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S.I. No. 380/2006 - European Communities (Reinsurance) Regulations 2006

Type Statutory Instrument

Publication 2006-07-13

Last updated 2015-11-20

State Partially repealed superseded text

Text As published

Source Irish Statute Book

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This is the act as published. Later amendments are not folded into the text below: each one is a separate act in this repository and an entry in this law's history.

9 amending acts · 2015-11-20, Finance (Miscellaneous Provisions) Act 2015

Reform history JSON API

S.I. No. 380 of 2006

REGULATIONS

entitled

EUROPEAN COMMUNITIES (REINSURANCE) REGULATIONS 2006

ARRANGEMENT OF REGULATIONS

PART 1 PRELIMINARY PROVISIONS

Section


1.	Citation and commencement
2.	Object of these Regulations
3.	Interpretation
4.	Scope of these Regulations

PART 2 RESTRICTIONS ON CARRYING ON REINSURANCE BUSINESS


5.	Carrying on of reinsurance business prohibited unless authorised or exempt
6.	Reinsurance undertaking restricted to carrying on kind of reinsurance business permitted by its authorisation

PART 3 AUTHORISATION OF REINSURANCE UNDERTAKINGS


7.	Who is eligible to apply for a reinsurance authorisation?
8.	Eligible undertakings may apply for an authorisation to carry on reinsurance business
9.	Schemes of operations for reinsurance undertakings
10.	Bank to grant or refuse application for reinsurance authorisation
11.	Reinsurance undertakings taken to be authorised if carrying on business before 10 December 2005
12.	Power to impose, vary and revoke conditions of reinsurance authorisation
13.	Effect of reinsurance authorisation
14.	Cancellation of authorisation on application of reinsurance undertaking
15.	Cancellation of authorisation otherwise than on application of reinsurance undertaking.
16.	Partial cancellation of authorisation otherwise than on application of reinsurance undertaking
17.	Cancellation of reinsurance authorisation taken to have been granted under Regulation 11
18.	Consequences of cancellation of authorisation of reinsurance undertaking

PART 4 REGULATION OF REINSURANCE UNDERTAKINGS


19.	Application of this Part to authorised reinsurance undertakings
20.	Reinsurance undertakings established in the State to maintain sound and adequate administrative and accounting procedures and internal control mechanisms
21.	Reinsurance undertaking to lodge certain annual returns and other statistical documents with the Bank
22.	Transfer of reinsurance undertaking's policy portfolio prohibited without authorisation of the Bank
23.	Reinsurance undertaking to establish and maintain technical reserves, solvency margin and guarantee fund
24.	Reinsurance undertaking to establish and maintain equalisation reserve
25.	Bank may give directions for determining liabilities of authorised reinsurance undertaking
26.	Reinsurance undertaking to cover its technical and equalisation reserves by equivalent assets
27.	Reinsurance undertaking required to keep register of assets

PART 5 RESTRICTIONS ON OPERATING SPECIAL PURPOSE REINSURANCE VEHICLES


28.	Operation of SPRVs prohibited unless authorised
29.	SPRV restricted to transacting reinsurance business of a kind permitted by its authorisation

PART 6 AUTHORISATION OF SPRVs


30.	Applications to operate SPRVs
31.	Bank to grant or refuse application for SPRV
32.	SPRVs taken to be authorised if operating before 10 December 2005
33.	Power to impose, vary and revoke conditions of SPRV authorisation
34.	Effect of SPRV authorisation
35.	Cancellation of authorisation on application of SPRV
36.	Cancellation of authorisation otherwise than on application of person operating a SPRV
37.	Consequences of cancellation of SPRV authorisation under corresponding law of another Member State

PART 7 OPERATION OF SPRVs


38.	SPRV to comply with certain requirements
39.	Bank may make rules specifying solvency requirements for SPRVs

PART 8 ACQUISITION AND DISPOSAL OF QUALIFYING HOLDINGS IN REINSURANCE UNDERTAKINGS AND SPRVs


40.	Interpretation: Part 8
41.	Restrictions on acquiring and disposing of qualifying holdings in reinsurance undertakings and SPRVs
42.	Bank to consult with other competent authorities in certain cases
43.	Obligation of reinsurance undertaking or SPRV to provide information
44.	Bank may oppose certain acquisitions
45.	Power of Court to make certain orders

PART 9 AUDITING OF ACCOUNTS OF REINSURANCE UNDERTAKINGS AND SPRVs


46.	Responsibilities of auditors in respect of reinsurance undertakings and SPRVs
47.	Bank may require auditor of reinsurance undertaking or SPRV to provide information
48.	Auditor not liable to reinsurance undertaking or SPRV etc. for having complied with this Part

PART 10 PROVISIONS APPLICABLE TO BOTH REINSURANCE UNDERTAKINGS AND SPRVs


49.	Bank to keep Register of Authorised Reinsurance Undertakings and SPRVs
50.	Rights of appeal against certain Bank decisions made under these Regulations
51.	Consequences of cancellation of authorisation as regards other Member States

PART 11 RESPONSIBILITIES OF THE BANK UNDER THESE REGULATIONS


52.	Responsibilities of Bank with respect to authorised reinsurance undertakings and SPRVs established in the State
53.	Bank to be responsible for enforcing continued compliance with obligations
54.	Bank to collaborate with other competent authorities and the European Commission
55.	Bank to consult with other competent authorities before granting authorisation or when assessing compliance with conditions
56.	Bank to notify competent authority of other Member State of belief that reinsurance undertaking or SPRV of that State may be financially unsound
57.	Limitations on Bank with respect to its supervisory functions under these Regulations

PART 12 SPECIAL POWERS OF BANK TO DEAL WITH CERTAIN MATTERS


58.	Consequences of failing to comply with provision of Part 4
59.	Reinsurance undertaking to provide financial recovery plan if required to do so by the Bank
60.	Consequences of failure of SPRV to comply with certain provisions

PART 13 SPECIAL PROVISIONS WITH RESPECT TO FINITE REINSURANCE CONTRACTS


61.	Powers of Bank with respect to finite reinsurance activities undertaken by reinsurance undertakings and SPRVs
62.	Regulation of finite reinsurance contracts

