Commission Delegated Regulation (EU) 2026/269 of 29 October 2025 amending Delegated Regulation (EU) 2015/35 as regards technical provisions, long-term guarantee measures, own funds, equity risk, spread risk on securitisation positions, other standard formula capital requirements, reporting and disclosure, proportionality and group solvency

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (1), and in particular Article 29(5), Article 31(4), Article 35(9), Article 37(6), Article 50(1), Article 56, Article 75(2), Article 75(3), Article 86(1), Article 92(1a), Article 97(1), Article 99, point (b), Article 105a(5), Article 111(1), Article 127, Article 130, Article 213a(6), Article 233b, point (a), Article 234, Article 256(4), and Article 256b(6), thereof,

Whereas:

(1) With around EUR 10 trillion of assets under management, insurance and reinsurance undertakings are a mainstay of the financial system. In view of the long-term nature of their business, they are particularly well-placed to provide stable funding to the real economy, including small and medium-sized enterprises (SMEs). Due to their pivotal socio-economic role, insurance and reinsurance undertakings are subject to comprehensive prudential rules, set out in Directive 2009/138/EC and Commission Delegated Regulation (EU) 2015/35 (2).

(2) To enhance the ability of the sector to support the real economy, the green and digital transitions, and other Union priorities, while preserving prudential soundness and financial stability, Directive 2009/138/EC was amended by Directive (EU) 2025/2 of the European Parliament and of the Council (3) which entered into force on 28 January 2025. Directive (EU) 2025/2 improves the design of long-term guarantee measures and introduces a preferential treatment for long-term investments in equity. Those amendments will increase undertakings’ available capital in excess of the Solvency Capital Requirement, and thereby strengthen their capacity to support the objectives of the Savings and Investments Union and the European Green Deal. Directive (EU) 2025/2 also enhances proportionality of prudential rules, by introducing a new category of ‘small and non-complex undertakings’ which can automatically benefit from identified proportionality measures on reporting, disclosure, governance, revision of written policies, calculation of technical provisions, own-risk and solvency assessment, and liquidity risk management plans. At the same time, recognising the need to maintain a robust supervisory framework, Directive (EU) 2025/2 strengthens cooperation requirements between supervisory authorities, enhances the coordination role and the supervisory powers of the European Insurance and Occupational Pensions Authority (EIOPA), and expands the macroprudential toolkit available to national supervisory authorities.

(3) To become fully operational, the new regime requires further specifications of key quantitative parameters in delegated acts. Therefore, Delegated Regulation (EU) 2015/35 should be amended. The amendments to Delegated Regulation (EU) 2015/35 should contribute to the implementation of the Unions’ policy agenda on the Savings and Investments Union, and should help insurers enhance the competitiveness of the economy of the Union, as outlined in the Commission’s Competitiveness Compass (4). In particular, the potential of insurers to mobilise additional private capital in support of key Union objectives, including when investing together with public funds in the real economy, in particular through significant public guarantees or subsidies, should be recognised.

(4) Current prudential calibrations ensure a high level of policyholder protection and contribute significantly to financial stability. However, those calibrations can also be overly conservative, limiting insurers’ capacity to engage in long-term investments. To address that issue, the prudential framework should be revised to remove unjustified layers of prudence. While such revisions may result in higher own funds in excess of the solvency capital requirements, insurance and reinsurance undertakings are expected to support the Union’s broader policy objectives, by directing additional capital towards productive investments in the real economy.

(5) The Union faces massive financing needs to deliver on its already-agreed objectives on innovation, sustainable growth and defence (5). Directive (EU) 2025/2 has amended Directive 2009/138/EC, inter alia to ensure that the level of available capital in excess of the Solvency Capital Requirement is increased. It is important that national supervisory authorities and EIOPA monitor the use of that newly available capital considering the impact on the capital position of insurers over time. Expectations are that insurers direct excess capital to productive investments, including securitisation positions, that contribute to the funding of companies and the economy of the Union. The Commission will monitor whether such expectations are fulfilled and will assess the effectiveness of the reforms in particular as regards their impact on increasing the insurance sector participation in productive investments contributing to the funding of companies and the economy of the Union. In this context, EIOPA should regularly report to the European Commission, the European Parliament and the Council on (i) the allocation of assets, broken down by sector and geographical area; (ii) increases in distributions to shareholders, including share buy-backs, as well as variable remuneration to the administrative, management or supervisory body, key function holders or senior management, taking into account the newly available capital in excess of the Solvency Capital Requirement stemming from Directive (EU) 2025/2 and from this Regulation. The first report should be submitted by 31 December 2028.

(6) The Commission, together with EIOPA, will assess how sustainability risks related to fossil fuel assets and activities, including transition risks currently associated with high emissions but on a trajectory towards alignment with the Paris Agreement objectives, are managed by insurance and reinsurance undertakings. Where appropriate, the Commission will consider possible amendments to ensure that these emerging risks are adequately reflected in the prudential framework, taking into account developments in the framework for credit institutions, and the report delivered by EIOPA pursuant to Article 304c(1) of Directive 2009/138/EC. The Commission will also consider, as part of the forthcoming European Climate Adaptation Plan, whether prudential rules can be more conducive to issuances of or investments in catastrophe bonds and other green bonds.

