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Small Mutual Associations Investment Regulation - Kv-Kav

Original Language Title: Kleine Versicherungsvereine Kapitalanlageverordnung – kV-KAV

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Regulation of the Financial Markets Authority (FMA) on capital investments of small insurance associations on reciprocity (small insurance company capital investment regulation-kV-KAV)

On the basis of § 72 (2) of the Insurance Supervision Act 2016-VAG 2016, BGBl. I No 34/2015, shall be arranged:

Scope

§ 1. This Regulation shall apply to small insurance companies in accordance with § 5 Z 4 VAG 2016.

Principles of capital investment

§ 2. (1) In the selection of the assets in accordance with Section 72 (1) of the VAG 2016, small insurance companies have to take care of safety, profitability and the need for liquid resources, as well as a suitable mix and dispersion. Likewise, the risks associated with the assets must be respected, in particular on a sufficient credit rating of the issuer or the contractual partner. This shall apply in particular to claims arising from reinsurance business. Appropriate risk monitoring shall be ensured and documented.

(2) Once exploitable loans, assets and receivables may be used only if the debtor, the guarantor and, in the case of fiduciary administration, the trustees have waived in writing any right to recalculate and retain their rights.

(3) Securities may only be used if the depositary has waived in writing any right of settlement and retention and the liability of the depositary or the interim depositary for the fault of third-party depositors is neither limited nor excluded. Securities shall be deposited with a credit or financial institution entitled to operate the depository business in a Member State (depositary), ensuring that the securities deposited in each Member State are subject to the depositary's Special assets constituting a special mass in the event of a bankruptcy procedure of the depositary.

(4) Assets in accordance with paragraph 1 may only be used if it is ensured that the repayment and redemption of the assets to a bank account for which the bank is entitled to the small insurance association for each settlement and retention right has waived in writing.

(5) Assets, provided that they are not subject to a custodial obligation, shall be sufficiently safe to be preserved.

Appropriate assets

§ 3. (1) The following assets pursuant to § 2 are suitable for the capital investment of small insurance companies:

1.

Non-subordinated debt securities denominated in euro, which have an "investment grade" rating of a credit rating agency under Regulation (EC) No 1060/2009 on credit rating agencies, OJ L 327, 22.10.2009, p. No. OJ L 302, 17.11.2009, p. 1, as last amended by Directive 2014 /51/EU, OJ L 302, 15.11.2009, p. No. 1., or which, in the absence of a credit rating, have a stable income and financial position of the issuer by means of internal measures:

a)

Debt securities issued by a Member State in accordance with § 5 Z 11 VAG 2016, a local authority of a Member State and securities for whose repayment and interest rate a Member State or a local authority of a Member State is liable;

b)

Debt securities issued by companies established in a Member State, as well as debt securities issued by supranational organisations, which are trading on a regulated market pursuant to Article 1 (2) of the 1989 Stock Exchange Act (BörseG), BGBl. 555, are authorised;

c)

other debt securities issued by undertakings established in a Member State and debt securities issued by supranational organisations which may be sold within a reasonable period of time.

Not suitable for the capital investment are structured bonds in which the repayment of the nominal amount is not fully guaranteed or the repayment amount unconditionally as a result of an optional component not in the to be determined in advance, as well as to financial instruments in which a derivative is embedded or which contain a structure which makes it difficult for the customer to understand the risks involved;

2.

Shares denominated in euro and other shares with a fluctuating yield:

a)

of undertakings which are listed on a regulated market pursuant to Article 1 (2) BörseG;

b)

to capital companies established in a Member State whose business activities are limited solely to the brokerage business of insurance contracts;

c)

share and securitised rights of the right to a capital company established in a Member State, the principal purpose of which is the acquisition of real estate and rights of property rights registered in a public book, which accuse or discontinue a yield; or expect the construction of buildings on these properties and the management of these properties, provided that the value of the real estate or property rights at the time of purchase by an appraisal of a general in the case of a court expert,

3.

In euro denominated shares in capital investment funds, which fall under one of the following categories:

a)

Shares in collective investment undertakings in transferable securities (UCITS) pursuant to § 2 (1) of the Investment Fund Act 2011 (InvFG 2011), BGBl. I No 77, with the exception of structured UCITS within the meaning of Article 36 (1), second subparagraph, of Regulation (EU) No 583/2010 implementing Directive 2009 /65/EC as regards the essential information for the investor and the terms and conditions of the , where the essential information for the investor or the prospectus is made available on a durable medium other than paper or on a website, OJ L 327, 31.12.2002, p. No. 1. as amended by the corrigendum OJ L 176, 15.7.2010, p. No. OJ L 108, 10.07.2010 p. 28;

b)

Shares in real estate funds according to § 1 paragraph 1 of the Real Estate Investment Fund Act (Immo-InvFG), BGBl. I No 80/2003, as well as shares in real estate funds, managed by a capital investment company established in another Member State and subject to public supervision.