PART 14 RELATIONS INVOLVING REINSURANCE UNDERTAKINGS AND SPRVs ESTABLISHED IN OTHER MEMBER STATES


63.	Competent authority of other Member State empowered to undertake verification of information about reinsurance undertakings and SPRVs established in the State
64.	Bank entitled to take measures to prevent irregularities involving reinsurance undertakings and SPRVs established in other Member States
65.	Competent authority of other Member State entitled to request Bank to respond appropriately against reinsurance undertakings and SPRVs established in the State

PART 15 RELATIONS INVOLVING THIRD COUNTRIES


66.	Treatment of reinsurance undertakings established in third countries
67.	Bank to ensure obligations of European Communities under international agreements are complied with
68.	Bank may enter into agreement with responsible authority of third country
69.	Bank to notify European Commission of authorisations and acquisitions of reinsurance undertakings governed by laws of third country
70.	Minister to notify European Commission of difficulties encountered by reinsurance undertakings in establishing or carrying on business in third country

PART 16 ENFORCEMENT OF REGULATIONS


71.	Enforcement powers of the Bank
72.	Appointment of authorised officers
73.	Powers of authorised officers
74.	Warrant required to enter private dwelling
75.	Offence to obstruct authorised officers
76.	Offence to provide false or misleading information in purported compliance with direction or requirement under these Regulations
77.	Liability of officers of undertaking for offences committed by the undertaking
78.	Penalties for offences under these Regulations
79.	Prosecution of offences under these Regulations
80.	Power of the Court to make enforcement orders

PART 17 MISCELLANEOUS PROVISIONS


81.	Power to amend or revoke rules
82.	Publication of rules, etc
83.	Consequences of certain reinsurance undertakings and SPRVs being wound up
84.	Consequential amendment of Central Bank Act 1942
85.	Consequential amendment of Insurance Act 1989

SCHEDULE 1 DETERMINATION OF REQUIRED SOLVENCY MARGIN


1.	Solvency margin required for reinsurance undertakings
2.	Bank may authorise repayment of certain loans in certain circumstances
3.	Other amounts that may be included in an undertaking's solvency margin
4.	Reductions in available solvency margin
5.	Required solvency margin to be determined either on premium basis or claims basis
6.	Determination of solvency margin on premium basis
7.	Determination of solvency margin on claims basis
8.	Reduction of fractions
9.	Solvency margin for life reinsurance undertaking
10.	Solvency margin for a reinsurance undertaking conducting simultaneously non-life and life reinsurance

SCHEDULE 2 GUARANTEE FUNDS


1.	What a reinsurance undertaking's guarantee fund must contain
2.	Minimum amounts for reinsurance undertaking's guarantee fund

I, Brian Cowen, Minister for Finance, in exercise of the powers conferred on me by section 3 of the European Communities Act 1972 (No. 27 of 1972), as amended by the European Communities (Amendment) Act 1993 (No. 25 of 1993), and for the purpose of giving effect to Directive 2005/68/EC,¹ dated 16 November 2005, of the European Parliament and of the Council, hereby make the following Regulations:

PART 1 PRELIMINARY PROVISIONS

Citation and commencement

(1) These Regulations may be cited as the European Communities (Reinsurance) Regulations 2006.

(2) These Regulations come into operation on 15 July 2006.

Object of these Regulations

The object of these Regulations is to give effect to Directive 2005/68/EC of the European Parliament and of the Council dated 16 November 2005 on reinsurance, and amending Council Directives 73/239/EEC, 92/49/EEC, 98/78/EC and 2002/83/EC, and in particular, to establish a prudential regulatory framework for reinsurance activities and an internal market with respect to the conduct of those activities within the reinsurance sector.

Interpretation

(1) In these Regulations, unless the context otherwise requires—

“aggregate limit”, in relation to a SPRV contract, means the maximum amount payable to the ceding insurance undertaking or reinsurance undertaking under the contract;

“authorised officer” means a person holding office as an authorised officer under Regulation 72;

“authorised reinsurance undertaking” means a reinsurance undertaking—

(a) authorised, or taken to be authorised, by the Bank under these Regulations, or

(b) authorised, or taken to be authorised, under a corresponding law of another Member State;

“authorised SPRV” means a SPRV—

(a) authorised, or taken to be authorised, by the Bank under these Regulations, or

(b) authorised, or taken to be authorised, under a corresponding law of another Member State;

“Bank” means the Central Bank and Financial Services Authority of Ireland constituted under the Central Bank Act 1942 ;

“Capital Adequacy Directive” means Council Directive 93/6/EEC on the capital adequacy of investments firms and credit institutions;

“captive reinsurance undertaking” means a reinsurance undertaking owned—

(a) by a financial undertaking (other than an insurance undertaking, a reinsurance undertaking, or a group of insurance or reinsurance undertakings, to which the Supplementary Supervision of Grouped Insurance Undertakings Directive applies), or

(b) by a non-financial undertaking,

the purpose of which is to provide reinsurance cover that is limited exclusively to the risks of the undertaking or undertakings to which the reinsurance undertaking belongs, or of an undertaking or undertakings of the group of which the reinsurance undertaking is a part;

“cession” means a transaction under which a person reinsures another person in respect of risks insured or reinsured by that other person;

“chief executive”, in relation to a reinsurance undertaking or SPRV, means irrespective of the person's actual title, the person who has overall responsibility for the day-to-day operation of the undertaking or SPRV;

“close links” means a situation in which 2 or more persons are linked—

(a) by a participating interest, or

(b) by control in those cases referred to in Article 1(1) and (2) of the Group Consolidated Accounts Directive or by a similar relationship existing between a person and an undertaking;

“Companies Acts” means the Companies Act 1963 and any Act that is required to be read as one with that Act or with any Act that amends that Act;

“company”, except when qualified by “European”, means a company within the meaning of the Companies Acts;

“competent authority”—

(a) in relation to the State, means the Bank, and

(b) in relation to another Member State, means the authority that is empowered by a law of that State to supervise the conduct of reinsurance business carried on by reinsurance undertakings in that State;

