CELEX: 51998PC0038
Language: en
Date: 1998-01-28
Title: Amended proposal for a European Parliament and Council Directive on the supplementary supervision of insurance undertakings in an insurance group

COMMISSION OF THE EUROPEAN COMMUNITIES
                                         Brussels, 28.01.1998
                                        COM(1998) 38 final
                                        95/ 0245 (COD)
                      Amended proposal for a
   EUROPEAN PARLIAMENT AND COUNCIL DIRECTIVE
          ON THE SUPPLEMENTARY SUPERVISION
OF INSURANCE UNDERTAKINGS IN AN INSURANCE GROUP
    (presented by the Commission pursuant to Article 189 a (2)
                        of the EC-Treaty)
 ---pagebreak---  ---pagebreak---                        EXPLANATORY MEMORANDUM
INTRODUCTION
1.  On 4 October 1995 the Commission adopted a Proposal for a Directive on the
    supplementary supervision of insurance undertakings in an insurance group1. The
    proposal was submitted to Parliament and Council by letter on 20 October 1995.
2.  At its 334th plenary session on 27 March 1996, the Economic and Social Committee
    adopted a favourable opinion2 on the Proposal for a Directive and suggested certain
    amendments.
3.  The Parliament adopted a legislative resolution embodying its opinion3 on the
    Commission's Proposal for a Directive at its plenary session on 23 October 1997.
    The Parliament's opinion includes 24 amendments. A large number of these
    amendments, which will contribute to clarify and improve the Proposal, were
    accepted by the Commission, some totally, others in part, either in accordance with
    their spirit or with some adaptation of their text.
4.   The amended proposal has been drafted to take account of the opinions of both
    institutions.
COMMKNTS ON THE AMENDMENTS INTRODUCED INTO THE PROPOSAL
5.  Article 1 (b) [new]
    A definition of 'third country insurance undertaking' has been introduced in the text
    in order to be able to incorporate Parliament's Amendment N° 7, relating to the
    definition of'mixed activity insurance holding company'. This amendment refers to
    third country insurance undertakings, a term which was not defined in the initial
    Proposal, although it was implicitly referred to in Article 9(2). The definition will
    also contribute to a clearer understanding of Annex I.
6.  Article 1 (d) and (e) [formerly, Article 1(c) and (d)]
    A reference to the whole of Article 1 of Directive 83/349/RKC4 (the initial Proposal
    only referred to paragraph 1) has been introduced in the definitions of 'parent
    undertaking' and 'subsidiary' to take partial account of Parliaments' Amendment
    Nos 1 and 2. This change will permit the inclusion in the definition of cases of
    effective dominant influence as provided for in Article 1(2) of Directive
    83/349/EEC. However, since the application of Article 1(2) depends on Member
    States' discretion, the last sentence of the definitions contained in the initial
1
   OJN°C341, Î9.12.1995, p. 16.
2
   OJN°C 174, 17.06.1996, p. 16.
3
   A4-0295/97. Minutes of the plenary session of 23.10.1997 (PE 262.699).
4
   Seventh Company Law Directive: OJ N° 1-193, 18.07.1983, p. 1.
                                                  1
 ---pagebreak---      Proposal has been maintained in order to permit the competent authorities to assess
     where a dominant influence is exercised. This assessment by the competent
     authorities is considered necessary so that they can properly perform their prudential
     duties.
7.   Article I (0 |formerly. Article l(e)|
     A reference lo Article 17, lirsl sentence, of Directive 7X/660/f l',Cs has been
     introduced into the definition of a "participation" in order to take partial account of
     Amendment N" 3 adopted by the Parliament. In this way the qualitative criterion of
     ""durable link" provided for in this Article is rellected in the definition. Nevertheless,
     the automatic criterion of the 20% threshold has been kept in the text. Legal
    certainty is required on such an important element to determine the scope of
    application of the Directive.
8.  Article 1 (j) [formerly, Article l(i)]
    In accordance with Amendment N° 7 as proposed by Parliament, the definition of
     'mixed activity insurance holding company' has been clarified by specifically
    excluding from its scope "third country insurance undertakings' and "reinsurance
     undertakings".
9.   Article 6
     As suggested by the Parliament (Amendment N" 10) changes have been introduced
     into paragraph I of this Article in order to ensure that direct access to the
     information concerning an undertaking of the group is only granted when such
     information is not communicated by the insurance undertaking subject to
    supplementary supervision. Minor drafting changes have also been made in this
    paragraph to avoid unnecessary repetition.
    A reference to paragraph 1 has been introduced into paragraph 3 of this Article to
    correct an omission in the initial Proposal.
10. Article 9(1)
     The text has been improved to take account of Parliament's Amendment N° 11.
11. Article II
    In paragraph 1 of this Article, the date of implementation of the Directive has been
    revised to lake account of the expected timetable. A new paragraph 2 has been
    introduced in order lo specify the lirsl financial year for which the supplementary
    supervision provided for in the Directive should apply.
    As requested by Parliament (Amendment N° 12) a new paragraph 6 has been
    included whereby the Commission shall submit a report to the Insurance Committee
    on the implementation of the Directive and, where appropriate, on any need for
5  Fourth Company Law Directive: OJ N° L 222, 14.08.1978, p. 11.
                                               2
 ---pagebreak---      further harmonization in this area. The deadline for the preparation of this report is
     live years. After consultation with the national experts, this deadline has been
     considered more appropriate in order properly to assess the functioning of the
     supervisory mechanism provided for in the Directive.
12. Annex I, section l.A
     References lo the First Insurance Directives have been introduced in order to take
     account of Amendment N° 13 by Parliament. References to the Third Insurance
     Directives, also requested by Parliament, have not been included since, in
     accordance with the usual rules for drafting legal instruments in the Community, a
     reference to the original Directive is sufficient where a reference to the amending
     Directive is already contained in the recital or in other parts of the text.
13. Annex I, section l.C [formerly, second part of section l.B]
     Changes to this section have been made in order to take partial account of
    Amendment N° 14 by Parliament, and have been incorporated in a separate section,
    under "C". Elements that were totally excluded from the calculation in accordance
     with the initial Proposal are now accepted with no restriction where they concern the
     participating insurance undertaking at the level of which the calculation of the
    adjusted solvency situation is being performed. They are also accepted, where they
    concern related insurance undertakings, insofar as they are eligible to cover the
    solvency margin requirement of that related undertaking. In addition, the
    admissibility of these elements must be consistent with the elimination of double
    gearing of capital: a sentence making reference to section B has therefore been
     introduced at the beginning of the new section C.