4.

Non-subordinated loans denominated in euro:

a)

at the same time, loans to a local authority of a Member State and loans and other claims for which a local authority of a Member State is liable for its repayment and interest-rate interest;

b)

at one time, loans and other claims made to municipalities or those with the liability of municipalities other than the Federal Capital of Vienna, but only if the proceeds are pledged by means of statutory charges;

c)

Mortgage loans registered in a public book on real estate or property rights registered in a public book, which are situated in a Member State, up to a charge of 60% of the transport value of the Property or the right of property, provided that this value is verified by an appraisal of a general court expert at the time of purchase, and provided that the property is held during the term of the the loan is sufficiently insured against the risk of fire;

5.

Real estate registered in a public book in a Member State and equal rights which allow a return to be paid or to be expected, provided that the appropriateness of the purchase price is determined by an appraisal of a generally -judicial experts or in any other appropriate manner, and where the property is sufficiently insured against the risk of fire in the event of a building;

6.

Credit institutions and cash balances denominated in euro denominated in euro:

a)

Credit for credit institutions entitled to banking in a Member State ("bank credit");

b)

Cash balances.

1 (2) (1) (1) (1) (b) and (c) and (2) to (5) shall not apply to small insurance companies which are solely responsible for the operation of animal insurance.

Capital investment limits

§ 4. (1) The following individual investments may be applied only up to the following rates on the basis of the carrying amount of the total capital investments ("single limit"):

1.

up to 2% in each case: shares and other shares with a fluctuating income in accordance with § 3 (1) Z 2 lit. a;

2.

up to 10% each:

a)

Debt securities according to § 3 paragraph 1 Z 1 lit. a to c of the same issuer;

b)

Shares and other shares with a fluctuating income in accordance with § 3 para. 1 Z 2 lit. b and c of the same undertaking;

c)

Shares in capital investment funds according to § 3 (1) (3) (3) (3) lit. a and b of the same fund;

d)

Loans pursuant to § 3 para. 1 Z 4 lit. a to c of the same issuer;

3.

up to 25% in each case: bank deposits according to § 3 (1) Z 6 lit. a;

4.

up to 30% in each case: real estate and equal rights in accordance with § 3 (1) (5).

(2) The following capital investments may be applied in total only up to the following rates on the basis of the carrying amount of the total capital investments ("total limit"):

1.

up to 3% in total: cash balances in accordance with § 3 (1) Z 6 lit. b;

2.

up to 10% in total: debt securities in accordance with § 3 paragraph 1 Z 1 lit. c;

3.

up to 25% in total: shares and other shares with a fluctuating income in accordance with § 3 (1) Z 2 lit. a and b including the indirectly in the framework of capital investment funds according to § 3 para. 1 Z 3 lit. a held shares;

4.

up to 40% in total:

a)

Properties and rights of property rights pursuant to § 3 (1) (5);

b)

Shares and other shares with a fluctuating income in accordance with § 3 (1) (c) 2 lit. c;

c)

Shares in real estate funds according to § 3 paragraph 1 Z 3 lit. b;

d)

Loans and rights of property rights in accordance with § 3 (1) (4) (c) (c);

5.

up to 50% in total:

a)

Debt securities according to § 3 paragraph 1 Z 1 lit. b and loans pursuant to § 3 para. 1 Z 4 lit. a and b;

b)

Bank deposits according to § 3 paragraph 1 Z 6 lit. a.

(3) By way of derogation from paragraphs 1 and 2, the following capital requirements shall apply to small insurance companies which are solely responsible for the operation of animal insurance:

1.

up to 15% each: debt securities in accordance with § 3 (1) (1) (1) (1) lit. a of the same issuer;

2.

up to 10% in total: cash balances in accordance with § 3 (1) Z 6 lit. b;

3.

from 30 000 euro up to 60% each: bank credit according to § 3 (1) Z 6 lit. a.

(4) In the case of short-term overruns of the capital investment limits set out in paragraphs 1 to 3 by market-related value fluctuations or claims payments of up to 10% of the limit value, immediate measures may be waived, provided that: can be achieved in a timely manner to comply with the limits of the investment limits.

entry into force

§ 5. This Regulation shall enter into force 1. Jänner 2016 in force.

Ettl Kumpfmüller