should be made for a system of
        prior condition for carrying on assurance business ;                 penalties to be imposed when , in the Member State
        whereas , from this standpoint , systems for the prior               in which the commitment is entered into , an
        approval of policy conditions do not appear to be                    assurance undertaking does not comply with those
        justified ; whereas it is therefore necessary to provide             provisions protecting the general good that are
        for other systems better suited to the requirements of               applicable to it ;
 ---pagebreak---  No C 196 / 12                               Official Journal of the European Communities                                              3 . 8 . 92
 27 .   Whereas some Member States do not subject                         HAS ADOPTED THIS DIRECTIVE :
         assurance transactions to any form of indirect
         taxation , while the majority apply special taxes and
         other forms of contribution ; whereas the structures
                                                                                                          TITLE I
         and rates of such taxes and contributions vary
         considerably between the Member States in which
         they are applied ; whereas it is desirable to prevent
         existing differences leading to distortions of                                           Definitions and scope
         competition in assurance services between Member
         States ; whereas , pending subsequent harmonization ,
         application of the tax systems and other forms of                                               Article 1
         contribution provided for by the Member States in
        which commitments entered into are likely to                     For the purposes of this Directive :
         remedy that problem and it is for the Member States
        to make arrangements to ensure that such taxes and               ( a ) assurance undertaking shall mean an undertaking
        contributions are collected ;                                            which has received official authorization in accordance
                                                                                with Article 6 of Directive 79 / 267 / EEC ;
                                                                         ( b ) branch shall mean an agency or branch of an assurance
 28 .   Whereas , it is important to introduce Community                        undertaking , having regard to Article 3 of Directive
        coordination on the winding-up of assurance                              90 / 619 / EEC ;
        undertakings ; whereas it is henceforth essential to
        provide , in event of the winding-up of an assurance             ( c) commitment shall mean a commitment represented by
        undertaking , that the system of protection in place in                 one of the kinds of insurance or operations referred to
        each Member State must guarantee equality of                            in Article 1 of Directive 79 / 267 / EEC ;
        treatment for all assurance creditors , irrespective of          ( d ) home Member State shall mean the Member State in
        nationality and of the method of entering into the                      which the head office of the assurance undertaking
        commitment ;                                                            covering the commitment is situated ;
                                                                        ( e) Member State of the branch shall mean the Member
                                                                                State in which the branch covering the commitment is
 29 .   Whereas technical adjustments to the detailed rules                     situated ;
        laid down in this Directive may be necessary from
        time    to  time    to  take    account   of the   future       ( f) Member State of the provision of services shall mean
        development of the assurance industry ; whereas the                     the Member State of the commitment , as defined in
        Commission will make such adjustments as and                            Article 2 ( e ) of Directive 90 / 619 / EEC , if the
        when necessary , after consulting the Insurance                         commitment is covered by an assurance undertaking or
       Committee set up by Directive 91 / 675 / EEC ( J ), in                   a branch situated in another Member State;
       the exercise of the implementing powers conferred                ( g) control shall mean the relationship between a parent
       on it by the Treaty ;                                                    undertaking and a subsidiary , as defined in Article 1 of
                                                                                Directive 83 / 349 / EEC ( 2), or a similar relationship
                                                                                between any natural or legal person and an
                                                                                undertaking;
 30.   Whereas it is necessary to adopt specific provisions
       intended to ensure smooth transition from the legal              ( h ) qualifying holding shall mean a direct or indirect
       arrangements in existence when this Directive                            holding in an undertaking which represents 10 % or
       becomes applicable to those that it introduces ;                        more of the capital or of the voting rights or which
       whereas care should be taken in such provisions not                      makes it possible to exercise a significant influence over
       to place an additional workload on Member states'                       the management of the undertaking in which a holding
       competent authorities ;                                                  subsists .
                                                                               For the purposes of this definition , in the context of
                                                                               Articles 7 and 14 and of the other levels of holding
31 .   Whereas , pursuant to Article 8c of the Treaty ,                        referred to in Article 14 , the voting rights referred to in
       account should be taken of the extent of the effort                     Article 7 of Directive 88 / 627 / EEC ( 3 ) shall be taken
                                                                               into consideration ;
       which must be made by certain economies at
       different stages of development ; whereas , therefore ,
       transitional arrangements should be adopted for the
                                                                       (2 ) Seventh Council Directive 83 / 349 / EEC of 13 June 1983 based
       gradual application of this Directive by certain                       on Article 54 ( 3 ) (g) of the Treaty on consolidated accounts
       Member States ,                                                        ( OJ No L 193 , 18 . 7 . 1983 , p. 1 ). Last amended by Directive
                                                                              90 / 605 / EEC ( OJ No L 317 , 16 . 11 . 1990 , p. 60).
                                                                       ( 3 ) Council Directive 88 / 627 / EEC of 12 December 1988 on the
                                                                              information to be published when a major holding in a listed
                                                                              company is acquired or disposed of ( OJ L 348 , 17 . 12 . 1988 ,
(!) OJ No L 374 , 31 . 12 . 1991 , p. 32 .                                    p. 62). '
 ---pagebreak---  3 . 8 . 92                                        Official Journal of the European Communities                                 No C 196 / 13
  ( i ) parent undertaking shall mean a parent undertaking as                                               TITLE
        defined in Articles 1 and 2 of Directive 83 / 349 / EEC ;
  ( j ) subsidiary shall mean a subsidiary undertaking as                              The taking-up of the business of life assurance
        defined in Articles 1 and 2 of Directive 83 / 349 / EEC ;
         any subsidiary of a subsidiary undertaking shall also be
         regarded as a subsidiary of the undertaking which is
        those undertakings' ultimate parent undertaking ;                                                  Article 3
  ( k ) regulated market shall mean a financial market                        Article 6 of Directive 79 / 267 / EEC shall be replaced by the
        regarded by an undertaking's home Member State as a                   following:
        regulated market pending the adoption of a definition
        in a Directive on investment services and characterized                  'Article 6
        by :
                                                                                 The taking-up of the activities covered by this Directive
        — regular operation , and                                                shall be subject to prior official authorization .
        — the fact that regulations issued or approved by the
             appropriate authorities define the conditions for the               Such authorization shall be sought from the authorities
             operation of the market, the conditions for access to               of the home Member State by :
             the market and , where Council Directive                            ( a ) any undertaking which establishes its head office in
             79 / 279 / EEC of 5 March 1979 coordinating the                           the territory of that State ;
             conditions for the admission of securities to official
             stock-exchange listing 0 ) applies , the conditions for             ( b ) any undertaking which , having received the
             admission to listing imposed in that Directive or,                        authorization required in the first subparagraph ,
             where that Directive does not apply , the conditions                      extends its business to an entire class or to other
             to be satisfied by a financial instrument in order to                     classes .'
             be effectively dealt in on the market .
        For the purposes of this Directive , a regulated market                                            Article 4
        may be situated in a Member State or in a third
        country . In the latter event, the market must be
        recognized by the undertaking's home Member State                     Article 7 of Directive 79 / 267 / EEC shall be replaced by the
        and meet comparable requirements . Any financial                      following:
        instruments dealt in must be of a quality comparable to
                                                                                    'Article 7
        that of the instruments dealt in on the regulated market
        or markets of the Member State in question ;                                1.   Authorization    shall  be  valid   for  the  entire
 ( 1 ) competent authorities shall mean the national                               Community . It shall permit an undertaking to carry on
                                                                                   business there , under either the right of establishment
        authorities which are empowered by law or regulation
        to supervise assurance undertakings .                                      or freedom to provide services.
                                                                                   2 . Authorization shall be granted for a particular class
                                                                                   of assurance as listed in the Annex . It shall cover the
                                Article 2                                          entire class , unless the applicant wishes to cover only
                                                                                   some of the risks pertaining to that class .
 1 . This Directive shall apply to the commitments and                             The competent authorities may restrict authorization
undertakings referred to in Article 1 of Directive                                 requested for one of the classes to the operations set out
79 / 267 / EEC .                                                                   in the scheme of operations referred to in Article 9 .
                                                                                   Each Member State may grant authorization for two or
2 . In Article 1 ( 2 ) of Directive 79 / 267 / EEC the words                       more of the classes , where its national laws permit such
'and are authorized in the country concerned' shall be                             classes to be carried on simultaneously .'
deleted .
                                                                                                           Article 5
3 . This Directive shall apply neither to classes of
insurance or operations nor to undertakings or institutions
to which Directive 79 / 267 / EEC does not apply , nor shall                 Article 8 of Directive 79 / 267 / EEC shall be replaced by the
it apply to the bodies referred to in Article 4 of that                      following.
Directive .
                                                                                   'Article 8
                                                                                   1 . The home Member State shall require every
(') OJ No L 66 , 13 . 3 . 1979 , p. 21 . Last amended by Directive                 assurance undertaking for which authorization is
       82 / 148 / EEC ( OJ No L 62 , 5 . 3 . 1982 , p. 22 ).                       sought to :
 ---pagebreak--- No C 196 / 14                                Official Journal of the European Communities                                       3 . 8 . 92
   ( a ) adopt one of the following forms :                                      An assurance undertaking may also adopt the form
                                                                                 of a European company when that has been
         — in the case of the Kingdom of Belgium :                               established .
             'société anonyme / naamloze vennootschap',
              'société        en         commandite            par               Furthermore , Member States may , where
              actions / commanditaire        vennootschap       op               appropriate , set up undertakings in any public-law
              aandelen',         'association          d'assurance               form provided that such bodies have as their object
              mutuelle / onderlinge      verzekeringsvereniging',                insurance operations under conditions equivalent to
              'société coopérative / coöperatieve vennoot­                       those under which private-law undertakings
                                                                                 operate ;
              schap',
         — in the case of the Kingdom of Denmark :                         ( b ) limit its objects to the business provided for in this
              'aktieselskaber',       'gensidige        selskaber',              Directive and operations directly arising therefrom ,
              'pensionskasser      omfattet      af     lov    om                to the exclusion of all other commercial business ;
             forsikringsvirksomhed ( tværgående pensions­
              kasser )',                                                   ( c) submit a scheme of operations in accordance with
                                                                                 Article 9 ;
         — in the case of the Federal Republic of
              Germany :
                                                                           ( d) possess the minimum guarantee fund provided for
             'Aktiengesellschaft', 'Versicherungsverein auf                      in Article 20 ( 2 );
              Gegenseitigkeit', 'öffentlich-rechtliches Wett­
              bewerbsversicherungsunternehmen',                            ( e ) be effectively run by persons of good repute with
         — in the case of the French Republic :                                  appropriate       professional    qualifications       or
                                                                                 experience.