    Other elements whose inclusion was requested by the Parliament have not been
    mentioned in this section, since either they are already included in the general
     references contained in section LA of Annex I, or they are not admissible under the
     insurance directives for the cover of the solvency margin requirement.
14. Annex I, section l.D [formerly, section l.C]
     The wording of this section has been modified as requested by Parliament
     (Amendment N° 15). The definition of the 'proportional share' (a footnote in the
     initial Proposal) has been inserted in the main text. In order to clarify the initial
     Proposal, explicit references have been made to the different calculation methods
     laid down in Annex I.
15. Annex I, section l.K [formerly, section l.D|
     A reference to the Insurance Accounts Directive (Directive 91/674/EEC6) has been
     introduced in order to take into account Amendment N° 16 as requested by
     Parliament.
    OJN°L 374, 31.12.91, p. 7.
 ---pagebreak--- 16. Annex I, section 2.1
    The wording of the last paragraph of this section has been modified as also
    requested by Parliament (Amendment N° 17). The waiver provided for in the initial
    Proposal where participations are held within one Member State has been extended
    to the case where the participating undertaking of the insurance undertaking is
    located in another Member Stale. However, the use of the waiver in cross-border
    situations has been made subject to the condition that the competent authorities
    concerned have reached an agreement, in order to ensure that supervision is
    effective. Drafting changes have also been made with a view to facilitating the
    understanding of this section.
17. Annex 1, section 2.3
    As requested by Parliament (Amendment Nos 18 and 19), funds of an insurance
    holding company arising from outside the group have been recognised. In order to
    avoid that any kind of debt held by an insurance holding company is automatically
    considered as equivalent to own funds, it has been provided that the debt has to fulfil
    the same conditions as in the First Insurance Directives (as amended by the Third
    Insurance Directives) concerning subordinated loan capital, cumulative preferential
    shares, other securities with no specified maturity date and other instruments.
18. Annex I, section 3
    Following Amendment N° 27 requested by Parliament, the exact treatment of
    related third country insurance undertakings, which was implicit in Annex I of the
    initial Proposal, has been specified. In principle, the EU solvency margin rules,
    which apply to the participating insurance undertaking, should also be used in
    relation to related insurance undertakings in order to assess the adjusted solvency
    situation of that participating undertaking. However, where a related insurance
    undertaking is situated in a third country in which a solvency margin requirement
    comparable to that of the HU is enforced, that requirement may be recognised in
    performing the calculation.
19. Annex I, section 4
    This section has been deleted in accordance with Amendment N° 21 of Parliament.
20. Annex II, sections 2.1 and 2.2
    Changes have been made to these sections in order to take into account Amendment
    N os 23 and 24 as requested by Parliament. The same comments as for section 2.3 of
    Annex I (paragraph 17 of this Explanatory Memorandum) apply.
 ---pagebreak---   Amended Proposal for a European Parliament and Council Directive on the supplementary
                         supervision of insurance undertakings in an insurance group
                  INITIAL PROPOSAL                                AMUNDttl) PROPOSAL
THE EUROPEAN PARLIAMENT AND THE                           THE EUROPEAN PARLIAMENT AND THE
COUNCIL OF THE EUROPEAN UNION,                            COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the              UNCHANGED
European Community, and in particular
Article 57 (2) thereof,
Having regard to the proposal from the
Commission,
Having regard to the opinion of the Economic
and Social Committee,
Acting in accordance with the procedure referred
to in Article 1 89b of the Treaty,
Whereas Council Directive 73/239/EEC of 24 UNCHANGED
July 1973 on the coordination of laws,
regulations and             administrative     provisions
relating to the taking-up and pursuit of the
business of direct insurance other than life
assurance(1), as last amended by European
Parliament and Council Directive 95/26/EC(2)
and Council Directive 79/267/EEC of 5 March
1979 on the coordination of laws, regulations
and administrative provisions relating to the
taking-up and pursuit of the business of direct
life a s s u r a n c e , as last amended by Directive
95/26/EC require insurance undertakings to
possess a solvency margin;
Whereas, as a result of Council Directive UNCHANGED
92/49/EEC of IK June 1992 (in the coordination
of     laws, regulations and               administrative
provisions relating to direct insurance other than
life assurance and amending                    Directives
73/239/EEC and 88/357/EEC (third non-life
assurance Directive)'4', and Council Directive
92/96/EEC of 10 November 1992 on the
coordination            of   laws,    regulations     and
administrative provisions relating to direct life
assurance and amending Directives 79/267/EEC
 and      90/619/EEC           (third   life    assurance
 Directive)(D), the taking-up and the pursuit of the
 business of insurance is subject to the granting
 of a single authorization issued by the competent
 authorities of the Member State in which an
 insurance undertaking has its head office;
 whereas         such      authorization     allows    an
 undertaking to carry on business throughout the
 Community, under the right of establishment or
 the freedom to provide services; whereas the
 competent authorities of home Member States
 are responsible for monitoring the financial
 ---pagebreak---                 INITIAL PROPOSAL                         AMKNDKI) PROPOSAL
health of insurance undertakings, including their
state of solvency;
Whereas measures involving supplementary           UNCHANGED
supervision on insurance undertakings in a
group should enable the authorities supervising a
parent insurance undertaking to make a more
soundly based judgement about the financial
situation of that insurance undertaking; whereas
supplementary supervision should take into
account certain undertakings which are presently
not subject to supervision under Community
directives; whereas this Directive does not in
any way imply thai Member Stales are required
to play a supervisory role in relation to those
undertakings standing alone;
Whereas insurance undertakings in a single         UNCHANGED
insurance market engage in direct competition
with each other and the standards pertaining to
capital     requirements   must therefore       be
equivalent; whereas, to that end, the criteria for
determining supplementary supervision must not
be left solely to Member States; whereas the
adoption of common basic standards will be in
the best interests of the Community in that it
will prevent Distortions of competition and will
strengthen the Community insurance system;
whereas it is necessary to eliminate certain
differences between the laws of the Member
States as regards the prudential rules to which
insurance undertakings that arc part of a group
are subject;
Whereas it is necessary to calculate an adjusted   UNCHANGED
solvency situation for insurance undertakings in
a group; whereas different methods are applied
by some authorities in the Community to take
into account the effects on the financial position
of an insurance undertaking in a group; whereas
the principle is accepted that these methods are
prudentially equivalent;
Whereas the approach adopted consists in           UNCHANGED
bringing about such harmonization as is
essential, necessary and sufficient to achieve the
mutual recognition of prudential control systems
 in this field;
 Whereas certain provisions of this Directive      UNCHANGED
 define minimum standards; whereas a home
 Member State may lay down stricter rules for