“control” means—

(a) the relationship between a parent undertaking and a subsidiary, as defined in Article 1 of the Group Consolidated Accounts Directive, or

(b) a similar relationship between a person and an undertaking;

“control relationship”, in relation to a reinsurance undertaking or SPRV, means a control relationship as defined in Article 1(1) and (2) of the Group Consolidated Accounts Directive;

“corresponding law”, in relation to another Member State, means a law of that State that corresponds to these Regulations;

“country” includes a territory that is a separate dependency of a country;

“Court” means the High Court;

“credit institution” has the meaning given by the Credit Institutions Directive;

“Credit Institutions Directive” means Directive 2000/12/EC relating to the taking up and pursuit of the business of credit institutions;

“credit insurance risks” means those risks that are included in Class 14 in Part A of the Annex to the Non-life Insurance Business Directive;

“eligible undertaking” means a person that satisfies the requirements of Regulation 7;

“entire business”, in relation to a reinsurance undertaking, includes business carried on by the undertaking in a third country;

“established”, in relation to a reinsurance undertaking, has the meaning given by paragraph (2);

“exempt undertaking” means any of the following:

(a) an insurance undertaking to which the Non-life Insurance Business Directive applies;

(b) a life assurance undertaking to which the Life Assurance Business Directive applies;

(d) a body referred to in Article 3 of the Life Assurance Business Directive;

(e) a reinsurance undertaking or SPRV established in a third country that does not have a place of business in the State and is not required by the corresponding law of another Member State to be authorised under that law;

(f) subject to section 4(6), if a reinsurance undertaking whose head office is established in a third country maintains a branch in the State, the branch;

“European company” means a company as defined by Council Regulation (EC) No 2157/2001;²

“Financial Conglomerates Directive” means 2002/87/EC on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate, and amending the Non-life Insurance Business Directive, Directive 79/267/EEC³ , Directive 92/49/EEC⁴ , the Capital Adequacy Directive and the Investment Services Directive, and the Supplementary Supervision of Grouped Insurance Undertakings Directive and the Credit Institutions Directive;

“financial sector activities” means activities within the meaning of Article 2, point 8 of the Financial Conglomerates Directive;

“financial undertaking” means one of the following entities:

(a) a credit institution, a financial institution or an ancillary banking services undertaking within the meaning of Article 1(5) and (23) of the Credit Institutions Directive;

(b) an insurance undertaking, a reinsurance undertaking or an insurance holding company within the meaning of Article 1(i) of the Supplementary Supervision of Grouped Insurance Undertakings Directive;

(c) an investment firm or a financial institution within the meaning of point 1 of Article 4(1) of the Markets in Financial Instruments Directive;

(d) a mixed financial holding company within the meaning of Article 2(15 of the Financial Conglomerates Directive;

“finite reinsurance” means reinsurance under which the explicit maximum loss potential, expressed as the maximum economic risk transferred, arising both from a significant underwriting risk and a timing risk transfer, exceeds the premium over the lifetime of the contract, by a limited but significant amount, together with at least one of the following features:

(a) explicit and material consideration of the time value of money;

(b) contractual provisions to moderate the balance of economic experience between the parties over time to achieve the target risk transfer;

“fully funded”—

(a) in relation to a SPRV contract that specifies an aggregate limit, means that—

(i) the market value of the assets as held in trust or as otherwise held under the terms of the contract by or on behalf of the SPRV for the benefit of the counterparty to the contract, or

(ii) the value of a letter of credit established by or on behalf of the SPRV for the benefit of the counterparty,

equals or exceeds that limit, and

(b) in relation to a SPRV contract that does not specify an aggregate limit means that—

(i) the market value of the assets, as held in trust or as otherwise held under the terms of the contract by or on behalf of the SPRV for the benefit of the counterparty to the contract, or

(ii) the value of a letter of credit established by or on behalf of the SPRV for the benefit of the counterparty,

equals or exceeds the projected economic reserve requirements of the SPRV under the contract as determined from time to time on an actuarial basis;

“Group Consolidated Accounts Directive” means Directive 83/349/EEC on the preparation of consolidated accounts for undertakings that are part of a group;

“Insurance Accounts Directive” means Directive 91/674/EEC on the annual accounts and consolidated accounts of insurance undertakings;

“investment firm” has the meaning given by the Markets in Financial Instruments Directive;

“Investment Services Directive” means Council Directive 93/22/EEC on investment services in the securities field;

“law” includes regulations and other kinds of subordinate legislation;

“Life Assurance Business Directive” means Directive 2002/83/EC on life insurance;

“Markets in Financial Instruments Directive” means Directive 2004/39/EC on markets in financial instruments;

“Member State” means a Member State of the European Communities;

“Non-life Insurance Business Directive” means the First Council Directive 73/239/EEC on the co-ordination of laws, regulations and administrative provisions relating to the taking-up and pursuit of the business of direct insurance other than life assurance;

“officer”, in relation to a reinsurance undertaking or SPRV, means—

(a) a director of the undertaking or SPRV, or

(b) the chief executive or secretary of the undertaking or SPRV, or

(c) any other person who makes, or participates in making, decisions that affect the whole or a substantial part, of the business of the undertaking or SPRV unless that person's participation is attributable to advice that the person has given in a professional capacity;

“parent undertaking” means a parent undertaking as defined in Articles 1 and 2 of the Group Consolidated Accounts Directive;

“participating interest”, in relation to an undertaking, means the ownership, direct or by way of control, of 20 per cent or more of the voting rights or capital of the undertaking;

“publish” includes posting information on an Internet Website;

“qualifying holding”—

(a) in relation to a reinsurance undertaking, means a direct or indirect holding that—

(i) represents 10 per cent or more of the capital of, or voting rights in the undertaking, or

(ii) makes it possible to exercise a significant influence over the management of the undertaking, or

(b) in relation to an SPRV, means a direct or indirect shareholding that—

(i) represents 10 per cent or more of the share capital of, or voting rights attaching to shares in, the SPRV, or

(ii) makes it possible to exercise a significant influence over the management of the SPRV;

“records” includes books and all other kinds of documents, and also includes—

(a) information kept in a non-legible form (whether electronically or otherwise) that is capable of being reproduced in a legible form, and