             'société     anonyme',       'société     d'assurance
             mutuelle', 'institution de prévoyance régie par le
             code de la sécurité sociale', 'institution de                 2 . An undertaking seeking authorization to extend its
                                                                           business to other classes or to extend an authorization
             prévoyance régie par le code rural' and
             'mutuelles régies par le code de la mutualité',               covering only some of the risks pertaining to one class
                                                                           shall be required to submit a scheme of operations in
         — in the case of Ireland :                                        accordance with Article 9 .
             'incorporated companies limited by shares or by
             guarantee or unlimited', 'societies registered
             under the Industrial and Provident Societies                  It shall , furthermore , be required to show proof that it
             Acts' and 'societies registered under the Friendly            possesses the solvency margin provided for in Article 1 9
             Societies Acts',                                              and the guarantee fund referred to in Article 20 ( 1 )
                                                                           and ( 2 ).
         — in the case of the Italian Republic:
             'società per azioni , 'società cooperativa , 'mutua
             di assicurazione',                                            3 . Member States shall not adopt provisions requiring
         — in the case of the Grand Duchy of                               the prior approval or systematic notification of general
             Luxembourg:                                                   and special policy conditions , of scales of premiums , of
             'société anonyme', 'société en commandite par                 the technical bases , used in particular for calculating
             actions', 'association d'assurances mutuelles',               scales of premiums and technical provisions or of forms
             'société coopérative',
                                                                           and other printed documents which an assurance
                                                                           undertaking intends to use in its dealings with
         — in the case of the Kingdom of the Netherlands :                 policyholders .
             'naamloze vennootschap', 'onderlinge waar­
             borgmaatschappij ',
                                                                          Notwithstanding the first subparagraph , for the sole
         — in the case of the United Kingdom:                              purpose of verifying compliance with national
            'incorporated companies limited by shares or by               provisions concerning actuarial principles , the home
            guarantee or unlimited', 'societies registered                 Member State may require systematic notification of
            under the Industrial and Provident Societies                  the technical bases used for calculating scales of.
            Acts', 'societies registered or incorporated under            premiums and technical provisions , without that
            the Friendly Societies Acts', 'the association of             requirement constituting a prior condition for an
            underwriters known as Lloyd's',                               undertaking to carry on its business .
         — in the case of the Hellenic Reupublic:
            'ανώνυμη εταιρία
                                                                          Nothing in this Directive shall prevent Member States
         — in the case of the Kingdom of Spain :                          from maintaining in force or introducing laws ,
            'sociedad anónima ', 'sociedad mutua', 'sociedad              regulations or administrative provisions requiring
            cooperativa',                                                 approval of the memorandum and articles of
                                                                          association and the communication of any other
         — in the case of the Portuguese Republic:                        documents necessary for the normal exercise of
            'sociedade anónima', 'mútua de seguros'.                      supervision .
 ---pagebreak---  3 . 8 . 92                                     Official Journal of the European Communities                                No C 196 / 15
      Not later than five years after the date of entry into                                           TITLE III
       force mentioned in the first subparagraph of Article 5 1
       ( 1 ) of Directive 92 /.../ EEC ( ! ), the Commission shall
       submit a report to the Council on the implementation                        Harmonization of conditions governing pursuit
       of this paragraph .                                                                            of business
       4 . The abovementioned provisions may not require
       that any application for authorization be considered in                                        Chapter 1
       the light of the economic requirements of the market .
       (!) OJNoL ....'                                                                                 Article 8
                                                                           Article 15 of Directive 79 / 267 / EEC shall be replaced by
                               Article 6                                   the following :
                                                                                'Article 15
 Article 9 of Directive 79 / 267 / EEC shall be replaced by the
following:                                                                      1 . The financial supervision of an assurance
       'Article 9                                                              undertaking , including that of the business it carries on
                                                                               either through branches or under the freedom to
      The scheme of operations referred to in Article 8 ( 1 ) (c)              provide services, shall be the sole responsibility of the
      and ( 2 ) shall include particulars or proof concerning:                 home Member State . If the competent authorities of the
                                                                               Member State of the commitment have reason to
      ( a ) the    nature  of    the  commitments        which   the           consider that the activities of an assurance undertaking
             undertaking proposes to cover;                                    might affect its financial soundness , they shall inform
                                                                               the competent authorities of the undertaking's home
      ( b ) the guiding principles as to reassurance;                          Member State . The latter authorities shall determine
      (c ) the items constituting the minimum guarantee                        whether the undertaking is complying with the
             fund;                                                             prudential principles laid down in this Directive .
      (d ) estimates relating to the costs of setting up the                   2. That financial supervision shall include verification ,
             administrative services and the organization for                  with respect to the assurance undertaking's entire
             securing business and the financial resources                     business , of its state of solvency , the establishment of
             intended to meet those costs ;                                    technical      provisions ,    including     mathematical
                                                                               provisions , and of the assets covering them , in
                                                                               accordance with the rules laid down or practices
      in addition , for the first three financial years :                      followed in the home Member State pursuant to the
                                                                               provisions adopted at Community level .
      (e ) a plan setting out detailed estimates of income and
             expenditure in respect of direct business ,                       3 . The competent authorities of the home Member
             reassurance acceptances and reassurance cessions ;                State shall require every assurance undertaking to have
                                                                               sound administrative and accounting procedures and
      ( f) a forecast balance sheet ;
                                                                               adequate internal control mechanisms .'
      ( g) estimates relating to the financial resources intended
             to cover underwriting liabilities and the solvency
             margin .'                                                                                 Article 9
                                                                          Article 16 of Directive 79 / 267 / EEC shall be replaced by
                               Article 7                                  the following:
                                                                               'Article 16
The competent authorities of the home Member State shall
not grant an undertaking authorization to take up the
business of assurance before they have been informed of the                    The Member State of the branch shall provide that ,
identities of the shareholders or members , direct or                         where an assurance undertaking authorized in another
                                                                              Member State carries on business through a branch , the
indirect , whether natural or legal persons, who have
qualifying holdings in that undertaking and of the amounts                    competent authorities of the home Member State may ,
of those holdings .                                                           after having first informed the competent authorities of
                                                                              the member State of the branch , carry out themselves ,
                                                                              or through the intermediary of persons they appoint for
The same authorities shall refuse authorization if, taking                    that purpose, on-the-spot verification of the
into account the need to ensure the sound and prudent                         information necessary to ensure the financial
management of an assurance undertaking, they are not                          supervision of the undertaking . The authorities of the
satisfied as to the qualifications of the shareholders or                     Member State of the branch may participate in that
members .                                                                     verification .'
 ---pagebreak--- No C 196 / 16                              Official Journal of the European Communities                                    3 . 8 . 92
                              Article 10                              2 . Under the conditions laid down by national law, each
                                                                      Member State shall authorize assurance undertakings with
                                                                      head offices within its territory to transfer all or part of
Article 23 ( 2 ) and ( 3 ) of Directive 79 / 267 / EEC shall be       their portfolios of contracts , concluded under either the
replaced by the following:                                            right of establishment or the freedom to provide services , to
                                                                      an accepting office established within the Community , if
    '2 . Member           States     shall require     assurance      the competent authorities of the home Member State of the
    undertakings with head offices within their territories           accepting office certify that after taking the transfer into
    to render periodically the returns , together with                account the latter possesses the necessary solvency
    statistical documents , which are necessary for the               margin .
    purposes of supervision . The competent authorities
    shall provide each other with any documents and
    information that are useful for the purposes of                   3 . Where a branch proposes to transfer all or pan of its
    supervision .                                                     portfolio of contracts, concluded under either the right of
                                                                      establishment or the freedom to provide services , the
    3 . Every Member State shall take all steps necessary to          Member State of the branch shall be consulted .
    ensure that the competent authorities have the powers
    and means necessary for the supervision of the business
    of assurance undertakings with head offices within their
    territories , including business carried on outside those         4 . In the circumstances referred to in paragraphs 2 and 3 ,
                                                                      the authorities of the home Member State of the
    territories , in accordance with the Council Directives
    governing those activities and for the purpose of seeing          transferring undertaking shall authorize the transfer after
    that they are implemented .                                       obtaining the agreement of the competent authorities of the
                                                                      Member States of the commitment .
    These powers and means must , in particular, enable the
    competent authorities to :
                                                                      5 . The competent authorities of the Member States
    ( a ) make detailed enquiries regarding the undertaking's         consulted shall give their opinion or consent to the
          situation and the whole of its business , inter alia,       competent authorities of the home Member State of the
          by :                                                        transferring assurance undertaking within three months of
          — gathering information or requiring the                    receiving a request ; the absence of any response within that
                submission of documents concerning its                period from the authorities consulted shall be considered
                assurance business ,                                  equivalent to a favourable opinion or tacit consent.
          — carrying out on-the-spot investigations at the
                undertaking's premises ;
                                                                      6 . A transfer authorized in accordance with this Article
    ( b ) take any measures , with regard to the undertaking ,        shall be published as laid down by national law in the
          its directors or managers or the persons who control        Member State of the commitment . Such transfers shall
          it , that are appropriate and necessary to ensure that      automatically be valid against policyholders , the assured
          that undertaking's business continues to comply             persons and any other person having rights or obligations
          with the laws , regulations and administrative              arising out of the contracts transferred.
          provisions with which the undertaking must comply
          in each Member State and in particular with the
          scheme of operations in so far as it remains
                                                                      This provision shall not affect the Member States' rights to
          mandatory , and to prevent or remedy any                    give policyholders the option of cancelling contracts within
          irregularities prejudicial to the interests of the          a fixed period after a transfer .
          assured persons ;
    ( c) ensure that those measures are carried out, if need
          be by enforcement, where appropriate through
          judicial channels .                                                                    Article 12
    Member States may also make provision for the
    competent authorities to obtain any information                   Article 24 of Directive 79 / 267 / EEC shall be replaced by
    regarding contracts which are held by intermediaries .'          the following :
                                                                          'Article 24
                              Article 11                                  1 . If an undertaking does not comply with Article 17 ,
                                                                          the competent authority of its home Member State may
                                                                          prohibit the free disposal of its assets after having
1 . Article 6 ( 2) to ( 7) of Directive 90 / 619 / EEC shall be           communicated its intention to the competent
deleted .                                                                 authorities of the Member States of commitment .
 ---pagebreak--- 3 . 8 . 92                                  Official Journal of the European Communities                                No C 196 / 17
     2 . For the purposes of restoring the financial situation             ( b ) no longer fulfils the conditions for admission ;
     of an undertaking the solvency margin of which has
     fallen below the minimum required under Article 19 ,                  (c ) has been unable , within the time allowed , to take
     the competent authority of the home Member State                            the measures specified in the restoration plan or
     shall require that a plan for the restoration of a sound                    finance scheme referred to in Article 24 ;
      financial position be submitted for its approval .
