The Solvency 2 and Insurance (Amendment, etc.) (EU Exit) Regulations 2019

Interpretation

7.—(1) In Part 1 (citation, commencement and interpretation), regulation 2 (interpretation) is amended as follows.

(2) For paragraph (1) substitute—

“(1) In these Regulations—

“capital add-on” means the amount by which the solvency capital requirement of an insurance undertaking or reinsurance undertaking, or a group, is increased by the PRA;

“college of supervisors” means a permanent but flexible structure for the co-operation, co-ordination and facilitation of decision making concerning the supervision of a group;

“common management relationship” means a relationship between two or more undertakings which satisfies the following conditions—

(a)

the undertakings are not connected in the manner described in section 1162 of, and Schedule 7 to, the Companies Act 2006, and

(b)

either—

(i)

the undertakings are managed on a unified basis pursuant to a contract with one of them, or provisions in the undertakings’ respective memoranda or articles of association, or

(ii)

the administrative, management or supervisory bodies of those undertakings consist, for the major part, of the same persons in office during the financial year in respect of which it is being decided whether such a relationship exists;

“Financial Conglomerates Directive” means 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, as it had effect immediately before exit day;

“FSMA” means the Financial Services and Markets Act 2000;

“insurance holding company” means a parent undertaking which is not a mixed financial holding company and the main business of which is to acquire and hold participations in subsidiary undertakings, where those subsidiary undertakings are exclusively or mainly insurance or reinsurance undertakings, or third-country insurance or reinsurance undertakings, at least one of such subsidiary undertakings being an insurance or reinsurance undertaking;

“method 1” and “method 2” have the meaning given in rule 1.2 of the Group Supervision part of the PRA Rulebook;

“mixed-activity insurance holding company” means a parent undertaking other than an insurance undertaking, a third-country insurance undertaking, a reinsurance undertaking, a third-country reinsurance undertaking, an insurance holding company or a mixed financial holding company, which includes at least one insurance or reinsurance undertaking among its subsidiary undertakings;

“non-UK solvency 2 parent” means a parent undertaking which is—

(a)

a third-country insurance undertaking, or

(b)

an insurance holding company or mixed financial holding company with its head office outside the United Kingdom;

“parent undertaking” means—

(a)

a parent undertaking, within the meaning of section 420 of FSMA, or

(b)

an undertaking which, in the opinion of the PRA, effectively exercises a dominant influence over another undertaking;

“participating undertaking” means —

(a)

an undertaking which is either a parent undertaking or other undertaking which holds a participation, or an undertaking linked with another undertaking by a common management relationship, or

(b)

an undertaking which holds, directly or indirectly, voting rights or capital in another undertaking over which, in the opinion of the PRA, it effectively exercises a significant influence;

“regulated entity” has the meaning given in regulation 1(2) of the Financial Conglomerates and Other Financial Groups Regulations 2004(1);

“related undertaking” means either a subsidiary undertaking or other undertaking in which a participation is held, or an undertaking linked with another undertaking by a common management relationship;

“Solvency 2 Directive” means Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II), as it has effect immediately before exit day;

“Solvency 2 Regulation” means Commission Delegated Regulation (EU) 2015/35 of 10 October 2014 supplementing Directive 2009/138/EC of the European Parliament and of the Council on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II);

“subsidiary undertaking” means—

(a)

a subsidiary undertaking, within the meaning of section 420 of FSMA, or

(b)

an undertaking over which, in the opinion of the PRA, a parent undertaking effectively exercises a dominant influence;

“supervisory authority” means the national authority, or the national authorities, empowered to supervise third-country insurance undertakings or third-country reinsurance undertakings;

“third country” means a country other than the United Kingdom;

“third-country insurance undertaking” means an undertaking which would require authorisation as an insurance undertaking in accordance with the United Kingdom law which implemented Article 14 of the Solvency 2 Directive, if its head office were situated in the United Kingdom;

“third-country reinsurance undertaking” means an undertaking which if its head office were situated in the United Kingdom—

(a)

would require permission under Part 4A of FSMA to carry out regulated activities relating to reinsurance, and

(b)

immediately before exit day, would have required authorisation as a reinsurance undertaking in accordance with Article 14 of the Solvency 2 Directive;

“UK solvency 2 parent” means a parent undertaking with its head office in the United Kingdom which is—

(a)

an insurance undertaking or reinsurance undertaking which is a participating undertaking in at least one insurance undertaking, reinsurance undertaking or third-country insurance undertaking,

(b)

an insurance holding company, or

(c)

a mixed financial holding company;

“ultimate non-UK solvency 2 parent” means a non-United Kingdom solvency 2 parent which has no parent undertaking which is a United Kingdom solvency 2 parent or non-United Kingdom solvency 2 parent;

“ultimate UK solvency 2 parent” means a United Kingdom solvency 2 parent which has no parent undertaking which is a United Kingdom solvency 2 parent.”

(3) After paragraph (1) insert—

“(1A) In these Regulations, reference to a “group” is to a group of undertakings that—

(a) does not include any undertaking not included in the scope of group supervision in accordance with a direction issued by the PRA under section 138A of FSMA; and

(b) either—

(i) consists of a participating undertaking, its subsidiaries and the entities in which the participating undertaking or its subsidiaries hold a participation, as well as undertakings linked to each other by a common management relationship, or

(ii) is based on the establishment, contractually or otherwise, of strong and sustainable financial relationships among those undertakings, and that may include mutual or mutual-type associations, provided that—

(aa) one of those undertakings effectively exercises, through centralised coordination, a dominant influence over the decisions, including financial decisions, of the other undertakings that are part of the group, and

(bb) the establishment and dissolution of such relationships are subject to prior approval by the PRA.

(1B) For the purposes of paragraph (1A), the undertaking exercising the centralised coordination must be considered as the parent undertaking, and the other undertakings must be considered as subsidiaries.”

(4) After paragraph (2) insert—

“(3) In these Regulations, a reference to the PRA Rulebook is to the rulebook published by the PRA containing rules made by the PRA under FSMA as the rulebook has effect on exit day.

(4) In these Regulations, a reference to the United Kingdom law which implemented—

(a) the Financial Conglomerates Directive, or a provision thereof, is to the law of the United Kingdom which was relied on by the United Kingdom immediately before exit day to implement Directive 2002/87/EC and its implementing measures;

(b) the capital requirements directive and the capital requirements regulation, or a provision thereof, is to the law of the United Kingdom which was relied on by the United Kingdom immediately before exit day to—

(i) implement Directive 2013/36/EU and its implementing measures, and

(ii) enable an EU obligation (within the meaning of Part 2 of Schedule 1 to the European Communities Act 1972, as that Act has effect immediately before exit day) under Regulation (EU) No 575/2013 to be implemented;

(c) the Solvency 2 Directive, or a provision thereof, is to the law of the United Kingdom which was relied on by the United Kingdom immediately before exit day to implement Directive 2009/138/EU and its implementing measures.

(5) For the purposes of paragraph (4), a reference to the law of the United Kingdom is to the law—

(a) as it has effect on exit day, in the case of rules made by the Financial Conduct Authority or by the PRA under FSMA, and

(b) as amended from time to time, in all other cases.”

(1)

S.I. 2004/1862.