S.I. No. 485/2015 - European Union (Insurance and Reinsurance) Regulations 2015

• (d) a branch of another third-country insurance undertaking established in another Member State.

• (2) A transfer may not be effected unless—

• (a) the supervisory authority of the accepting undertaking or, where appropriate, the selected supervisory authority referred to in Regulation 181, certifies that, after taking the transfer into account, the accepting undertaking possesses the necessary eligible own funds to cover the Solvency Capital Requirement referred to in Regulation 113, and

• (b) the supervisory authority of each Member State where the risks are situated or which is the state of the commitment have consented,

and, in the case of a transfer within paragraph (1)(d), the law of the Member State in which that branch is situated permits the transfer and the supervisory authority of that Member State has consented.

• (3) The Bank shall consult the supervisory authorities referred to in paragraph (2)(b) before the transfer to obtain their opinion or consent, and the absence of any response by a supervisory authority within 3 months of being consulted shall be deemed to be consent by that supervisory authority.

• (4) Without prejudice to the requirements of section 13(3)(a) of the Assurance Companies Act 1909 , a transfer in accordance with this Regulation shall be published—

• (a) prior to the transfer being authorised, by advertisement once in each of 2 daily newspapers published in the State, and

• (b) in each Member State in which the risks are situated or which is the Member State of the commitment in accordance with the law of that Member State.

• (5) Where the Bank is consulted by the supervisory authority of a Member State pursuant to Article 164 of the Directive, the Bank shall provide an opinion or consent within 3 months of being consulted and the absence of any response within that period from the Bank shall be deemed to be consent.

• (6) Where—

• (a) a transfer is to be effected under the law of a Member State other than the State in accordance with Article 164 of the Directive, and

• (b) the State is a Member State in which the risk is situated or is a Member State of the commitment,

the transfer shall, prior to being authorised, be published by advertisement once in Iris Oifigiúil and once in each of 2 daily newspapers published in the State.

• (7) A transfer in accordance with this Regulation shall automatically be valid against policy holders, insured persons and any other persons having rights or obligations arising out of the contracts transferred.

Technical provisions

• (2) The technical provisions must be calculated in accordance with Regulations 83 to 101.

• (3) Assets and liabilities shall be determined in accordance with Regulation 82, and own funds shall be determined in accordance with Regulations 102 to 112.

Solvency Capital Requirement and Minimum Capital Requirement

• (2) The Solvency Capital Requirement and the Minimum Capital Requirement for the branch shall be calculated in accordance with these Regulations.

• (3) However, for the purpose of calculating the Solvency Capital Requirement and the Minimum Capital Requirement, both for life and non-life insurance, account shall be taken only of the operations effected by the branch.

• (4) The eligible amount of basic own funds required to cover the Minimum Capital Requirement and the absolute floor of that Minimum Capital Requirement shall be constituted in accordance with Regulation 112(6).

• (5) The eligible amount of basic own funds shall not be less than half of the absolute floor required under Regulation 140(2).

• (6) The deposit lodged in accordance with Regulation 176(2)(e) shall be counted towards such eligible basic own funds to cover the Minimum Capital Requirement.

• (7) The assets representing the Solvency Capital Requirement shall be kept within the State up to the amount of the Minimum Capital Requirement and the excess shall be kept within any one or more Member States.

Advantages to undertakings authorised in more than one Member State

• (a) the Solvency Capital Requirement shall be calculated in relation to the entire business which it pursues within the European Union but with account being taken only of the operations effected by branches established within the European Union;

• (b) the deposit required under Regulation 176(2)(e) shall be lodged in only one of the Member States where the undertaking has a branch;

• (c) the assets representing the Minimum Capital Requirement shall be localised in any one of the Member States in which it pursues its activities.

• (2) Application to benefit from the advantages provided for in paragraph (1) shall be made to the Bank and all the other relevant supervisory authorities.

• (3) The application shall state the authority of the Member State which in future is to supervise the solvency of the entire business of the branches established in the European Union and give reasons for the selection of supervisory authority made by the undertaking.

• (4) The deposit required under Regulation 176(2)(e) shall be lodged with the selected supervisory authority.

• (5) The advantages provided for in paragraph (1) may be granted only where the supervisory authorities of all Member States in which an application has been made agree to them.

• (6) Those advantages shall take effect from the time when the selected supervisory authority informs the other relevant supervisory authorities that it will supervise the state of solvency of the entire business of the undertaking’s branches in the European Union.

• (7) Where the Bank is the selected supervisory authority it shall obtain from each of the other relevant supervisory authorities the information necessary for the supervision of the overall solvency of the branches in the Member States of which they are the supervisory authorities.

• (8) Where another supervisory authority is selected the Bank shall provide to that supervisory authority the information necessary for the supervision of the overall solvency of the branch in the State.

• (9) If the Bank or another relevant supervisory authority so requests, the advantages provided for in paragraph (1) shall be withdrawn simultaneously by all the Member States concerned.

Accounting, prudential and statistical information and undertakings in difficulty

• (2) Where the Bank is the selected supervisory authority under Regulation 181 in relation to a third-country insurance undertaking, the State shall be treated as the undertaking’s home Member State as regards the application of Regulations 145 to 148.

Separation of non-life and life business

Withdrawal of authorisation for undertakings authorised in more than one Member State

• (2) Where another supervisory authority is the selected supervisory authority under Article 167 of the Directive and it notifies the Bank of the withdrawal of the undertaking’s authorisation, the Bank shall take whatever measures it considers appropriate (including, where appropriate, withdrawal of authorisation).