(b) the means (if any) by which the information is capable of being reproduced;

“Register” means the Register of Reinsurance Undertakings and Special Purpose Reinsurance Vehicles kept under Regulation 49;

“reinsurance” means the activity consisting of accepting risks ceded by an insurance undertaking, or by another reinsurance undertaking, and includes reassurance;

“reinsurance authorisation” means an authorisation granted to, and held by, a reinsurance undertaking;

“reinsurance business” means a business in the course of which reinsurance is provided;

“Reinsurance Directive” means Directive 2005/68/EC on reinsurance;

“reinsurance undertaking” means a person who carries on a business in the course of which reinsurance is provided;

“retrocession” means a transaction under which a reinsurance undertaking or SPRV cedes to another reinsurance undertaking or to an insurance undertaking or SPRV all or part of the risk that the first-mentioned undertaking has, as a result of a cession, assumed in respect of particular insurance contracts entered into by an insurance undertaking;

“special purpose reinsurance vehicle” means an undertaking (whether incorporated or not) that—

(a) assumes risks from insurance undertakings or reinsurance undertakings under reinsurance contracts, and

(b) fully funds its exposures to those risks through the proceeds of a debt issue or some other financing arrangement under which the repayment rights of the providers of the debt or financing arrangement are subordinated to the reinsurance obligations of the undertaking,

but does not include an authorised insurance undertaking or authorised reinsurance undertaking;

“SPRV” means a special purpose reinsurance vehicle;

“SPRV authorisation” means an authorisation granted to, and held by, a SPRV;

“SPRV contract” means a contract between a SPRV and a ceding insurance undertaking or reinsurance undertaking under which the SPRV agrees, in accordance with the terms of the contract, to make one or more payments to the undertaking if a triggering event should occur;

“Stock Exchange Listings Directive” means Directive 2001/34/EC on the admission of securities to official stock exchange listing and on information to be published on those securities;

“subsidiary” means—

(a) a subsidiary undertaking as defined in Articles 1 and 2 of the Group Consolidated Accounts Directive, or

(b) a subsidiary undertaking of another undertaking that is a subsidiary of a parent undertaking;

“Supplementary Supervision of Grouped Insurance Undertakings Directive” means Directive 98/78/EC on the supplementary supervision of insurance undertakings in an insurance group;

“third country” means a country that is not a Member State;

“triggering event”, in relation to a SPRV contract, means an event or condition specified in the contract, that would oblige the SPRV to make one or more payments to the ceding insurance undertaking or reinsurance undertaking under the contract.

(2) For the purposes of these Regulations—

(a) an undertaking is established in the State if it has both its head office and its registered office located in the State, and

(b) an undertaking is established in another Member State if it has both its head office and its registered office located in that other State.

(3) For the purposes of these Regulations, a reinsurance business is carried on in the State even if the risks associated with the business arise wholly or partly outside the State provided the business is transacted in or from the State.

(4) In these Regulations—

(a) a reference to a reinsurance undertaking established in another Member State carrying on reinsurance business in the State includes carrying on that business through an agency or branch of the undertaking or by maintaining a permanent presence in the State, even if that presence does not take the form of a branch or agency, but consists merely of an office managed by the undertaking's own staff or by a person who is independent but has permanent authority to act for the undertaking, and

(b) a reference to a reinsurance undertaking established in the State carrying on reinsurance business in another Member State includes carrying on that business through an agency or branch of the undertaking or by maintaining a permanent presence in that other State, even if that presence does not take the form of a branch or agency, but consists merely of an office managed by the undertaking's own staff or by a person who is independent but has permanent authority to act for the undertaking, and

(c) a reference to a SPRV established in another Member State operating in the State includes operating through an agency or branch of the SPRV or by maintaining a permanent presence in the State, even if that presence does not take the form of a branch or agency, but consists merely of an office managed by the SPRV's own staff or by a person who is independent but has permanent authority to act for the SPRV and

(d) a reference to a SPRV established in the State operating in another Member State includes operating through an agency or branch of the SPRV or by maintaining a permanent presence in that other State, even if that presence does not take the form of a branch or agency, but consists merely of an office managed by the SPRV's own staff or by a person who is independent but has permanent authority to act for the SPRV, and

(e) a reference to a reinsurance undertaking established in another Member State carrying on business in the State includes providing the services of that business from a place of business outside the State to a person in the State, and

(f) a reference to a SPRV established in another Member State operating in the State includes providing the services of that SPRV from a place of business outside the State to a person in the State.

(5) For the purposes of the definition of “close links” in paragraph (1)—

(a) a subsidiary undertaking of a subsidiary undertaking is to be treated as a subsidiary of the parent undertaking that is at the head of those undertakings, and

(b) a situation in which 2 or more persons are permanently linked to the same person by a control relationship is to be treated as being a close link between those persons.

(6) For the purposes of the definition of “qualifying holding” in paragraph (1), the voting rights referred to in Article 92 of Stock Exchange Listings Directive are to be taken into account.

(7) If a word or expression used in these Regulations is defined in the Reinsurance Directive, then, unless the context otherwise requires or these Regulations otherwise provide, the word or expression has the same meaning as it has in the Reinsurance Directive.

(8) Notes appearing in the text are provided for information only and do not form part of these Regulations.

Scope of these Regulations

(1) Except as provided by paragraphs (2) to (4), these Regulations apply to all persons who undertake reinsurance business or operate as a SPRV within the State.

(2) Except as expressly provided, these Regulations do not apply to or in relation to an exempt undertaking.

(3) These Regulations do not apply to or in relation to the following activities:

(a) an activity referred to in Article 2 or 3 of the Non-life Insurance Business Directive;

(b) an activity referred to in Article 3 of the Life Assurance Business Directive;

(c) reinsurance conducted or fully guaranteed by the government of a Member State when it is acting, for reasons of substantial public interest, as a reinsurer of last resort (including when it is so acting because it is not feasible in the market in which it is acting to obtain adequate commercial cover).