                                                                           ( d ) fails seriously in its obligations        under   the
                                                                                 regulations to which it is subject .
     In exceptional circumstances , if the competent
     authority is of the opinion that the financial situation of
     the undertaking will further deteriorate , it may also                In the event of the withdrawal or lapse of the
     restrict or prohibit the free disposal of the undertaking's           authorization , the competent authority of the home
     assets . It shall inform the authorities of other Member              Member State shall notify the competent authorities of
     States within the territories of which the undertaking                the other member States accordingly and they shall take
     carries on business of any measures it has taken and the              appropriate measures to prevent the undertaking from
     latter shall , at the request of the former , take the same           commencing new operations within their territories ,
     measures .
                                                                           under either the freedom of establishment or the
                                                                           freedom to provide services . The home Member State's
                                                                           competent authority shall , in conjunction with those
     3 . If the solvency margin falls below the guarantee
                                                                           authorities , take all necessary measures to safeguard the
     fund as defined in Article 20 , the competent authority
                                                                           interests of the assured persons and shall restrict , in
     of the home Member State shall require the undertaking
     to     submit   a   short-term   finance   scheme    for its
                                                                           particular , the free disposal of the assets of the
                                                                           undertaking in accordance with Article 24 ( 1 ), ( 2 ),
     approval .
                                                                           second subparagraph , or ( 3 ), second subparagraph .
     It may also restrict or prohibit the free disposal of the
                                                                           2 . Any decision to withdraw an authorization shall be
     undertaking's assets . It shall inform the authorities of
     other Member States within the territories of which the               supported by precise reasons and notified to the
                                                                           undertaking in question .'
     undertaking carries on business accordingly and the
     latter shall , at the request of the former , take the same
     measures .
     4 . The competent authorities may further take all                                            Article 14
     measures necessary to safeguard the interests of the
     assured persons in the cases provided for in paragraphs
      1 , 2 and 3 .                                                    1 . Member States shall require any natural or legal person
                                                                       who proposes to acquire , directly or indirectly , a qualifying
     5.    Each    Member     State  shall  take   the  measures       holding in an assurance undertaking first to inform the
     necessary to be able in accordance with its national law          competent authorities of the home Member State ,
     to prohibit the free disposal of assets located within its        indicating the size of the intended holding. Such a person
     territory at the request , in the cases provided for in           must likewise inform the competent authorities of the home
     paragraphs 1 , 2 and 3 , of the undertaking's home                Member State if he proposes to increase his qualifying
     Member State , which shall designate the assets to be             holding so that the proportion of the voting rights or of the
     covered by such measures .'                                       capital held by him would reach or exceed 20 , 33 or 50 %
                                                                       or so that the assurance undertaking would become his
                                                                       subsidiary .
                             Article 13
                                                                       The competent authorities of the home Member State shall
                                                                       have a maximum of three months from the date of the
Article 26 of Directive 79 / 267 / EEC shall be replaced by            notification provided for in the first subparagraph to
the following:                                                         oppose such a plan if, in view of the need to ensure sound
                                                                       and prudent management of the assurance undertaking,
     'Article 26
                                                                       they are not satisfied as to the qualifications of the person
                                                                       referred to in the first subparagraph . If they do not oppose
                                                                       the plan in question they may fix a maximum period for its
     1 . Authorization granted to an assurance undertaking             implementation .
     by the competent authority of its home Member State
     may be withdrawn by that authority if that
     undertaking :
                                                                       2 . Member States shall require any natural or legal person
     ( a ) does not make use of the authorization within 12            who proposes to dispose , directly or indirectly , of a
           months , expressly renounces it or ceases to carry on       qualifying holding in an assurance undertaking first to
           business for more than six months , unless the              inform the competent authorities of the home Member
           Member State concerned has made provision for               State, indicating the size of his intended holding . Such a
           authorization to lapse in such cases ;                      person must likewise inform the competent authorities if he
 ---pagebreak--- No C 196 / 18                           Official Journal of the European Communities                                     3 . 8 . 92
proposes to reduce his qualifying holding so that the              Nevertheless , where an assurance undertaking has been
proportion of the voting rights or of the capital held by him      declared bankrupt or is being compulsorily wound up ,
would fall below 20 , 33 or 50 % or so that the assurance          confidential information which does not concern third
undertaking would cease to be his subsidiary .                     parties involved in attempts to rescue that undertaking may
                                                                   be divulged in civil or commercial proceedings .
3 . On becoming aware of them , assurance undertakings             2 . Paragraph 1 shall not prevent the competent authorities
shall inform the competent authorities of their home               of the different Member States from exchanging
Member States of any acquisitions or disposals of holdings         information in accordance with the Directives applicable to
in their capital that cause holdings to exceed or fall below       assurance undertakings. That information shall be subject
one of the thresholds referred to in paragraphs 1 and 2 .          to the conditions of professional secrecy indicated in
                                                                   paragraph 1 .
They shall also , at least once a year , inform them of the        3 . Member States may conclude cooperation agreements ,
names of shareholders and members possessing qualifying            providing for exchanges         of information , with the
holdings and the sizes of such holdings as shown , for             competent authorities of       third countries only if the
example , by the information received at the annual general        information disclosed is         subject to guarantees of
meetings of shareholders and members or as a result of             professional secrecy at least  equivalent to those referred to
compliance with the regulations relating to companies              in this Article .
listed on stock exchanges .
                                                                   4 . Competent        authorities     receiving    confidential
                                                                   information under paragraphs 1 or 2 may use it only in the
                                                                   course of their duties :
4 . Member States shall require that , if the influence
exercised by the persons referred to in paragraph 1 is likely
to operate to the detriment of the prudent and sound               — to check that the conditions governing the taking-up of
                                                                       the business of assurance are met and to facilitate
management of the assurance undertaking, the competent
authorities    of  the   home    Member    State   shall  take         monitoring of the conduct of such business , especially
appropriate measures to put an end to that situation . Such            with regard to the monitoring of technical provisions ,
measures may consist , for example, in injunctions ,                   solvency margins , administrative and accounting
sanctions against directors and managers , or the suspension           procedures and internal control mechanisms , or
of the exercise of the voting rights attaching to the shares
                                                                   — to impose sanctions , or
held by the shareholders or members in question .
                                                                   — in administrative appeals against decisions of the
                                                                       competent authority , or
Similar measures shall apply to natural or legal persons           — in court proceedings initiated pursuant to Article 50 or
failing to comply with the obligation to provide prior                 under special provisions provided for in the Directives
information , as laid down in paragraph 1 . If a holding is            adopted in the field of assurance undertakings .
acquired despite the opposition of the competent
authorities , the Member States shall , regardless of any
other sanctions to be adopted , provide either for exercise of     5 . Paragraphs 1 and 4 shall not preclude the exchange of
the corresponding voting rights to be suspended , or for the       information within a Member State , where there are two or
nullity of votes cast or for the possibility of their              more competent authorities in the same Member State , or ,
annulment .                                                        between Member States , between competent authorities
                                                                   and :
                                                                   — authorities responsible for the official supervision of
                                                                       credit institutions and other financial organizations and
                           Article 15                                  the authorities responsible for the supervision of
                                                                       financial markets ,
                                                                   — bodies involved in the liquidation and bankruptcy of
 1 . The Member States shall provide that all persons                  assurance undertakings and in other similar procedures ,
working or who have worked for the competent                           and
authorities , as well as auditors or experts acting on behalf
of the competent authorities , shall be bound by the               — persons responsible for carrying out statutory audits of
obligation of professional secrecy . This means that no                the accounts of assurance undertakings and other
confidential information which they may receive in the                 financial institutions ,
course of their duties may be divulged to any person or
authority whatsoever , except in summary or aggregate
form , such that individual assurance undertakings cannot          in the discharge of their supervisory functions , and the
be identified , without prejudice to cases covered by              disclosure , to bodies which administer ( compulsory)
criminal law .                                                     winding-up proceedings or guarantee funds , of information
 ---pagebreak--- 3 . 8 . 92                                 Official Journal of the European Communities                                  No C 196 / 19
necessary to the performance of their duties . The                        4 . Member States may provide that the undertakings
information received by these authorities , bodies and                    referred to in paragraph 2 shall comply with the
persons shall be subject to the obligation of professional                accounting rules governing undertakings authorized
secrecy laid down in paragraph 1 .                                        under this Directive for all of their activities . Pending
                                                                          coordination in this respect, Member States may also
                                                                          provide that , with regard to rules on winding-up ,
6 . In addition , notwithstanding paragraphs 1 and 4 ,                    activities relating to the risks listed in classes 1 and 2 in
Member States may , under provisions laid down by law ,                   the Annex to Directive 73 / 239 / EEC carried on by the
authorize the disclosure of certain information to other                  undertakings referred to in paragraph 2 shall be
departments of their central government administrations                   governed by the rules applicable to life assurance
                                                                          activities .
responsible for legislation on the supervision of credit
institutions , financial institutions , investment services and
assurance undertakings and to inspectors acting on behalf                 5 . Where an undertaking carrying on the activities
                                                                          referred to in the Annex to Directive 73 / 239 / EEC has
of those departments .
                                                                          financial , commercial or administrative links with an
                                                                          undertaking carrying on the activities covered by this
                                                                          Directive , the supervisory authorities of the Member
However , such disclosures may be made only where                         States within whose territories the head offices of those
necessary for reasons of prudential control .                             undertakings are situated shall ensure that the accounts
                                                                          of the undertakings in question are not distorted by
                                                                          agreements between these undertakings or by any
However , Member States shall provide that information                    arrangement which could affect the apportionment of
received pursuant to paragraphs 2 and 5 and that obtained                 expenses and income .
by means of the on-the-spot verification referred to in
Article 16 of Directive 79 / 267 / EEC may never be                       6 . Any Member State may require undertakings whose
disclosed in the cases referred to in this paragraph except               head offices are situated in its territory to cease , within
with the express consent of the competent authorities                     a period to be determined by the Member State
which disclosed the information or of the competent                       concerned , the simultaneous pursuit of activities in
authorities of the Member State in which on-the-spot                      which they were engaged at the time of notification of
verification was carried out .                                            this Directive .
                                                                          7 . The provisions of this Article shall be reviewed on
                                                                          the basis of a report from the Commission to the
                            Article 16                                    Council in the light of future harmonization of the rules
                                                                          on winding-up , and in any case before 31 December
                                                                          1999 .'