• (3) Where the reason for the withdrawal of the authorisation by the other supervisory authority is the inadequacy of the overall state of solvency as agreed by the Member States under Article 167 of the Directive, the Bank shall also withdraw its authorisation.

Chapter 2 Reinsurance

Equivalence

• (a) the solvency regime of the third country has been deemed to be equivalent to that laid down in the Directive in accordance with the delegated acts referred to in Article 172(2) of the Directive, or

• (b) the supervisory regime of the third country has been deemed to be temporarily equivalent to that laid down in the Directive in accordance with the delegated acts referred to in Article 172(4) of the Directive.

Principle and conditions for conducting reinsurance activity

Chapter 3 Subsidiaries

Information from Member States to Commission and EIOPA

• (2) The information shall also contain an indication of the structure of the group concerned.

• (3) Where an undertaking governed by the law of a third country acquires a holding in an insurance undertaking or reinsurance undertaking established in the State which results in it becoming a subsidiary undertaking of the undertaking governed by the law of the third country, the Bank shall inform the Commission, EIOPA and the supervisory authorities of the other Member States.

Third-country treatment of Community insurance and reinsurance undertakings

• (2) The Minister shall, without delay, inform the Commission and EIOPA of any difficulties notified in accordance with paragraph (1).

Part 13 APPLICABLE LAW AND CONDITIONS OF DIRECT INSURANCE CONTRACTS

Chapter 1 Compulsory insurance

Related obligations

• (2) In circumstances where the law of the State imposes a requirement to take out insurance, all contracts relating to that requirement must comply with the specific provisions relating to that insurance laid down by the State.

• (3) Where an undertaking is carrying on compulsory insurance it shall notify the Bank of any cessation of cover and such cessation may be invoked against injured third parties in the circumstances laid down by the law of the State.

Chapter 2 Conditions of insurance contracts and scales of premiums

Non-life insurance

• (a) general and special policy conditions,

• (b) scales of premiums, or

• (c) forms or other documents which the undertaking intends to use in its dealings with policy holders.

• (2) The Bank may require non-systematic notification of those policy conditions, scales of premiums or forms or other documents for the purpose only of verifying compliance with provisions concerning insurance contracts which apply in the State but such requirements shall not constitute a prior condition for an undertaking to pursue business.

• (3) A non-life insurance undertaking is required to communicate to the Bank the general and special conditions of compulsory insurance before circulating them.

• (4) The Bank shall not retain or introduce an obligation of prior notification or approval of proposed increases in premium rates except as part of general price-control systems.

Life insurance

• (a) general and special policy conditions,

• (b) scales of premiums,

• (c) technical bases used in particular for calculating scales of premiums and technical provisions, or

• (d) forms or other documents which the undertaking intends to use in its dealings with policy holders.

• (2) The Bank may, for the sole purpose of verifying compliance with provisions concerning actuarial principles which apply in the State, require systematic communication of the technical bases used in particular for calculating scales of premiums and technical provisions but such requirements shall not constitute a prior condition for an insurance undertaking to pursue business.

Chapter 3 Information for policy holders

Non-life insurance

General information for policy holders

• (a) the law applicable to the contract, where the parties do not have a free choice;

• (b) the fact that the parties are free to choose the law applicable and the law the insurer proposes to choose.

• (2) The undertaking shall also inform the policy holder of the arrangements for handling complaints by policy holders concerning contracts including, where appropriate, the existence of a complaints body, without prejudice to the right of the policy holder to take legal proceedings.

• (3) The obligations referred to in paragraphs (1) and (2) apply only where the policy holder is a natural person.

Additional information in case of non-life insurance offered under right of establishment or freedom to provide services

• (2) Any documents issued to the policy holder shall convey the information referred to in paragraph (1).

• (3) The obligations imposed in paragraphs (1) and (2) shall not apply to large risks.

• (4) The contract or any other document granting cover, together with the insurance proposal where it is binding upon the policy holder, shall state the address of the head office or, where appropriate, of the branch of the undertaking which grants the cover.

• (5) Those documents shall also contain the name and address of the representative of the undertaking referred to in Regulation 17(4)(i).

Life insurance

Cancellation period

• (2) The giving of notice of cancellation by a person shall have the effect of releasing the person from any future obligation arising from the contract.

• (3) The other legal effects and the conditions of cancellation shall be determined by the law applicable to the contract, particularly as regards the arrangements for informing a person that the contract has been concluded.

• (4) For this purpose, where the law of the State is applicable to the contract—

• (a) a person shall be deemed to be informed that a contract has been concluded when the policy is delivered to the person who submitted the proposal for the insurance or, if the policy is sent directly to that person by post, the date on which the policy is posted,

• (b) the notice of cancellation referred to in paragraph (1) shall expressly indicate that the person has withdrawn from the proposed contract,

• (c) a notice of cancellation referred to in paragraph (1) shall be deemed to be served on the undertaking at the time when such notice is posted to an address specified by the undertaking,

• (d) any sums paid by the person serving the notice of cancellation in connection with the contract shall be refunded in full by the undertaking,

• (e) in the case of the service of notice of cancellation in respect of a single premium life insurance contract, the undertaking may, when the person has withdrawn from the proposed contract, refund the amount of premium paid less any losses incurred by the undertaking as a result of fluctuations in the financial markets during the period of the validity of the contract.

