Commission Delegated Regulation (EU) 2015/35Show full title

SECTION 2 Mandatory contract conditions

Article 319 Fully Funded

The contractual arrangements relating to the transfer of risk from an insurance or reinsurance undertaking to a special purpose vehicle shall ensure that the special purpose vehicle is at all times fully funded in accordance with Article 326.

Article 320 Effective transfer of risk

1. The contractual arrangements relating to the transfer of risk from an insurance or reinsurance undertaking to a special purpose vehicle and from the special purpose vehicle to the providers of debt or financing shall ensure all of the following:

(a) the transfer of risk is effective in all circumstances;

(b) the extent of risk transfer is clearly defined and incontrovertible.

2. The transfer of risk shall not be deemed to be effective in all circumstances where there are connected transactions which could undermine the effective transfer of risk.

Article 321 Rights of the providers of debt or financing mechanisms

The contractual arrangements relating to the transfer of risk from an insurance or reinsurance undertaking to a special purpose vehicle and from the special purpose vehicle to the providers of debt or finance shall ensure all of the following:

(a)

the claims of the providers of debt or financing mechanisms are at all times subordinated to the reinsurance obligations of the special purpose vehicle to the insurance or reinsurance undertaking;

(b)

no payments are made to the providers of debt or financing, if following those payments the special purpose vehicle would no longer be fully funded;

(c)

the providers of debt or finance to the special purpose vehicle have no rights of recourse to the assets of the insurance or reinsurance undertaking;

(d)

the providers of debt or finance to the special purpose vehicle have no rights to apply for the winding-up of the special purpose vehicle.