(4) These Regulations do not apply to a reinsurance undertaking or SPRV established in the State if not later than 10 December 2007,⁵ the undertaking or SPRV—

(a) has ceased to enter into new reinsurance contracts or SPRV contracts and

(b) exclusively administers its existing portfolios of reinsurance contracts or SPRV contracts only in order to wind up its reinsurance or SPRV business.

(5) As soon as practicable after 10 December 2007, the Bank shall—

(a) prepare a list of those reinsurance undertakings and SPRVs that, to the Bank's knowledge, are no longer subject to these Regulations because of paragraph (4), and

(b) send a copy of the list to each of the competent authorities of all the other Member States.

(6) If a reinsurance undertaking whose head office is established in a third country maintains a branch in the State and the Bank determines on reasonable grounds that the undertaking is failing, or has failed, to comply with a requirement or condition imposed on the branch under section 22A of the Insurance Act 1989 , the branch, on being notified in writing of the determination, ceases to be an exempt undertaking for the purposes of these Regulations.

PART 2 RESTRICTIONS ON CARRYING ON REINSURANCE BUSINESS

Carrying on of reinsurance business prohibited unless authorised or exempt

(1) A person may carry on reinsurance business in the State only if the person is an authorised reinsurance undertaking, an authorised SPRV or an exempt undertaking.

(2) A person who carries on reinsurance business in contravention of paragraph (1) commits an offence.

(3) If a person is found guilty of an offence under paragraph (2), the Bank shall take all reasonably practicable measures to ensure that the person ceases to carry on reinsurance business within the State and within every other Member State.

Reinsurance undertaking restricted to carrying on kind of reinsurance business permitted by its authorisation

(1) A reinsurance undertaking (other than an exempt undertaking) may carry on in the State reinsurance business of a particular kind only if it is an authorised reinsurance undertaking and the authorisation extends to that kind of business.

(2) A reinsurance undertaking that carries on reinsurance business in contravention of paragraph (1) commits an offence.

(3) If a reinsurance undertaking is found guilty of an offence under paragraph (2) the Bank shall take all reasonably practicable measures to ensure that the undertaking ceases to carry on within the State and within every other Member State the kind of reinsurance business to which the contravention relates.

PART 3 AUTHORISATION OF REINSURANCE UNDERTAKINGS

Who is eligible to apply for a reinsurance authorisation?

(1) A person is eligible to apply to the Bank for a reinsurance authorisation only if it is an undertaking that—

(a) has both its head office and its registered office located in the State, and

(b) is—

(i) a company limited by shares or guarantee or an unlimited company, or

(ii) a European company.

(2) An authorised reinsurance undertaking established in the State can apply to the Bank to extend its authorisation to another kind of reinsurance activity.

Eligible undertakings may apply for an authorisation to carry on reinsurance business

(1) An eligible undertaking may apply to the Bank for a reinsurance authorisation in accordance with this Regulation.

(2) An application must—

(a) specify the kind of reinsurance business that the applicant proposes to carry on and contain such information with respect to the applicant as is indicated on a form provided or approved by the Bank, and

(b) be accompanied by or include satisfactory information about the identities of—

(i) the persons who are or will be officers of the undertaking, and

(ii) those persons who have qualifying holdings (whether direct or indirect) in the undertaking, the amounts of those holdings, and the qualifications of those persons, and

(d) be accompanied by or include a scheme of operations that complies with Regulation 9, and

(e) contain such other information, and be accompanied by such documents, as the Bank reasonably requires, and

(f) be accompanied by the fee (if any) prescribed under section 33K of the Central Bank Act 1942 for the purposes of this section.

(3) In considering an application made by an undertaking under this Regulation the Bank may, by written notice given to the undertaking, require the undertaking to provide such additional information and documents as are reasonably necessary to enable the application to be determined. Among the kinds of information that may be required under this paragraph is information about persons who hold shares or any other interest in the undertaking.

(4) If such a requirement is not complied with within a period specified in the notice (being not less than 28 days) the Bank may summarily reject the application.

Schemes of operations for reinsurance undertakings

(1) The scheme of operations referred to in Regulation 8(2)(d) must contain particulars or proof concerning the following matters:

(a) the nature of the risks that the undertaking proposes to cover, and

(b) reinsurance arrangements that the undertaking proposes to make with ceding undertakings, and

(c) the principles that will guide the undertaking when retroceding reinsurance business to insurance undertakings or other reinsurance undertakings, and

(d) the establishment by the undertaking of a guarantee fund that complies with Schedule 2, and

(e) an estimate of the costs likely to be incurred by the undertaking in establishing administrative services, making arrangements for securing reinsurance business and obtaining the financial resources necessary to meet those costs.

(2) In respect of the period of 3 years immediately following the date of the application, the scheme of operations must also contain the following information:

(a) estimates of management expenses (other than installation costs) that the undertaking is likely to incur during that period;

(b) estimates of the amounts of premiums or contributions, and claims that the undertaking reasonably expects to receive during that period;

(d) estimates of the financial resources that the undertaking intends to set aside to cover underwriting liabilities and the solvency margin during that period.

(3) In paragraph (2), “management expenses” includes current general expenses and commissions.

Bank to grant or refuse application for reinsurance authorisation

10.

(1) Subject to paragraphs (3) and (4), the Bank shall grant an application for a reinsurance authorisation if satisfied that—

(a) the applicant is an eligible undertaking, and

(b) the application complies with Regulation 8, and

(d) the applicant has established or has, to the satisfaction of the Bank made arrangements to establish a guarantee fund that complies with Schedule 2.

(2) In paragraph (1)(c), “related operations” includes acting as a holding company and undertaking financial sector activities within the meaning of the Supplementary Supervision of Regulated Entities Directive.

(3) The Bank shall refuse an application for a reinsurance authorisation if it is satisfied that—

(a) the applicant is not of good repute or is not, or will not be, able to fulfil in a proper manner, the responsibilities that are imposed on authorised reinsurance undertakings by or under these Regulations, or

(b) any officer of the applicant is not a person of good repute, or

(c) the officers of the applicant do not have the professional qualifications and experience necessary to operate a reinsurance undertaking, or

(d) any person who has a qualifying holding in the applicant is not of good repute, or

(e) the undertaking or any of its officers has, during the immediately preceding 5 years, been convicted of an offence involving breach of trust, fraud or dishonesty, or

(f) any officer of the undertaking is prohibited from being or acting as an officer of a reinsurance undertaking or SPRV under a law of another Member State, or

(g) any officer of the undertaking is prohibited from being or acting as an officer of a reinsurance undertaking or a SPRV under a law of a third country in which, in the opinion of the Bank, there exists a regulatory regime equivalent to these Regulations.