Article 13 of Directive 79 / 267 / EEC shall be replaced by
the following :
                                                                                                  Article 17
     'Article 13
     1 . Without prejudice to paragraphs 3 and 7 , no                 Article 35 of Directive 79 / 267 / EEC and Article 18 of
                                                                      Directive 90 / 619 / EEC shall be deleted .
     undertaking may be authorized both under this
     Directive and under Directive 73 / 239 / EEC .
     2 . However , Member States may provide that:
     — undertakings authorized unter this Directive may                                          Chapter 2
          also obtain authorization , in accordance with
          Article 6 of Directive 73 / 239 / EEC for the risks
          listed in classes 1 and 2 in the Annex to that                                          Article 18
          Directive ,
     — undertakings authorized under Article 6 of                     Article 17 of Directive 79 / 267 / EEC shall be replaced by
          Directive 73 / 239 / EEC solely for the risks listed in     the following:
          classes 1 and 2 in the Annex to that Directive may
          obtain authorization under this Directive .                     'Article 1 7
     3 . Subject to paragraph 6 , undertakings referred to in             1 . The home Member State shall require every
     paragraph 2 and those which at the time of notification              assurance undertaking to establish sufficient technical
     of this Directive carry on simultaneously both of the                provisions , including mathematical provisions , in
     activities covered by this Directive and by Directive                respect of its entire business .
     73 / 239 / EEC may continue to do so , provided that
     each activity is separately managed in accordance with               The amount of such technical provisions shall be
     Article 14 .                                                         determined according to the following principles:
 ---pagebreak--- No C 196 / 20                                 Official Journal of the European Communities                                           3 . 8 . 92
   A. ( i )     the amount of the technical life-assurance                  B. the rate of interest used shall be chosen prudently . It
                provisions shall be calculated by a sufficiently               shall be determined in accordance with the rules of
                prudent prospective actuarial valuation, taking                the competent authority in the home Member State,
                account of all future liabilities as determined                applying the following principles :
                by the policy conditions for each existing
                contract , including :
                                                                               ( a ) for all contracts, the competent authority of the
                — all        guaranteed      benefits,    including                   undertaking's home Member State shall fix one
                                                                                      or more maximum rates of interest , in particular
                      guaranteed surrender values ,
                                                                                      in accordance with the following rules :
                — bonuses to which policyholders are already
                                                                                      ( i ) when contracts contain an interest rate
                      either collectively or individually entitled ,
                      however those bonuses are described , —                                 guarantee, the competent authority in the
                                                                                              home Member State shall set a single
                      vested , declared or allotted,
                                                                                              maximum rate of interest . It may differ
                                                                                              according to the currency in which the
                 — all options available to the policyholder                                  contract is denominated , provided that it is
                      under the terms of the contract ,                                       not more than 60 % of the rate on bond
                                                                                              issues by the State in whose currency the
                                                                                              contract is denominated . In the case of a
                 — expenses , including commissions ,                                         contract denominated in ecus , this limit shall
                                                                                              be set by reference to ecu-denominated
                 taking credit for future premiums due;                                       issues by the Community institutions .
                                                                                              If a Member State decides , pursuant to the
       ( ii ) the use of a retrospective method is allowed, if                                second sentence of the preceding paragraph ,
                 it can be shown that the resulting technical                                 to set a maximum rate of interest for
                 provisions are not lower than would be                                       contracts denominated in another Member
                 required under a sufficiently prudent                                        State's currency , it shall first consult the
                 prospective calculation or if a prospective                                  competent authority of the Member State
                 method cannot be used for the type of contract                               in whose currency the contract is
                 involved ;                                                                   denominated ;
                                                                                       ( ii ) however, when the assets of the undertaking
        ( iii ) a prudent valuation is not a 'best estimate'                                  are not valued at their purchase prices , a
                 valuation , but shall include an appropriate                                 Member State may stipulate that one or
                 margin for adverse deviation of the relevant                                 more maximum rates may be calculated
                 factors ;                                                                    taking into account the yield on the
                                                                                              corresponding assets currently held , minus a
                                                                                              prudential margin and , in particular for
        ( iv ) the method of valuation for the technical                                      contracts     with       periodic    premiums ,
                 provisions must not only be prudent in itself,                               furthermore       taking   into   account      the
                 but must also be so having regard to the                                     anticipated yield on future assets . The
                 method of valuation for the assets covering                                  prudential margin and the maximum rate or
                 those provisions ;                                                           rates of interest applied to the anticipated
                                                                                              yield on future assets shall be fixed by the
                                                                                              competent authority of the home Member
        ( v ) technical provisions shall be calculated                                        State ;
                 separately for each contract . The use of
                 appropriate approximations or generalizations
                 is allowed , however , where they are likely to                ( b ) the establishment of a maximum rate of interest
                 give approximately the same result as                                 shall not imply that the undertaking is bound to
                 individual calculations . The principle of                            use a rate as high as that ;
                  separate calculation shall in no way prevent
                 the establishment of additional provisions for
                  general risks which are not individualized ;                  ( c ) the home Member State may decide not to apply
                                                                                        ( a ) to the following categories of contracts :
        ( vi ) where the surrender value of a contract is                              — unit-linked contracts ,
                  guaranteed , the amount of the mathematical
                  provisions for the contract at any time shall be
                  at least as great as the value guaranteed at that                    — single-premium contracts for a period of up
                  time ;                                                                       to eight years ,
 ---pagebreak--- 3 . 8 . 92                                    Official Journal of the European Communities                                No C 196 / 21
                — without-profits      contracts ,   and     annuity          2 . Assurance undertakings shall make available to the
                    contracts with no surrender value .                       public the bases and methods used in the calculation of
                                                                              the technical provisions, including provisions for
                    In the cases referred to in the last two                  bonuses .
                    indents of the first subparagraph , in
                    choosing a prudent rate of interest , account
                    may be taken of the currency in which the                 3 . The home Member State shall require every
                    contract is denominated and corresponding                 assurance undertaking to cover the technical provisions
                    assets currently held and where the                       in respect of its entire business by matching assets , in
                    undertakings's assets are valued at their                 accordance with Article 24 of Directive 92 / 000 / EEC .
                    current value , the anticipated yield on future           In respect of business written in the Community , these
                    assets .
                                                                              assets must be localized within the Community .
                                                                              Member States shall not require assurance undertakings
                    Under no circumstances may the rate of                    to localize their assets in a particular Member State .
                    interest used be higher than the yield on                 The home Member State may , however, permit
                    assets as calculated in accordance with the
                                                                              relaxations in the rules on the localization of assets .
                    accounting rules in the home Member State,
                    less an appropriate deduction ;
                                                                             4 . If the home Member State allows any technical
          ( d ) the Member State shall require an undertaking                provisions to be covered by claims against reassurers , it
                to set aside in its accounts a provision to meet              shall fix the percentage so allowed . In such case , it may
                interest-rate commitments vis-a-vis policy­                  not require the localization of the assets representing
                holders if the present or foreseeable yield on the            such claims .'
                undertaking's assets is insufficient to cover those
                commitments :
         (e) the Commission and the competent authorities                                            Article 19
                of the Member States which so request shall be
                notified of the maximum rates of interest set
                under ( a );                                             Premiums for new business shall be sufficient , on
                                                                         reasonable actuarial assumptions , to enable assurance
                                                                         undertakings to meet all their commitments and , in
                                                                         particular , to establish adequate technical provisions .
     C. the statistical elements of the valuation and the
         allowance for expenses used shall be chosen
         prudently , having regard to the State of the                   For this purpose , all aspects of the financial situation of an
         commitment , the type of policy and the                         assurance undertaking may be taken into account, without
         administrative costs and commissions expected to                the input from resources other than premiums and income
         be incurred :
                                                                         earned thereon being systematic and permanent in such a
                                                                        way that it may jeopardize the undertaking's solvency in
                                                                        the long term .
     D. in the case of participating contracts , the method of
         calculation for technical provisions may take into
         account , either implicitly or explicitly , future
         bonuses of all kinds , in a manner consistent with                                          Article 20
         the other assumptions on future experience and
         with the        current    method    of   distribution   of
         bonuses :
                                                                        The assets covering the technical provisions shall take
                                                                        account of the type of business carried on by an
                                                                        undertaking in such a way as to secure the safety , yield and
                                                                        marketability of its investments , which the undertaking
     E. allowance for future expenses may be made                       shall ensure are diversified and adequately spread .
         implicitly , for instance by the use of future
         premiums net of management charges . However,
         the overall allowance , implicit or explicit , shall be
         not less than a prudent estimate of the relevant                                            Article 21
         future expenses ;
                                                                         1 . The home Member State may not authorize assurance
                                                                        undertakings to cover their technical provisions with any
     F. the method of calculation of technical provisions               but the following categories of assets:
         shall not be subject to discontinuities from year to
         year arising from arbitrary changes to the method              A. Investments
         or the bases of calculation and shall be such as to
         recognize the distribution of profits in an                         ( a ) debt securities , bonds and other money- and
         appropriate way over the duration of each policy .                        capital-market instruments ;
 ---pagebreak--- No C 196 / 22                                  Official Journal of the European Communities                                      3 . 8 . 92
    ( b ) loans ;                                                         detailed rules fixing the conditions for the use of acceptable
                                                                          assets ; in this connection , it may require valuable security
    (c) shares and other variable - yield participations ;                or guarantees , particularly in the case of debts owed by
                                                                          reassurers .
