S.I. No. 399/1999 - European Communities (Supplementary Supervision of Insurance Undertakings in an Insurance Group) Regulations, 1999.


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/EC1 of the European Parliament and of the Council of 27 October 1998, hereby make the following regulations:

Citation and commencement

1. (1) These Regulations may be cited as the European Communities (Supplementary Supervision of Insurance Undertakings in an Insurance Group) Regulations, 1999.

(2) These Regulations shall come into operation on 1 January 2001.

Interpretation.

2. (1) In these Regulations, except where the context otherwise requires—

“authorised officer” means an authorised officer appointed under the Insurance Acts, 1909 to 1990;

“Directive” means Directive No. 98/78/EC2 of the European Parliament and of the Council of 27 October 1998;

“financial year” has the same meaning as in section 2 of the Companies Act, 1963 (No. 33 of 1963);

“insurance holding company” means a parent undertaking the main business of which is to acquire and hold participations in subsidiary undertakings, where those subsidiary undertakings are exclusively or mainly insurance undertakings, reinsurance undertakings or non-member-country insurance undertakings, one at least of such subsidiary undertakings being an insurance undertakings;

“insurance undertaking” means—

(a) the holder of an authorisation issued by the Minister under the Regulations of 1976 or the Regulations of 1984.

(b) the holder of an authorisation granted by the authority charged by law with the duty of supervising the activities of insurance undertakings in a Member State other than the State in accordance with Article 6 of Directive No. 73/239/EEC3 or Article 6 of Directive No. 79/267/EEC4 , or

(c) the holder of an official authorisation to undertake insurance in Iceland, Liechtenstein and Norway pursuant to the EEA Agreement within the meaning of the European Communities (Amendment) Act, 1993 (No. 25 of 1993);

“Life Regulations of 1994” means the European Communities (Life Assurance) Framework Regulations, 1994 ( S.I. No. 360 of 1994 );

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

“Minister” means the Minister for Enterprise, Trade and Employment;

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

“Non-Life Regulations of 1994” means the European Communities (Non-Life Insurance) Framework Regulations, 1994 ( S.I. No. 359 of 1994 );

“non-member-country insurance undertaking” means an undertaking which would require authorisation if it had its registered office in a Member State;

“parent undertaking” means a parent undertaking within the meaning of Article 1 of Directive No. 83/349/EEC5 and any undertaking which, in the opinion of the Minister, effectively exercises a dominant influence over another undertaking;

“participation” means participation within the meaning of Article 17, first sentence, of Directive No. 78/660/EEC6 or the holding, directly or indirectly, of 20 per cent or more of the voting rights or capital of an undertaking;

“participating undertaking” means an undertaking which is either a parent undertaking or other undertaking which holds a participation;

“Regulations of 1976” means the European Communities (Non-Life Insurance) Regulations, 1976 ( S.I. No. 115 of 1976 );

“Regulations of 1984” means the European Communities (Life Assurance) Regulations, 1984 ( S.I. No. 57 of 1984 );

“Regulations of 1996” means the European Communities (Insurance Undertakings: Accounts) Regulations, 1996 ( S.I. No. 23 of 1996 );

“reinsurance undertaking” means an undertaking, other than an insurance undertaking or a non-member-country insurance undertaking, the main business of which consists in accepting risks ceded by an insurance undertaking, a non-member-country insurance undertaking or other reinsurance undertakings;

“related undertaking” means a subsidiary or other undertaking in which a participation is held;

“subsidiary undertaking” means a subsidiary undertaking within the meaning of Article 1 of Directive No. 83/349/EEC and any undertaking over which, in the opinion of the Minister, a parent undertaking effectively exercises a dominant influence and all subsidiaries of subsidiary undertakings shall also be considered subsidiaries of the parent undertaking which is at the head of those undertakings.

(2) A word or expression that is used in these Regulations and is also used in the Directive has, unless the contrary intention appears, the same meaning in these Regulations as it has in the Directive.

(3) In these Regulations, unless the contrary intention appears—

(a) a reference to a Regulation is a reference to a Regulation of these Regulations,

(b) a reference to a paragraph, subparagraph or clause is a reference to a paragraph, subparagraph or clause of the provision in which the reference occurs, and

(c) a reference to an Annex is to an Annex of these Regulations.

(4) In these Regulations, a reference to any enactment, Council Directive, order or regulation shall be construed as a reference to that enactment, Council Directive, order or regulation as amended by or under any subsequent enactment, Council Directive, order or regulation, including these Regulations.