(4) The Bank shall also refuse such an application if satisfied that—

(a) close links that exist between the applicant and other persons, or

(b) a law or administrative provision of a third country that governs one or more persons with which the applicant has close links, or

would prevent or inhibit the effective exercise of the Bank's supervisory functions under these Regulations.

(5) In granting an authorisation, the Bank shall specify whether the holder of the authorisation is authorised to carry on—

(a) a non-life reinsurance business, or

(b) a life reinsurance business, or

(6) A reinsurance authorisation—

(a) must be in a form that will enable any interested party, by consulting the Register, to verify that the undertaking concerned is authorised to carry on a reinsurance business in the State and in any other Member State and to ascertain the kind of reinsurance business that is authorised, and

(b) whether or not any other information is included, must specify the undertaking's name and the addresses of its head office and registered office.

(7) The Bank may not refuse an application for a reinsurance authorisation without giving the applicant an opportunity to make representations in writing as to why the application should be granted.

(8) If the Bank refuses such an application, it shall promptly give to the applicant a written notice of refusal, which must include a statement setting out the reasons for the refusal.

(9) On granting a reinsurance authorisation under this Regulation, the Bank shall record in the Register the relevant particulars of the reinsurance undertaking concerned and the kind of reinsurance business that that undertaking is authorised to carry on.

Reinsurance undertakings taken to be authorised if carrying on business before 10 December 2005

11.

(1) A reinsurance undertaking established in the State that, immediately before 10 December 2005,⁶ had a right to carry on a reinsurance business is taken to be the holder of a reinsurance authorisation granted by the Bank that authorises the undertaking to carry on the same kind of reinsurance business as it had a right to carry on immediately before that commencement, subject to compliance with paragraph (2).

(2) Not later than 10 December 2007, every reinsurance undertaking to which paragraph (1) applies shall satisfy the Bank that the undertaking has complied with the following requirements:

(a) the undertaking is incorporated as—

(i) a company limited by shares or guarantee or an unlimited company, or

(ii) a European company;

(b) the undertaking's objects limit its operations to carrying on reinsurance business and related operations;

(d) the officers of the undertaking are persons of good repute and have the professional qualifications and experience necessary to operate a reinsurance undertaking;

(e) both the head office and registered office of the undertaking are located in the State;

(f) no close links between the undertaking and other persons exist that would prevent or inhibit the effective exercise of the Bank's supervisory functions under these Regulations;

(g) the undertaking has established, and is maintaining, technical reserves and an adequate solvency margin in accordance with Regulation 23;

(h) if the undertaking underwrites credit insurance risks, it has established and is maintaining, an equalisation reserve in accordance with Regulation 24;

(i) the undertaking has invested, and is continuing to invest, the assets that cover the technical reserves and equalisation reserve in accordance with Regulation 26.

(3) In paragraph (2)(b), “related operations” includes acting as a holding company and undertaking financial sector activities within the meaning of the Supplementary Supervision of Regulated Entities Directive.

Power to impose, vary and revoke conditions of reinsurance authorisation

12.

(1) When granting a reinsurance authorisation, the Bank may impose such conditions with respect to the conduct of the reinsurance business concerned as it considers appropriate with a view to ensuring that the undertaking carries out in a proper manner the responsibilities that are imposed on reinsurance undertakings by or under these Regulations.

(2) At any time while a reinsurance authorisation has effect, the Bank may, by notice in writing, impose such conditions as it considers appropriate with respect to the conduct of the reinsurance business concerned with a view to ensuring that the undertaking carries out in a proper manner the responsibilities that are imposed on reinsurance undertakings by or under these Regulations.

(3) If it thinks it would be in the general public interest to do so, the Bank may by notice in writing, also impose conditions with respect to the conduct in the State of the reinsurance business of a reinsurance undertaking established in another Member State with a view to ensuring that the undertaking carries out in a proper manner the responsibilities that are imposed on it by or under these Regulations.

(4) The Bank may, from time to time, by notice in writing given to the reinsurance undertaking concerned, vary or revoke a condition imposed in accordance with this Regulation or previously varied in accordance with this paragraph.

(5) In imposing or varying a condition under this Regulation, the Bank shall ensure that the condition, or the condition as varied, is consistent with the objects of the Reinsurance Directive and these Regulations.

Effect of reinsurance authorisation

13.

(1) A reinsurance authorisation granted under Regulation 10 or taken to have been granted under Regulation 11 authorises its holder to carry on in the State and in every other Member State the kind or kinds of reinsurance business specified in the authorisation, subject to compliance with the requirements imposed by or under these Regulations and any other restrictions imposed by law.

(2) The fact that the Bank has granted a reinsurance authorisation to an undertaking does not of itself make the Bank liable for any financial loss incurred by a person—

(a) because the undertaking, any of its officers, employees or agents has contravened or failed to comply with a provision of these Regulations or any condition of the undertaking's authorisation, or

(b) because the undertaking has become subject to an insolvency process.

(3) An authorisation granted under these Regulations remains in force until it is cancelled under this Part.

(4) A reinsurance authorisation granted or taken to have been granted to a reinsurance undertaking in accordance with a corresponding law of another Member State also authorises the undertaking to carry on in the State the same kind of reinsurance business as it is authorised to carry on in the other Member State, subject to compliance with that law and any requirements imposed under it and with the laws of the State in so far as they apply to it.

Cancellation of authorisation on application of reinsurance undertaking

14.

(1) The Bank may, on the application of a reinsurance undertaking established in the State, cancel the undertaking's authorisation. The application must be accompanied by the undertaking's authorisation.

(2) A reinsurance undertaking whose authorisation is cancelled under this Regulation or under a provision of a corresponding law of another Member State ceases to be entitled to carry on a reinsurance business in the State and in every other Member State.

