Changes from report parliamentary committee draft to plenary report

Added‘3. Without prejudice to the treatment of undertakings referred to in Article 228(1), supervisory authorities may only decide to apply method 2 pursuant to paragraph 2, second subparagraph, of this Article to insurance and reinsurance undertakings, third-country insurance and reinsurance undertakings, insurance holding companies, mixed financial holding companies, and holding companies of third-country insurance and reinsurance undertakings.’;

Added(66) in Article 221, the following paragraph 1a is inserted:

Added‘1a. By way of derogation from paragraph 1 of this Article, for the sole purpose of Article 228, irrespective of whether method 1 or method 2 is used, ‘proportional share’ means the proportion of the subscribed capital that is held, directly or indirectly, by the participating undertaking in the related undertaking.’;

Added(67) in Article 222, paragraph 4 is replaced by the following:

Added‘4. The sum of the own funds referred to in paragraphs 2 and 3 shall not exceed the contribution of the related insurance or reinsurance undertaking to the group Solvency Capital Requirement.’;

Added(68) in Article 226, the following paragraph 3 is added:

Added‘3. For the purposes of paragraphs 1 and 2, holding companies of third-country insurance and reinsurance undertakings shall also be treated as insurance or reinsurance undertakings.’;

Added(69) in Article 227(1), first subparagraph, the words ‘and Article 233a’ are inserted after the words ‘Article 233’;

Added(70) Article 228 is replaced by the following:

Added‘Article 228 Treatment of specific related undertakings from other financial sectors

Added1. Irrespective of the method used in accordance with Article 220 of this Directive, for the purpose of calculating the group solvency, the participating insurance or reinsurance undertaking shall take into account the contribution to the group eligible own funds and to the group Solvency Capital Requirement of the following undertakings:

Added(a) credit institutions or investment firms within the meaning of Article 4(1), point (1) or (2), of Regulation (EU) No 575/2013 ;

Added(b) UCITS management companies within the meaning of Article 2(1), point (b), of Directive 2009/65/EC and investment companies authorised pursuant to Article 27 of that Directive provided that they have not designated a management company pursuant to that Directive;

Added(c) alternative investment fund managers within the meaning of Article 4(1), point (b), of Directive 2011/61/EU;

Added(d) undertakings other than regulated undertakings which carry one or more of the activities referred to in Annex I to Directive 2013/36/EU where those activities constitute a significant part of their overall activity;

Added(e) institutions for occupational retirement provision within the meaning of Article 6, point (1) of Directive (EU) 2016/2341.

Added2. The contribution to the group eligible own funds of the related undertakings referred to in paragraph 1 of this Article shall be calculated as the sum of the proportional share of the own funds of each undertaking, where those own funds are calculated as follows:

Added(a) for each undertaking referred to in paragraph 1, point (a), of this Article in accordance with the relevant sectoral rules, as defined in Article 2, point (7), of Directive 2002/87/EC;

Added(b) for each related undertaking referred to in paragraph 1, point (b), of this Article in accordance with Article 2(1), point 1, of Directive 2009/65/EC;

Added(c) for each related undertaking referred to in paragraph 1, point (c), of this Article in accordance with Article 4(1), point (ad), of Directive 2011/61/EU;

Added(d) for each related undertaking referred to in paragraph 1, point (d), of this Article in accordance with the relevant sector rules as defined in Article 2, point (7), of Directive 2002/87/EC if they were regulated entities within the meaning of Article 2(4) of that Directive;

Added(e) for each related undertaking referred to in paragraph 1, point (e), of this Article the available solvency margin calculated in accordance with Article 17a of Directive (EU) 2016/2341.

AddedFor the purpose of the first subparagraph of this paragraph, the amount of own funds of each related undertaking corresponding to non-distributable reserves and other items identified by the group supervisor as having a reduced loss-absorbency capacity, as well as preference shares, subordinated mutual members account, subordinated liabilities, and deferred tax assets, that are included in the own funds in excess to the own fund requirements calculated in accordance with paragraph 3, shall not be taken into account, unless the participating insurance or reinsurance undertaking is able to justify, to the satisfaction of the group supervisor, that those items can be made available to cover the group Solvency Capital Requirement. When determining the composition of the excess own funds, the participating insurance or reinsurance undertaking shall take into account that certain requirements of some related undertakings shall only be met with Common Equity 1 capital or Additional Tier 1 capital within the meaning of Regulation (EU) No 575/2013.