    ( d ) units in undertakings for collective investment in
           transferable securities and other investment funds ;
     ( e) land , buildings and immovable property rights ;
                                                                          In determining and applying the rules which it lays down ,
B. Debts and claims
                                                                          the home Member State shall , in particular, ensure that the
     ( f) debts owed by reassurers , including reassurers'                following principles are complied with :
           shares of technical provisions ;
     (g) deposits with         and debts owed by ceding                   (i)     assets covering technical provisions shall be valued
           undertakings ;                                                         net of any debts arising out of their acquisition ;
     (h ) debts owed by policyholders and intermediaries
           arising out of direct and reassurance operations ;             ( ii )  all assets must be valued on a prudent basis , allowing
                                                                                  for the risk of any amounts not being realizable . In
     ( i ) advances against policies ;                                            particular, tangible fixed assets other than land and
                                                                                  buildings may be accepted as cover for technical
     ( j ) tax recoveries ;                                                       provisions only if they are valued on the basis of
     ( k ) claims against guarantee funds ;                                       prudent amortization ;
C. Others
                                                                          ( iii ) loans , whether to undertakings , to a State or
     (1 ) tangible fixed assets , other than land and buildings ,                 international organization , to local or regional
           valued on the basis of prudent amortization ;                          authorities or to natural persons , may be accepted as
                                                                                  cover for technical provisions only if there are
     ( m)cash at bank and in hand , deposits with credit                          sufficient guarantees as to their security , whether
           institutions and any other body authorized to                          these are based on the status of the borrower,
           receive deposits ;                                                     mortgages , bank guarantees or guarantees granted by
                                                                                  assurance undertakings or other forms of security ;
     ( n ) deferred acquisition costs ;
     ( o ) accrued interest and rent , other accrued income and           ( iv )  derivative instruments such as options , futures and
           prepayments ;                                                          swaps in connection with assets covering technical
                                                                                  provisions may be used in so far as they contribute to
     ( p ) reversionary interests .                                               a reduction of investment risks or facilitate efficient
                                                                                  portfolio management . They must be valued on a
                                                                                  prudent basis and may be taken into account in the
In the case of the association of underwriters known as                           valuation of the underlying assets;
Lloyd's , asset categories shall also include guarantees and
letters of credit issued by credit institutions within the
meaning of Directive 77 / 780 / EEC ( J ) or by assurance                 (v )    transferable securities which are not dealt in on a
undertakings , together with verifiable sums arising out of                       regulated market may be accepted as cover for
life assurance policies , to the extent that they represent                       technical provisions only if they can be realized in the
funds belonging to members .                                                      short term or if they are holdings in credit
                                                                                  institutions , in assurance undertakings, within the
                                                                                  limits permitted by Article 8 of Directive
                                                                                  79 / 267 / EEC , or in investment undertakings
The inclusion of any asset or category of assets listed in the                    established in a Member State ;
first subparagraph shall not mean that all these assets
should automatically be accepted as cover for technical
provisions . The home Member State shall lay down more                    ( vi )  debts owed by and claims against a third party may
                                                                                  be accepted as cover for the technical provisions only
                                                                                  after deduction of all amounts owed to the same
                                                                                  third party ;
(*) First Council Directive 77 / 780 / EEC of 12 December 1977 on
    the coordination of the laws , regulations and administrative
    provisions relating to the taking up and pursuit of the business
    of credit institutions ( OJ No L 322 , 17 . 12 . 1977 , p. 30 ). Last (vii ) the value of any debts and claims accepted as cover
    amended by Directive 89 / 646 / EEC ( OJ No L 386 , 30 . 12 .                 for technical provisions must be calculated on a
    1989 , p. 1 ).                                                                prudent basis, with due allowance for the risk of any
 ---pagebreak--- 3 . 8 . 92                                  Official Journal of the European Communities                                    No C 196 / 23
          amounts not being realizable . In particular, debts          (c) 5 % of its total gross technical provisions in unsecured
          owed by policyholders and intermediaries arising out                loans, including 1 % for any single unsecured loan ,
          of assurance and reassurance operations may be                      other than loans granted to credit institutions ,
          accepted only in so far as they have been outstanding               assurance undertakings — in so far as Article 8 of
          for not more than three months ;                                    Directive 79 / 267 / EEC allows it — and investment
                                                                              undertakings established in a Member State . The limits
                                                                              may be raised to 8 and 2 % respectively by a decision
(viii ) where the assets held include an investment in a                      taken on a case-by-case basis by the competent
          subsidiary undertaking which manages all or part of                 authority of the home Member State ;
          the assurance undertaking^ investments on its
          behalf, the home Member State must , when applying
          the rules and principles laid down in this Article , take    ( d ) 3 % of its total gross technical provisions in the form of
          into account the underlying assets held by the                      cash in hand ;
          subsidiary undertaking ; the home Member State may
          treat the assets of other subsidiaries in the same
          way ;                                                        ( e) 10 % of its total gross technical provisions in shares,
                                                                              other securities treated as shares and debt securities
                                                                              which are not dealt in on a regulated market .
( ix )    deferred acquisition costs may be accepted as cover
          for technical provisions only to the extent that this is
          consistent with the calculation of the mathematical
          provisions .
                                                                       2 . The absence of a limit in paragraph 1 on investment in
                                                                       any particular category does not imply that assets in that
                                                                       category should be accepted as cover for technical
                                                                       provisions without limit. The home Member State shall lay
2 . Notwithstanding paragraph 1 , in exceptional                       down more detailed rules fixing the conditions for the use
circumstances and at an assurance undertaking's request ,              of acceptable assets . In particular it shall ensure , in the
the home Member State may , temporarily and under a                    determination and the application of those rules , that the
properly reasoned decision , accept other categories of                following principles are complied with :
assets as cover for technical provisions , subject to Article
20 .
                                                                       (i)      assets covering technical provisions must be diversified
                                                                                and spread in such a way as to ensure that there is no
                                                                                excessive reliance on any particular category of asset ,
                                                                                investment market or investment ;
                             Article 22
                                                                       ( ii ) investment in particular types of asset which show
                                                                                high levels of risk , whether because of the nature of
                                                                                the asset or the quality of the issuer , must be restricted
                                                                                to prudent levels ;
1 . As regard the assets covering technical provisions , the
home Member State shall require every assurance
undertaking to invest no more than :                                   ( iii ) limitations on particular categories of asset must take
                                                                                account of the treatment of reassurance in the
                                                                               calculation of technical provisions ;
( a ) 10 % of its total gross technical provisions in any one
       piece of land or building , or a number of pieces of land
       or buildings close enough to each other to be                   ( iv ) where the assets held include an investment in a
       considered effectively as one investment ;                               subsidiary undertaking which manages all or part of
                                                                               the assurance undertaking's investments on its behalf,
                                                                                the home Member State must , when applying the rules
( b ) 5 % of its total gross technical provisions in shares and                 and principles laid down in this Article , take into
       other negotiable securities treated as shares , bonds,                   account the underlying assets held by the subsidiary
       debt securities and other money- and capital-market                      undertaking; the home Member State may treat the
       instruments from the same undertaking , or in loans                      assets of other subsidiaries in the same way ;
       granted to the same borrower , taken together , the loans
       being loans other than those granted to a State, regional
       or local authority or to an international organization of       ( v ) the percentage of assets covering technical provisions
       which one or more Member States are members . This                      which are the subject of non-liquid investments must
       limit may be raised to 10 % if an undertaking invests                   be kept to a prudent level ;
       not more than 40 % of its gross technical provisions in
       the loans or securities of issuing bodies and borrowers
       in each of which it invests more than 5 % of its                ( vi ) where the assets held include loans to or debt
       assets ;                                                                 securities issued by certain credit institutions , the
 ---pagebreak---  No C 196 / 24                                   Official Journal of the European Communities                                      3 . 8 . 92
         home Member State may , when applying the rules and                and which , in the event of failure of the issuer, would be
         principles contained in this Article , take into account           used on a priority basis for the reimbursement of the
          the underlying assets held by such credit institutions .          principal and payment of the accrued interest.
          This treatment may be applied only where the credit
          institution has its head office in a Member State , is
         entirely owned by that Member State and / or that                  5 . Member       States   shall    not     require   assurance
          State's local authorities and its business , according to
                                                                            undertakings to invest in particular categories of assets .
          its memorandum and articles of association , consists
          of extending , through its intermediaries , loans to , or
          guaranteed by , States or local authorities or of loans
          to bodies closely linked to the State or to local                 6 . Notwithstanding paragraph 1 , in exceptional
          authorities .                                                     circumstances and at the assurance undertaking's request ,
                                                                            the home Member State may , temporarily and under a
                                                                            properly reasoned decision , allow exceptions to the rules
                                                                            laid down in paragraph 1 ( a ) to ( e ), subject to Article 20 .
  3 . In the context of the detailed rules laying down the
  conditions for the use of acceptable assets , the Member
  State shall give more limitative treatment to :
                                                                                                      Article 23
  — any loan unaccompanied by a bank guarantee , a
       guarantee issued by an assurance undertaking , a
       mortgage or any other form of security , as compared
       with loans accompanied by such collateral ,                           1 . Where the benefits provided by a contract are directly
                                                                            linked to the value of units in a Ucits or to the value of
                                                                            assets contained in an internal fund held by the insurance
 — Ucits not coordinated within the meaning of Directive                    undertaking, usually divided into units, the technical
       85 / 611 / EEC (*) and other investment funds , as
                                                                            provisions in respect of those benefits must be represented
       compared with Ucits coordinated within the meaning                   as closely as possible by those units or , in the case where
       of that Directive ,
                                                                            units are not established , by those assets .
 — securities which are not dealt in on a regulated market ,
       as compared with those which are ,
                                                                            2 . Where the benefits provided by a contract are directly
                                                                            linked to a share index or some other reference value other
 — bonds , debt securities and other money- and                             than those referred to in paragraph 1 , the technical
       capital-market instruments not issued by States , local              provisions in respect of those benefits must be represented
       or regional authorities or undertakings belonging to                 as closely as possible either by the units deemed to
       Zone A as defined in Directive 89 / 647 / EEC ( 2 ), or the          represent the reference value or , in the case where units are
       issuers of which are international organizations not                 not established , by assests of appropriate security and
       numbering at least one Community Member State                        marketability which correspond as closely as possible with
       among their member, as compared with the same                        those on which the particular reference value is based .
       financial instruments issued by such bodies .
                                                                            3 . Articles 20 and 22 shall not apply to assets held to
 4 . Member States may raise the limit laid down in                        match liabilities which are directly linked to the benefits
 paragraph 1 ( b ) to 40 % in the case of certain debt                      referred to the paragraphs 1 and 2 . References to the
 securities when these are issued by a credit institution                  technical provisions in Article 22 shall be to the technical
 which has its head office in a Member State and is subject                provisions excluding those in respect of such liabilities .
 by law to special official supervision designed to protect the
 holders of those debt securities . In particular , sums
 deriving from the issue of such debt securities must be
 invested in accordance with the law in assets which , during              4 . Where the benefits referred to in paragraphs 1 and 2
 the whole period of validity of the debt securities , are                 include a guarantee of investment performance or some
 capable of covering claims attaching to the debt securities               other guaranteed benefit , the corresponding additional
                                                                           technical provisions shall be subject to Articles 20 , 21 and
                                                                           22 .
(') Council Directive 85 / 611 / EEC of 20 December 1985 on the
      coordination of laws, regulations and administrative provisions
      relating to undertakings for collective investment in                                          Article 24
      transferable securities ( Ucits) ( OJ No L 375 , 31 . 12. 1985 , p.
      3 ). Amended by Directive 88 / 220 / EEC ( OJ No L 100, 19 . 4.
      1988 , p . 31 ).
( 2 ) Council Directive 89 / 647 / EEC of 18 December 1989 on a             1 . For the purposes of Article 17 ( 3 ) and Article 28 of
      solvency ratio for credit institutions ( OJ No L 386 , 30 . 12 .     Directive 79 / 267 / EEC , Member States shall comply with
      1989 , p . 14 ).                                                     Annex I to this Directive as regards the matching rules .
