Group Supervision [EU]
The European Commission’s proposals are:
Article 212 (Definitions) is amended to facilitate the identification of undertakings which form a group, in particular with respect to groups which are not in the scope of Directive 2013/34/EU on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, and to horizontal groups. In addition, the definition of insurance holding company is clarified in a similar manner as the amendments to the definition of financial holding company in Directive 2013/36/EU on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms.
Article 213 (Cases of application of group supervision) is amended in order to bring insurance holding companies and mixed financial holding companies directly in the scope of the EU prudential framework. The new paragraph 3a requires appropriate internal governance and corporate structure for groups whose parent undertaking is a holding company, to allow for effective group supervision. Paragraphs 3b and 3c are inserted to ensure appropriate enforcement powers, including, as a last resort measure, the power to require the group to restructure.
Article 214 (Scope of group supervision) is amended to clarify when an undertaking can be excluded from the scope of group supervision, when group supervision can be waived or can be exercised at the level of an intermediate parent undertaking.
Articles 244 (Supervision of risk concentration), 245 (Supervision of intra-group transactions) and 265 (Intra-group transactions) are amended in order to extend the list of indicators based on which a group supervisor may define significant intragroup transactions and risk concentrations and to clarify the scope of reporting of intragroup transactions.
Article 258 (Enforcement measures) is amended to give supervisory authorities a minimum set of powers that may be applied to insurance holding companies and mixed financial holding companies.
Article 262 (Parent undertakings registered in a third country) is amended to clarify the objectives and necessary powers where “other methods” are applied for the supervision of groups whose ultimate parent undertakings have their head office outside the EEA.
A new Article 229a (Simplified calculations) is inserted in order to grant the possibility, subject to supervisory approval, to use a simplified approach to the integration of non-material related undertakings in the group solvency calculation. Materiality thresholds are introduced.
Articles 220 (Choice of method), 222 (Elimination of double use of eligible own funds), 228 (Related credit institutions, investment firms and financial institutions), 230 (Method 1 (Default method): Accounting consolidation-based method), 233 (Method 2 (Alternative method): Deduction and aggregation method), 234 (Delegated acts concerning Articles 220 to 229 and 230 to 233) and 308b(17) are amended and a new article 233a is inserted in order to provide the following clarifications on rules governing group solvency calculation:
- the type of undertakings that may be included through method 2;
- how the consolidated group Solvency Capital Requirement should be calculated in the case of a combination of methods;
- how to include undertakings from other financial sectors, e.g. credit institutions, in the group solvency calculation;
- how to assess group own funds, notably the concept of “clear of encumbrances”, the treatment of transitional measures on technical provisions and on the risk-free rate, and the treatment of own-funds items that cannot effectively be made available to cover the Solvency Capital Requirement;
- in the case of a use of method 1 or a combination of methods, how to calculate the floor to the consolidated group Solvency Capital Requirement.
In addition, a revised “Minimum Consolidated Group Solvency Capital Requirement” is introduced mirroring the rules on the Minimum Capital Requirement at individual level.
Articles 246 (Supervision of the system of governance) and 257 (Administrative, management or supervisory body of insurance holding companies) and mixed financial holding companies are amended in order to clarify the application mutatis mutandis at group level of governance rules applicable to individual undertakings. Those amendments include the role of the administrative, management or supervisory body of the parent undertaking and require that groups ensure consistency of the group written policies with those adopted by related undertakings. Finally, they clarify that the persons in charge of other key functions within insurance holding companies and mixed financial holding companies should be fit and proper.
In addition, Articles 246a and 246b are inserted in order to specify how the new macroprudential rules apply at the level of insurance groups.