Directive 2005/68/EC of the European Parliament and of the Council (repealed)Show full title

Article 59 U.K. Amendments to Directive 98/78/EC

Directive 98/78/EC is hereby amended as follows:

1.

The title shall be replaced by the following:

‘Directive 98/78/EC of the European Parliament and of the Council of 27 October 1998 on the supplementary supervision of insurance and reinsurance undertakings in an insurance or reinsurance group’.

2.

Article 1 is hereby amended as follows:

(a)

the points (c), (i), (j) and (k) shall be replaced by the following:

‘(c)

“reinsurance undertaking” means an undertaking, which has received official authorisation in accordance with Article 3 of Directive 2005/68/EC of the European Parliament and of the Council of 16 November 2005 on reinsurance(1);’

‘(i)

“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 or non-member country reinsurance undertakings, at least one of such subsidiary undertakings being an insurance undertaking, or a reinsurance undertaking and which is not a mixed financial holding company within the meaning of Directive 2002/87/EC of the European Parliament and of the Council of 16 December 2002 on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate(2);

(j)

“mixed-activity insurance holding company” means a parent undertaking, other than an insurance undertaking, a non-member country insurance undertaking, a reinsurance undertaking, a non-member country reinsurance undertaking, an insurance holding company or a mixed financial holding company within the meaning of Directive 2002/87/EC, which includes at least one insurance undertaking or a reinsurance undertaking among its subsidiary undertakings;

(k)

“competent authorities” means the national authorities which are empowered by law or regulation to supervise insurance undertakings or reinsurance undertakings.’

(b)

the following point shall be added:

‘(l)

“non-member country reinsurance undertaking” means an undertaking which would require authorisation in accordance with Article 3 of Directive 2005/68/EC if it had its head office in the Community;’.

3.

Articles 2, 3 and 4 shall be replaced by the following:

‘Article 2 Cases of application of supplementary supervision of insurance undertakings and reinsurance undertakings

1. In addition to the provisions of Directive 73/239/EEC, Directive 2002/83/EC of the European Parliament and of the Council of 5 November 2002 concerning life assurance(3) and Directive 2005/68/EC, which lay down the rules for the supervision of insurance undertakings and reinsurance undertakings, Member States shall provide supervision of any insurance undertaking or any reinsurance undertaking, which is a participating undertaking in at least one insurance undertaking, reinsurance undertaking, non-member-country insurance undertaking or non-member country reinsurance undertaking, shall be supplemented in the manner prescribed in Articles 5, 6, 8 and 9 of this Directive.

2. Every insurance undertaking or reinsurance undertaking the parent undertaking of which is an insurance holding company, a non-member country insurance or a non-member country reinsurance undertaking shall be subject to supplementary supervision in the manner prescribed in Articles 5(2), 6, 8 and 10.

3. Every insurance undertaking or reinsurance undertaking the parent undertaking of which is a mixed-activity insurance holding company shall be subject to supplementary supervision in the manner prescribed in Articles 5(2), 6 and 8.

Article 3 Scope of supplementary supervision

1. The exercise of supplementary supervision in accordance with Article 2 shall in no way imply that the competent authorities are required to play a supervisory role in relation to the non-member country insurance undertaking, the non-member country reinsurance undertaking, insurance holding company or mixed-activity insurance holding company taken individually.

2. The supplementary supervision shall take into account the following undertakings referred to in Articles 5, 6, 8, 9 and 10:

• related undertakings of the insurance undertaking or of the reinsurance undertaking,

• participating undertakings in the insurance undertaking or in the reinsurance undertaking,

• related undertakings of a participating undertaking in the insurance undertaking or in the reinsurance undertaking.

3. Member States may decide not to take into account in the supplementary supervision referred to in Article 2 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 the provisions of Annex I, point 2.5, and of Annex II, point 4.

Furthermore, the competent authorities responsible for exercising supplementary supervision may in the cases listed below decide on a case-by-case basis not to take an undertaking into account in the supplementary supervision referred to in Article 2:

• if the undertaking which should be included is of negligible interest with respect to the objectives of the supplementary supervision of insurance undertakings or reinsurance undertakings;

• if the inclusion of the financial situation of the undertaking would be inappropriate or misleading with respect to the objectives of the supplementary supervision of insurance undertakings or reinsurance undertakings.

