Changes from plenary report to adopted text

Removed(d) paragraph 3 is replaced by the following:

Removed‘3. By 31 December 2025, and every five years thereafter, EIOPA shall make an assessment of the appropriateness of the methods, assumptions, and standard parameters used when calculating the Solvency Capital Requirement standard formula. It shall in particular take into account the performance of any asset class and financial instruments, the behaviour of investors in those assets and financial instruments as well as developments in international standard setting in financial services. On the basis of EIOPA’s assessment, the Commission shall present, where appropriate, proposals for the amendment of this Directive, or of delegated or implementing acts adopted pursuant hereto.’

Removed▌

Removed(48) in Article 122, the following paragraph 5 is added:

Removed‘5. Member States may allow insurance and reinsurance undertakings to take into account the effect of credit spread movements on the volatility adjustment calculated in accordance with Article 77d in their internal model, only where:

Removed(a) the method to take into account the effect of credit spread movements on the volatility adjustment for the euro does not take into account a possible increase of the volatility adjustment by a macro volatility adjustment pursuant to Article 77d(4);

Removed(b) the Solvency Capital Requirement is not lower than any of the following:

Removed(i) a notional Solvency Capital Requirement calculated as the Solvency Capital Requirement, except that the effect of credit spread movements on the volatility adjustment is taken into account in accordance with the methodology used by EIOPA for the purposes of the publication of technical information pursuant to Article 77e(1), point (c);

Removed(ii) a notional Solvency Capital Requirement calculated in accordance with (i), except that the representative portfolio for a currency referred to in Article 77d(2), second subparagraph, is determined on the basis of the assets in which the insurance and reinsurance undertaking is investing instead of the assets of all insurance or reinsurance undertakings with insurance or reinsurance obligations denominated in that currency.

RemovedFor the purpose of the first subparagraph, point (b), the determination of the representative portfolio for a given currency shall be based on the undertaking’s assets dominated in that currency and used to cover the best estimate for insurance and reinsurance obligations denominated in that currency.’;

Removed(49) Article 132 is amended as follows:

Removed(a) in paragraph 3, second subparagraph, the words ‘Directive 85/611/EEC’ are replaced by the words ‘Directive 2009/65/EC’;

Removed(b) the following paragraphs 5, 6 and 7 are added:

Removed‘5. Member States shall ensure that insurance and reinsurance undertakings take account of possible macroeconomic and financial markets’ developments, and of the potential long-term impact of investment decisions on environmental, social, and governance factors, and, at the request of the supervisory authority, macroprudential concerns when they decide on their investment strategy.

Removed6. Insurance and reinsurance undertakings shall assess the extent to which their investment strategy may affect macroeconomic and financial markets’ developments and have the potential to turn into sources of systemic risk, and incorporate such considerations as part of their investment decisions.

Removed7. For the purpose of paragraphs 5 and 6 of this Article, macroeconomic developments and macroprudential concerns shall have the same meaning as in Article 45.’;

Removed(50) in Article 133(3), the words ‘Directive 85/611/EEC’ are replaced by the words ‘Directive 2009/65/EC’;

Removed(51) Article 138(4) is amended as follows:

Removed(a) the first subparagraph is replaced by the following:

Removed‘In the event of exceptional adverse situations affecting insurance and reinsurance undertakings representing a significant share of the market or of the affected lines of business, as declared by EIOPA, the supervisory authority may extend, for affected undertakings, the period set out in paragraph 3, second subparagraph, by a maximum period of seven years, taking into account all relevant factors including the average duration of the technical provisions.’;

Removed(b) in the second subparagraph, the first sentence is replaced by the following:

Removed‘Without prejudice to the powers of EIOPA under Article 18 of Regulation (EU) No 1094/2010, for the purposes of this paragraph EIOPA shall, following a request by the supervisory authority concerned and, where appropriate, after consulting the ESRB, declare the existence of exceptional adverse situations.’;

Removed(52) Article 139 is replaced by the following:

Removed‘Article 139 Non-Compliance with the Minimum Capital Requirement

Removed1. Insurance and reinsurance undertakings shall inform the supervisory authority immediately where they observe that the Minimum Capital Requirement is no longer complied with, or where there is a risk of non-compliance in the following three months.

RemovedFor the purpose of the first subparagraph of this paragraph, the requirement to inform the supervisory authority shall apply irrespective of whether the insurance or reinsurance undertaking observes the failure to comply with the Minimum Capital Requirement or the risk of non-compliance during a calculation of the Minimum Capital Requirement pursuant to Article 129(4) or during a calculation of the Minimum Capital Requirement between two dates when such calculation is reported to the supervisory authority pursuant to Article 129(4).

Removed2. Within one month from the observation of non-compliance with the Minimum Capital Requirement or from the observation of the risk of non-compliance, the insurance or reinsurance undertaking concerned shall submit, for approval by the supervisory authority, a short-term realistic finance scheme to restore, within three months of that observation, the eligible basic own funds, at least to the level of the Minimum Capital Requirement or to reduce its risk profile to ensure compliance with the Minimum Capital Requirement.

Removed3. If a winding-up proceeding is not opened within two months of receipt of the information referred to in paragraph 1, the supervisory authority of the home Member State shall consider restricting or prohibiting the free disposal of assets of the insurance or reinsurance undertaking. It shall inform the supervisory authorities of the host Member States accordingly. At the request of the supervisory authority of the home Member State, those authorities shall take the same measures. The supervisory authority of the home Member State shall designate the assets to be covered by such measures.