  insurance undertakings authorized by its own
 competent authorities;
 ---pagebreak---               INITIAL PROPOSAL                              AMENDED PROPOSAL
WTiereas this Directive is concerned solely with UNCHANGED
cases where one insurance undertaking is owned
wholly or in part by another insurance
undertaking or holding company; whereas the
supervision of individual insurance undertakings
by the competent authorities remains an
essential principle of insurance supervision;
Whereas the competent authorities must at least       UNCHANGED
have the means of obtaining from all
undertakings within a group (he information
necessary for the performance of their function;
whereas cooperation between the authorities
responsible for the supervision of insurance
undertakings as well as between the authorities
responsible for the supervision of different
financial sectors must be established;
WTiereas      certain    types    of     intra-group  UNCHANGED
transactions can affect the financial position of
an     insurance     undertaking;    whereas      the
competent authorities should determine whether
intra-group transactions are concluded in
principle according to normal market conditions;
whereas the application of this general principle
does not imply that intra-group transactions
concluded on other terms should be prohibited
under all circumstances; whereas it is therefore
desirable that the competent authorities monitor
such transactions;
Whereas this Directive will, in particular, ensure    UNCHANGED
the homogeneous application throughout the
Community of prudential rules established by
other Community legislation and facilitate the
taking-up and pursuit of the business of
insurance; whereas application of this Directive
must be aimed at, in particular, protecting the
interests of the policyholders of insurance
undertakings;
 Whereas the application of this Directive            UNCHANGED
requires complicated adaptations to be made to
the laws of certain Member States in the fields
 of prudential supervision, company law and
 taxation, and that these adaptations therefore
justify that these Member States may apply the
 definition of a participation in another
 undertaking at the level of 25 % of the capital or
 the voting rights until 1 July 2001 at the latest,
 ---pagebreak---               INITIAL PROPOSAL                                  AMENDED PROPOSAL
HAVE ADOPTED THIS DIRECTIVE:                        HAVE ADOPTED THIS DIRECTIVE:
                      Article 1                                          Article 1
                     Definitions                                        Definitions
For the purpose of this Directive:                  UNCHANGED
(a)     'insurance    undertaking'   means      an  UNCHANGED
undertaking which has received             official
authorization in accordance with Article 6 of
Directive 73/239/EEC or Article 6 of Directive
79/267/EEC;
                                                    (b) 'third country insurance underlaking , means
                                                    an undertaking which if IT had its registered
                                                    office iiT~lhc Comnuiniy would require
                                                    authorization in accordance with Article 6 of
                                                    Directive            or Article 6 of Directive
                                                    79/z67/EEC;
(b) 'reinsurance undertaking'         means an      (c) 'reinsurance undertaking'          means     an
undertaking which only accepts risks ceded by       undertaking which only accepts risks ceded by
an insurance undertaking or other reinsurance       an insurance undertaking or other reinsurance
undertakings established in the Community or in     undertakings established in the Community or in
a third country;                                    a third country;
(c) 'parent undertaking' means a parent             (d) 'parent undertaking means a parent
undertaking within the meaning of Article 1 (1)     undertaking within the meaning of Article 1 [...]
of Council Directive 83/349/EEC(6) and any          of Council Directive 83/349/EEC(6) and any
 undertaking which, in the opinion of the           undertaking which, in the opinion of the
 competent authorities, effectively exercises a     competent authorities, effectively exercises a
 dominant influence over another undertaking;       dominant influence over another undertaking;
 (d) 'subsidiary' means a subsidiary undertaking     (e) 'subsidiary' means a subsidiary undertaking
 within the meaning of Article 1(1) of Directive     within the meaning of Article 1 [.."] of Directive
 83/349/EEC and any undertaking over which, in       83/349/EEC and any undertaking over which, in
 the opinion of the competent authorities, a         the opinion of the competent authorities, a
 parent undertaking effectively exercises a          parent undertaking effectively exercises a
 dominant influence. All subsidiaries of             dominant influence. All subsidiaries of
 subsidiary undertakings shall also be considered    subsidiary undertakings shall also be considered
 subsidiaries of the undertaking that is their       subsidiaries of the undertaking that is their
 original parent;                                    original parent;
 (e) 'participation' means the ownership, direct or (f) 'participation' means participation within the
 indirect, of 20 % or more of the voting rights or meaning of Article 17, first sentence oT
 capital of an undertaking;                          Directive 78/660/EEO /; or the ownershipTlïïrëct
                                                     or indirect, of 20% or more of the voting rights
                                                     or capital of an undertaking;
  (f) 'participating undertaking' means an (g) 'participating undertaking' means an
  undertaking which is cither a parent undertaking undertaking which is either a parent undertaking
  or an undertaking which holds a participation;      or an undertaking which holds a participation;
 ---pagebreak---               INITIAL PROPOSAL                                 AMENDED PROPOSAL
(g) 'related undertaking' means either a (h) 'related undertaking' means either a
subsidiary or any other undertaking in which a subsidiary or any other undertaking in which a
participation is held;                             participation is held
(h) 'insurance holding company' means an           (j) 'insurance holding company' means an
undertaking other than an insurance undertaking,   undertaking other than an insurance undertaking,
the subsidiary undertakings of which are           the subsidiary undertakings of which are
exclusively or mainly insurance or reinsurance     exclusively or mainly insurance or reinsurance
undertakings, one at least of such subsidiaries    undertakings, one at least of such subsidiaries
being an insurance undertaking;                    being an insurance undertaking;
(i) 'mixed activity insurance holding company' Q} 'mixed activity insurance holding company'
means a parent undertaking, other than an means a parent undertaking, other than an
insurance holding company or an insurance insurance undertaking, a third country insurance
undertaking, the subsidiaries of which include at undertaking, a reinsurance undertaking or an
least one insurance undertaking;                   insurance holding company, the subsidiaries of
                                                   which include at least one             insurance
                                                   undertaking;
(j) 'competent authorities' means the national (k) 'competent authorities' means the national
authorities which are empowered by law or authorities which are empowered by law or
regulation to supervise insurance undertakings.    regulation to supervise insurance undertakings
                      Article 2                                          Article 2
                            >e                                            Scope
Subject to the provisions of Article 3, this        UNCHANGED
 Directive shall apply to insurance undertakings
which have their registered offices in the
Community.