(5) Subject to these Regulations, the Insurance Acts, 1909 to 1990, shall, where applicable and subject to any necessary modifications, apply to all insurance undertakings to which these Regulations relate.

(6) These Regulations shall have effect, notwithstanding any provision to the contrary in any enactment, order or Regulation passed or made before the making of these Regulations.

Application.

3. (1) Any insurance undertaking which is the holder of an authorisation issued by the Minister and which is a participating undertaking in at least one insurance undertaking, reinsurance undertaking or non-member-country insurance undertaking shall be subject to supplementary supervision as prescribed in Regulations 6, 7, 9 and 10, such supervision being supplementary to that prescribed in the Regulations of 1976 or the Regulations of 1984.

(2) Every insurance undertaking which is the holder of an authorisation issued by the Minister, the parent undertaking of which is an insurance holding company, a reinsurance undertaking or a non-member-country insurance undertaking, shall be subject to supplementary supervision as prescribed in Regulations 6(2), 7, 9 and 11, such supervision being supplementary to that prescribed in the Regulations of 1976 or the Regulations of 1984.

(3) Every insurance undertaking which is the holder of an authorisation issued by the Minister, the parent undertaking of which is a mixed-activity insurance holding company, shall be subject to supplementary supervision as prescribed in Regulations 6(2), 7 and 9, such supervision being supplementary to that prescribed in the Regulations of 1976 or the Regulations of 1984.

Scope of supplementary supervision.

4. (1) The exercise of supplementary supervision in accordance with Regulation 3 shall not in any way imply that the Minister is required to play a supervisory role in relation to a non-member-country insurance undertaking, insurance holding company or mixed-activity insurance holding company or reinsurance undertaking taken individually.

(2) The supplementary supervision referred to in Regulation 3 shall take into account—

(a) related undertakings of the insurance undertaking,

(b) participating undertakings in the insurance undertaking, and

(c) related undertakings of a participating undertaking in the insurance undertaking,

referred to in Regulations 6, 7, 9, 10 and 11,

(3) (a) The Minister shall not be obliged to take into account, in the supplementary supervision referred to in Regulation 3, undertakings having their registered office in a non-member country where there are legal impediments to the transfer of the necessary information, without prejudice to paragraph 17 of Annex I and paragraph 4 of Annex II.

(b) The Minister may decide, on a case-by-case basis, not to take an undertaking into account in the supplementary supervision referred to in Regulation 3 in the following circumstances:

(i) if the undertaking which should be included is of negligible interest with respect to the objectives of the supplementary supervision;

(ii) if the inclusion of the financial situation of the undertaking would be inappropriate of misleading with respect to the objectives of the supplementary supervision.

Competent authority for exercising supplementary supervision.

5. Where the parent undertaking, being an insurance holding company, reinsurance undertaking, non-member-country insurance undertaking or mixed-activity insurance holding company, of an insurance undertaking which is the holder of an authorisation issued by the Minister is also the parent undertaking of an insurance undertaking which is the holder of an authorisation issued by the competent authorities of another Member State, the Minister may reach agreement with the competent authorities of that other Member State as to which of them will be responsible for exercising supplementary supervision.

Availability and quality of information.

6. (1) An insurance undertaking which is subject to the supplementary supervision referred to in Regulation 3 shall have adequate internal control mechanisms in place for the production of any data and information relevant for the purposes of such supplementary supervision.

(2) Insurance undertakings and their related undertakings and participating undertakings shall be free to exchange among themselves any information relevant for the purposes of supplementary supervision and no liability shall attach to them arising from the provision of such information.

Access to information.

7. (1) An insurance undertaking which is the holder of an authorisation issued by the Minister shall provide to the Minister such information as he or she may require for the purpose of supplementary supervision.

(2) If an insurance undertaking fails to provide information to the Minister within 28 days after the date of a request made under paragraph (1) or such longer period as the Minister considers appropriate, the Minister may seek the information from the relevant undertakings referred to in Regulation 4(2).

(3) The Minister may carry out, in the State, on-the-spot verification of the information referred to in paragraph (1) and for this purpose the Minister may appoint an authorised officer.

(4) Paragraph (3) shall apply to the following:

(a) the insurance undertaking subject to supplementary supervision:

(b) subsidiary undertakings of that insurance undertaking;

(c) parent undertakings of that insurance undertaking;

(d) subsidiary undertakings of a parent undertaking of that insurance undertaking.