Cancellation of authorisation otherwise than on application of reinsurance undertaking

15.

(1) The Bank may cancel the authorisation of a reinsurance undertaking established in the State on being satisfied on reasonable grounds that—

(a) the undertaking is failing or has failed to comply with a condition of the authorisation, or

(b) the undertaking is failing or has failed to comply with a direction or requirement imposed on the undertaking by or under these Regulations or

(d) the authorisation was obtained by means of a false or misleading representation, or

(e) the undertaking has become subject to an insolvency process, such as winding-up or bankruptcy, or

(f) since the authorisation was granted, the circumstances under which it was granted have changed to the extent that an application for an authorisation would be refused had it been made in the changed circumstances, or

(g) the undertaking has failed, within the permitted period, to implement a restoration plan prepared under Regulation 58 or a financial recovery plan prepared under Regulation 59, or

(h) the undertaking or any of its officers, is convicted of—

(i) an offence under these Regulations or under any enactment or statutory instrument specified in Schedule 2 to the Central Bank Act 1942 , or

(ii) an offence involving fraud, dishonesty or breach of trust.

(2) The Bank may cancel the authorisation of a reinsurance undertaking under paragraph (1), only after it has, by notice in writing given to the undertaking, informed the undertaking of its intention to cancel that authorisation. The notice must specify—

(a) the grounds on which it is proposed to cancel the authorisation, and

(b) that the undertaking may, within 21 days after the giving of the notice make written representations to the Bank showing why the authorisation should not be cancelled.

(3) Not later than 21 days after being given a notice under paragraph (2), the undertaking may make written representations to the Bank as to why the undertaking's authorisation should not be cancelled.

(4) As soon as practicable after cancelling the authorisation of a reinsurance undertaking under this Regulation, the Bank shall given written notice of the cancellation to the undertaking. The notice must include a statement of the reasons for the cancellation.

(5) A reinsurance undertaking shall return its authorisation to the Bank as soon as practicable after being notified that the authorisation has been cancelled under this Regulation.

(6) A reinsurance undertaking that, without reasonable excuse, fails to comply with paragraph (5) commits an offence.

Partial cancellation of authorisation otherwise than on application of reinsurance undertaking

16.

(1) If an authorisation granted to a reinsurance undertaking established in the State relates to a particular kind of reinsurance business, the Bank may cancel the authorisation with respect to that kind of reinsurance business on being satisfied on reasonable grounds that—

(a) the undertaking is failing or has failed to comply with a condition of the authorisation as regards that kind of reinsurance business,

(b) the undertaking is failing or has failed to comply with a direction or requirement imposed on the undertaking by or under these Regulations with respect to that kind of reinsurance business, or

(d) since the authorisation was granted with respect to that kind of reinsurance business, the circumstances under which the authorisation was granted have changed to the extent that an application for an authorisation in respect of that kind of business would be refused had it been made in the changed circumstances.

(2) The Bank may cancel the authorisation of a reinsurance undertaking under paragraph (1) with respect to a particular kind of reinsurance business only after it has, by notice in writing given to the undertaking, informed the undertaking of its intention to cancel that authorisation with respect to that kind of business. The notice must specify—

(a) the grounds on which it is proposed to cancel the authorisation with respect to that kind of business, and

(b) that the undertaking may, within 21 days after the giving of the notice make written representations to the Bank showing why the authorisation should not be cancelled with respect to that kind of business.

(3) Not later than 21 days after being given a notice under paragraph (2), the undertaking may make written representations to the Bank as to why the undertaking's authorisation should not be cancelled with respect to the particular kind of reinsurance business concerned.

(4) As soon as practicable after cancelling the authorisation of a reinsurance undertaking with respect to a particular kind of reinsurance business under this Regulation, the Bank shall give written notice of the cancellation to the undertaking. The notice must include a statement of the reasons for the cancellation.

(5) A reinsurance undertaking shall return its authorisation to the Bank for amendment as soon as practicable after being notified that the authorisation has been cancelled under this Regulation with respect to a particular kind of reinsurance business.

(6) A reinsurance undertaking that, without reasonable excuse, fails to comply with paragraph (5) commits an offence.

Cancellation of reinsurance authorisation taken to have been granted under Regulation 11

17.

(1) The Bank shall cancel a reinsurance authorisation taken to have been granted to a reinsurance undertaking under Regulation 11(1) if the undertaking has not, by 10 December 2007, complied with all of the requirements of Regulation 11(2).

(2) Nothing in paragraph (1) affects the operation of Regulation 15 or 16 in relation to a reinsurance undertaking whose reinsurance authorisation is taken to have been granted under Regulation 11(1).

Consequences of cancellation of authorisation of reinsurance undertaking

18.

(1) A reinsurance undertaking whose authorisation is cancelled under this Part ceases to be entitled to carry on reinsurance business in the State and in every other Member State.

(2) A reinsurance undertaking whose authorisation is cancelled under this Part as regards a particular kind of reinsurance business ceases to be entitled to carry on that kind of reinsurance business in the State and in every other Member State.

(3) If the authorisation of a reinsurance undertaking established in another Member State is cancelled in accordance with a corresponding law of that other Member State, the undertaking ceases to be entitled to carry on reinsurance business in the State.

(4) If the authorisation of a reinsurance undertaking established in another Member State is cancelled in accordance with a corresponding law of that other Member State as regards a particular kind of reinsurance business, the undertaking ceases to be entitled to carry on that kind of reinsurance business in the State.

(5) The cancellation of an authorisation, or of an authorisation as regards a particular kind of reinsurance business, does not relieve the reinsurance undertaking concerned from fulfilling obligations arising out of reinsurance business that were outstanding at the time of the cancellation.

PART 4 REGULATION OF REINSURANCE UNDERTAKINGS

Application of this Part to authorised reinsurance undertakings

19.

Except as provided by Regulation 11(2), this Part applies to all reinsurance undertakings as soon as they are granted, or are taken to have been granted, reinsurance authorisations by the Bank.

Reinsurance undertakings established in the State to maintain sound and adequate administrative and accounting procedures and internal control mechanisms

20.