• (5) The provisions of paragraph (1) shall not apply in the following cases:

• (a) a contract with duration of 6 months or less;

• (b) where, because of the status of the policy holder or the circumstances in which the contract is concluded, the policy holder does not need special protection including where:

• (i) the contract is one where none of the proposers or policy holders is an individual;

• (ii) the contract is a contract of creditor insurance effected for the purpose of insuring the repayment of a loan and it is intended that the contract will be assigned or deposited with the lender;

• (iii) the contract is a contract of reinsurance.

• (6) In the case of an industrial assurance policy of insurance only, the undertaking may, through its industrial assurance agent, deliver directly to the person who is seeking the policy—

• (a) a form of notice of cancellation,

• (b) the insurance policy, and

• (c) any accompanying documents.

• (7) For the purposes of paragraph (6), the form of notice of cancellation must specify that that person has a period of 30 days after the date of delivery by the agent within which to serve the notice of cancellation on the undertaking and in that case the period specified in paragraph (1) extends to the end of that period.

Part 14 PROVISIONS SPECIFIC TO NON-LIFE INSURANCE

Chapter 1 General provision

Policy conditions

Chapter 2 Community co-insurance

Community co-insurance operations

• (2) In this Chapter “Community co-insurance operations” means co-insurance operations relating to one or more risks which are in classes 3 to 16 in Part 1 of Schedule 1 and which fulfil the following conditions:

• (a) the risk is a large risk;

• (b) the risk is covered by a single contract at an overall premium and for the same period by 2 or more insurance undertakings each for its own part as co-insurer, one of them being the leading insurance undertaking;

• (c) the risk is situated within the European Union;

• (d) for the purpose of covering the risk, the leading insurance undertaking is treated as if it were the insurance undertaking covering the whole risk;

• (e) at least one of the co-insurers participates in the contract through a head office or a branch established in a Member State other than that of the leading insurance undertaking;

• (f) the leading insurance undertaking fully assumes the leader’s role in co-insurance practice and in particular determines the terms and conditions of insurance and rating.

• (2) Co-insurance operations which are not Community co-insurance operations within the meaning of paragraph (1) are subject to these Regulations (but not the rules in this Chapter).

Rules that are to apply only to leading insurance undertaking

Participation in Community co-insurance

Technical provisions

• (2) The technical provisions shall be at least equal to those determined by the leading insurance undertaking according to the rules of its home Member State.

Statistical data

Treatment of co-insurance contracts in winding-up proceedings

Exchange of information between supervisory authorities

Co-operation on implementation

• (2) In the course of that co-operation the Bank shall examine in particular any practices which might indicate that leading insurance undertakings do not assume the role of the leader in Community co-insurance operations or that the risks covered by such operations clearly do not require the participation of 2 or more insurers for their coverage.

Chapter 3 Legal expenses insurance

Scope of Chapter

• (a) securing compensation for the loss, damage or injury suffered by the insured person, by settlement out of court or through civil or criminal proceedings;

• (b) defending or representing the insured person in civil, criminal, administrative or other proceedings or in respect of any claim made against that person.

• (2) However, this Chapter does not apply to any of the following:

• (a) legal expenses insurance concerning disputes or risks arising out of, or in connection with, the use of sea-going vessels;

• (b) the activity pursued by an insurance undertaking providing civil liability cover for the purpose of defending or representing the insured person in any inquiry or proceedings where that activity is at the same time pursued in the own interest of that insurance undertaking under such cover;

• (c) the activity of legal expenses insurance undertaken by an assistance insurer which complies with the following conditions:

• (i) the activity is pursued in a Member State other than that in which the insured person is habitually resident;

• (ii) the activity forms part of a contract covering solely the assistance provided for persons who fall into difficulties while travelling, while away from their home or their habitual residence;

• (iii) the contract clearly states that the cover concerned is limited to those circumstances and is ancillary to the assistance.

Separate contracts

• (a) the subject of a contract separate from that drawn up for the other classes of insurance, or

• (b) dealt with in a separate section of a single policy in which the nature of the legal expenses cover is specified.

Management of claims

• (2) Whichever solution is adopted, the interest of persons having legal expenses cover shall be regarded as safeguarded in an equivalent manner.

• (3) The legal expenses insurance undertaking shall ensure that no member of the staff who is concerned with the management of legal expenses claims, or with legal advice in respect of their management, pursues at the same time a similar activity—

• (a) where the undertaking carries on one or more other classes of insurance in relation to another class carried on by it, or

• (b) in another undertaking which has financial, commercial or administrative links with the legal expenses insurance undertaking and carries on one or more of the other classes of insurance in Part 1 of Schedule 1.

• (4) The legal expenses insurance undertaking shall entrust the management of claims in respect of legal expenses insurance to an undertaking having separate legal personality which shall be mentioned in the separate contract or separate section referred to in Regulation 205 and—

• (a) if the undertaking having separate legal personality has links to an insurance undertaking which carries on one or more of the classes of insurance in Part 1 of Schedule 1, members of the staff of that undertaking who are concerned with the management of claims or with legal advice connected with such management shall not pursue the same or a similar activity in the other insurance undertaking at the same time, and

• (b) the same requirements apply to the board of directors.

• (5) The contract shall provide that the insured persons may instruct a lawyer of their choice or any other appropriately qualified person, from the moment that those insured persons have a claim under that contract.