Article 4 Competent authorities for exercising supplementary supervision

1. Supplementary supervision shall be exercised by the competent authorities of the Member State in which the insurance undertaking or the reinsurance undertaking has received official authorisation under Article 6 of Directive 73/239/EEC or Article 4 of Directive 2002/83/EC or Article 3 of Directive 2005/68/EC.

2. Where insurance undertakings or reinsurance undertakings authorised in two or more Member States have as their parent undertaking the same insurance holding company, non-member country insurance undertaking, non-member country reinsurance undertaking or mixed-activity insurance holding company, the competent authorities of the Member States concerned may reach agreement as to which of them will be responsible for exercising supplementary supervision.

3. Where a Member State has more than one competent authority for the prudential supervision of insurance undertakings and reinsurance undertakings, such Member State shall take the requisite measures to organise coordination between those authorities.’

4.

In Article 5, paragraph 1 shall be replaced by the following:

‘1. Member States shall prescribe that the competent authorities are to require that every insurance undertaking or reinsurance undertaking subject to supplementary supervision shall have adequate internal control mechanisms in place for the production of any data and information relevant for the purposes of such supplementary supervision.’

5.

Articles 6, 7 and 8 shall be replaced by the following:

‘Article 6 Access to information

1. Member States shall provide that their competent authorities responsible for exercising supplementary supervision are to have access to any information which would be relevant for the purpose of supervision of an insurance undertaking or a reinsurance undertaking subject to such supplementary supervision. The competent authorities may address themselves directly to the relevant undertakings referred to in Article 3(2) to obtain the necessary information only if such information has been requested from the insurance undertaking or the reinsurance undertaking and has not been supplied by it.

2. Member States shall provide that their competent authorities may carry out within their territory, themselves or through the intermediary of persons whom they appoint for that purpose, on-the-spot verification of the information referred to in paragraph 1 at:

• the insurance undertaking subject to supplementary supervision,

• the reinsurance undertaking subject to supplementary supervision,

• subsidiary undertakings of that insurance undertaking,

• subsidiary undertakings of that reinsurance undertaking,

• parent undertakings of that insurance undertaking,

• parent undertakings of that reinsurance undertaking,

• subsidiary undertakings of a parent undertaking of that insurance undertaking.

• subsidiary undertakings of a parent undertaking of that reinsurance undertaking.

3. Where, in applying this Article, the competent authorities of one Member State wish in specific cases to verify important information concerning an undertaking situated in another Member State which is a related insurance undertaking, a related reinsurance undertaking, a subsidiary undertaking, a parent undertaking or a subsidiary of a parent undertaking of the insurance undertaking or of the reinsurance undertaking subject to supplementary supervision, they must ask the competent authorities of that other Member State to have that verification carried out. The authorities which receive such a request must act on it within the limits of their jurisdiction by carrying out the verification themselves, by allowing the authorities making the request to carry it out or by allowing an auditor or expert to carry it out.

The competent authority which made the request may, if it so wishes, participate in the verification when it does not carry out the verification itself.

Article 7 Cooperation between competent authorities

1. Where insurance undertakings or reinsurance undertakings established in different Member States are directly or indirectly related or have a common participating undertaking, the competent authorities of each Member State shall communicate to one another on request all relevant information which may allow or facilitate the exercise of supervision pursuant to this Directive and shall communicate on their own initiative any information which appears to them to be essential for the other competent authorities.

2. Where an insurance undertaking or a reinsurance undertaking and either a credit institution as defined in Directive 2000/12/EC of the European Parliament and of the Council of 20 March 2000 relating to the taking up and pursuit of the business of credit institutions(4) or an investment firm as defined in Council Directive 93/22/EEC of 10 May 1993 on investment services in the securities field(5), or both, are directly or indirectly related or have a common participating undertaking, the competent authorities and the authorities with public responsibility for the supervision of those other undertakings shall cooperate closely. Without prejudice to their respective responsibilities, those authorities shall provide one another with any information likely to simplify their task, in particular within the framework of this Directive.

3. Information received pursuant to this Directive and, in particular, any exchange of information between competent authorities which is provided for in this Directive shall be subject to the obligation of professional secrecy defined in Article 16 of Council Directive 92/49/EEC of 18 June 1992 on the coordination of laws, regulations and administrative provisions relating to direct insurance other than life assurance (third non-life insurance Directive)(6) and Article 16 of Directive 2002/83/EC and Articles 24 to 30 of Directive 2005/68/EC.