(7) The requirement to obtain two credit assessments from nominated external credit assessment institutions (ECAIs) is in general justified by the complexity of assessing in a reliable manner the credit risk of securitisation positions. However, securitisations meeting the criteria of simplicity, transparency and standardisation (STS) are subject to a specific regulatory framework designed to ensure comparability and to reduce information asymmetries. For that reason, and to support the Union’s efforts to address unjustified administrative and compliance costs, it is appropriate to lift the double-rating requirement for STS securitisations, while maintaining it for other securitisations.

(8) Climate change related risks are long-term in nature, non-linear and systemic, making them challenging for insurance and reinsurance undertakings to estimate solely based on past data. Directive (EU) 2025/2 introduced new requirements on the management of climate change related risks and sustainability risks more generally. In particular, Article 45a of Directive 2009/138/EC as amended by Directive (EU) 2025/2 requires undertakings to identify any material exposure to climate change risks and, where relevant, to assess the impact of long-term climate change scenarios on their business. However, when it comes to the valuation or computation of capital requirements with an internal model, insurance and reinsurance undertaking often use data from past events to inform predictions on risks materialising in the future. Data from past events may not sufficiently capture climate change related trends. Forward looking assessments, including plausible climate scenarios, may therefore be necessary to assess how the risks evolve and to mitigate possible impacts. Where an insurance or reinsurance undertaking relies too heavily on past data, its best estimate for obligations to policy holders or its internal model, where applied, may underestimate obligations or relevant risks. It is therefore necessary to require undertakings to have in place internal procedures to avoid overreliance on data from past events in relation to climate-change related trends.

(9) The risk margin is currently calibrated conservatively. Directive (EU) 2025/2 reduces the cost-of-capital rate underlying the risk margin calculation, leading to an overall reduction in its level by approximately 21 %. Despite that amendment, the calculation formula set out in Delegated Regulation (EU) 2015/35 does not adequately reflect the natural decline of certain risks over time and may result in the double counting of such risks, including lapse and mortality. It is therefore necessary to introduce an exponential and time-dependent factor, which ensures an annual reduction of risks of at least 3,5 %. That adjustment is intended to correct the conservative bias in the current calibration, thereby reducing technical provisions of insurance and reinsurance undertakings, and, as a result, increasing the capital available to cover the Solvency Capital Requirement. However, to ensure that the risk margin continues to reflect an appropriate level of prudence and does not compromise policyholder protection, the reduction in the quantification of future risks resulting from that factor should be capped at 50 %.

(10) Directive (EU) 2025/2 amended the method for the extrapolation of risk-free interest rates. In particular, that Directive changed the approach for identifying the starting maturity of extrapolation (‘first smoothing point’). Article 77a(1) of Directive 2009/138/EC provides that the first smoothing point should correspond to a maturity for which the volume of outstanding bonds of that or a longer maturity is sufficiently high. Article 77a(3) of that Directive further specifies that the first smoothing point for the euro should be at a maturity of 20 years on 28 January 2025. Currently, the percentage threshold for determining a sufficient volume of bonds is set at 6 % for the euro. However, due to the increase in outstanding long-maturity bonds in recent years, that threshold may no longer point to a 20-year first smoothing point going forward. In addition, EIOPA will need to decide which data source it will use for that assessment, including the publication of information pursuant to Article 77e(1a) of Directive 2009/138/EC. To avoid market disruption, it is important that the percentage threshold is in such a way that it also results in a first smoothing point of 20 years at the application date of Directive (EU) 2025/2, regardless of the data source used by EIOPA. Therefore, the currency-related threshold used for the euro to assess whether the percentage of outstanding bonds with maturities equal to or greater than the first smoothing point referred to in Article 77a of Directive 2009/138/EC is sufficiently high, should be calculated as follows. A ‘safety margin’ of 1,5 % should be applied to the minimum percentage that results in a 20-year first smoothing point on 28 January 2025, based on the data source that EIOPA will use at the application date of new rules. The obtained percentage should be rounded up to the closest half-integer or integer percentage.

(11) The extrapolated forward rate should be equal to a weighted average between a liquid forward rate and the ultimate forward rate (UFR). Article 77a(1) of Directive 2009/138/EC provides that for maturities of at least 40 years past the first smoothing point, the weight of the UFR should be at least 77,5 %. That implies that the parameter determining the speed of the convergence of the forward rates towards the UFR of the extrapolation should not be lower than 11 %. Therefore, such value should be used. However, due to the specificities of the Swedish bond market, and as explained by EIOPA in its Opinion on the Solvency II review (6), the use of such a value for the Swedish krona, would result in a significant and unintended distortion of the risk-free interest rate term structure. To preserve the integrity of the risk-free interest term structure, a convergence parameter of 40 % should apply for that currency.