• (6) For the purposes of this Regulation and Regulations 207 and 208 “lawyer” means any person entitled to pursue his professional activities under one of the denominations laid down in Council Directive 77/249/EEC of 22 March 1977 to facilitate the effective exercise by lawyers of freedom to provide services³¹ .

Free choice of lawyer

• (a) where recourse is had to a lawyer or other appropriately qualified person to defend, represent or serve the interests of the insured person in any inquiry or proceedings, the insured person shall be free to choose such lawyer or other person, and

• (b) the insured person shall be free to choose a lawyer or, if he so prefers, another appropriately qualified person, to serve his or her interests whenever a conflict of interests arises.

Exception to free choice of lawyer

• (a) the insurance is limited to cases arising from the use of road vehicles in the State;

• (b) the insurance is connected to a contract to provide assistance in the event of accident or breakdown involving a road vehicle;

• (c) neither the legal expenses insurance undertaking nor the assistance insurer carries out any class of liability insurance;

• (d) measures are taken so that the legal advice and representation of each of the parties to a dispute is effected by wholly independent lawyers where those parties are insured for legal expenses by the same insurance undertaking.

• (2) The exemption granted pursuant to paragraph (1) shall not affect the application of Regulation 206.

Arbitration

• (2) The contract must inform the insured person of his right to invoke the arbitration procedure referred to in paragraph (1).

Conflict of interest

Chapter 4 Health insurance

Health insurance as an alternative to social security

• (2) For that purpose the “general good requirements” includes a requirement that such health insurance contracts provide for open enrolment, community rating and lifetime cover, in accordance with any enactment for the time being in force.

Part 15 PROVISIONS SPECIFIC TO LIFE INSURANCE

Premiums for new business

• (2) For that purpose, all aspects of the financial situation of a life insurance undertaking may be taken into account, without the input from resources other than premiums and income earned on them being systematic and permanent in a way that it may jeopardise the solvency of the undertaking in the long term.

Part 16 PROVISIONS SPECIFIC TO REINSURANCE

Finite reinsurance

• (2) For the purposes of paragraph (1), 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 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.

Special purpose vehicles

• (2) These Regulations do not apply to special purpose reinsurance vehicles authorised under the European Communities (Reinsurance) Regulations 2006.

• (3) However, any new activity commenced by such a special purpose reinsurance vehicle on or after 1 January 2016 shall be subject to these Regulations and other laws applicable in the State adopted pursuant to the Directive and shall require the prior approval of the Bank.

Part 17 SUPERVISION OF INSURANCE AND REINSURANCE UNDERTAKINGS IN A GROUP

Chapter 1 Definitions and scope

Definitions

“college of supervisors” means a permanent but flexible structure for co-operation, coordination and facilitation of decision-making concerning the supervision of a group;

“group” means a group of undertakings that—

• (a) consists of a participating undertaking, its subsidiaries and the entities in which the participating undertaking or its subsidiaries hold a participation, as well as undertakings linked to each other by a relationship as set out in Article 12(1) of Directive 83/349/EEC, or

• (b) is based on the establishment, contractually or otherwise, of strong and sustainable financial relationships among the undertakings;

“group supervisor” means the supervisory authority responsible for group supervision, determined in accordance with Regulation 248;

“insurance holding company” means a parent undertaking which is not a mixed financial holding company and the main business of which is to acquire and hold participations in subsidiary undertakings, where those subsidiary undertakings are exclusively or mainly insurance undertakings or reinsurance undertakings, or third-country insurance undertakings or reinsurance undertakings, at least one of such subsidiary undertakings being an insurance undertaking or reinsurance undertaking;

“mixed-activity insurance holding company” means a parent undertaking, other than an insurance undertaking, a third-country insurance undertaking, a reinsurance undertaking, a third-country reinsurance undertaking, an insurance holding company or a mixed financial holding company which includes at least one insurance undertaking or reinsurance undertaking among its subsidiary undertakings;

“mixed financial holding company” means a mixed financial holding company as defined in Article 2(15) of Directive 2002/87/EC;

“participating undertaking” means an undertaking which is a parent undertaking, an undertaking which holds a participation or an undertaking linked with another undertaking by a relationship as set out in Article 12(1) of Directive 83/349/EEC;

“related undertaking” means a subsidiary undertaking, an undertaking in which a participation is held or an undertaking linked with another undertaking by a relationship as set out in Article 12(1) of Directive 83/349/EEC.

• (2) The relationships mentioned in paragraph (b) of the definition of “group” in paragraph (1) may include one between undertakings that are mutual or mutual-type associations if—

• (a) one of those undertakings effectively exercises, through centralised coordination, a dominant influence over the decisions, including financial decisions, of the other undertakings that are part of the group, and

• (b) the establishment and dissolution of the relationships are subject to prior approval by the group supervisor,

and, in such a case, the undertaking exercising the centralised coordination shall be considered as the parent undertaking, and the other undertakings shall be considered as subsidiaries.

• (3) For the purposes of this Part, an undertaking which the Bank considers effectively exercises a dominant influence over another undertaking shall be regarded as a parent of that other undertaking and that other undertaking shall be regarded as its subsidiary undertaking.

• (4) For the purposes of this Part, the holding, directly or indirectly, of voting rights or capital in an undertaking over which, in the Bank’s opinion a significant influence is effectively exercised shall be regarded as participation.

