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S.I. No. 399/1999 - European Communities (Supplementary Supervision of Insurance Undertakings in an Insurance Group) Regulations, 1999.
Table of Provisions (21)
Statutory Text (21 Articles)
1. The Minister shall co-operate as necessary with the competent authorities of other Member States to ensure that the method described in this Annex is applied in a consistent manner in cases where an insurance holding company, a reinsurance undertaking or a non-member-country insurance undertaking is the parent undertaking of one or more insurance undertakings which are holders of authorisations issued by the Minister and one or more insurance undertakings which are holders of authorisations issued by the competent authorities of other Member States.
2. (1) The Minister may waive the calculation provided for in this Annex with regard to an insurance undertaking
(
a
) if the insurance undertaking is a related undertaking of another insurance undertaking and if it is taken into account in the calculation provided for in this Annex carried out for that other undertaking;
(
b
) if the insurance undertaking and one or more other insurance undertakings which are holders of authorisations issued by the Minister have as their parent undertaking the same insurance holding company, reinsurance undertaking or non-member-country insurance undertaking, and the insurance undertaking is taken into account in the calculation provided for in this Annex carried out for one of these other undertakings;
(
c
) if the insurance undertaking and one or more other insurance undertakings authorised in other Member States have as their parent undertaking the same insurance holding company, reinsurance undertaking or non-member-country insurance undertaking, and an agreement granting exercise of the supplementary supervision covered by this Annex to the competent authorities of another Member State has been concluded in accordance with Regulation 5.
(2) In the case of successive participations (for example, an insurance holding company or a reinsurance undertaking which is itself owned by another insurance holding company, a reinsurance undertaking or a non-member-country insurance undertaking), the Minister may direct that the calculations provided for in this Annex shall only be applied at the level of the ultimate parent undertaking of the insurance undertaking which is an insurance holding company, a reinsurance undertaking or a non-member-country insurance undertaking.
3. (1) Calculations analogous to those described in Annex I shall be carried out at the level of the insurance holding company, reinsurance undertaking or non-member-country insurance undertaking.
(2) The analogy referred to in subparagraph (1) shall consist in applying the general principles and methods described in Annex I at the level of the insurance holding company, reinsurance undertaking or non-member-country insurance undertaking.
(3) For the sole purpose of the calculation referred to in subparagraph (1), the parent undertaking shall be treated as if it were an insurance undertaking subject to
(
a
) a zero solvency requirement where it is an insurance holding company;
(
b
) a notional solvency requirement as provided for in paragraph 13 of Annex I where it is a reinsurance undertaking, or as provided for in paragraph 16 of Annex I where it is a reinsurance undertaking with its registered office in a non-member country;
(
c
) a solvency requirement determined according to the principles of paragraph 15 of Annex I, where it is a non-member-country insurance undertaking;
(
d
) the same conditions as are prescribed in Annex II of the Non-Life Regulations of 1994 or in Annex II of the Life Regulations of 1994 as regards the elements eligible for the solvency margin.
Non-availability of the necessary information
4. Where information necessary for the calculation provided for in this Annex, concerning a related undertaking with its registered office in a Member State or a non-member country, is not available to the Minister, for whatever reason, the book value of that undertaking in the participating undertaking shall be deducted from the elements eligible for the calculation provided for in this Annex and, in that case, the unrealised gains connected with such participation shall not be allowed as an element eligible for the calculation.
GIVEN under my Official Seal, this 16th day of December, 1999.
MARY HARNEY,
Minister for Enterprise, Trade and Employment.
EXPLANATORY NOTE
(This note is not part of the Instrument and does not purport to be a legal interpretation.)
These Regulations give effect to the Insurance Groups Directive (98/78/EC — O.J. No. L 330). They take effect on 1 January 2001. The Directive introduces additional requirements to be met by insurance undertakings within the European Economic Area — that is, the European Union plus Iceland, Norway and Liechtenstein — which are parts of insurance groups. These requirements include an obligation to provide information to the supervisory authorities on intra-group transactions and, in certain cases, to demonstrate compliance with additional solvency tests.