                      Article 3                                          Article 3
      Supplementary supervision of insurance            Supplementary supervision of insurance
              undertakings in a group                            undertakings in a group
 1. In addition to the provisions of Directives UNCHANGED
 73/239/EEC and 79/267/EEC laying down the
 rules for the supervision of insurance
 undertakings, Member States shall provide that
 the supervision of any insurance undertaking
 which is a participating undertaking of at least
 one insurance undertaking or reinsurance
 undertaking shall be supplemented to the extent
 and in the manner prescribed in Articles 5, 6, 8
  and 9.
  2. Every insurance undertaking the parent UNCHANGED
  undertaking of which is an insurance holding
  company which has its registered office in the
  Community shall be subject, to the extent and in
  the manner prescribed in Articles 5 (2), 6, 8
  and 10, to supplementary supervision.
 ---pagebreak---                INITIAL PROPOSAL                              AMENDED PROPOSAL
3. livery insurance undertaking the parent l INCHANGE!
undertaking of which is a mixed activity
insurance holding company which has its
registered office in the Community shall be
subject, to the extenl and in the manner
prescribed in Articles 5 (2), 6 and 8, to
supplementary supervision.
4. The exercise of supplementary supervision in UNCHANGED
accordance with this Article shall not in any way
imply that the competent authorities are required
to play a supervisory role in relation to the
insurance holding company or mixed activity
insurance holding company or reinsurance
undertaking standing alone.
5. Member States or the competent authorities          JNCHANGED
responsible      for exercising      supplementary
supervision may decide that in the cases listed
below an insurance undertaking or other
undertaking which is a subsidiary or in which a
participation is held need not be included in the
supplementary supervision:
- if the undertaking thai should be included is
situated in a third country where there are legal
 impediments to the transfer of the necessary
 information;
 - if, in the opinion of the competent authorities,
the undertaking that should be included is of
negligible interest only with respect to the
objective of monitoring insurance undertakings;
or
 - if, in the opinion of the competent authorities,
 the inclusion of the financial situation of the
 undertaking in the calculation of the adjusted
 solvency situation would be inappropriate or
 misleading as far as the objectives of the
 supplementary       supervision    of    insurance
 undertakings are concerned.
                      Article 4                                        Article 4
         Competent authorities for exercising              Competent authorities for exercising
              supplementary supervision                       supplementary supervision
  1. The supervision referred to in Article 3 shall    UNCHANGED
 be exercised by the competent authorities of the
 Member State that authorized the insurance
 undertaking under Article 6 of Directive
 73/239/EEC or Article 6 of Directive
 79/267/EEC.
 2. Where Member States have more than one             UNCHANGED
                                                    10
 ---pagebreak---                INITIAL PROPOSAI,                                  AMKNDKI) PROPOSAL
competent authority for the prudential
supervision of insurance undertakings and
reinsurance undertakings. Member States shall
take the requisite measures to organize
coordination between such authorities.
                      Article 5                                             Article 5
       Availability and quality of information         Availability and quality of information
 1. Member States shall prescribe that the UNCHANGED
competent authorities shall require that, in any
insurance undertaking, which is a participating
undertaking or related undertaking of one or
more insurance undertakings, insurance holding
companies or reinsurance undertakings, there are
adequate internal control mechanisms for the
production of any data and information which
would be relevant for the purposes of
supervision in accordance with this Directive.
2. Member States shall take the necessary steps UNCHANGED
to ensure that there are no legal impediments
preventing the undertakings that are subject to
the supervision referred to in Article 3, and their
related      undertakings      and     participating
undertakings, from          exchanging amongst
themselves any information which would be
relevant for the purposes of supervision in
accordance with this Directive.
                      Article 6                                             Article 6
                Access to information                                Access to information
 1. Member States shall provide that their             1. Member Slates shall provide that their
competent authorities responsible for exercising       competent authorities responsible for exercising
the supervision referred to in Article 3 shall have    supplementary supervision referred to in
access to any information which wouid be               Article 3 shall have access to any information
relevant for the purpose of supervision of an          which would be relevant for the purpose of
insurance undertaking which has participating          supervision of an insurance undertaking [...]
undertakings, related undertakings or related          subject to such supplementary supervision. The
undertakings of participating undertakings in the      competent authorities may address themselves to
insurance       undertaking.     The     competent     the undertakings concerned directly to ensure the
authorities may address themselves to the              communication of the required information, [...]
 undertakings concerned directly to ensure the         only when such information has been requested
communication of the required information, or          from the insurance undertaking and it has not
they may receive such information through the          been supplied by it!
 insurance undertaking.
 2. Member States shall provide that their UNCHANGED
 competent authorities may carry out, within their
 territory, themselves or through the intermediary
 of persons they appoint for that purpose, an-the-
 spot verification of the information received
 under paragraph 1.
  3. Where, in applying paragraph 2, the 3. Where, in applying paragraphs 1 and 2, the
  competent authorities of one Member State wish competent authorities of one Member State wish
                                                     11
 ---pagebreak---                INITIAL PROPOSAL                                   AMENDED PROPOSAL
 in specific cases to verify the information          in specific cases to verify the information
concerning an insurance undertaking situated in       concerning an insurance undertaking situated in
another Member Slate, they must ask the               another Member State, they must ask the
competent authorities of that other Member            competent authorities of rhat other Member
 State to have that verification carried out. The     State to have that verification carried out. The
 authorities which receive such a request, must,      authorities which receive such a request, must,
 within the framework of their competence, act        within the framework of their competence, act
 upon it either by carrying out the verification      upon it either by carrying out the verification
 themselves, by allowing the authorities who          themselves, by allowing the authorities who
 made the request to carry it out, or by allowing     made the request to carry it out, or by allowing
 an auditor or expert to carry it out.                an auditor or expert to carry it out.
                       Article 7                                            Article 7
     * dopera lie m between competent authorities         Cooperation between competent authorities
  1. Where insurance undertakings are directly or UNCHANGED
  indirectly related, or have a common
  participating undertaking and are established in
 different Member States, the competent
 authorities of each Member State shall
 communicate to each other all relevant
  information which may allow or aid the exercise
  of supervision in the framework cf this
 Directive.