Cases of application of group supervision

• (2) The provisions of these Regulations which apply to insurance undertakings and reinsurance undertakings on an individual basis shall continue to apply to undertakings to which this Part applies except where otherwise specified in this Part.

• (3) Supervision at the level of the group—

• (a) shall apply to an insurance undertaking or reinsurance undertaking which is a participating undertaking in at least one insurance undertaking, reinsurance undertaking, third-country insurance undertaking or third-country reinsurance undertaking, in accordance with Regulations 221 to 263;

• (b) shall apply to an insurance undertaking or reinsurance undertaking, the parent undertaking of which is an insurance holding company or a mixed financial holding company which has its head office in the European Union in accordance with Regulations 221 to 263;

• (c) shall apply to an insurance undertaking or reinsurance undertaking, the parent undertaking of which is an insurance holding company or a mixed financial holding company which has its head office in a third country, or which is a third-country insurance undertaking or third-country reinsurance undertaking, in accordance with Regulations 264 to 267;

• (d) shall apply to an insurance undertaking or reinsurance undertaking, the parent undertaking of which is a mixed-activity insurance holding company, in accordance with Regulation 268.

• (4) In the cases referred to in subparagraphs (a) and (b) of paragraph (3) where the participating insurance undertaking or reinsurance undertaking or the insurance holding company or mixed financial holding company which has its head office in the European Union is, or is a related undertaking of, a regulated entity or a mixed financial holding company which is subject to supplementary supervision in accordance with Article 5(2) of Directive 2002/87/EC, the Bank may, where it is group supervisor, after consulting the other supervisory authorities concerned, decide not to carry out at the level of that undertaking or holding company the supervision of risk concentration referred to in Regulation 245, the supervision of intra-group transactions referred to in Regulation 246, or both.

• (5) Where a mixed financial holding company is subject to equivalent provisions under these Regulations and under Directive 2002/87/EC, in particular in terms of risk-based supervision, the Bank may, where it is group supervisor, after consulting the other supervisory authorities concerned, apply only the provisions of Directive 2002/87/EC to that mixed financial holding company.

• (6) Where a mixed financial holding company is subject to equivalent provisions under these Regulations and under Directive 2006/48/EC, in particular in terms of risk-based supervision, the Bank may, where it is group supervisor, in agreement with the consolidating supervisor in the banking and investment services sector, apply only the provisions of whichever of these Regulations or that Directive relates to the most significant sector as defined in Article 3(2) of Directive 2002/87/EC.

• (7) The Bank shall, where it is group supervisor, inform the EBA and EIOPA of decisions taken under paragraphs (5) and (6).

Scope of group supervision

• (2) The Bank may, where it is group supervisor, decide on a case-by-case basis not to include an undertaking in the group supervision referred to in Regulation 216 where—

• (a) the undertaking is situated in a third country where there are legal impediments to the transfer of the necessary information, without prejudice to the provisions of Regulation 232,

• (b) the undertaking which should be included is of negligible interest with respect to the objectives of group supervision, or

• (c) the inclusion of the undertaking would be inappropriate or misleading with respect to the objectives of the group supervision.

• (3) However, where several undertakings of the same group, taken individually, may be excluded pursuant to paragraph (2)(b), they must nevertheless be included where, collectively, they are of non-negligible interest.

• (4) Where the Bank, as group supervisor, is of the opinion that an insurance undertaking or reinsurance undertaking should not be included in the group supervision under paragraph (2)(b) or (c), it shall consult the other supervisory authorities concerned before taking a decision.

• (5) Where the group supervisor excludes an insurance undertaking or reinsurance undertaking from group supervision under Article 214(2)(b) or (c) of the Directive, the Bank may ask the undertaking which is at the head of the group in question for any information which may facilitate its supervision of the insurance undertaking or reinsurance undertaking.

Ultimate parent undertaking at EU level

• (2) Where the ultimate parent insurance undertaking, reinsurance undertaking, insurance holding company or mixed financial holding company which has its head office in a Member State is a subsidiary undertaking of an undertaking which is subject to supplementary supervision in accordance with Article 5(2) of Directive 2002/87/EC, the Bank may, where it is group supervisor, after consulting the other supervisory authorities concerned, decide not to carry out at the level of that ultimate parent undertaking the supervision of risk concentration referred to in Regulation 245, the supervision of intra-group transactions referred to in Regulation 246, or both.

Ultimate parent undertaking at national level

• (2) In such a case, the Bank shall explain its decision to the group supervisor and the ultimate EU parent.

• (3) Regulations 221 to 263 shall apply to group supervision of the national parent, subject to the provisions of this Regulation and to any other necessary modifications.

• (4) The Bank may restrict group supervision of the national parent to one or several of the areas covered by Regulations 221 to 247.

• (5) Where the Bank decides to apply Regulations 221 to 244 to the national parent, the choice of method made in accordance with Regulation 223 by the group supervisor in respect of the ultimate EU parent shall be recognised as determinative and applied by the Bank.

• (6) Where the Bank decides to apply Regulations 221 to 244 to the national parent and where the ultimate EU parent has obtained, in accordance with Regulation 234 or 237(5), permission to calculate the group Solvency Capital Requirement, as well as the Solvency Capital Requirement of insurance and reinsurance undertakings in the group, on the basis of an internal model, that decision shall be recognised as determinative and applied by the Bank.