(5) Where the Minister, in specific cases, wishes to verify information concerning an undertaking situated in another Member State which is a related insurance undertaking, a subsidiary undertaking, a parent undertaking or a subsidiary of a parent undertaking of an insurance undertaking which is the holder of an authorisation issued by the Minister and which is subject to supplementary supervision, the Minister shall ask the competent authorities of that other Member State to have that verification carried out or, with the consent of the competent authorities of that other Member State, the Minister may carry out that verification, including by means of on-the-spot verification by an authorised officer.

(6) (a) Subject to paragraph (b), where the competent authorities of another Member State address to the Minister a request to verify information concerning an undertaking situated in the State which is a related insurance undertaking, a subsidiary undertaking, a parent undertaking or a subsidiary of a parent undertaking of an insurance undertaking which is the holder of an authorisation issued by the competent authorities of that other Member State, the Minister shall either comply with the request or allow the competent authorities of that other Member State to carry out the verification, including by means of on-the-spot verification.

(b) Verification may be carried out—

(i) by an authorised officer, or

(ii) by an official of, or auditor or other expert appointed by, the competent authorities of the other Member State, as the case may be, who shall have all of the powers of an authorised officer.

Co-operation between competent authorities.

8. (1) Where an insurance undertaking which is the holder of an authorisation issued by the Minister is directly or indirectly related to an insurance undertaking which is the holder of an authorisation issued by the competent authorities of another Member State, or they have a common participating undertaking, the Minister shall communicate—

(a) on request to the competent authorities of the other Member State all relevant information which may allow or facilitate the exercise of supplementary supervision by those authorities, and

(b) on his or her own initiative any information which appears to the Minister to be essential for those authorities.

(2) Where an insurance undertaking which is the holder of an authorisation issued by the Minister and either a credit institution as defined in Directive No. 77/780/EEC7 or an investment firm as defined in Directive No. 93/22/EEC8 , or both, are directly or indirectly related or have a common participating undertaking, the Minister shall co-operate closely with the competent authorities responsible for the supervision of those other undertakings, and such co-operation shall include the provision of information relevant to the purpose of supplementary supervision.

(3) Information received under these Regulations and, in particular, any exchange of information between the Minister and the competent authorities of other Member States which is provided for by these Regulations shall be subject to the obligation of professional secrecy within the meaning of Article 41 of the Life Regulations of 1994 and Article 22 of the Non-Life Regulations of 1994.

Intra-group transactions.

9. (1) This Regulation shall apply to—

(a) a transaction which exceeds, or

(b) a series of transactions between the same parties the aggregate of which, in the course of a financial year, exceeds,

euro 10,000 or the equivalent thereof in other currencies.

(2) An insurance undertaking which is the holder of an authorisation issued by the Minister shall report to the Minister annually, or at such other times as the Minister may request, any transaction between the insurance undertaking and all or any of the following:

(a) a related undertaking of the insurance undertaking;

(b) a participating undertaking in the insurance undertaking;

(c) a related undertaking of a participating undertaking in the insurance undertaking;

(d) a natural person who holds a participation in:

(i) the insurance undertaking or any of its related undertakings;

(ii) a participating undertaking in the insurance undertaking;

(iii) a related undertaking of a participating undertaking in the insurance undertaking.

(3) Without prejudice to the generality of paragraphs (1) and (2), this Regulation shall apply, in particular, to the following transactions:

(a) loans;

(b) guarantees and off-balance-sheet transactions;

(c) elements eligible for the solvency margin;

(d) investments;

(e) reinsurance operations;

(f) agreements to share costs.

(4) If, on the basis of the information provided to the Minister under this Regulation, it appears that the solvency of the insurance undertaking is, or may be, jeopardised, the Minister shall take appropriate measures at the level of the insurance undertaking.

Adjusted solvency requirement.

10. (1) In the case of an insurance undertaking referred to in Regulation 3(1), the undertaking shall provide to the Minister annually, or at such other times as the Minister may request, the result of an adjusted solvency calculation carried out in accordance with Annex I.

(2) A related undertaking, participating undertaking or related undertaking of a participating undertaking shall be included in the calculation referred to in paragraph (1).

(3) If the calculation referred to in paragraph (1) demonstrates that the adjusted solvency is negative, the Minister shall take appropriate measures at the level of the insurance undertaking.

Reinsurance undertakings, insurance holding companies and non-member-country insurance undertakings.

11. (1) In the case of an insurance undertaking referred to in Regulation 3(2), the undertaking shall provide to the Minister annually, or at such other times as the Minister may request, the result of the calculation prescribed in Annex II.

(2) All related undertakings of the insurance holding company, the reinsurance undertaking or the non-member-country insurance undertaking shall be included in the calculation required under paragraph (1), in the manner prescribed in Annex II.