 ---pagebreak--- 3 . 8 . 92                                     Official Journal of the European Communities                             No C 196 / 25
2 . This Article shall not apply to the commitments                                      preferential share capital ranks after the
referred to in Article 23 of this Directive .                                            claims of all other creditors and is not to be
                                                                                         repaid until all other debts outstanding at
                                                                                         the time have been settled ;
                                 Article 25
                                                                                   subordinated loan capital must also fulfil the
Article 18 , second subparagraph , point 1 of Directive                            following conditions :
79 / 267 / EEC shall be replaced by the following:
     '1 .  the assets of the undertaking free of any                               ( b ) only fully paid-up funds may be taken into
           foreseeable liabilities , less any intangible items . In                      account ;
           particular the following shall be included :
           — the paid-up share capital or , in the case of a                       ( c) for loans with a fixed maturity , the original
               mutual assurance undertaking , the effective                              maturity must be at least five years . No
               initial fund plus any members' accounts which                             later than one year before the repayment
               meet all the following criteria :                                         date the assurance undertaking must
                                                                                         submit to the competent authorities for
               ( a ) the memorandum and articles of                                      their approval a plan showing how the
                     association must stipulate that payments                            solvency margin will be kept at or brought
                     may be made from these accounts to                                  to the required level at maturity , unless the
                     members only in so far as this does not                             extent to which the loan may rank as a
                     cause the solvency margin to fall below the                         component of the solvency margin is
                     required level , or , after the dissolution of                      gradually reduced during at least the last
                     the undertaking, if all the undertaking's                           five years before the repayment date . The
                     other debts have been settled ;
                                                                                         competent authorities may authorize the
               ( b ) the memorandum and articles of                                      early repayment of such loans provided
                     association must stipulate , with respect to                        application is made by the issuing
                     any such payments for reasons other than                            assurance undertaking and its solvency
                     the individual termination of membership ,                          margin will not fall below the required
                     that the competent authorities must be                              level ;
                     notified at least one month in advance and
                     can prohibit the payment within that
                     period ;                                                      ( d ) loans the maturity of which is not fixed
                                                                                         must be repayable only subject to five
               ( c ) the       relevant     provisions     of    the                     years' notice unless the loans are no longer
                     memorandum and articles of association                              considered as a component of the solvency
                     may be amended only after the competent                             margin or unless the prior consent of the
                     authorities have declared that they have no                         competent authorities is specifically
                     objection to the amendment, without                                 required for early repayment . In the latter
                     prejudice to the criteria stated in ( a ) and                       event the assurance undertaking must
                     ( b );                                                              notify the competent authorities at least six
                                                                                         months before the date of the proposed
           — one half of the unpaid share capital or initial                             repayment , specifying the actual and
               fund , once the paid-up part amounts to 25 %                              required solvency margin both before and
               of that share capital or fund ,                                           after that repayment . The competent
                                                                                         authorities shall authorize repayment only
           — reserves ( statutory reserves and free reserves)                            if the assurance undertaking's solvency
               not corresponding to underwriting liabilities ,                           margin will not fall below the required
                                                                                         level ;
           — any profits brought forward ,
           — cumulative preferential share capital and
               subordinated loan capital may be included but ,                     (e ) the loan agreement must not include any
               if so , only up to 50 % of the margin , no more                           clause providing that in specified
               than         25 %    of   which   shall   consist  of                     circumstances , other than the winding-up
               subordinated loans with a fixed maturity , or                             of the assurance undertaking, the debt will
               fixed-term cumulative preferential share                                  become repayable before the agreed
               capital , if the following minimum criteria are                           repayment dates ;
               met :
               ( a ) in the event of the bankruptcy or                             ( f) the loan agreement may be amended only
                     liquidation of the assurance undertaking,                           after the competent authorities have
                     binding agreements must exist under which                           declared that they have no objection to the
                     the subordinated loan capital or                                    amendment ;
 ---pagebreak--- No C 196 / 26                               Official Journal of the European Communities                                      3 . 8 . 92
          — securities with no specified maturity date and                  of the lives assured , are entitled to take as owners or
              other instruments that fulfil the following                   members of or partners to the undertakings in
              conditions , including cummulative preferential               question .'
              shares other than those mentioned in the
              preceding indent , up to 50 % of the margin for
              the      total    of   such  securities     and       the
               subordinated loan capital referred to in the
              preceding indent :                                                                  Chapter 3
               ( a ) they may not be repaid on the initiative of
                     the bearer or without the prior consent of                                    Article 28
                     the competent authority ;
               ( b ) the contract of issue must enable the              The Member State of the commitment shall not prevent a
                     assurance undertaking to defer the                 policyholder from concluding a contract with an assurance
                     payment of interest on the loan ;                  undertaking authorized under the conditions of Article 6 of
                                                                        Directive 79 / 267 / EEC , as long as that does not conflict
               ( c) the lender's claims on the assurance
                                                                        with legal provisions protecting the general good in the
                     undertaking must rank entirely after those         Member State of the commitment .
                     of all non-subordinated creditors ;
               ( d ) the documents governing the issue of the
                     securities     must   provide        for       the                            Article 29
                     loss-absorption capacity of the debt and
                     unpaid interest , while enabling the
                     assurance undertaking to continue its              Member States shall not adopt provisions requiring the
                     business ;                                         prior approval or systematic notification of general and
                                                                        special policy conditions , scales of premiums , technical
               ( e) only fully paid-up amounts may be taken             bases used in particular for calculating scales of premiums
                     into account .'                                    and technical provisions or forms and other printed
                                                                        documents which an assurance undertaking intends to use
                                                                        in its dealings with policyholders .
                               Article 26
                                                                        Notwithstanding the first subparagraph , for the sole
                                                                        purpose of verifying compliance with national provisions
                                                                        concerning actuarial principles , the Member State of origin
No more than three years after the date of application of               may require systematic communication of the technical
this Directive, the Commission shall submit a report to the             bases used for calculating scales of premiums and technical
Insurance       Committee        on    the  need     for       further
                                                                        provisions , without that requirement constituting a prior
harmonization of the solvency margin .                                  condition for an undertaking to carry on its business .
                                                                        Not later than five years after the date of application of this
                               Article 27                               Directive , the Commission shall submit a report to the
                                                                        Council on the implementation of those provisions .
Article 21 of Directive 79 / 267 / EEC shall be replaced by
the following :                                                                                    Article 30
     'Article 21
                                                                        1 . In the first subparagraph of Article 15 ( 1 ) of Directive
                                                                        90 / 619 / EEC the words 'in one of the cases referred to in
    1 . Member States shall not prescribe any rules as to               Title III' shall be deleted .
    the choice of the assets that need not be used as cover
    for the technical provisions referred to in Article 17 .
                                                                        2 . Article 15 ( 2 ) of Directive 90 / 619 / EEC shall be
    2 . Subject to Article 17 ( 3 ), Article 24 ( 1 ), ( 2 ), ( 3 ) and replaced by the following:
    ( 5 ) and the second subparagraph of Article 26 ( 1 ),
    Member States shall not restrain the free disposal of                    '2 . The Member States need not apply paragraph 1 to
    those assets , whether movable or immovable, that form                  contracts of six months' duration or less , nor where,
    part of the assets of authorized assurance                              because of the status of the policyholder or the
    undertakings .                                                          circumstances in which the contract is concluded , the
                                                                            policyholder does not need this special protection .
    3 . Paragraphs 1 and 2 shall not preclude any measures                   Member States shall specify in their rules where
    which Member States , while safeguarding the interests                  paragraph 1 is not applied .'
 ---pagebreak--- 3 . 8 . 92                                  Official Journal of the European Communities                              No C 196 / 27
                            Article 31                                        represent it in relations with the authorities and
                                                                              courts of the Member State of the branch . With
1 . Before the assurance contract is concluded , at least the                 regard to Lloyd's , in the event of any litigation in
information listed in point A of Annex II shall be                            the Member State of the branch arising out of
communicated to the policyholder.                                             underwritten commitments , the assured persons
                                                                              must not be treated less favourably than if the
                                                                              litigation had been brought against businesses of a
2 . The policyholder shall be kept informed throughout                        conventional type . The authorized agent must,
the term of the contract of any change concerning the                         therefore, possess sufficient powers for proceedings
information listed in point B of Annex II .                                   to be taken against him and must in that capacity be
                                                                              able to bind the Lloyd's underwriters concerned .
3 . The Member State of the commitment may require
assurance undertakings to furnish information in addition                 3 . Unless the competent authorities of the home
to that listed in Annex II only if it is necessary for a proper           Member State have reason to doubt the adequacy of the
understanding by the policyholder of the essential elements               administrative structure or the financial situation of the
of the commitment .                                                       assurance undertaking or the good repute and
                                                                          professional qualification or experience of the directors
                                                                          or managers or the authorized agent , taking into
4 . The detailed rules for implementing this Article and
                                                                          account the business planned , they shall within three
Annex II shall be laid down by the Member State of the
commitment .
                                                                          months of receiving all the information referred to in
                                                                          paragraph 2 communicate that information to the
                                                                          competent authorities of the Member State of the
                                                                          branch and shall inform the undertaking concerned
                                                                          accordingly .
                            TITLE IV
                                                                          The competent authorities of the home Member State
Provisions relating to right of establishment and freedom to              shall also attest that the assurance undertaking has the
                         provide services                                 minimum solvency margin calculated in accordance
                                                                          with Articles 19 and 20 .
                            Article 32                                    Where the competent authorities of the home Member
                                                                          State refuse to communicate the information referred to
                                                                          in paragraph 2 to the competent authorities of the
Article 10 of Directive 79 / 267 / EEC shall be replaced by
                                                                          Member State of the branch they shall give the reasons
the following :
                                                                          for their refusal to the undertaking concerned within
     'Article 10                                                          three months of receiving all the information in
                                                                          question . That refusal or failure to act shall be subject
     1 . An assurance undertaking that proposes to                        to a right to apply to the courts in the home Member
     establish a branch within the territory of another                   State .
     Member State shall notify the competent authorities of
     its home Member State .