Article 8 Intra-group transactions

1. Member States shall provide that the competent authorities exercise general supervision over transactions between:

(a)

an insurance undertaking or a reinsurance undertaking and:

(i)

a related undertaking of the insurance undertaking or of the reinsurance undertaking;

(ii)

a participating undertaking in the insurance undertaking or in the reinsurance undertaking;

(iii)

a related undertaking of a participating undertaking in the insurance undertaking or in the reinsurance undertaking;

(b)

an insurance undertaking or a reinsurance undertaking and a natural person who holds a participation in:

(i)

the insurance undertaking, the reinsurance undertaking or any of its related undertakings;

(ii)

a participating undertaking in the insurance undertaking or in the reinsurance undertaking;

(iii)

a related undertaking of a participating undertaking in the insurance undertaking or in the reinsurance undertaking.

These transactions concern in particular:

• loans,

• guarantees and off-balance-sheet transactions,

• elements eligible for the solvency margin,

• investments,

• reinsurance and retrocession operations,

• agreements to share costs.

2. Member States shall require insurance undertakings and reinsurance undertakings to have in place adequate risk management processes and internal control mechanisms, including sound reporting and accounting procedures, in order to identify, measure, monitor and control transactions as provided for in paragraph 1 appropriately. Member States shall also require at least annual reporting by insurance undertakings and reinsurance undertakings to the competent authorities of significant transactions. These processes and mechanisms shall be subject to overview by the competent authorities.

If, on the basis of this information, it appears that the solvency of the insurance undertaking or the reinsurance undertaking is, or may be, jeopardised, the competent authority shall take appropriate measures at the level of the insurance undertaking or of the reinsurance undertaking.’

6.

In Article 9, paragraph 3 shall be replaced by the following:

‘3. If the calculation referred to in paragraph 1 demonstrates that the adjusted solvency is negative, the competent authorities shall take appropriate measures at the level of the insurance undertaking or the reinsurance undertaking in question.’

7.

Article 10 is hereby amended as follows:

(a)

the title shall be replaced by the following:

‘Insurance holding companies, non-member country insurance undertakings and non-member country reinsurance undertakings’;

(b)

paragraphs 2 and 3 shall be replaced by the following:

‘2. In the case referred to in Article 2(2), the calculation shall include all related undertakings of the insurance holding company, the non-member country insurance undertaking or the non-member country reinsurance undertaking, in the manner provided for in Annex II.

3. If, on the basis of that calculation, the competent authorities conclude that the solvency of a subsidiary insurance undertaking or a reinsurance undertaking of the insurance holding company, the non-member country insurance undertaking or the non-member country reinsurance undertaking is, or may be, jeopardised, they shall take appropriate measures at the level of that insurance undertaking or reinsurance undertaking.’

8.

Article 10a is hereby amended as follows:

(a)

in paragraph 1, point (b) shall be replaced by the following:

‘(b)

reinsurance undertakings which have, as participating undertakings, undertakings within the meaning of Article 2 which have their head office situated in a third country;

(c)

non-member country insurance undertakings or non-member country reinsurance undertakings which have, as participating undertakings, undertakings within the meaning of Article 2 which have their head office in the Community.’;

(b)

paragraph 2 shall be replaced by the following:

‘2. The agreements referred to in paragraph 1 shall in particular seek to ensure both:

(a) that the competent authorities of the Member States are able to obtain the information necessary for the supplementary supervision of insurance undertakings and reinsurance undertakings which have their head office in the Community and which have subsidiaries or hold participations in undertakings outside the Community; and

(b) that the competent authorities of third countries are able to obtain the information necessary for the supplementary supervision of insurance undertakings and reinsurance undertakings which have their head office in their territories and which have subsidiaries or hold participations in undertakings in one or more Member States.’

9.

Annexes I and II to Directive 98/78/EC shall be replaced by Annex II to this Directive.

(1)

OJ L 323, 9.12.2005, p. 1.’

(2)

OJ L 35, 11.2.2003, p. 1. Directive as amended by Directive 2005/1/EC (OJ L 79, 24.3.2005, p. 9).;’

(3)

OJ L 345, 19.12.2002, p. 1. Directive as last amended by Directive 2005/1/EC.’

(4)

OJ L 126, 26.5.2000, p. 1. Directive as last amended by Directive 2005/1/EC.

(5)

OJ L 141, 11.6.1993, p. 27. Directive as last amended by Directive 2002/87/EC.

(6)

OJ L 228, 11.8.1992, p. 1. Directive as last amended by Directive 2005/1/EC.’