(1) Every authorised reinsurance undertaking established in the State shall establish and maintain—

(a) administrative and accounting procedures, and

(b) internal control mechanisms and risk management requirements that, in the opinion of the Bank, are sound and adequate.

(2) A reinsurance undertaking that, without reasonable excuse, fails to comply with paragraph (1) commits an offence.

Reinsurance undertaking to lodge certain annual returns and other statistical documents with the Bank

21.

(1) An authorised reinsurance undertaking established in the State shall lodge with the Bank within 6 months after the end of the undertaking's financial year, or at such more frequent intervals as the Bank may require—

(a) a return containing such information as the Bank may specify, and

(b) statistical documents that the Bank requires to enable it to perform its functions under these Regulations and to verify the state of solvency of the undertaking with respect to its entire business, and

(c) such information as the Bank requires to enable it to verify that the undertaking's technical reserves are being maintained.

Such a return and information must be in such form and manner as the Bank specifies to the undertaking in writing.

(2) A reinsurance undertaking that, without reasonable excuse, fails to comply with paragraph (1) commits an offence.

(3) If the undertaking carries on reinsurance business in another Member State the Bank shall provide the competent authority of that other Member State with such information, within the scope of the Reinsurance Directive, as is necessary to enable that authority to carry out its supervisory functions in that other Member State.

(4) If the Bank reasonably believes that a person is in possession or has control of information relating to reinsurance contracts that are entered into through, or are held by insurance or reinsurance intermediaries, it may require the person to provide it with that information. The person shall comply with such a requirement to the extent that the information is in the possession or under the control of the person.

(5) A person does not break any duty of confidentiality owed to a principal only by providing information to the Bank in accordance with a requirement made under paragraph (4).

(6) A person who, without reasonable excuse, fails to comply with a requirement made under paragraph (4) commits an offence.

Transfer of reinsurance undertaking's policy portfolio prohibited without authorisation of the Bank

22.

(1) Subject to this Regulation, an authorised reinsurance undertaking established in the State may transfer its portfolio of reinsurance contracts to another person without restriction.

(2) A reinsurance undertaking established in the State shall not acquire a portfolio of reinsurance contracts held by another reinsurance undertaking (whether or not established in the State) unless it has obtained from the Bank a certificate to the effect that, after taking the acquisition into account, the undertaking will have the solvency margin required by the Reinsurance Directive.

(3) A transfer of a portfolio of reinsurance contracts in accordance with this Regulation binds the reinsured persons concerned and any other persons having rights and obligations under the contacts transferred.

(4) A reinsurance undertaking that, without reasonable excuse, contravenes paragraph (2) commits an offence.

(5) In this paragraph—

“portfolio of reinsurance contracts” includes contracts entered into under the right of establishment or the freedom to provide services in a Member State, and includes a part of a portfolio, and

“reinsurance contracts” means reinsurance contracts transacted by an authorised reinsurance undertaking in the course of carrying on a reinsurance business.

Reinsurance undertaking to establish and maintain technical reserves, solvency margin and guarantee fund

23.

(1) An authorised reinsurance undertaking established in the State shall establish and maintain in respect of its entire business—

(a) technical reserves as determined in accordance with the Insurance Accounts Directive and any rules in force under paragraph (2), and

(b) an adequate solvency margin that complies with Schedule 1, and

(2) The Bank may from time to time make rules with respect to the technical reserves that are to be established and maintained by an authorised reinsurance undertaking established in the State.

(3) A reinsurance undertaking that, without reasonable excuse, fails to comply with paragraph (1) commits an offence.

Reinsurance undertaking to establish and maintain equalisation reserve

24.

(1) An authorised reinsurance undertaking established in the State that is underwriting credit insurance risks shall establish and maintain an equalisation reserve to offset any technical deficit or above-average claims ratio arising during a financial year of the undertaking in relation to those risks.

(2) The undertaking shall calculate its equalisation reserve in accordance with whichever of the methods set out in point D of the Annex to the Non-life Insurance Business Directive as is chosen by the undertaking, with the authorisation of the Bank.

(3) The undertaking's equalisation reserve is to be disregarded for the purpose of calculating its required solvency margin, up to the amount calculated in accordance with the chosen method.

(4) Paragraph (1) does not apply to an authorised reinsurance undertaking for which the premiums or contributions receivable in respect of its credit insurance business are less than whichever is the smaller of the following amounts:

(a) 4 per cent of the total premiums or contributions receivable by it;

(b) €2,500,000.

(5) A reinsurance undertaking that, without reasonable excuse, fails to comply with this Regulation commits an offence.

Bank may give directions for determining liabilities of authorised reinsurance undertaking

25.

(1) The Bank may, for the purposes of Regulation 23 or 24, give a direction relating to determining the liabilities of an authorised reinsurance undertaking. In so doing, the Bank is required to have regard to generally accepted accounting concepts bases and policies and other generally accepted methods appropriate for reinsurance undertakings.

(2) An authorised reinsurance undertaking that, without reasonable excuse, fails to comply with a direction given to it under paragraph (1) commits an offence.

Reinsurance undertaking to cover its technical and equalisation reserves by equivalent assets

26.

(1) An authorised reinsurance undertaking established in the State shall cover its technical reserves and, where required by Regulation 24, its equalisation reserve, by investing in equivalent assets in accordance with this Regulation.

(2) In investing its assets to cover its technical reserves and equalisation reserve the undertaking shall—

(a) take into account the type of business carried on by the undertaking, in particular the nature, the amount and the duration of the expected claims payments, in such a way as to secure sufficiency, liquidity, security quality, profitability and matching of the undertaking's investments, and

(b) diversify and adequately spread the assets so as to enable the undertaking to respond adequately to changing economic circumstances in particular developments in the financial markets and real estate markets or large impact catastrophic events, and

(d) properly diversify the assets so as to avoid excessive reliance on any particular asset, issuer or group of undertakings and accumulations of risk in the portfolio as a whole, and

(e) not invest in assets issued by the same issuer, or by issuers belonging to the same group, in such a way as to expose the undertaking to excessive risk concentration, and

(f) assess the impact of irregular market circumstances on its assets and diversify those assets to ensure that that impact is reduced.

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