• (7) In such a situation however, if the Bank considers that the risk profile of the national parent deviates significantly from the internal model for which permission has been obtained as mentioned in paragraph (6), and for as long as the national parent does not properly address the Bank’s concerns, the Bank may decide to impose a capital add-on to the group Solvency Capital Requirement of the national parent resulting from the application of that model or, in exceptional circumstances where such capital add-on would not be appropriate, to require the national parent to calculate its group Solvency Capital Requirement on the basis of the standard formula.

• (8) The Bank shall explain any actions under paragraph (7) to both the national parent and the group supervisor.

• (9) Where the Bank decides to apply Regulations 221 to 244 to the national parent, the national parent shall not be permitted to introduce in accordance with Regulation 239 or 244, an application for permission to subject any of its subsidiaries to Regulations 241 and 242.

• (10) Paragraph (1) shall not apply where the national parent is a subsidiary undertaking of the ultimate EU parent and the ultimate EU parent has obtained, in accordance with Regulation 240 or 244, permission for the national parent to be subject to Regulations 241 and 242.

• (11) Where the Bank is group supervisor of a group and is informed, in accordance with Article 216(1) or (4) of the Directive, of the matters referred to in it, it shall inform the college of supervisors.

Parent undertaking covering several Member States

• (2) In such a case, the Bank, in conjunction with the supervisory authority referred to in paragraph (1), shall explain their agreement to the group supervisor and the ultimate EU parent.

• (3) Where an agreement has been concluded as mentioned in paragraph (1), group supervision shall not be carried out at the level of any ultimate parent undertaking at a national level located in Member States other than the Member State where the subgroup referred to in that paragraph is located.

• (4) Regulation 219(4) to (10) shall apply to group supervision at the level of the subgroup referred to in paragraph (1) subject to any necessary modifications.

• (5) Where the Bank is group supervisor of a group and is informed, in accordance with Article 217(1) of the Directive, of the matters referred to in it, it shall inform the college of supervisors.

Chapter 2 Financial position

Group solvency

Supervision of group solvency

• (2) In the case referred to in Regulation 216(3)(a), participating insurance undertakings or reinsurance undertakings shall ensure that eligible own funds are available in the group which are always at least equal to the group Solvency Capital Requirement as calculated in accordance with Regulations 223 to 237.

• (3) In the case referred to in Regulation 216(3)(b) insurance undertakings and reinsurance undertakings in a group shall ensure that eligible own funds are available in the group which are always at least equal to the group Solvency Capital Requirement as calculated in accordance with Regulation 238.

• (4) Regulations 144 and 146(1) to (9) shall apply subject to any necessary modifications.

• (5) Where the Bank is the group supervisor of a group, the Bank shall—

• (a) subject the requirements referred to in paragraphs (2) and (3) to supervisory review in accordance with Regulations 248 to 263, and

• (b) inform the other supervisory authorities within the college of supervisors on being informed by the participating undertaking that the group Solvency Capital Requirement is no longer complied with or that there is a risk of non-compliance in the following 3 months so that the college of supervisors may analyse the situation of the group.

• (6) Despite paragraphs (2) and (3) above, the transitional provisions referred to in Regulations 99 to 101, 109, 118(1), 143, 256 and 259 shall apply, subject to any necessary modifications, at the level of the group.

• (7) Despite paragraphs (2), (3), (4) and (5)(a), the transitional provisions referred to in Regulation 147 shall apply, subject to any necessary modifications, at the level of the group where the participating insurance undertaking or reinsurance undertaking or the insurance undertakings and reinsurance undertakings in a group comply with the Adjusted Solvency referred to in Article 9 of Directive 98/78/EC but do not comply with the group Solvency Capital Requirement.

Frequency of calculation

• (2) The insurance undertaking, reinsurance undertaking, insurance holding company or mixed financial holding company shall monitor the group Solvency Capital Requirement on an ongoing basis.

• (3) Where the risk profile of the group deviates significantly from the assumptions underlying the last reported group Solvency Capital Requirement, the group Solvency Capital Requirement shall be recalculated without delay and reported to the group supervisor.

• (4) Where the Bank is the group supervisor, it shall—

• (a) ensure that the calculations referred to in Regulation 221(2) and (3) are carried out at least annually, by the participating insurance undertaking or reinsurance undertaking, the insurance holding company or the mixed financial holding company, and

• (b) identify the undertaking in the group to provide the information referred to in paragraph (1).

• (5) Where the Bank is the group supervisor it may require a recalculation of the group Solvency Capital Requirement where there is evidence to suggest that the risk profile of the group has altered significantly since the date on which the group Solvency Capital Requirement was last reported to it.

Choice of method of calculation

• (2) Subject to paragraph (3), the method for that calculation shall be the accounting consolidation-based method (method 1) as set out in Regulations 233 to 236.

• (3) However, the Bank may, where it is the group supervisor of a group, decide, after consulting the other supervisory authorities concerned and the group itself, to apply to that group the deduction and aggregation method (method 2) as set out in Regulation 237, or a combination of both methods 1 and 2, where the exclusive application of method 1 would not be appropriate.

Inclusion of proportional share

• (2) For the purposes of paragraph (1), the proportional share shall comprise either of the following:

• (a) where method 1 is used, the percentages used for the establishment of the consolidated accounts;

• (b) where method 2 is used, the proportion of the subscribed capital that is held, directly or indirectly, by the participating undertaking.

• (3) But, regardless of the method used, where the related undertaking is a subsidiary undertaking and does not have sufficient eligible own funds to cover its Solvency Capital Requirement, the total solvency deficit of the subsidiary undertaking shall be taken into account.