 2. Where an insurance undertaking and a credit        2. WTiere an insurance undertaking and a credit
 institution as defined in Council Directive           institution as defined in Council Directive
 77/780/EEC(7) or investment firm as defined in        77/780/EECffi or investment firm as defined in
 Council Directive 93/22/EECw are directly or          Council Directive 93/22/EEC® are directly or
 indirectly related, or have a common                  indirectly related, or have a common
 participating undertaking, the competent              participating undertaking, the competent
 authorities and the authorities entrusted with the    authorities and the authorities entrusted with the
 public task of supervising ihose other                public task of supervising those other
 undertakings shall cooperate closely. Without         undertakings shall cooperate closely. Without
 prejudice to their respective responsibilities,       prejudice to their respective responsibilities,
 those authorities shall provide one another with      those authorities shall provide one another with
 any information likely to simplify their task, in     any information likely to simplify their task, in
 particular in the framework of this Directive.       particular in the framework of this Directive.
3. Information received pursuant to this UNCHANGED
Directive and, in particular, any exchange of
information between competent authorities
which is provided for in this Directive shall be
subject to the obligation of professional secrecy
defined in Article 16 of Directive 92/49/EEC
and Article 15 of Directive 92/96/EEC.
                                                   12
 ---pagebreak---               INITIAL PROPOSAI,                              AMENDED PROPOSAL
                      Article 8                                       Article 8
              Intra-group transactions                        Intra-group transactions
 1. With a view to establishing whether                UNCHANGED
transactions arc, in principle, carried out
according lo normal market conditions. Member
Stales shall provide that the competent
authorities monitor:
(a) the transactions referred to in paragraph 2
between an insurance undertaking and:
(i) a related undertaking of the insurance
undertaking;
(ii) a participating undertaking in the insurance
undertaking;
(iii) a related undertaking of a participating
undertaking in the insurance undertaking;
(b) the transactions referred to in paragraph 2
between the insurance undertaking and a natural
person which holds a participation in:
(i) the insurance undertaking or any of its related
undertakings;
(ii) a participating undertaking in the insurance
undertaking;
(iii) a related undertaking of a participating
undertaking in the insurance undertaking.
2. Member States shall require at least an annual      UNCHANGED
reporting by the insurance undertaking to the
competent authorities of the transactions as
described in paragraph 1, concerning in
particular significant:
- loans,
- guarantees and other off-balance sheet
transactions,
 - elements eligible for the solvency margin,
 - investments.
                                                    13
 ---pagebreak---               INITIAL PROPOSAI,                                    AMENDED PROPOSAI,
                       Article 9                                           Article 9
          Aili"sled solvency requirement                         Adjusted solvency requirement
1. Subject to Article 3 (1), Member Stales shall        1. In the cases referred to in Article 3 (1).
require that an adjusted solvency calculation           Member Stales shall require thai an adjusted
shall be carried out in accordance with Annex I.        solvency calculation shall be carried out in
                                                        accordance with Annex I.
2. The calculation described in Annex 1 shall            JNC1IANGED
include a related undertaking or participating
undertaking which has its registered office in a
third country and which is:
- an undertaking which, if it were established in
the Community, would be required to have an
authorization in accordance with Article 6 of
Directive 73/239/EEC or Article 6 of Directive
79/267/EEC,
- a reinsurance undertaking, or
- an insurance holding company.
3. If the adjusted solvency situation is negative,      UNCHANGED
the competent authorities shall take appropriate
measures at the level of the relevant insurance
undertaking.
                      Article 10                                           Article 10
            Insurance holding companies                           Insurance holding companies
 1. In the case referred to in Article 3 (2),            UNCHANGED
 Member States shall require the application of
one of the supplementary               methods of
supervision in accordance with Annex II.
2. In the case referred to in Article 3 (2), the         UNCHANGED
calculation shall include all related undertakings
of the insurance holding company referred to in
Article 9 (2).
3. If, as a result, the competent authorities are of     UNCHANGED
the opinion that the state of solvency of a related
 insurance undertaking of the insurance holding
company is affected, the competent authorities
 shall take appropriate measures at the level of
 that insurance undertaking.
                       Article 11                                          Article ! 1
                    Implementation                                       Implementation
  1. Member States shall adopt the laws,                 1. Member States shall adopt the laws,
 regulations and         administrative provisions      regulations   and    administrative   provisions
 necessary to comply with this Directive no later       necessary to comply with this Directive no later
 than ! January 1997, and bring them into force         than I Januarv 1999 '•••).          They shall
 no later than 1 July 1997. They shall                  immediately inform ihc Commission thereof,
 immediately inform the Commission thereof.
                                                     14
 ---pagebreak---                  INITIAL PROPOSAI,                                    AMUNDFJ) PROPOSAL
                                                      2. Member_ States shall provide that the
                                                      provisï(>ns refcijed^ io in paragraph I shall first
                                                      apply to the supervision of accounts for financial
                                                      years beginning on I January 2000 or during
                                                      that calendar year.
2. Member States may decide to apply the 3. Member States may decide to apply the
definition of a 'participation' at a level of 25 % definition of a 'participation' at a level of 25 %
for a period expiring not later than 1 July 2001.     for a period expiring not later than 1 July 2001.
3. When Member States adopt the measures              4. When Member States adopt the measures
referred to in paragraph 1, these shall contain a     referred to in paragraph 1, these shall contain a
reference to this Directive, or shall be              reference to this Directive, or shall be
accompanied by such reference at the time of          accompanied by such reference at the time of
their official publication. The procedure for such    their olTicial publication. The procedure for such
reference shall be adopted by Member States.          reference shall be adopted by Member States.
4. Member States shall communicate to the 5. Member States shall communicate to the
Commission the texts of the main provisions of rommission the texts of the main provisions of
national law which they adopt in the field national law which they adopt in the field
covered by this Directive.                            covered by this Directive.
                                                      6. hive years at the latest after the deadline for
                                                      implementation             of    this    Directive,     the
                                                      Commission shall submit to the Insurance
                                                      Committee a report on its implementation and, if
                                                      appropriate, on any need                     for
                                                                                                   tor    further
                                                                                                          iurther
                                                      harmonization of supplementary supervision of
                                                      insurance undertakings in an insurance group.
                          Article 12                                             Article 12
                       Entry into force                                       Entry into force
This Directive shall enter into force on the UNCHANGED
twentieth day following that of its publication in
the Official            Journal    of the   European
Communities.
                          Article 13                                             Article 13
                          Addressees                                             Addressees
 This Directive is addressed to the Member              UNCHANGED
 States.
