the paid-up share capital or, in the case of a mutual reinsurance undertaking, the effective initial fund plus any members' accounts which meet all the following criteria:

1. (i)

   the memorandum and articles of association shall stipulate that payments may be made from those accounts to members only in so far as this does not cause the available solvency margin to fall below the required level, or, after the dissolution of the undertaking, if all the undertaking's other debts have been settled;

2. (ii)

   the memorandum and articles of association shall stipulate, with respect to any payments referred to in point (i) for reasons other than the individual termination of membership, that the competent authorities must be notified at least one month in advance and can prohibit the payment within that period;

3. (iii)

   the relevant provisions of the memorandum and articles of association may be amended only after the competent authorities have declared that they have no objection to the amendment, without prejudice to the criteria stated in points (i) and (ii);

statutory and free reserves which neither correspond to underwriting liabilities nor are classified as equalisation reserves;

the profit or loss brought forward after deduction of dividends to be paid.

participations which the reinsurance undertaking holds in the following entities:

1. (i)

   insurance undertakings within the meaning of Article 6 of Directive 73/239/EEC, Article 4 of Directive 2002/83/EC, or Article 1(b) of Directive 98/78/EC,

2. (ii)

   reinsurance undertakings within the meaning of Article 3 of this Directive or non-member country reinsurance undertakings within the meaning of Article 1(l) of Directive 98/78/EC,

3. (iii)

   insurance holding companies within the meaning of Article 1(i) of Directive 98/78/EC,

4. (iv)

   credit institutions and financial institutions within the meaning of Article 1(1) and (5) of Directive 2000/12/EC,

5. (v)

   investment firms and financial institutions within the meaning of Article 1(2) of Directive 93/22/EEC22 and of Article 2(4) and (7) of Directive 93/6/EEC23;

each of the following items which the reinsurance undertaking holds in respect of the entities defined in (a) in which it holds a participation:

1. (i)

   instruments referred to in paragraph 4,

2. (ii)

   instruments referred to in Article 27(3) of Directive 2002/83/EC,

3. (iii)

   subordinated claims and instruments referred to in Article 35 and Article 36(3) of Directive 2000/12/EC.

cumulative preferential share capital and subordinated loan capital up to 50 % of the available solvency margin or the required solvency margin, whichever is the smaller, no more than 25 % of which shall consist of subordinated loans with a fixed maturity, or fixed-term cumulative preferential share capital, provided that, in the event of the bankruptcy or liquidation of the reinsurance undertaking, binding agreements exist under which the subordinated loan capital or preferential share capital ranks after the claims of all other creditors and is not to be repaid until all other debts outstanding at the time have been settled.

Subordinated loan capital shall also fulfil the following conditions:

1. (i)

   only fully paid-up funds may be taken into account;

2. (ii)

   for loans with a fixed maturity, the original maturity shall be at least five years. No later than one year before the repayment date the reinsurance undertaking shall submit to the competent authorities for their approval a plan showing how the available solvency margin will be kept at or brought to the required level at maturity, unless the extent to which the loan may rank as a component of the available solvency margin is gradually reduced during at least the last five years before the repayment date. The competent authorities may authorise the early repayment of such loans provided that application is made by the issuing reinsurance undertaking and that its available solvency margin will not fall below the required level;

3. (iii)

   loans the maturity of which is not fixed shall be repayable only subject to five years' notice unless the loans are no longer considered as a component of the available solvency margin or unless the prior consent of the competent authorities is specifically required for early repayment. In the latter event the reinsurance undertaking shall notify the competent authorities at least six months before the date of the proposed repayment, specifying the available solvency margin and the required solvency margin both before and after that repayment. The competent authorities shall authorise repayment only if the reinsurance undertaking's available solvency margin will not fall below the required level;

4. (iv)

   the loan agreement shall not include any clause providing that in specified circumstances, other than the winding-up of the reinsurance undertaking, the debt will become repayable before the agreed repayment dates;

5. (v)

   the loan agreement may be amended only after the competent authorities have declared that they have no objection to the amendment;

securities with no specified maturity date and other instruments, including cumulative preferential shares other than those referred to in point (a), up to 50 % of the available solvency margin or the required solvency margin, whichever is the smaller, for the total of such securities and the subordinated loan capital referred to in point (a) provided that they fulfil the following:

1. (i)

   they may not be repaid on the initiative of the bearer or without the prior consent of the competent authority;

2. (ii)

   the contract of issue shall enable the reinsurance undertaking to defer the payment of interest on the loan;

3. (iii)

   the lender's claims on the reinsurance undertaking shall rank entirely after those of all non-subordinated creditors;

4. (iv)

   the documents governing the issue of the securities shall provide for the loss-absorption capacity of the debt and unpaid interest, while enabling the reinsurance undertaking to continue its business;

5. (v)

   only fully paid-up amounts may be taken into account.

one half of the unpaid share capital or initial fund, once the paid-up part amounts to 25 % of that share capital or fund, up to 50 % of the available solvency margin or the required solvency margin, whichever is the smaller;

in the case of a non-life mutual or mutual-type association with variable contributions, any claim which it has against its members by way of a call for supplementary contribution, within the financial year, up to one half of the difference between the maximum contributions and the contributions actually called in, and subject to a limit of 50 % of the available solvency margin or the required solvency margin, whichever is the smaller. The competent national authorities shall establish guidelines laying down the conditions under which supplementary contributions may be accepted;

any hidden net reserves arising out of the valuation of assets, in so far as such hidden net reserves are not of an exceptional nature.

until 31 December 2009, an amount equal to 50 % of the undertaking's future profits, but not exceeding 25 % of the available solvency margin or the required solvency margin, whichever is the smaller; the amount of the future profits shall be obtained by multiplying the estimated annual profit by a factor which represents the average period left to run on policies; the factor used may not exceed six; the estimated annual profit shall not exceed the arithmetical average of the profits made over the last five financial years in the activities listed in Article 2(1) of Directive 2002/83/EC.

Competent authorities may only agree to include such an amount for the available solvency margin:

1. (i)

   when an actuarial report is submitted to the competent authorities substantiating the likelihood of emergence of these profits in the future; and

2. (ii)

   insofar as that part of future profits emerging from hidden net reserves referred to in paragraph 4(c) has not already been taken into account;

where Zillmerising is not practised or where, if practised, it is less than the loading for acquisition costs included in the premium, the difference between a non-Zillmerised or partially Zillmerised mathematical provision and a mathematical provision Zillmerised at a rate equal to the loading for acquisition costs included in the premium; this figure may not, however, exceed 3,5 % of the sum of the differences between the relevant capital sums of life reassurance activities and the mathematical provisions for all policies for which Zillmerising is possible; the difference shall be reduced by the amount of any undepreciated acquisition costs entered as an asset.

the premiums paid are calculated on the basis of sickness tables according to the mathematical method applied in insurance;

a provision is set up for increasing age;

an additional premium is collected in order to set up a safety margin of an appropriate amount;

the insurance undertaking may cancel the contract before the end of the third year of insurance at the latest;

the contract provides for the possibility of increasing premiums or reducing payments even for current contracts.