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Group
Support Regime and Group Supervision
from the Solvency ii
Association, the largest Association of Solvency ii Professionals
in the world
Consultation
Paper No. 60
Draft CEIOPS’ Advice for Level 2 Implementing
Measures on Solvency II: Assessment of Group Solvency
2. Synopsis of Level 1
Text
2.1. The Level 1 text sets out in Article 232
that
The Commission shall adopt implementing measures
specifying the technical principles and methods set out in Articles
218 to 227 and the application of Articles 228 to 231 to ensure
uniform application within the Community.
Those measures designed to amend non-essential
elements of this directive by supplementing it shall be adopted in
accordance with the regulatory procedure with scrutiny referred to
in Article 304(3).
2.2.
These provisions should be read in connection with Recitals 64 to 76
of the Level 1 text.
2.3.
The following paragraphs provide a brief synopsis of the main topics
and features covered by articles 218 to 231 that are addressed in
subsequent chapters of this paper.
2.4.
Article 218 details the choice of the
calculation method for the group SCR.
The
Accounting Consolidation-based method is the default
method.
The group supervisor shall be able to require the use
of the deduction aggregation method or a combination of both methods
when the default method is not appropriate.
2.5.
Article 219 deals with the interpretation
of the concept of the "proportional
share" of related undertakings to be included in
the
calculation.
This
includes the recognition of solo solvency
deficits at group level and includes an explicit power for the group supervisor to set the
proportional share in some cases (dominant or significant influence
determined by the supervisory authorities and absence of capital
ties).
The
absence of capital ties often refers to mutual
undertakings.
2.6.
Article 220 ensures there are no double use of own funds and addresses the
eligibility of own funds at group level taking into account
potential availability constraints.
2.7.
Article 221 ensures that the intra-group creation of capital is eliminated
when calculating group solvency.
2.8.
Article 222 states that the valuation principles that apply at solo level also
apply at group level.
It allows
Member States to use the solvency figures
calculated in other Member States.
2.9.
Article 223 ensures that all related (re)insurance undertakings are included in
the group calculations.
2.10.
Article 224 accounts for the inclusion of intermediate insurance holding
companies in the group calculations.
2.11.
Article 225 details the equivalence assessment process
for third country regimes for the purposes of the deduction and
aggregation method.
2.12.
Article 226 accounts for the treatment of related credit institutions, investment
firms and financial institutions when calculating group
solvency and allows their inclusion (via methods 1 and 2 described
in Annex 1 of the financial conglomerates directive 2002/87/EC)
unless their deduction is decided by the group
supervisor.
2.13.
Article 227 provides for the possibility to deduct the book value of a related
undertaking if the information necessary for calculating the
group solvency of its participating undertaking is not
available.
2.14.
Article 228 describes the default method for the group calculations, the
Accounting consolidation-based method, including the minimum
consolidated group SCR.
2.15.
Article 229 describes the approval process for a group internal model and
the application of a solo capital add-on in the context of a group
internal model.
The
approval process for a group internal model is covered by the advice
in the addendum on CEIOPS-CP-37-09 Draft Level 2 Advice on the the
approval of an internal model.
2.16.
Article 230 deals with the application,
when the consolidation method is used, of capital add-ons at group
level.
That
advice includes the description of issues related to group specific
risks.
The
setting of a capital add-on at group level is covered by the advice
in the CEIOPS consultation paper on capital add-ons
(CEIOPS-CP-57/09).
2.17.
Article 231 describes the deduction and aggregation method for the group
calculations, including the imposition of a capital add-on to
the aggregated group SCR.
CEIOPS may
complement its advice on this provision to take into account the
advice on the treatment of participations
at solo level, which
CEIOPS will consult on in autumn 2009.
Consultation Paper No. 60
Draft CEIOPS’ Advice for Level 2 Implementing Measures on Solvency
II: Assessment of Group Solvency
1.
Assessment of Group Solvency - Introduction
2.
Level 1 Text
3.
Advice from CEIOPS
4.
Third Countries
5.
Calculation Method
6.
Fungibility and Transferability
7.
Transferability of Own Funds
8.
Calculations
9.
Annex 1 to Annex 5
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