• (4) Despite paragraph (3), the Bank may, where it is the group supervisor, allow for the solvency deficit of the subsidiary undertaking to be taken into account on a proportional basis where in the opinion of the supervisory authorities concerned in the supervision of that group, the responsibility of the parent undertaking owning a share of the capital is strictly limited to that share of the capital.

• (5) The Bank, where it is the group supervisor, shall determine, after consulting the other supervisory authorities concerned and the group itself, the proportional share which shall be taken into account in the following cases:

• (a) where there are no capital ties between some of the undertakings in a group;

• (b) where a supervisory authority has determined that the holding, directly or indirectly, of voting rights or capital in an undertaking qualifies as a participation because, in its opinion, a significant influence is effectively exercised over that undertaking;

• (c) where a supervisory authority has determined that an undertaking is a parent undertaking of another because, in its opinion, it effectively exercises a dominant influence over that other undertaking.

Elimination of double use of eligible own funds

• (2) For that purpose, when calculating the group solvency and where the methods described in Regulations 233 to 237 do not provide for it, the following amounts shall be excluded:

• (a) the value of any asset of the participating insurance undertaking or reinsurance undertaking which represents the financing of own funds eligible for the Solvency Capital Requirement of one of its related insurance undertakings or reinsurance undertakings;

• (b) the value of any asset of a related insurance undertaking or reinsurance undertaking of the participating insurance undertaking or reinsurance undertaking which represents the financing of own funds eligible for the Solvency Capital Requirement of that participating insurance undertaking or reinsurance undertaking;

• (c) the value of any asset of a related insurance undertaking or reinsurance undertaking of the participating insurance undertaking or reinsurance undertaking which represents the financing of own funds eligible for the Solvency Capital Requirement of any other related insurance undertaking or reinsurance undertaking of that participating insurance undertaking or reinsurance undertaking.

• (3) Without prejudice to paragraphs (1) and (2), the following may be included in the group solvency calculation only in so far as they are eligible for covering the Solvency Capital Requirement of the related undertaking concerned:

• (a) surplus funds falling under Regulation 106(2) arising in a related life insurance undertaking or reinsurance undertaking of the participating insurance undertaking or reinsurance undertaking for which the group solvency is calculated;

• (b) any subscribed but not paid-up capital of a related insurance undertaking or reinsurance undertaking of the participating insurance undertaking or reinsurance undertaking for which the group solvency is calculated.

• (4) But the following shall in any event be excluded from the calculation:

• (a) subscribed but not paid-up capital which represents a potential obligation on the part of the participating undertaking;

• (b) subscribed but not paid-up capital of the participating insurance undertaking or reinsurance undertaking which represents a potential obligation on the part of a related insurance undertaking or reinsurance undertaking;

• (c) subscribed but not paid-up capital of a related insurance undertaking or reinsurance undertaking which represents a potential obligation on the part of another related insurance undertaking or reinsurance undertaking of the same participating insurance undertaking or reinsurance undertaking.

• (5) Where the Bank or other supervisory authorities concerned in the supervision of that group consider that certain own funds eligible for the Solvency Capital Requirement of a related insurance undertaking or reinsurance undertaking other than those referred to in paragraphs (3) and (4) cannot effectively be made available to cover the Solvency Capital Requirement of the participating insurance undertaking or reinsurance undertaking for which the group solvency is calculated, those own funds may be included in the calculation only in so far as they are eligible for covering the Solvency Capital Requirement of the related undertaking.

• (6) The sum of the own funds referred to in paragraphs (3) and (5) shall not exceed the Solvency Capital Requirement of the related insurance undertaking or reinsurance undertaking.

• (7) Any eligible own funds of a related insurance undertaking or reinsurance undertaking of the participating insurance undertaking or reinsurance undertaking for which the group solvency is calculated that are subject to prior authorisation from the supervisory authority of that related undertaking in accordance with Regulation 105 shall be included in the calculation only in so far as they have been duly authorised by that supervisory authority.

Elimination of the intra-group creation of capital

• (a) a related undertaking;

• (b) a participating undertaking;

• (c) another related undertaking of any of its participating undertakings.

• (2) When calculating group solvency, no account shall be taken of any own funds eligible for the Solvency Capital Requirement of a related insurance undertaking or reinsurance undertaking of the participating insurance undertaking or reinsurance undertaking for which the group solvency is calculated where the own funds concerned arise out of reciprocal financing with any other related undertaking of that participating insurance undertaking or reinsurance undertaking.

• (3) Reciprocal financing includes, but is not limited to, circumstances where an insurance undertaking or reinsurance undertaking, or any of its related undertakings, holds shares in, or makes loans to, another undertaking which, directly or indirectly, holds own funds eligible for the Solvency Capital Requirement of the first undertaking.

Valuation

Related insurance undertakings and reinsurance undertakings

• (2) Where the Bank is the group supervisor and a related insurance undertaking or reinsurance undertaking has its head office in a Member State other than the State, the Bank shall allow the calculation to take account, in respect of the related undertaking, of the Solvency Capital Requirement and the own funds eligible to satisfy that requirement as prescribed by the law of that other Member State unless, in the opinion of the Bank, there is a significant change to the law of that other Member State and it would not be in the interests of policyholders to do so.