                                                                          4 . Before the branch of an assurance undertaking
     2 . The Member States shall require every assurance                  starts business , the competent authorities of the
     undertaking that proposes to establish a branch within               Member State of the branch shall , within two months
     the territory of another Member State to provide the                 of receiving the information referred to in paragraph 3 ,
     following information when effecting the notification                inform the competent authority of the home Member
     provided for in paragraph 1 :                                        State , if appropriate , of the conditions under which , in
                                                                          the interest of the general good , that business must be
     ( a ) the Member State within the territory of which it              carried on in the Member State of the branch .
           proposes to establish a branch ;
     ( b ) a scheme of operations setting out inter alia the              5 . On receiving a communication from the competent
           types of business envisaged and the structural                 authorities of the Member State of the branch or , if no
           organization of the branch ;                                   communication is received from them , on expiry of the
     ( c) the address in the Member State of the branch from              period provided for in paragraph 4 , the branch may be
                                                                          established and start business .
           which documents may be obtained and to which
           they may be delivered , being understood that that
           address   shall   be    the  one     to    which   all
           communications to the authorized agent are sent ;              6 . In the event of a change in any of the particulars
                                                                          communicated under paragraph 2 ( b ), (c) or ( d ), an
     ( d) the name of the branch's authorized agent, who                  assurance undertaking shall give written notice of the
           must possess sufficient powers to bind the                     change to the competent authorities of the home
           undertaking in relation to third parties and to                Member State and of the Member State of the branch at
 ---pagebreak--- No C 196 / 28                              Official Journal of the European Communities                                     3 . 8 . 92
   least one month before making the change so that the                                          Article 36
    competent authorities of the home Member State and
    the competent authorities of the Member State of the              Article 17 of Directive 90 / 61 9 / EEC shall be replaced by
    branch may fulfil their respective roles under                    the following:
    paragraphs 3 and 4 .'
                                                                           'Article 1 7
                             Article 33                                    Any change which an undertaking intends to make to
                                                                          the information referred to in Article 1 1 shall be subject
Article 11 of Directive 79 / 267 / EEC shall be deleted .                 to the procedure provided for in Articles 11 and 14 .'
                             Article 34
                                                                                                Article 37
Article 11 of Directive 90 / 619 / EEC shall be replaced by
the following:                                                        Articles 10 , 12 , 13 , 16 , 22 and 24 of Directive
                                                                      90 / 61 9 / EEC shall be deleted .
    'Article 11
    Any undertaking that intends to carry on business for
    the first time in one or more Member States under the                                       Article 38
    freedom to provide services shall first inform the
    competent authorities of the home Member State ,
                                                                      The competent authorities of the Member State of the
    indicating the nature of the commitments it proposes to
    cover .'
                                                                      branch or the Member State of the provision of services
                                                                      may require that the information which they are authorized
                                                                      under this Directive to request with regard to the business
                                                                      of assurance undertakings operating in the territory of that
                             Article 35
                                                                      State shall be supplied to them in the official language or
                                                                      languages of that State .
Article 14 of Directive 90 / 619 / EEC shall be replaced by
the following :
    'Article 14                                                                                 Article 39
    1 . Within one month of the notification provided for
    in Article 11 , the competent authorities of the home             1.   Article 19 of Directive 90 / 619 / EEC shall be deleted .
    Member State shall communicate to the Member State
    or Member States within the territory of which the
    undertaking intends to carry on business by way of the            2 . The Member State of the branch or of provision of
    freedom to provide services :                                     services shall not lay down provisions requiring the prior
                                                                      approval or systematic notification of general and special
    ( a ) a certificate attesting that the undertaking has the        policy conditions , scales of premiums , technical bases used
          minimum solvency margin calculated in accordance            in particular for calculating scales of premiums and
          with     Articles    19    and   20    of    Directive      technical provisions , forms and other printed documents
          79 / 267 / EEC ;                                            which an undertaking intends to use in its dealings with
    ( b ) the classes which the undertaking has been                  policyholders . For the purpose of verifying compliance
          authorized to offer ;                                       with national provisions concerning assurance contracts , it
                                                                      may require an undertaking that proposes to carry on
    (c) the     nature     of the    commitments     which   the      assurance business within its territory , under the right of
          undertaking proposes to cover in the Member State           establishment or the freedom to provide services , to effect
          of the provision of services .                              only non-systematic notification of those policy conditions
    At the same time , they shall inform the undertaking              and other printed documents without that requirement
    concerned accordingly .                                           constituting a prior condition for an undertaking to carry
                                                                      on its business .
    2 . Where the competent authorities of the home
    Member State do not communicate the information
    referred to in paragraph 1 within the period laid down ,                                    Article 40
    they shall give the reasons for their refusal to the
    undertaking within that same period . The refusal shall
    be subject to a right to apply to the courts in the home          1.   Article 20 of Directive 90 / 619 / EEC shall be deleted .
    Member State .
    3 . The undertaking may start business on the certified           2 . Any undertaking carrying on business under the right
    date on which it is informed of the communication                 of establishment or the freedom to provide services shall
    provided for in the first subparagraph of paragraph               submit to the competent authorities of the Member State of
    1 .'                                                              the branch and / or of the Member State of the provision of
 ---pagebreak--- 3 . 8 . 92                                 Official Journal of the European Communities                               No C 196 / 29
services all documents requested of it for the purposes of            10 . Every two years , the Commission shall submit to the
this Article in so far as undertakings the head office of             Insurance Committee a report summarizing the number
which is in those Member States are also obliged to do                and type of cases in which , in each Member State,
so .                                                                  authorization has been       refused under Article 10 of
                                                                      Directive 79 / 267 / EEC     or Article 14 of Directive
                                                                      90 / 619 / EEC as amended by this Directive or measures
3 . If the competent authorities of a Member State                    have been taken under paragraph 5 . Member States shall
establish that an undertaking with a branch or carrying on            cooperate with the Commission by providing it with the
business under the freedom to provide services in its                 information required for that report.
territory is not complying with the legal provisions
applicable to it in that State , they shall require the
undertaking concerned to remedy that irregular situation .                                      Article 41
                                                                      Nothing in this Directive shall prevent assurance
4 . If the undertaking in question fails to take the necessary
                                                                      undertakings with head offices in other Member States
action , the competent authorities of the Member State
                                                                      from advertising their services through all available means
concerned shall inform the competent authorities of the               of communication in the Member State of the branch or
home Member State accordingly . The latter authorities
                                                                      Member State of the provision of services , subject to any
shall , at the earliest opportunity , take all appropriate
                                                                      rules governing the form and content of such advertising
measures to ensure that the undertaking concerned
                                                                      adopted in the interest of the general good .
remedies that irregular situation . The nature of those
measures shall be communicated to the competent
authorities of the Member State concerned .
                                                                                                Article 42
5 . If, despite the measures taken by the home Member                 1.   Article 21 of Directive 90 / 619 / EEC shall be deleted .
State or because those measures prove inadequate or are
lacking in that State , the undertaking persists in violating
                                                                      2 . Should an assurance undertaking be wound up ,
the legal provisions in force in the member State concerned ,
                                                                      commitments arising out of contracts underwritten through
the latter may , after informing the competent authorities of
                                                                      a branch or under the freedom to provide services shall be
the home Member State , take appropriate measures to
                                                                      met in the same way as those arising out of that
prevent or penalize further irregularities , including, in so         undertaking's other assurance contracts , without
far as is strictly necessary , preventing that undertaking
                                                                      distinction as to nationality as far as the lives assured and
from continuing to conclude new assurance contracts                   the beneficiaries are concerned .
within its territory . Member States shall ensure that in their
territories it is possible to serve the legal documents
necessary for such measures on assurance undertakings .
                                                                                                Article 43
6 . Paragraphs 3 , 4 and 5 shall not affect the emergency             1.   Article 23 of Directive 90 / 619 / EEC shall be deleted .
power of the Member States concerned to take appropriate
measures to prevent or penalize irregularities committed              2 . Every assurance undertaking shall inform the
within their territories . This shall include the possibility of
                                                                      competent authority of its home Member State , separately
preventing assurance undertakings from continuing to                  in respect of transactions carried out under the right of
conclude new assurance contracts within their territories .
                                                                      establishment and those carried out under the freedom to
                                                                      provide services , of the amount of the premiums , without
                                                                      deduction of reassurance , by Member State and by each of
7 . Paragraphs 3 , 4 and 5 shall not affect the power of the          classes I to IX , as defined in the Annex to Directive
Member States to penalize infringements within their                  79 / 267 / EEC .
territories .
                                                                      The competent authority of the home Member State shall ,
8 . If an undertaking which has committed an                          within a reasonable time and on an aggregate basis forward
infringement has an establishment or possesses property in            this information to the competent authorities of each of the
the Member State concerned , the competent authorities of             Member States concerned which so request.
the latter may , in accordance with national law , apply the
administrative penalties prescribed for that infringement by
way of enforcement against that establishment or                                                Article 44
property .
                                                                      1.   Article 25 of Directive 90 / 619 / EEC shall be deleted .
9 . Any measure adopted under paragraphs 4 to 8
involving penalties or restrictions on the conduct of                 2 . Without prejudice to any subsequent harmonization ,
assurance business must be properly reasoned and                      every assurance contract shall be subject exclusively to the
communicated to the undertaking concerned .                           indirect taxes and parafiscal charges on assurance
 ---pagebreak--- No C 196 / 30                                  Official Journal of the European Communities                                      3 . 8 . 92
premiums in the Member State of the commitment within                         those assets shall be effected under the supervision of
the meaning of Article 2 (e) of Directive 90 / 619 / EEC and                  that Member State in accordance with its rules and
also , with regard to Spain , to the surcharges legally                       practices adopted in accordance with this Directive.
established in favour of the Spanish 'Consorcio de
Compensation de Seguros' for the performance of its
functions relating to the compensation of losses arising
from extraordinary events occurring in that Member                                                      TITLE VI
State .
The law applicable to the contract under Article 4 of                                             Final provisions
Directive      90 / 619 / EEC       shall  not  affect   the   fiscal
arrangements applicable .