Removed4. EIOPA may develop guidelines for the actions that supervisory authorities should take when they observe a failure to comply with the Minimum Capital Requirement or the risk of non-compliance referred to in paragraph 1.’;

Removed(52a) Article 141 is replaced by the following:

Removed‘Article 141

RemovedSupervisory powers in deteriorating financial conditions

Removed1. Following a notification pursuant to Article 136 or following the identification of deteriorating financial conditions pursuant to Article 36(3), where the insurance or reinsurance undertaking’s decisions, including financial ones, would during the following three months result in or are already resulting in non-compliance with any of the items referred to in Article 36(2), points (a) to (e), the supervisory authorities shall have the power to take the necessary measures to restore compliance.

Removed2. The measures referred to in paragraph 1 shall be proportionate to the risk and to the extent of non-compliance with regulatory requirements, and may contain the following:

Removed(a) requiring the administrative, management or supervisory body of the undertaking to update the pre-emptive recovery plan drawn up in accordance with Article 5 of Directive (EU) xx/xx of the European Parliament and of the Council*, where the circumstances are different from the assumptions set out in that plan;

Removed(b) requiring the administrative, management or supervisory body of the undertaking to take measures set out in the pre-emptive recovery plan drawn up in accordance with Article 5 of Directive (EU) xx/xx [PO, please insert the number of the IRRD]. Where the plan is updated pursuant to point (a) of this paragraph, the measures taken shall contain any updated measures;

Removed(c) requiring the administrative, management or supervisory body of an undertaking that does not have in place a pre-emptive recovery plan as referred to in Article 5 of Directive (EU) xx/xx [PO, please insert the number of the IRRD], to identify the causes of the non-compliance or likely non-compliance with regulatory requirements and to identify suitable measures and a timeframe for the implementation of those regulatory requirements;

Removed(d) requiring the administrative, management or supervisory body of the undertaking to suspend or restrict variable remuneration and bonuses, distributions on own fund instruments or repayment or repurchase of own fund items.

Removed3. Where the solvency position of the undertaking continues to deteriorate following a notification as referred to in Article 138(1) or Article 139(1), the supervisory authorities shall have the power to take all measures, including those referred to in paragraph 2, which are necessary to safeguard the interests of policy holders in the case of insurance contracts, or the obligations arising out of reinsurance contracts.

RemovedThose measures shall be proportionate and thus reflect the level of the deterioration of the solvency position of the insurance or reinsurance undertaking concerned.’;

Removed(53) in Article 144, the following paragraph 4 is added:

Removed‘4. In the event of withdrawal of authorisation, Member States shall ensure that insurance and reinsurance undertakings continue to be subject to the general rules and objectives of the insurance supervision set out in Title I, Chapter III, until any winding-up proceedings are opened.’;

Removed(54) in Title I, the following chapter is inserted:

Removed‘CHAPTER VIIA Macroprudential tools

Removed1. Member States shall ensure that the liquidity risk management of insurance and reinsurance undertakings referred to in Article 44(2), point (d), ensure they maintain adequate liquidity to settle their financial obligation towards policyholders and other counterparties when they fall due, even under stressed conditions.

Removed2. For the purpose of paragraph 1, Member States shall ensure that insurance and reinsurance undertakings draw up and keep up to date a liquidity risk management plan projecting the incoming and outgoing cash flows in relation to their assets and liabilities. Member States shall ensure that insurance and reinsurance undertakings develop and keep up to date a set of liquidity risk indicators to identify, monitor and address potential liquidity stress.

Removed3. Member States shall ensure that insurance and reinsurance undertakings submit to the supervisory authorities the liquidity risk management plan▌.

Removed4. Member States shall ensure that▌low-risk profile undertakings pursuant to Article 29c and insurance or reinsurance undertakings which have obtained prior approval from the supervisory authority pursuant to Article 29d are not obliged to draw up a liquidity risk management plan as referred to in paragraph 2 of this Article.

Removed5. Member States shall ensure that, where insurance and reinsurance undertakings apply the matching adjustment referred to in Article 77b or the volatility adjustment referred to in Article 77d, they may combine the liquidity risk management plan referred to in paragraph 2 of this Article with the plan required in accordance with Article 44(2), third subparagraph.

Removed6. In order to ensure consistent application of this Article, EIOPA shall develop draft regulatory technical standards to further specify the content and the frequency of update of the liquidity risk management plan.

RemovedEIOPA shall submit those draft regulatory technical standards to the Commission by [OP please add date = 12 months after entry into force].

RemovedPower is conferred on the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1094/2010.

RemovedArticle 144b Supervisory powers to remedy liquidity vulnerabilities in exceptional circumstances

Removed1. As part of the regular supervisory review process, supervisory authorities shall monitor the liquidity position of individual insurance and reinsurance undertakings. Where they identify material liquidity risks, they shall inform the concerned insurance or reinsurance undertaking of this assessment. The insurance or reinsurance undertaking shall explain how it intends to address those liquidity risks.

Removed2. Member States shall ensure that supervisory authorities have the necessary powers to require undertakings to reinforce their liquidity position when liquidity risks or deficiencies are identified. Such powers shall be applied where there is sufficient evidence regarding the existence of liquidity risk vulnerabilities and the absence of effective remedies taken by the insurance or reinsurance undertaking.

RemovedThe measures taken by supervisory authorities on the basis of this paragraph shall be reviewed at least every six months by the supervisory authority and be removed when the undertaking has taken effective remedies.

RemovedWhere relevant, the supervisory authority shall share the evidence of liquidity risk and vulnerabilities with EIOPA.

Removed3. Member States shall ensure that, in relation to individual undertakings facing extreme liquidity risks or an imminent risk of non-compliance with their Solvency Capital Requirement that may cause a severe and imminent threat to the protection of policyholders or to the stability of the financial system, supervisory authorities have the power to temporarily:

Removed(a) restrict or suspend dividend distributions to shareholders and other subordinated creditors;

Removed(b) restrict or suspend other payments to shareholders and other subordinated creditors;