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No 10 (December 97/Décembre 97/Dezember 97)
The European Parliament concluded on 23 October its first reading of the proposed Directive on supervision of insurance groups and the Internal Market ministers achieved a political agreement on the text on 27 November 1997. The proposal, put forward in October 1995 (see SMN N.1), would oblige European insurance supervisory authorities to make sure that the solvency of an insurance company was not undermined if it belonged to a wider group of insurance undertakings.
Twenty-four amendments were proposed by the Parliament, including:
As regards these amendments, the Commission informed the Parliament that it was not able to accept the reduction of the scope of the Directive to cases of parent-subsidiary relationship or fully to take on board the amendments to the definitions of a participation, of a parent undertaking and of a subsidiary. By contrast, the amendments concerning the resources of insurance holding companies and the recognition of a broader list of elements eligible for the adjusted solvency situation could be accepted, subject to certain conditions. Finally, 18 amendments carried by the EP were accepted by the Commission, either in spirit or subject to certain conditions, and 6 were rejected.
The Commission is now preparing an amended proposal in order to take into account the 18 amendments mentioned above. In the meantime, a political agreement on a global compromise text was achieved at the Internal Market Council of 27 November 1997. This text has been supported by the Commission, as it respects the most important principles of the original proposal and is also fully consistent with the amendments requested by the Parliament and accepted by the Commission. Given this situation, it is expected that adoption of the formal Common Position will be carried in the first half of 1998, after the amended proposal has been adopted by the Commission and presented to the Council.
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(1) Whilst the original proposal refers to the notion of a participation held by one insurance undertaking in another.
(2) The adjusted solvency situation is the main new provision introduced by the proposal. It is the result of the assessment of the solvency of an insurance undertaking belonging to an insurance group, after risks borne by its (direct and indirect) participations in other insurance undertakings and in reinsurance undertakings have been taken into account.
(3) Whether the holding company is in an intermediate position or at the top of a group or sub-group.
(4) Whilst the proposal forbade the inclusion of certain elements otherwise admitted at "solo" level in the calculation.