                                                                                                       Article 47
Pending future harmonization , each Member State shall
apply to those undertakings which cover commitments
situated within its territory its own national provisions for             The following technical adjustments to be made to
measures to ensure the collection of indirect taxes and                   Directives 79 / 267 / EEC and 90 / 619 / EEC and to this
parafiscal charges due under the first subparagraph .                     Directive shall be adopted in accordance with the
                                                                          procedure laid down in Directive 91 / 675 / EEC :
                                                                          — extension of the legal forms provided for in Article 8(1 )
                                 TITLE V
                                                                              ( a ) of Directive 79 / 267 / EEC ,
                                                                          — amendments to the list set out in the Annex to Directive
                                                                              79 / 267 / EEC , or adaptation of the terminology used in
                        Transitional provisions                               that list to take account of the development of
                                                                              assurance markets ,
                                Article 45                                — clarification of the items constituting the solvency
                                                                              margin listed in Article 18 of Directive 79 / 267 / EEC to
                                                                              take account       of    the   creation of   new   financial
 Member States may allow assurance undertakings with                           instruments ,
head offices in their territories , and whose buildings and
 land covering their technical provisions exceed , at the time            — alteration of the minimum guarantee fund provided for
 of the notification of this Directive , the percentage laid                  in Article 20 ( 2 ) of Directive 79 / 267 / EEC to take
 down in Article 22 ( 1 ) ( a ), a period expiring no later than               account of economic and financial developments ,
 31 December 1998 within which to comply with that
provision .                                                               — amendments , to take account of the creation of new
                                                                               financial instruments , to the list of assets acceptable as
                                                                              cover for technical provisions set out in Article 21 of
                                Article 46                                     this Directive and to the rules on the spreading of
                                                                               investments laid down in Article 22 of this Directive ,
 1 . Article 26 of Directive 90 / 619 / EEC shall be deleted .            — changes in the relaxations in the matching rules laid
                                                                               down in Annex I to this Directive , to take account of
 2 . Spain and Portugal , until 31 December 1995 , and                         the development of new currency-hedging instruments
 Greece , until 31 December 1998 , may operate the                             or progress made in economic and monetary union ,
 following transitional arrangements for contracts in respect             — clarification of the definitions in order to ensure
 of which one of those Member States is the Member State
 of the commitment :                                                           uniform application of Directives 79 / 267 / EEC and
                                                                               90 / 619 / EEC and of this Directive throughout the
 ( a ) by way of derogation from Article 8 ( 3 ) of Directive                  Community ,
       79 / 267 / EEC and from Articles 29 and 39 of this
       Directive, the competent authorities of the member                 — the technical adjustments necessary to the rules for
       States in question may require the communication ,                      setting the maxima applicable to interest rates ,
       before use , of general and special insurance policy                    pursuant to Article 17 of Directive 79 / 267 / EEC , as
       conditions ;                                                            amended by this Directive , in particular to take account
                                                                               of progress made in economic and monetary union .
 ( b ) the amount of the technical provisions relating to such
       contracts shall be determined under the supervision of
       the Member State concerned in accordance with its own
                                                                                                       Article 48
       rules or , failing that , in accordance with the procedures
       established in that State in accordance with this
       Directive . Cover of those technical provisions by                 1 . Branches which have started business , in accordance
       equivalent and matching assets and the localization of             with the provisions in force in their Member State of
 ---pagebreak--- 3 . 8 . 92                                  Official Journal of the European Communities                               No C 196 / 31
establishment, before the entry into force of the provisions               agency or branch is situated shall authorize the transfer
adopted in implementation of this Directive shall be                       after obtaining the agreement of the competent
presumed to have been subject to the procedure laid down                   authorities of the Member State of the commitment,
in Article 10 ( 1 ) to ( 5 ) of Directive 79 / 267 / EEC . They            where different from the Member State in which the
shall be governed , from the date of that entry into force , by            transferring agency or branch is situated .
Articles 17 , 23 , 24 and 26 of Directive 79 / 267 / EEC and
by Article 40 of this Directive .                                          5 . The competent authorities of the Member States
                                                                           consulted shall give their opinion or consent to the
                                                                           competent authorities of the home Member States of
2 . Articles 11 and 14 of Directive 90 / 619 / EEC , as                    the transferring assurance undertaking within three
amended by this Directive , shall not affect rights acquired               months of receiving a request ; the absence of any
by assurance undertakings carrying on business under the                   response from the authorities consulted within that
freedom to provide services before the entry into force of                 period shall be considered equivalent to a favourable
the provisions adopted in implementation of this                           opinion or tacit consent .
Directive .
                                                                           6.   A transfer authorized in accordance with this
                                                                           Article shall be published as laid down by national law
                                                                           in the Member State of the commitment . Such transfers
                            Article 49                                     shall automatically be valid against policyholders ,
                                                                           assured persons and any other persons having rights or
The following Article 31a shall be inserted in Directive                   obligations arising out of the contracts transferred .
79 / 267 / EEC :
                                                                           This provision shall not affect the Member States' right
      Article 31 a                                                         to give policyholders the option of cancelling contracts
                                                                           within a fixed period after a transfer.'
     1 . Under the conditions laid down by national law ,
     each Member State shall authorize agencies and
     branches set up within its territory and covered by this                                    Article 50
     Title to transfer all or part of their portfolios of
     contracts to an accepting office established in the same          Member States shall ensure that decisions taken in respect
     Member State if the competent authorities of that                 of an assurance undertaking under laws, regulations and
     Member State or , if appropriate , those of the Member            administrative provisions adopted in accordance with this
     State referred to in Article 30 certify that after taking        Directive may be subject to the right to apply to the
     the transfer into account the accepting office possesses         courts .
     the necessary solvency margin .
     2 . Under the conditions laid down by national law ,
                                                                                                 Article 51
     each Member State shall authorize agencies and
     branches set up within its territory and covered by this
    Title to transfer all or part of their portfolios of               1 . Member States shall adopt the laws , regulations and
    contracts to an assurance undertaking with a head                 administrative provisions necessary for their compliance
    office in another Member State if the competent                   with this Directive no later than 31 December 1993 and
    authorities of that Member State certify that after               bring them into force no later than 1 July 1994 . They shall
    taking the transfer into account the accepting office             forthwith inform the Commission thereof.
    possesses the necessary solvency margin .
    3 . If under the conditions laid down by national law a           When they adopt such measures , the Member States shall
                                                                      include references to this Directive or shall make such
    Member State authorizes agencies and branches set up
    within its territory and covered by this Title to transfer        references when they effect official publication . The
    all or part of their portfolios of contracts to an agency         manner in which such references are to be made shall be
    or branch covered by this Title and set up within the             laid down by the Member States .
    territory of another Member State it shall ensure that
    the competent authorities of the Member State of the              2.   The    Member     States   shall communicate     to    the
    accepting office or , if appropriate , of the Member State        Commission the texts of the main provisions of national
    referred to in Article 30 certify that after taking the           law which they adopt in the field covered by this
    transfer into account the accepting office possesses the          Directive .
    necessary solvency margin , that the law of the Member
    State of the accepting office permits such a transfer and
    that that State has agreed to the transfer .                                                 Article 52
    4 . In the circumstances referred to in paragraphs 1 , 2
    and 3 the Member State in which the transferring                  This Directive is addressed to the Member States .
 ---pagebreak--- No C 196 / 32                              Official Journal of the European Communities                                                  3 . 8 . 92
                                                                   ANNEX I
                                                             MATCHING RULES
            The currency in which the assurer's commitments are payable shall be determined in accordance with the
            following rules :
             1 . where the cover provided by a contract is expressed in terms of a particular currency , the assurer's
                 commitments are considered to be payable in that currency ;
            2 . Member States may authorize undertakings not to cover their technical provisions , including their
                 mathematical provisions , by matching assets if application of the above procedures would result in the
                 undertaking being obliged , in order to comply with the matching principle , to hold assets in a currency
                 amounting to not more than 7 % of the assets existing in other currencies ;
            3 . Member State may choose not to require undertakings to apply the matching principle where commitments
                 are payable in a currency other than the currency of one of the Community Member States , if investments in
                 that currency are regulated , if the currency is subject to transfer restrictions or if for similar reasons , it is not
                 suitable for covering technical provisions ;
            4 . undertakings are authorized not to hold matching assets to cover an amount not exceeding 20 % of their
                 commitments in a particular currency ,
                 However , total assets in all currencies combined must be at least equal to total commitments in all
                 currencies combined ;
            5 . each Member State may provide that, whenever , under the proceeding procedures a commitment has to be
                 covered by assets expressed in the currency of a Member State , this requirement shall also be considered to
                 be satisfied when the assets are expressed in ecus.
 ---pagebreak--- 3 . 8 . 92                                 Official Journal of the European Communities                                       No C 196 / 33
                                                               ANNEX II
                                                INFORMATION FOR POLICYHOLDERS
           The following information , which is to be communicated to the policyholder before the contract is concluded
           (A ) or during the term of the contract (B ), must be provided in a clear and accurate manner , in writing, in an
           official language of the Member State of the commitment .
           However , such information may be in another language if the policyholder so requests and the law of the
           Member State so permits or the policyholder is free to choose the law applicable .
           A. Before concluding the contract
                             Information about the
                                                                                    Information about the commitment
                             assurance undertaking
           a. 1 .   The name of the undertaking and its legal           a. 4 .   Definition of each benefit and each option
                    form
                                                                        a. 5 .   Term of the contract
           a. 2 .   The name of the Member State in which the
                    head office and , where appropriate , the           a. 6 .   Means of terminating the contract
                    agency or branch concluding the contract is
                    situated                                            a. 7 .   Means of payment of premiums and
                                                                                 duration of payments
           a. 3 .   The address of the head office and , where
                    appropriate , of the agency or branch              a. 8 .    Means of calculation and distribution of
                   concluding the contract                                       bonuses
                                                                       a. 9 .    Indication of surrender and paid-up values
                                                                                 and the extent to which they are
                                                                                guaranteed
                                                                       a.10 .   Information on the premiums for each
                                                                                benefit ,    both     main      benefits   and
                                                                                supplementary benefits , where appropriate
                                                                       a. 11 .  For unit-linked policies , definition of the
                                                                                units to which the benefits are linked
                                                                       a. 12 .  Indication of the nature of the underlying
                                                                                assets for unit-linked policies
                                                                       a. 13 .  Arrangements for         application    of the
                                                                                cooling-off period
                                                                       a. 14 .  General      information      on     the   tax
                                                                                arrangements applicable to the type of
                                                                                policy
                                                                       a. 15 .  The arrangements for handling complaints
                                                                                concerning contracts by policyholders, lives
                                                                                assured or beneficiaries under contracts
                                                                                including, where appropriate, the existence
                                                                                of a complaints body without prejudice to
                                                                                the right to take legal proceedings
                                                                       a . 16 . Law applicable to the contract where the
                                                                                parties do not have a free choice or , where
                                                                                the parties are free to choose the law
                                                                                applicable, the law the assurer proposes to
                                                                                choose
 ---pagebreak--- No C 196 / 34                                 Official Journal of the European Communities                                       3 . 8 . 92
            B. During the term of the contract
                   In addition to the policy conditions , both general and special , the policyholder must receive the following
                   information throughout the term of the contract:
                                Information about the
                                                                                        Information about the commitment
                                assurance undertaking
            b. 1 .     Any change in the name of the undertaking ,         b. 2 .   All the information listed in points a. 4 to
                       its legal form or the address of its head                    a. 12 of A in the event of a change in the
                       office and , where appropriate , of the agency               policy conditions or amendement of the law
                       or branch which concluded the contraa                        applicable to the contract
                                                                           b.3 .    Every year , information on the state of
                                                                                    bonuses .