1
OJ No. L330, 5.12.98, p. 1.
2
OJ No. L330, 5.12.98, p. 1.
3
OJ No. L228, 16.8.1973, p. 3.
4
OJ No. L63, 13.3.1979, p. 1.
5
OJ No. L193, 18.7.1983, p. 1.
6
OJ No. L222, 14.8.1978, p. 11.
7
OJ No. L322, 17.12.1977, p. 30.
8
OJ No. L141, 11.6.1993, p. 27.
5. (1) If the Minister considers that certain elements eligible for the solvency margin of a related insurance undertaking other than those referred to in paragraph 4 cannot effectively be made available to cover the solvency margin requirement of the participating insurance undertaking for which the adjusted solvency is calculated, those elements may be included in the calculation only in so far as they are eligible for covering the solvency margin requirement of the related undertaking.
(2) The sum of the elements referred to in paragraph 4 and subparagraph (1) may not exceed the solvency margin requirement of the related insurance undertaking.
Elimination of the intra-group creation of capital
6. (1) When calculating adjusted solvency, no account shall be taken of any element eligible for the solvency margin arising out of reciprocal financing between the insurance undertaking and
(
a
) a related undertaking;
(
b
) a participating undertaking;
(
c
) another related undertaking of any of its participating undertakings.
(2) No account shall be taken of any element eligible for the solvency margin of a related insurance undertaking of the insurance undertaking for which the adjusted solvency is calculated when the element in question arises out of reciprocal financing with any other related undertaking of that insurance undertaking.
(3) In particular, reciprocal financing exists when an insurance undertaking, or any of its related undertakings, holds shares in, or makes loans to, another undertaking which, directly or indirectly, holds an element eligible for the solvency margin of the first undertaking.
7. The value of the assets and liabilities shall be assessed according to the relevant provisions of the Regulations of 1976 or the Regulations of 1984, as the case may be, and the Regulations of 1996.
APPLICATION OF CALCULATION METHODS
Related insurance undertakings
8. (1) The adjusted solvency calculation shall be carried out in accordance with the general principles and methods set out in this Annex.
(2) Where the insurance undertaking has more than one related insurance undertaking, the adjusted solvency calculation shall be carried out by integrating each of these related insurance undertakings.
(3) In case of successive participations (for example, where an insurance undertaking is a participating undertaking in another insurance undertaking which is also a participating undertaking in an insurance undertaking), the adjusted solvency calculation shall be carried out at the level of each participating insurance undertaking which has at least one related insurance undertaking.
9. The Minister may waive calculation of the adjusted solvency of an insurance undertaking—
(
a
) if the undertaking is a related undertaking of another insurance undertaking which is the holder of an authorisation issued by the Minister, and that related undertaking is taken into account in the calculation of the adjusted solvency of the participating insurance undertaking, or
(
b
) if the undertaking is a related undertaking either of an insurance holding company or of a reinsurance undertaking which has its registered office in the State, and both the insurance holding company or the reinsurance undertaking and the related insurance undertaking are taken into account in the calculation carried out.
10. The Minister may also waive calculation of the adjusted solvency of an insurance undertaking if it is a related insurance undertaking of another insurance undertaking, a reinsurance undertaking or an insurance holding company which has its registered office in another Member State, and if the Minister has agreed to grant exercise of the supplementary supervision to the competent authorities of that Member State.
11. The Minister may only grant the waivers referred to in paragraphs 9 and 10 if he or she is satisfied that the elements eligible for the solvency margins of the insurance undertakings included in the calculation are adequately distributed between those undertakings.
12. The Minister may direct that where the related insurance undertaking has its registered office in another Member State, the calculation shall take account, in respect of the related undertaking, of the solvency situation as assessed by the competent authorities of that Member State.