(12) Directive (EU) 2025/2 amended the rules governing the volatility adjustment by requiring that the volatility adjustment is subject to supervisory approval and by requiring that its calculation takes into account undertaking-specific characteristics related to the spread sensitivity of assets and the interest rate sensitivity of the best estimate of technical provisions. In addition, the volatility adjustment is not to reflect the portion of the spreads that is attributable to a realistic assessment of expected losses or unexpected credit or other risk. Article 77d(3) of Directive 2009/138/EC as amended by Directive (EU) 2025/2 provides that such portion is to be calculated as percentage of the spreads, and is to decrease as spreads increase. Empirical economic studies confirm that for corporate bonds, the major part of spreads reflect genuine credit risk, in particular where spreads are at low-to-medium levels. Therefore, where spreads on corporate bonds and loans do not exceed their long-term average, the percentage applied to determine the risk correction should not be lower than 50 %.

(13) To ensure the volatility adjustment operates in a countercyclical manner, the risk correction should not exceed an appropriate share of long-term average spreads. Where that percentage is too low, the volatility adjustment could unduly neutralise an increase in spreads stemming from genuine deterioration of the credit worthiness of bond issuers, thereby overstating the solvency position of insurance or reinsurance undertakings during periods of short-term market stress. Therefore, to ensure that the volatility adjustment effectively stabilises the solvency position of insurance or reinsurance undertakings without distorting risk sensitivity, the maximum level of the risk correction should not be set too low.

(14) Article 70(1) Delegated Regulation (EU) 2015/35 provides that when calculating their available own funds, insurance and reinsurance undertakings are to deduct foreseeable dividends, distribution and charges from the excess of assets over liabilities. However, Delegated Regulation (EU) 2015/35 does not specify how the deduction should be made. In particular, while certain undertakings progressively accrue foreseeable dividends during the financial year, others immediately deduct the full amount of yearly foreseeable dividends. To ensure a level-playing field, insurers should use an accrual approach when determining the amount of foreseeable dividends to be deducted when calculating their available own funds.

(15) Article 69, point (a)(i), of Delegated Regulation (EU) 2015/35 provides that paid-in ordinary shares capital and the related share premium account are eligible as tier 1 basic own-fund items where their repayment or redemption is subject to prior supervisory approval. Such a requirement may create undue administrative and regulatory burden where an insurance or reinsurance undertaking executes a share buy-back programme with the objective of immediately using the bought shares for the exercise stock options. It should therefore be specified that where the repayment or redemption of basic own fund items aims at exercising stock option rights within no more than one month from the date of the share buyback, such repayment or redemption should not be subject to prior supervisory approval.

(16) Pursuant to Article 77b(1), point (b), of Directive 2009/138/EC, insurance and reinsurance undertakings that use the matching adjustment have to identify, organise and manage the assigned portfolio of assets and obligations separately from other parts of the business and are therefore not permitted to meet risks arising elsewhere in the business using the assigned portfolio of assets. However, the separated management of the portfolio does not result in an increase in correlation between the risks within that portfolio and those within the rest of the undertaking. Therefore, insurance and reinsurance undertakings which use the matching adjustment should not be required to calculate a distinct notional solvency capital requirement for the portfolio of assets and obligations to which the matching adjustment is applied, unless the portfolios of assets covering a corresponding best estimate of insurance or reinsurance obligations form a ring-fenced fund.

(17) Article 84(4) of Delegated Regulation (EU) 2015/35 provides that the ‘look-through’ approach should apply to related undertakings that mainly act as investment vehicles on behalf of the participating insurance or reinsurance undertaking. However, that wording may unduly exclude related undertakings that manage assets on behalf of several undertakings within the same insurance or reinsurance group. That creates a regulatory gap and risks inconsistent application of the ‘look-through’ principle. Article 84(4) of Delegated Regulation (EU) 2015/35 should therefore be amended to specify that the ‘look-through’ approach also applies where the related investment vehicle manages assets on behalf of multiple undertakings within the group, and not only on behalf of the participating undertaking itself.

(18) Rules governing the calculation of the counterparty default risk module, including the risk-mitigating effect of derivatives, reinsurance arrangements or insurance securitisation can prove to be very complex. Such complex calculations may not always be commensurate to the nature, scale, and complexity of the risks of an insurance or reinsurance undertaking. Therefore, to reduce compliance costs for smaller undertakings, an additional simplified calculation of the risk-mitigating effect of derivatives, reinsurance arrangements or securitisation should be introduced.

(19) Insurance and reinsurance undertakings may opt to transfer risks using non-proportional reinsurance arrangements. However, where the standard formula is used, such type of reinsurance arrangement is not appropriately reflected as a risk-mitigation technique to reduce the Solvency Capital Requirements. It is therefore necessary to lay down that certain forms of reinsurance, in particular adverse development covers allowing to transfer reserve risk, can be recognised in a simple manner under the standard formula.