 (1) OJ No L 228, 16. 8. 1973, p. 3.                   ( l ) O J N o L 2 2 8 , 16. 8. 1973, p. 3.
 ( 2 ) O J N o L 1 6 8 , 18. 7. 1995, p. 7.             ( 2 ) O J N o L 1 6 8 , 18. 7. 1995, p. 7.
 (3) OJ No L 63, 13.3. 1979, p. 1.                      ( 3 ) O J N o L 6 3 , 13.3. 1979, p. 1.
 (4) OJ No L 228, 11.8. 1992, p. 1.                     (4) OJ No L 228, 11.8. 1992, p. 1.
 (5) OJ No L 360, 9. 12. 1992, p. 1.                    (5) OJ No L 360, 9. 12. 1992, p. 1.
 ( 6 ) O J N o L 193, 18.7. 1983, p. 1.                 ( 6 ) O J N o L 1 9 3 , 18. 7. 1983, p. 1.
 (7) OJ No L 322, 17.12.1977, p. 30.                    (7) OJ No L 222, 14.08.1978, p. 11.
 ( 8 ) O J N o L 141, 11.6. 1993, p. 27.                (8} OJ No L 322, 17. 12. 1977, p. 30.
                                                        ( 9 } O J N o L 141, 11.6. 1993, p. 27.
                                                     15
 ---pagebreak---              INITIAL PROPOSAL                                   AMENDED PROPOSAL
                     ANNEX I                                             ANNEX I
    CALCULATION OF T H E ADJUSTED                        CALCULATION O F T H E ADJUSTED
            SOLVENCY SITUATION                                  SOLVENCY SITUATION
1. Choice of method of            calculation and     I. Choice of method         of   calculation and
gene nil principles                                   general principles
A One or more of the methods described below          A. One or more of the methods described below
shall be applied for the calculation of the           shall be applied for the calculation of the
adjusted solvency situation of insurance              adjusted solvency situation of insurance
undertakings referred to in Article 3(1). For this    undertakings referred to in Article 3 (1). For this
purpose, the elements eligible for the solvency       purpose, the elements eligible for the solvency
margin shall be adjusted an compared with an          margin mentioned in Article 16 paragraph 1 of
adjusted solvency margin.                             Directive 73/239/EEC or in Article 18 of
                                                      Directive 79/267/EEC shall be adjusted an
                                                      compared with an adjusted solvency margin.
B. Regardless of the method applied, the intra- B. UNCHANGED
group creation of elements eligible for the
solvency margin must be eliminated in the
calculation of the adjusted solvency situation.
For this purpose, where the methods do not             UNCHANGED
already provide for this, for Ihe calculation of
the elements eligible for the adjusted solvency
situation no account shall be taken of:
(i) all elements eligible for the solvency margin      UNCHANGED
of the insurance undertaking for which the
adjusted solvency situation is calculated, which
ultimately originate from:
- a related undertaking of this insurance
undertaking, or
- a related undertaking of a participating
undertaking in the insurance undertaking;
and
(ii) all elements eligible for the solvency margin    UNCHANGED
of a related insurance undertaking or the
notional solvency requirement of a related
reinsurance undertaking, of a participating
insurance undertaking for which the adjusted
solvency situation is calculated, originating
from:
- the participating insurance undertaking,
- related undertakings of the participating
insurance undertaking,
- a related undertaking of a participating
undertaking in the participating insurance
undertaking for which the adjusted solvency
situation is calculated.
Applying the same rules mutatis mutandis, the C. Without prejudice to                the  provisions   of
calculation shall also not take into account:         section B of"thi
                                                                   this Annex:
                                                   16
 ---pagebreak---               INITIAL PROPOSAI,                                   AMENDED PROPOSAL
- all subscribed but non paid-in parts ol the        - [...J subscribed but non paid-in parts of the
capital.                                             capital of a related insurance undertaking of the
                                                     insimmcc undertaking for which the adjusted
                                                     solvency is calculated" and
- pro lit reserves and future profits of life        - profit reserves and future profits arising in a
assurance undertakings.                              related life insurance undertaking of the
                                                     insurance undertaking for which the adjusted
                                                     solvency is calculated
                                                     may only be included in the calculation insofar
                                                     i s they are eligible to cover the solvency margin
                                                     requirement of that related undertaking
C. With the exception of calculating a solvency      D. The calculation of the adjusted solvency of an
deficit in a subsidiary, the calculation shall be    insurance undertaking shall take account of the
carried out on a proportional basis(1) taking into   proportional share held by the relevant
account the relevant percentages of the              participating undertaking         in the     related
mediating participations.                            undertakings concerned.
(I) Where this Annex refers to a proportional        Proportional share means either, where method 1
share or relevant percentage, the calculation        or method~2 is used, the proportion of the
shall be based on the basis of the percentage        subscribed capital that is owned, directly "or
used for the establishment of the consolidated       indirectly, by the relevant            participating
accounts.                                            undertaking or, where method 3 is used, the
                                                     percentages used in drawing up the consolidated
                                                     accounts.
                                                     However, whichever method is used, when the
                                                     related undertaking is a subsidiary and has~i
                                                     solvency deficit, the total solvency deficit of the
                                                     subsidiary has to be taken into account.           ~
D. The competent authorities shall ensure that       E. The competent authorities shall ensure that
the adjusted solvency situation is calculated at      the adjusted solvency situation is calculated at
the same frequency as the calculation of the          the same frequency as the calculation of the
solvency margin for insurance undertakings            solvency margin for insurance undertakings
according to Directives 73/239/EEC and                according to Directives 73/239/EEC and
 79/267/EEC. The value of the assets and              79/267/EEC. The value of the assets and
 liabilities shall be assessed according to the       liabilities shall be assessed according to the
 relevant provisions of Directives 73/239/EEC         relevant provisions of Directives 73/239/EEC,
 and Directive 79/267/EEC, as amended by              J _ ] 79/267/EEC \...] and 91/674/EEC.
 Directives 92/49/EEC and 92/96/EEC.
 2. Methods and relevant situations                    2. Methods and relevant situations
 2.1. Related insurance    undertakings                2.1. Related insurance    undertakings
 In the case of an insurance undertaking which is      UNCHANGED
 a directly participating undertaking in another
 insurance undertaking, the adjusted solvency
  calculation shall be carried out in accordance
  with one of the following methods.
  In all methods and in the case that the insurance     UNCHANGED
  undertaking has more than one directly related
                                                    17
 ---pagebreak---                INITIAL PROPOSAL                                   AMENDED PROPOSAL
insurance undertaking, the adjusted solvency
calculation shall be carried out by integrating
each of these directly related undertakings.
