Directive 2002/83/EC of the European Parliament and of the CouncilDangos y teitl llawn

Directive 2002/83/EC of the European Parliament and of the Council of 5 November 2002 concerning life assurance

Article 23U.K.Categories of authorised assets

1.The home Member State may not authorise assurance undertakings to cover their technical provisions with any but the following categories of assets:

A.

investments

(a)

debt securities, bonds and other money- and capital-market instruments;

(b)

loans;

(c)

shares and other variable-yield participations;

(d)

units in undertakings for collective investment in transferable securities (UCITS) and other investment funds;

(e)

land, buildings and immovable-property rights;

B.

debts and claims

(f)

[F1debts owed by reinsurers, including reinsurers' shares of technical provisions, and by special purpose vehicles referred to in Article 46 of Directive 2005/68/EC;]

(g)

deposits with and debts owed by ceding undertakings;

(h)

debts owed by policy holders and intermediaries arising out of direct and reassurance operations;

(i)

advances against policies;

(j)

tax recoveries;

(k)

claims against guarantee funds;

C.

others

(l)

tangible fixed assets, other than land and buildings, valued on the basis of prudent amortisation;

(m)

cash at bank and in hand, deposits with credit institutions and any other body authorised to receive deposits;

(n)

deferred acquisition costs;

(o)

accrued interest and rent, other accrued income and prepayments;

(p)

reversionary interests.

2.In the case of the association of underwriters known as ‘Lloyd's’, asset categories shall also include guarantees and letters of credit issued by credit institutions within the meaning of Directive 2000/12/EC of the European Parliament and of the Council(1) or by assurance undertakings, together with verifiable sums arising out of life assurance policies, to the extent that they represent funds belonging to members.

[F13. The inclusion of any asset or category of assets listed in paragraph 1 shall not mean that all these assets should automatically be accepted as cover for technical provisions. The home Member State shall lay down more detailed rules setting the conditions for the use of acceptable assets.]

In determining and applying the rules which it lays down, the home Member State shall, in particular, ensure that the following principles are complied with:

(i)

assets covering technical provisions shall be valued net of any debts arising out of their acquisition;

(ii)

all assets must be valued on a prudent basis, allowing for the risk of any amounts not being realisable. In particular, tangible fixed assets other than land and buildings may be accepted as cover for technical provisions only if they are valued on the basis of prudent amortisation;

(iii)

loans, whether to undertakings, to a State or international organisation, to local or regional authorities or to natural persons, may be accepted as cover for technical provisions only if there are sufficient guarantees as to their security, whether these are based on the status of the borrower, mortgages, bank guarantees or guarantees granted by assurance undertakings or other forms of security;

(iv)

derivative instruments such as options, futures and swaps in connection with assets covering technical provisions may be used in so far as they contribute to a reduction of investment risks or facilitate efficient portfolio management. They must be valued on a prudent basis and may be taken into account in the valuation of the underlying assets;

(v)

transferable securities which are not dealt in on a regulated market may be accepted as cover for technical provisions only if they can be realised in the short term or if they are holdings in credit institutions, in assurance undertakings, within the limits permitted by Article 6, or in investment undertakings established in a Member State;

(vi)

debts owed by and claims against a third party may be accepted as cover for the technical provisions only after deduction of all amounts owed to the same third party;

(vii)

the value of any debts and claims accepted as cover for technical provisions must be calculated on a prudent basis, with due allowance for the risk of any amounts not being realisable. In particular, debts owed by policy holders and intermediaries arising out of assurance and reassurance operations may be accepted only in so far as they have been outstanding for not more than three months;

(viii)

where the assets held include an investment in a subsidiary undertaking which manages all or part of the assurance undertaking's investments on its behalf, the home Member State must, when applying the rules and principles laid down in this Article, take into account the underlying assets held by the subsidiary undertaking; the home Member State may treat the assets of other subsidiaries in the same way;

(ix)

deferred acquisition costs may be accepted as cover for technical provisions only to the extent that this is consistent with the calculation of the mathematical provisions.

4.Notwithstanding paragraphs 1, 2 and 3, in exceptional circumstances and at an assurance undertaking's request, the home Member State may, temporarily and under a properly reasoned decision, accept other categories of assets as cover for technical provisions, subject to Article 22.

Textual Amendments

(1)

OJ L 126, 26.5.2000, p. 1. Directive as amended by Directive 2000/28/EC (OJ L 275, 27.10.2000, p. 37).