Added3. The contribution to the group Solvency Capital Requirement of the related undertakings referred to in paragraph 1 shall be calculated as the sum of the proportional share of the capital requirement or notional capital requirement of each related undertaking, where that capital requirement or notional capital requirement is calculated as follows:

Added(a) for related undertakings referred to in paragraph 1, point (a), of this Article in accordance with the following:

Added(b) for each investment firm which is subject to own fund requirements in accordance with Regulation (EU) 2019/2033, the sum of the requirement laid down in Article 11 of that Regulation, the specific own funds requirements referred to in Article 39(2), point (a), of Directive (EU) 2019/2034, or the local own funds requirements in third countries;

Added(c) for each credit institution, the higher of the following:

Added– the sum of the requirement laid down in Article 92(1), point (c), of Regulation (EU) No 575/2013, including measures referred to in Articles 458 and 459 of that Regulation, the specific own funds requirements to address risks other than the risk of excessive leverage referred to in Article 104 of Directive 2013/36/EU, the combined buffer requirement defined in Article 128, point (6), of that Directive, or any the local own funds requirements in third countries;

Added– the sum of the requirements laid down in Article 92(1), point (d), of Regulation (EU) No 575/2013, including measures referred to in Articles 458 and 459 of that Regulation, the specific own funds requirements to address the risk of excessive leverage referred to in Article 104 of Directive 2013/36/EU, the leverage ratio buffer requirement laid down in Article 92(1a) of Regulation (EU) No 575/2013, or the local own funds requirements in third countries insofar as those requirements are to be met by Tier 1 capital;

Added(d) for each related undertaking referred to in paragraph 1, point (b), of this Article, in accordance with Article 7(1), point (a), of Directive 2009/65/EC;

Added(e) for each related undertaking referred to in paragraph 1, point (c), of this Article, in accordance with Article 9 of Directive 2011/61/EU;

Added(f) for each related undertaking referred to in paragraph 1, point (d), of this Article, the capital requirement with which the related undertaking would have to comply under the relevant sector rules as defined in Article 2, point (7), of Directive 2002/87/EC if it was a regulated entity within the meaning of Article 2, point (4), of that Directive;

Added(g) for each related undertaking referred to in paragraph 1, point (e), of this Article, the required solvency margin calculated in accordance with Article 17b of Directive (EU) 2016/2341.

Added4. Where several related undertakings referred to in paragraph 1 form a subgroup which is subject to a capital requirement on a consolidated basis in accordance with one of the Directives or Regulations referred to in paragraph 3, the group supervisor may allow calculating the contribution of those related undertakings to the group eligible own funds as the proportional share of that subgroup’s own funds instead of applying paragraph 2, points (a) to (e), to each individual undertaking belonging to that subgroup. In that case, the participating insurance or reinsurance undertaking shall also calculate the contribution of those related undertakings to the group Solvency Capital Requirement as the proportional share of that subgroup’s capital requirement, instead of applying paragraph 3, points (a) to (e), to each individual undertaking belonging to that subgroup.

AddedFor the purposes of the first subparagraph of this paragraph, paragraphs 2 and 3, shall apply mutatis mutandis to the subgroup.

Added5. Notwithstanding paragraphs 1 to 4, Member States shall allow their supervisory authorities, where they assume the role of group supervisor with regard to a particular group, to decide, at the request of the participating undertaking or on their own initiative, to deduct any participation as referred to in paragraph 1, points (a) to (d) from the own funds eligible for the group solvency of the participating undertaking.’

Added5a. By 31 December 2027, the Commission shall assess the application of Directive 2002/87/EC. The assessment shall build on the Commission’s problem analysis in the Review undertaken in 2012 (COM(2012)0785), which was not accompanied by a legislative proposal. The assessment shall in particular concern the scope of the Directive, in particular financial services undertakings already subject to financial supervision under sectoral rules, but not yet covered by the Directive 2002/87/EC, as well as the question to which extent the supplementary requirements stemming from this directive, considered jointly with the latest requirements stemming from sectoral directives and regulations, ensure an adequate level playing field for the various types of structures that financial groups may have, and for various sets of assumptions regarding notably diversification effects, acquisition values, rate environments, and prudential treatments of participations in other financial undertakings.