In cases of successive participations (c. g. an UNCHANGED
insurance undertaking is a participating
undertaking in another insurance undertaking
which is also a participating undertaking in an
insurance undertaking) the adjusted solvency
calculation shall be carried out at the level of
each participating undertaking which has at least
one      related    insurance     or   reinsurance
undertaking.
If method 3 is applied, and without prejudice to     [...] Member States may waive calculation of the
specific provisions contained in other Directives,   adjusted solvency [...] of an insurance
Member States may waive calculation of the           undertaking^
adjusted solvency situation for an insurance
undertaking, if this undertaking is a related        - either if the undertaking is a related
undertaking of another insurance undertaking in      undertaking of another insurance undertaking
the same Member State, which calculates an           authorized in the same Member State, and that
adjusted solvency situation taking into account      related undertaking is taken into account in the
its    related    insurance    undertakings    and   calculation of the adjusted solvency of The
reinsurance undertakings. The same waiver shall      participating insurance undertaTcmg;
be allowed where the participating undertaking
is an insurance holding company which has its        - or if the undertaking is a related undertaking of
head office in the same Member State as the          an insurance holding company which has its
insurance undertaking, provided that it is subject   registered office in the same Member State as
to the same standard of supervision as that          the insurance undertaking, and both the holding
exercised over insurance undertakings. In both       company and the related insurance undertaking
cases, steps must be taken to ensure that capital    are taken into account in the calculation carried
is distributed adequately within the insurance       out.
group, and is genuinely available for transfer
between       the    related   and    participating  Member State may also provide for the waiver
undertaking or undertakings concerned.               involved in the above two cases to be granted in
                                                     the case of an insurance undertaking which is a
                                                     related undertaking of another insurance
                                                     undertaking or insurance holding company that
                                                     has its registered office in another Member
                                                     Stated IT the competent authorities of ~thc
                                                     Ivlcinber States conccrnëdlïavc agreed to allow
                                                     the competent authorities of the other Member
                                                     State to carry out supplementary supervision.
                                                     In all cases, the waiver may only be granted if
                                                     the competent authorities are satisfied that the
                                                     elements eligible for the solvency margin of the
                                                     insurance undertakings to be included in the
                                                     calculation are distributed adequately [...l~and
                                                      genuinely available for transfer between those
                                                      undertakings.
METHOD          1: Deduction     and  aggregation     METHOD        1: Deduction . and       aggregation
 method                                                method
 The adjusted solvency situation of              the  UNCHANGED
 participating insurance undertaking is          the
 ---pagebreak---               INITIAL PROPOSAI,                               AMENDED PROPOSAL
di(Terence between:
(i) the sum of:
1. (he elements eligible lor the solvency margin
of the participating undertaking;
2. the proportional share of the participating
undertaking in the solvency margin of the
related undertaking, which originates from the
participating undertaking;
and
(ii) the sum of:
(a) the book value in the participating
undertaking of all elements eligible for the
solvency margin of the related undertaking;
(b) the solvency requirement of the participating
undertaking;
(c) the proportional share of the solvency
requirement of the related undertaking; if the
related undertaking is a subsidiary and has a
solvency deficit, the total requirement has to be
taken into account.
METHOD 2: Requirement deduction method                METHOD 2: Requirement deduction method
The adjusted solvency situation of              the    UNCHANGED
participating insurance undertaking is          the
difference between(2):
(i) the sum of the elements eligible for the
solvency      margin     of    the    participating
undertaking;
and
(ii) the sum of:
(a) the solvency requirement of the participating
undertaking;
(b) the proportional share of the solvency
requirement of the related undertaking; if the
related undertaking is a subsidiary and has a
solvency deficit, the total requirement has to be
taken into account.
 (2) The participation in a related undertaking
 must be included at the net asset value of shares.
 METHOD 3: Accounting         consolidation-based      METHOD 3: Accounting   consolidation-based
 method                                                method
 The calculation of the adjusted solvency              UNCHANGED
 situation of the participating undertaking shall
 start from the consolidated accounts in order to
                                                    19
 ---pagebreak---              INITIAL PROPOSAL                                    AMENDED PROPOSAL
calculate the consolidated elements eligible for
the solvency margin of the participating and the
related undertakings concerned in accordance
with Directive 9Î/674/EEC and Directive
73/239/EEC and Directive 79/267/EEC, as
amended by Directives 92/49/EEC and
92/96/EEC.
The adjusted solvency          situation of the
participating undertaking      is the difference
between:
(i) the elements eligible for the solvency margin
as shown in the consolidated accounts;
and
(ii) the sum of the solvency requirement of the
participating undertaking, and (he full or
relevant proportional share of the solvency
requirement of the related undertaking. If the
related undertaking is a subsidiary and has a
solvency deficit, its solvency requirement shall
be taken into account in full.
2.2. Related reinsurance    undertaking              2.2. Related reinsurance   undertaking
For each related reinsurance undertaking of an UNCHANGED
insurance undertaking, a notional solvency
requirement shall be established according to the
same rules that have been laid down in Article
16 (3) of Directive 73/239/EEC or Article 18 (3)
of Directive 79/267/EIIC. The same own funds
elements for the reiaied reinsurance undertaking
shall be recognized as eligible for its national
own funds, as those according to the rules laid
down in Article 24 of Directive 92/49/EEC or
Article 25 of Directive 92/96/EEC. The value of
the assets and liabilities shall be assessed
according to the same rules that have been laid
down in Directive 73/239/EEC and Directive
79/267/EEC, as amended by Directives
92/49/EEC and 92/96/EEC.
The adjusted solvency situation of the UNCHANGED
participating insurance undertaking is obtained
by applying the methods and general principles
described above.
2.3. Intermediate insurance holding company          2.3. Intermediate insurance holding    company
Methods 1 and 2                                      Methods 1 and 2
For each participating insurance undertaking in      For each participating insurance undertaking in
an insurance holding company which is a              an insurance holding company which is a
participating undertaking in an insurance            participating undertaking in an insurance
undertaking or reinsurance undertaking, the          undertaking or reinsurance undertaking, the
adjusted solvency situation shall be calculated      adjusted solvency situation shall be calculated
applying the methods and genera! principles          applying the methods and general principles
                                                  20
 ---pagebreak---              INITIAL PROPOSAL                                     AMENDED PROPOSAL
described above, mutatis mutandis.                   described above, mutatis mutandis. When
                                                     carrying out this calculation, resources of the
                                                     insurance holding company which fulfil the
                                                     same conditions as laid down in Article 15
                                                     paragraph 1 of Directive 73/239/EEC or in
                                                      Article 18 of Directive 79/267/EEC shall be
                                                      recognized as elements eligible for the solvency
                                                      margin.