Related reinsurance undertakings
13. (1) When calculating the adjusted solvency of an insurance undertaking which is a participating undertaking in a reinsurance undertaking, the related reinsurance undertaking shall be treated, solely for the purposes of the calculation, by analogy with a related insurance undertaking, applying the general principles and methods described in this Annex.
(2) (
a
) For the purposes of subparagraph (1), a notional solvency requirement shall be established for each related reinsurance undertaking on the basis of the same rules as are prescribed in Annex II of the Non-Life Regulations of 1994 or Annex II of the Life Regulations of 1994, as the case may be.
(
b
) In the event of significant difficulties in applying the rules referred to in clause (
a
), the Minister may permit the notional life solvency requirement to be calculated on the basis of the first result as prescribed in paragraph 4 of Part A of Annex II of the Non-Life Regulations of 1994.
(
c
) The same elements as are prescribed in Annex II of the Non-Life Regulations of 1994 and Annex II of the Life Regulations of 1994 shall be recognised as eligible for the notional solvency margin.
(
d
) The value of the assets and liabilities shall be assessed in accordance with the Non-Life Regulations of 1994, the Life Regulations of 1994 and the Regulations of 1996.
Intermediate insurance holding companies
14. (1) When calculating the adjusted solvency of an insurance undertaking which holds a participation in an insurance undertaking, a related reinsurance undertaking, or an insurance undertaking in a non-member country through an insurance holding company, the situation of the intermediate insurance holding company shall be taken into account.
(2) For the sole purpose of the calculation referred to in subparagraph (1), to be undertaken in accordance with the general principles and methods described in this Annex, the insurance holding company shall be treated as if it were an insurance undertaking subject to a zero solvency requirement and were subject to the same conditions as are laid down in Annex II of the Non-Life Regulations of 1994 or in Annex II of the Life Regulations of 1994 in respect of elements eligible for the solvency margin.
Related insurance or reinsurance undertakings having their registered office in non-member countries
Related non-member country insurance undertakings.
15. (1) Subject to subparagraph (2), when calculating the adjusted solvency of an insurance undertaking which is a participating undertaking in a non-member-country insurance undertaking, the latter shall be treated, solely for the purposes of the calculation, by analogy with a related insurance undertaking, by applying the general principles and methods described in this Annex.
(2) Where the non-member-country in which the non-member-country insurance undertaking has its registered office makes it subject to authorisation and imposes on it a solvency requirement at least comparable to that laid down in Annex II of the Non-Life Regulations of 1994 or in Annex II of the Life Regulations of 1994, taking into account the elements of cover of that requirement, the Minister may direct that the calculation shall take into account, as regards that undertaking, the solvency requirement and the elements eligible to satisfy that requirement as laid down by the non-member-country concerned.
Related non-member country reinsurance undertakings.
16. (1) Notwithstanding paragraph 13, when calculating the adjusted solvency of an insurance undertaking which is a participating undertaking in a reinsurance undertaking with its registered office in a non-member country, and subject to the same conditions as those set out in paragraph 15, the Minister may direct that the calculation shall take account, as regards the latter undertaking, of the own-funds requirement and the elements eligible to satisfy that requirement as laid down by the non-member country concerned.
(2) Where only the insurance undertakings of the non-member country referred to in subparagraph (1) are subject to such provision, the notional own-funds requirement on the related reinsurance undertaking and the elements eligible to satisfy that notional requirement may be calculated as if the undertaking concerned were a related insurance undertaking of that non-member country.
Non-availability of the necessary information
17. Where information necessary for calculation the adjusted solvency of an insurance undertaking, concerning a related undertaking with its registered office in another Member State or a non-member country, is not available to the Minister, for whatever reason, the book value of that undertaking in the participating insurance undertaking shall be deducted from the elements eligible for the adjusted solvency margin and, in that case, the unrealised gains connected with such participation shall not be allowed as an element eligible for the adjusted solvency margin.
CALCULATION METHOD
Method 1: Deduction and aggregation method
18. (1) The adjusted solvency situation of the participating insurance undertaking shall be the difference between—
(
a
) the sum of—
(i) the elements eligible for the solvency margin of the participating insurance undertaking, and
(ii) the proportional share of the participating insurance undertaking in the elements eligible for the solvency margin of the related insurance undertaking,
(
b
) the sum of—
(i) the book value in the participating insurance undertaking of the related insurance undertaking,
(ii) the solvency requirement of the participating insurance undertaking, and
(iii) the proportional share of the solvency requirement of the related insurance undertaking.
(2) Where the participation in the related insurance undertaking consists, in whole or in part, of an indirect ownership, the figure referred to in subparagraph (1)(
b
)(i) shall incorporate the value of such indirect ownership, taking into account the relevant successive interests and the figures referred to in subparagraph (1)(
a
)(ii) and (
b
)(iii) shall include the corresponding proportional shares of the elements eligible for the solvency margin of the related insurance undertaking and of the solvency requirement of the related insurance undertaking, respectively.
Method 2: Requirement deduction method
19. (1) The adjusted solvency of the participating insurance undertaking shall be the difference between—
(
a
) the sum of the elements eligible for the solvency margin of the participating insurance undertaking, and
(
b
) the sum of—
(i) the solvency requirement of the participating insurance undertaking, and
(ii) the proportional share of the solvency requirement of the related insurance undertaking.
(2) When valuing the elements eligible for the solvency margin, participations shall be valued by the equity method, in accordance with the option set out in Article 59(2)(
b
) of Directive No. 78/660/EEC.
Method 3: Accounting consolidation-based method
20. (1) The calculation of the adjusted solvency of the participating insurance undertaking shall be carried out on the basis of the consolidated accounts.
(2) The adjusted solvency of the participating insurance undertaking shall be the difference between the elements eligible for the solvency margin calculated on the basis of consolidated data and—
(
a
) the sum of the solvency requirement of the participating insurance undertaking and of the proportional shares of the solvency requirements of the related insurance undertakings, based on the percentages used for the establishment of the consolidated accounts, or
(
b
) the solvency requirement calculated on the basis of consolidated data.
(3) The Life Regulations of 1994, the Non-Life Regulations of 1994 and the Regulations of 1996 shall apply for the calculation of the elements eligible for the solvency margin and of the solvency requirement based on consolidated data.
ANNEX II
SUPPLEMENTARY SUPERVISION FOR INSURANCE UNDERTAKINGS THAT ARE SUBSIDIARIES OF AN INSURANCE HOLDING COMPANY, A REINSURANCE UNDERTAKING OR A NON-MEMBER-COUNTRY INSURANCE UNDERTAKING
ARRANGEMENT OF REGULATIONS
Regulations
1.
Citation and commencement.
2.
Interpretation
3.
Application.
4.
Scope of supplementary supervision.
5.
Competent authority for exercising supplementary supervision.
6.
Availability and quality of information.
7.
Access to information.
8.
Co-operation between competent authorities.
9.
Intra-group transactions.
10.
Adjusted solvency requirement.
11.
Reinsurance undertakings, insurance holding companies and non-member-country insurance undertakings.
12.
Penalties.
ANNEXES
Annex I
Calculation of the adjusted solvency of insurance undertakings.
Annex II
Supplementary supervision for insurance undertakings that are subsidiaries of an insurance holding company, a reinsurance undertaking or a non-member-country insurance undertaking.
S.I. No. 399 of 1999.
EUROPEAN COMMUNITIES (SUPPLEMENTARY SUPERVISION OF INSURANCE UNDERTAKINGS IN AN INSURANCE GROUP) REGULATIONS, 1999.
I, MARY HARNEY, Minister for Enterprise, Trade and Employment, in exercise of the powers conferred on me by
section 3
of the
European Communities Act, 1972
(No. 27 of 1972), and for the purpose of giving effect to Directive No. 98/78/EC
1
of the European Parliament and of the Council of 27 October 1998, hereby make the following regulations
Citation and commencement