AddedThe Commission shall present a report to the European Parliament and to the Council accompanied, where deemed necessary, by proposals for the amendment of that Directive and where appropriate consequential amendments to sectoral Directives, including Directives 2009/65/EC, 2009/138/EC, 2011/61/EU, 2013/36/EU, and (EU) 2016/2341.’;

Added(71) in Title III, Chapter II, Section 1, Subsection 3, the following Article 229a is added:

Added‘Article 229a Simplified calculations

Added1. For the purposes of Article 230, the group supervisor, after consulting the other supervisory authorities concerned, may allow the participating insurance or reinsurance undertaking to apply a simplified approach to participations in related undertakings that are immaterial.

AddedThe application of the simplified approach, referred to in the first subparagraph, to one or several related undertakings shall be duly justified by the participating undertaking to the group supervisor, considering the nature, scale and complexity of the risks of the related undertaking or undertakings.

AddedMember States shall require the participating undertaking to assess, on an annual basis, whether the use of the simplified approach is still justified, and shall publicly disclose, in its group solvency and financial condition report, the list and size of the related undertakings subject to that simplified approach.

Added2. For the purpose of paragraph 1, the participating insurance and reinsurance undertaking shall demonstrate, to the satisfaction of the group supervisor, that the application of the simplified approach to participations in one or several related undertakings is sufficiently prudent to avoid an underestimation of risks stemming from that undertaking or from those undertakings when calculating the group solvency.

AddedWhen applied to a third-country insurance or reinsurance undertaking which has its head office in a country that is not equivalent or provisionally equivalent within the meaning of Article 227, the simplified approach shall not result in a contribution of the related undertaking to the group Solvency Capital Requirement that is lower than the capital requirement of that undertaking, as laid down by the third country concerned.

AddedThe simplified approach shall not be applied to a related third-country insurance or reinsurance undertaking, where the participating insurance or reinsurance undertaking has no reliable information on the capital requirement as laid down in that third country.

Added3. For the purposes of paragraph 1, related undertakings shall be deemed immaterial where the book value of each of them represents less than 0,2 % of the group’s consolidated accounts and the sum of the book values of all such undertakings represents less than 0,5 % of the group’s consolidated accounts.’;

Added(72) Article 230 is amended as follows:

Added(a) paragraph 1 is replaced by the following:

Added‘1. The calculation of the group solvency of the participating insurance or reinsurance undertaking shall be carried out on the basis of the consolidated accounts.

AddedThe group solvency of the participating insurance or reinsurance undertaking is the difference between the following:

Added(a) the sum of the own funds eligible to cover the Solvency Capital Requirement, calculated on the basis of consolidated data, and the contribution to the group eligible own funds of related undertakings referred in Article 228(1), where that contribution is calculated in accordance with Article 228(2) or (4);

Added(b) the sum of the Solvency Capital Requirement at group level calculated on the basis of consolidated data and the contribution to the group Solvency Capital Requirement of the related undertakings referred in Article 228(1), where that contribution is calculated in accordance with Article 228(3) or (4).

AddedFor the purposes of the second subparagraph, holdings in related undertakings referred to in Article 228(1) shall not be included in the consolidated data.

AddedTitle I, Chapter VI, Section 3, Subsections 1, 2 and 3 and Title I, Chapter VI, Section 4, Subsections 1, 2 and 3 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. In particular, an own fund item that is issued by a participating undertaking shall not be considered clear of encumbrances within the meaning of Article 93(2), second subparagraph, point (c), if the repayment of this item cannot be refused to its holder when a related insurance or reinsurance undertaking is wound up.’;

Added(b) paragraph 2 is amended as follows:

Added(i) in the second subparagraph, the following points (c) and (d) are added:

Added‘(c) the proportional share of the local capital requirements, at which the authorisation would be withdrawn, for related third-country insurance and reinsurance undertakings;

Added(d) the proportional share of the notional Minimum Capital Requirement of the insurance holding companies and mixed financial holding companies.’;

Added(ii) the third subparagraph is replaced by the following: