The Solvency ii
Directive
(21)
In order to guarantee transparency
insurance and reinsurance undertakings should publicly disclose at least annually essential information on their solvency and financial
condition.
Undertakings
should be allowed to publicly disclose additional information on a voluntary basis.
To
publicly disclose information means to make it available to the
public either in printed or electronic form free
of charge.
(22) Provision should be made for exchanges of information between the supervisory
authorities and authorities or bodies which, by virtue of
their function, help to strengthen the stability of the financial
system.
It
is therefore necessary to specify the conditions under which those
exchanges of information should be possible.
Moreover,
where information may be disclosed only with the express agreement
of the supervisory authorities, those authorities should be enabled,
where appropriate, to make their agreement subject to compliance
with strict conditions.
(23) It is necessary to promote supervisory convergence not only in
respect of supervisory tools but also in respect of supervisory practices.
The
Committee of European Insurance and Occupational
Pensions Supervisors (CEIOPS) established by Commission
Decision 2004/6/EC of 5 November 2003 should play an important role
in this respect and report regularly to the European Parliament and
the Commission on the progress made.
(23a) The objective of
the information and report to be presented in relation to capital
add-ons by the CEIOPS is not to inhibit their use as permitted under
this Directive but to contribute to an ever higher degree of
supervisory convergence in the use of capital add-ons between
supervisory authorities in the different Member States.
(24)
In order to limit the administrative
burden and avoid duplication of tasks,
supervisory authorities and national statistical authorities
should cooperate and exchange information.
(25) For the purposes of strengthening the
supervision of insurance and reinsurance undertakings and the
protection of policyholders, the statutory
auditors within the meaning of
Directive 2006/43/EC of the European Parliament and of
the Council of 17 May 2006 on statutory audits of annual accounts
and consolidated accounts should have a duty
to report promptly, any facts which are likely to have a serious
effect on the financial situation or the administrative
organisation of an insurance or a reinsurance undertaking.
(26) Insurance undertakings pursuing
both life and non-life activities should manage those activities separately, in
order to protect the interests of life
policyholders.
In
particular, those undertakings should be subject
to the same capital requirements as those applicable to an
equivalent insurance group, made
up of a life insurance undertaking and a non-life undertaking,
taking into account the increased transferability of capital in the
case of composite insurance undertakings.
(27) The assessment
of the financial position of insurance and reinsurance undertakings
should rely on sound economic principles and make optimal use of the information provided by financial
markets, as well as generally available data on insurance
technical risks.
In
particular, solvency requirements should be based on an economic
valuation of the whole balance-sheet.
(28) Valuation standards for supervisory purposes
should be compatible with international accounting developments, to
the extent possible, so as to limit the administrative burden on
insurance or reinsurance undertakings.
(29) In accordance
with that approach, capital requirements should
be covered by own funds whether, on or off the balance-sheet
items.
Since
all financial resources do not provide full
absorption of losses in the case of winding-up and on a
going-concern basis, own fund items should be classified in accordance with quality criteria
into three tiers, and the eligible amount of own funds to cover
capital requirements should be limited accordingly.
The
limits applicable to own fund items should only apply to determine
the solvency standing of insurance and reinsurance undertakings, and
should not further restrict the freedom of those undertakings with
respect to their internal capital management.
(29a)
Generally, assets which are free from any
foreseeable liabilities are available to absorb losses due to
adverse business fluctuations, both on a going-concern basis as well
as in the case of winding-up.
Therefore
the vast majority of the excess of assets over liabilities, as
valued in accordance with the principles set out in this Directive,
should be treated as high quality capital (Tier 1).
(29b)
Not all assets within an undertaking are unrestricted.
In
some Member States, specific products origin some ring-fenced fund
structures which give one class of policyholders greater rights to
assets within their own "fund".
Although
these assets are included in computing the excess of assets over
liabilities for own-funds purposes they cannot
in fact be made available to meet the risks outside the ring-fenced
fund.
To
be consistent with the economic approach, the assessment of
own-funds needs to be adjusted to reflect the different nature of
assets, which form part of a ring-fenced arrangement.
Similarly,
the Solvency Capital Requirement calculation
should reflect the reduction in pooling/diversification related to
those ring-fenced funds.
(29c) It is current practice in certain Member States
that insurance companies sell life
insurance products in relation to which the policy holders and
beneficiaries contribute to the risk capital of the company in
exchange for all or part of the return on the contributions.
Those
accumulated profits are surplus funds,
which are the property of the legal entity in which they are
generated.
(29d) Surplus funds should be valued in line with
the economic approach laid down in this Directive.
In
this respect, a mere reference to the evaluation of surplus funds in
the statutory annual accounts should not be
sufficient.
In
line with the requirements on own funds, surplus funds should be
subject to the criteria laid down in this Directive on the classification in tiers.
This
means, inter alia, that only surplus funds which fulfil the
requirements for classification in Tier 1 should be considered as
Tier 1 capital.
(29e) Mutual and
mutual-type associations with variable contributions may call for supplementary contributions from their
members in order to increase the amount of financial resources that
they hold to absorb losses.
Those
contributions (supplementary members' calls) may represent a
significant source of funding for mutual and mutual-type
associations, including when those associations are confronted with
adverse business fluctuations.
Therefore
those contributions should be recognised as
ancillary own fund items and treated accordingly for solvency
purposes.
In
particular, in the case of mutual or mutual-type associations of
ship owners with variable
contributions solely insuring maritime risks,
the recourse to supplementary members' calls has been a
long-established practice, subject to specific recovery
arrangements, and the approved amount of those members' calls should
be treated as good quality capital (Tier 2).
Similarly,
in the case of other mutual and mutual-type associations where
supplementary members' calls are of similar quality, the approved
amount of those members' calls should also be treated as good quality capital (Tier 2).
(30) In
order to allow insurance and reinsurance undertakings to meet their
commitments towards policyholders and beneficiaries, Member States
should require those undertakings to establish
adequate technical provisions.
The
principles and actuarial and statistical methodologies underlying
the calculation of those technical provisions should be harmonised
throughout the Community in order to achieve better comparability
and transparency.
  
Return to Index
Solvency ii Introduction (1) to (10)
Solvency ii Introduction (11) to (20)
Solvency ii Introduction (21) to (30)
Solvency ii Introduction (31) to (40)
Solvency ii Introduction (41) to (50)
Solvency ii Introduction (51) to (60)
Solvency ii Introduction (61) to (70)
Solvency ii Introduction (71) to (80)
Solvency ii Introduction (81) to (95)
Solvency ii Articles 1 to 10
Solvency ii Articles 11 to 20
Solvency ii Articles 21 to 30
Solvency ii Articles 31 to 39
Solvency ii Articles 40 to 49
Solvency ii Articles 50 to 62
Solvency ii Articles 63 to 71
Solvency ii Articles 72 to 85
Solvency ii Articles 86 to 99
Solvency ii Articles 100 to 125
Solvency ii Articles 126 to 142
Solvency ii Articles 143 to 159
Solvency ii Articles 160 to 173
Solvency ii Articles 174 to 203
Solvency ii Articles 204 to 215
Solvency ii Articles 216 to 233
Solvency ii Articles 234 to
262
Solvency ii Articles 263 to 298
Solvency ii Articles 300 to 313
Solvency ii ANNEX 1 to 3
Solvency ii ANNEX 4 to 5
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