Method 3                                              Method 3
 The insurance holding company shall be taken         The insurance holding company shall be taken
into account in the assessment by integration in     into account in the assessment by integration in
the accounting consolidation applying the            the accounting consolidation applying the
methods and general principles described above,      methods and general principles described above,
mutatis mutandis.                                    mutatis mutandis. When carrying out this
                                                     calculation, resources of the insurance holding
                                                     company which fulfil the same conditions as laid
                                                     down in Article 16 paragraph 1 of Directive
                                                     73/239/EEC or in Article 18 of Directive
                                                     79/267/E"EC shall be recognized as elements
                                                     eligible for the solvency margin.
3. Undertakings in third countries                   3. Undertakings in third countries
                                                      W1 îen calculating the adjusted solvency of an
                                                     insurance undertaking w nich is a participating
                                                     undertaking m a third country insurance
                                                      undertaking, the latter shall be treated, for the
                                                      sole purpose of that calculation, in a similar way
                                                      to a related insurance undertaking, by applying
                                                      the general principles and methods )ds described m
                                                      this Annexe
                                                      However, when the third country in which that
                                                      undertaking is established makes it subject "to
                                                      authorization and imposes on it a solvency
                                                      requirement comparable to that laid down In
                                                      Directives 73/239/EEC or 79/267/EEC, taking
                                                      into account the elements of cover of that
                                                      requirement, Member States may provide that
                                                      the calculation shall take into account, as regards
                                                      that undertaking, the solvency requirement and
                                                      the elements eligible to satisfy that requirement
                                                       as laid down by the third country in question.
 Where there are legal impediments to the UNCHANGED
 transfer of the information necessary for the
 inclusion of a related undertaking situated in a
 third country as referred to in Article 9 (2), the
 calculation shall, in applying the methods
 referred to in this Annex, deduct from the
 elements eligible for the adjusted solvency
 margin, the book value in the participating
 undertaking- of all elements eligible for the
  solvency margin of the related undertaking.
                                                    21
 ---pagebreak---               INITIAL PROPOSAL                                    AMENDED PROPOSAL
4. Non-spcciHed cases                                  DELETED
The competent authorities shall require in cases
that are not covered in 2.1-2.3, an appropriate
combination of the described methods.
                     ANNEX II                                              ANNEX II
      SUPPLEMENTARY SUPERVISORY                            SUPPLEMENTARY SUPERVISORY
         METHODS FOR INSURANCE                                 METHODS FOR INSURANCE
          UNDERTAKINGS THAT ARE                                UNDERTAKINGS THAT ARE
      SUBSIDIARIES OF AN INSURANCE                         SUBSIDIARIES OF AN INSURANCE
    HOLDING COMPANY WHICH IS THE                          HOLDING COMPANY WHICH !S T H E
  ULTIMATE PARENT OF AN INSURANCE                      ULTIMATE PARENT OF AN INSURANCE
         UNDERTAKING IN A GROUP                                UNDERTAKING IN A GROUP
 1. Choice of supplementary supervisory method         1. UNCHANGED
 - One of the methods described below shall be
 applied in order to check that its capital is
 sufficient.
 - In the case of insurance undertakings referred
 to in Article 3 paragraph 2, which are the
 subsidiaries of an insurance holding company
 and which are established in different Member
 States, the competent authorities shall ensure
 that the methods described in this Annex are
 applied in a coherent manner.
 - The competent authorities shall exercise the
 supplementary      supervision    in the same
 frequency as (he calculation of the solvency
 margin for insurance undertakings according to
 Directives 73/239/1 -EC and 79/267/EEC.
 2. Methods                                            2. Methods
 2.I. 'Solvency warning test '                         2.1. 'Solvency warning tesf
 The capital of an insurance holding company           The resources of an insurance holding company
 shall equal or exceed the sum of the solvency         which fulfil the same conditions as laid down in
 requirements      of    its   related    insurance    Article 16 paragraph 1 of Directive 73/23 9/EEC
 undertakings and the notional solvency                or in Article 18 of Directive 79/267/EEC shall
 requirements      of   its related     reinsurance    equal or exceed the sum oT~tEë sôTv ency
 undertakings.                                         requirements     of     its   related   insurance
                                                       undertakings and. the notional           solvency
                                                       requirements     of   its related     reinsurance
                                                       undertakings,
  2.2. 'Accounting consolidation test *                2.2. 'Accountingconsolidation   lest^
  The capital situation of an insurance holding         The resources of an insurance holding company
  company must equal or exceed the sum of the          must equaF or exceed the sum of the solvency
  solvency requirements of its related insurance       requirements     of     its   related   insurance
  undertakings and the notional            solvency    undertakings and the notional            solvency
  requirements     of   its related     reinsurance    requirements     of   its related     reinsurance
                                                    22
 ---pagebreak---              INITIAL PROPOSAL                                  AMENDED PROPOSAL
undertakings. The capital situation of this undertakings. The resources of this insurance
insurance holding company is calculated in holding company, including the elements which
accordance with the accounting consolidation fulfil the same conditions as laid down in Article
method in Annex 1, under 2.3, method 3.             16 paragraph 1 of Directive 73/239/EEC orTn
                                                    Article 18 of Directive 79/267/EEC, are
                                                    calculated in accordance with the accounting
                                                    consolidation method in Annex 1, under 2.3,
                                                    method 3.
3. Undertakings in third countries                  3. Undertakings in third countries
Where there are legal impediments to the UNCHANGED
transfer of the information necessary for the
inclusion of a related undertaking situated in a
third country as referred to in Article 10 (2), the
calculation shall, in applying the methods
referred to in this Annex, deduct from the
elements eligible for the adjusted solvency
margin the book value of the participation and of
all other elements eligible for the solvency
 margin of the related undertaking, which are
 held by the insurance undertaking.
                                                    23
 ---pagebreak---                                                                    ISSN 0254-1475
                                                             COM(98) 38 final
                                             DOCUMENTS
EN                                                                     10 09
                                    Catalogue number : CB-CO-98-036-EN-C
                                                              ISBN 92-78-30358-5
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