(3) If the calculation referred to in paragraph (1) demonstrates that the solvency of the insurance undertaking concerned is, or may be, jeopardised, the Minister shall take appropriate measures at the level of the insurance undertaking.

Penalties.

12. (1) Insurance undertakings and all persons concerned shall comply with these Regulations including any applicable decision, direction, requirement or request of the Minister made or given pursuant to these Regulations.

(2) A person who fails to comply with Regulation 7(1), 9(2), 10(1) or (2) or 11(1) or (2) shall be guilty of an offence and shall be liable on summary conviction to a fine not exceeding £1,500.

(3) Where a person, after conviction for an offence under these Regulations, continues to contravene the provision concerned, the person shall be guilty of an offence on every day on which the contravention continues and shall be liable on summary conviction to a fine not exceeding £1,500 for each such offence.

(4) Where an offence under these Regulations is committed by a body corporate and is proved to have been so committed with the consent, connivance or approval of or to be attributable to any neglect on the part of a person being a director, manager, secretary or other officer of the body corporate, or any other person who was acting or purporting to act in any such capacity, that person, as well as the body corporate, shall be guilty of an offence and shall be liable to be proceeded against and punished as if he or she were guilty of the first-mentioned offence.

(5) A prosecution for an offence under these Regulations may be brought by the Minister.

ANNEX I

CALCULATION OF THE ADJUSTED SOLVENCY OF INSURANCE UNDERTAKINGS

CALCULATION METHOD AND GENERAL PRINCIPLES

Calculation Method

1. (1) Subject to subparagraph (2), the calculation of the adjusted solvency of insurance undertakings referred to in Regulation 3 (1) shall be carried out according to the method described in paragraph 18.

(2) The Minister may authorise or direct an insurance undertaking to use the method described in paragraph 19 or 20.

Proportionality

2. (1) The calculation of the adjusted solvency of an insurance undertaking shall take account of the proportional share held by the participating undertaking in its related undertakings.

(2) In this Annex “proportional share” means—

(a) in the case where the methods described in paragraphs 18 or 19 are used, the proportion of the subscribed capital that is held, directly or indirectly, by the participating undertaking, or

(b) in the case where the method described in paragraph 20 is used, the percentage used for the establishment of the consolidated accounts.

(3) Subject to subparagraph (4), where the related undertaking is a subsidiary undertaking and has a solvency deficit, the total solvency deficit of the subsidiary shall be taken into account.

(4) Where, in the opinion of the Minister, the responsibility of the parent undertaking owning a share of the capital is limited strictly and unambiguously to that share of the capital, the Minister may give permission for the solvency deficit of the subsidiary undertaking to be taken into account on a proportional basis.

Elimination of double use of solvency margin elements

General treatment of solvency margin elements.

3. (1) In the calculation of the adjusted solvency of an insurance undertaking, the double use of elements eligible for the solvency margin among the different insurance undertakings taken into account in that calculation shall be eliminated.

(2) For this purpose, when calculating the adjusted solvency of an insurance undertaking, and where the methods described in paragraphs 18, 19 and 20 do not provide for such elimination, the following amounts shall be eliminated:

(a) the value of any asset of that insurance undertaking which represents the financing of elements eligible for the solvency margin of one of its related insurance undertakings;

(b) the value of any asset of a related insurance undertaking of that insurance undertaking which represents the financing of elements eligible for the solvency margin of that insurance undertaking.

(c) the value of any of a related insurance undertaking of that insurance undertaking which represents the financing of elements eligible for the solvency margin of any other related insurance undertaking of that insurance undertaking.

Treatment of certain elements.

4. (1) Without prejudice to paragraph 3—

(a) profit reserves and future profits arising in a related life assurance undertaking of the insurance undertaking for which the adjusted solvency is calculated, and

(b) any subscribed but not paid-up capital of a related insurance undertaking of the insurance undertaking for which the adjusted solvency is calculated,

may only be included in the calculation in so far as they are eligible for covering the solvency margin requirement of that related undertaking.

(2) (a) Any subscribed but not paid-up capital which represents a potential obligation on the part of the participating undertaking shall be entirely excluded from the calculation.

(b) Any subscribed but not paid-up capital of the participating insurance undertaking which represents a potential obligation on the part of a related insurance undertaking shall be excluded from the calculation.

(c) Any subscribed but not paid-up capital of a related insurance undertaking which represents a potential obligation on the part of another related insurance undertaking of the same participating insurance undertaking shall be excluded from the calculation.

Transferability.

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

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.

/images/seal.jpg

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.