Intermediate insurance holding companies

• (2) For the sole purpose of that calculation, the intermediate insurance holding company or intermediate mixed financial holding company shall be treated as if it were an insurance undertaking or reinsurance undertaking subject to the rules laid down in Regulations 113 to 138 in respect of the Solvency Capital Requirement and were subject to the same conditions as are laid down in Regulations 102 to 112 in respect of own funds eligible for the Solvency Capital Requirement.

• (3) In cases where an intermediate insurance holding company or an intermediate mixed financial holding company holds subordinated debt or other eligible own funds subject to limitation in accordance with Regulation 112, they shall be recognised as eligible own funds up to the amounts calculated by application of the limits set out in that Regulation to the total eligible own funds outstanding at group level as compared to the Solvency Capital Requirement at group level.

• (4) Any eligible own funds of an intermediate insurance holding company or an intermediate mixed financial holding company which would require prior authorisation from a supervisory authority in accordance with Article 90 of the Directive if they were held by an insurance undertaking or reinsurance undertaking may be included in the calculation of the group solvency only in so far as they have been duly authorised by the group supervisor.

• (5) The Bank, where it is the group supervisor of a group, may authorise the eligible own funds referred to in paragraph (4) to be included in the calculation of group solvency.

Equivalence concerning related third-country insurance undertakings and reinsurance undertakings

• (2) However, if the law of the third country in which that undertaking has its head office—

• (a) requires the undertaking to be licensed, registered or otherwise authorised, and

• (b) imposes on it a solvency regime at least equivalent to that laid down in Regulations 82 to 143,

the Bank, where it is group supervisor, shall permit the calculation referred to in paragraph (1) to take into account, as regards that undertaking, the Solvency Capital Requirement and the own funds eligible to satisfy that requirement as prescribed by that law unless, in the opinion of the Bank, there is a significant change to the law of that third country and it would not be in the interests of policyholders to do so.

• (3) Subject to paragraph (8), the law of a third country shall not be taken to impose a solvency regime at least equivalent to that laid down in Regulations 82 to 143 unless verified by the group supervisor.

• (4) Where the Bank is the group supervisor, it shall, on its own initiative or at the request of the participating undertaking, verify whether the law of the third country imposes a solvency regime at least equivalent to that laid down in Regulations 82 to 143.

• (5) In so doing, the Bank shall, assisted by EIOPA, consult the other supervisory authorities concerned before taking its decision on equivalence.

• (6) The Bank shall take its decision in accordance with the criteria adopted in accordance with Article 227(3) of the Directive.

• (7) The Bank shall not take any decision in relation to a third country that contradicts any decision previously taken in respect of that third country except where it is necessary to take into account significant changes to the supervisory regime laid down in Regulations 82 to 143 or to the supervisory regime in that third country.

• (8) Where the Commission adopts a decision in accordance with Article 227(4) or (5) of the Directive on equivalence of the solvency regime in the third country, that regime shall be considered equivalent for the purposes of paragraph (2) and paragraphs (3) to (7) shall not apply.

Related credit institutions, investment firms and financial institutions

• (2) However, method 1 set out in that Annex may be applied only with the permission of the group supervisor.

• (3) Where the Bank is the group supervisor, it shall permit the application of method 1 where it is satisfied as to the level of integrated management and internal control regarding the entities which would be included in the scope of consolidation.

• (4) The method chosen shall be applied in a consistent manner over time.

• (5) The Bank may, where it is the group supervisor, decide, at the request of the participating undertaking or on its own initiative, to deduct any participation as referred to in paragraph (1) from the own funds eligible for the group solvency of the participating undertaking.

Non-availability of necessary information

• (2) In that case, the unrealised gains connected with such participation shall not be recognised as own funds eligible for the group solvency.

Calculation method 1 (default method): accounting consolidation-based method

• (2) The group solvency of a participating insurance undertaking or reinsurance undertaking is the difference between the following:

• (a) the own funds eligible to cover the Solvency Capital Requirement, calculated on the basis of consolidated data;

• (b) the Solvency Capital Requirement at group level calculated on the basis of consolidated data.

• (3) The rules laid down in Regulations 102 to 138 shall apply for the calculation of the own funds eligible for the Solvency Capital Requirement and of the Solvency Capital Requirement at group level based on consolidated data.

• (4) The Solvency Capital Requirement at group level based on consolidated data (consolidated group Solvency Capital Requirement) shall be calculated on the basis of either the standard formula or an approved internal model, in a manner consistent with the general principles contained in Regulations 113 to 138.

• (5) The consolidated group Solvency Capital Requirement shall have as a minimum the sum of the following:

• (a) the Minimum Capital Requirement as referred to in Regulation 140 of the participating insurance undertaking or reinsurance undertaking;

• (b) the proportional share of the Minimum Capital Requirement of the related insurance undertakings and reinsurance undertakings.

• (6) That minimum shall be covered by eligible basic own funds as determined in Regulation 112(6).

• (7) For the purposes of determining whether such eligible own funds qualify to cover the minimum consolidated group Solvency Capital Requirement, the principles set out in Regulations 224 to 232 shall apply subject to any necessary modifications.

• (8) Regulation 148(1) and (2) shall also apply subject to any necessary modifications.

Group internal model

• (2) The supervisory authorities concerned shall co-operate to decide on the permission and any terms and conditions of it.

• (3) The Bank shall do everything in its power to reach a joint decision on the application with the other supervisory authorities concerned within 6 months from the date of receipt of the application by the group supervisor.