Key Benefits:
The Prime Minister,
On the report of the Minister of Economy, Finance and Industry,
Considering the insurance code (regulatory party);
In light of Order No. 2004-1201 of 12 November 2004 on the supplementary supervision of credit institutions, insurance companies and investment companies owned by a financial conglomerate;
Having regard to the advice of the Advisory Committee on Legislation and Financial Regulation dated 25 February 2005;
The State Council (Finance Section) heard,
Decrete:
Section R. 310-18 of the insurance code is amended to read:
1° The words: "as part of articles L. 310-18 and L. 310-18-1" are replaced by the words: "as part of articles L. 310-18, L. 310-18-1 and L. 334-16";
2° After the words: "L. 951-10", the words are inserted: "and L. 933-4-13";
3° After the words: "L. 510-11", the words are inserted: "and L. 212-7-16".
Article R. 321-2 of the same code is as follows:
"When pursuant to Article L. 321-1-2, the Insurance Companies Committee shall consult with the competent authority, within the meaning of Article L. 334-2, that authority shall have a period of one month to make its observations. Upon request, this period may be extended for one month. »
Section R. 321-17-1 of the same code is amended as follows:
1° After the words: "A company referred to in 1°, 3° and 4° of Article L. 310-2", the words ", at 1° of Article L. 322-1-2 and at 9° of Article L. 334-2" are inserted;
2° It is added a sentence as follows: "The Insurance Companies Committee shall transmit this information to the Insurance, Mutual and Provident Institutions Commission. »
Section R. 322-11-1 of the same code is amended as follows:
1° II is replaced by the following:
"The provisions of paragraph I shall also apply to transactions of taking, extension or transfer of direct or indirect participation in companies of insurance group defined in Article L. 322-1-2 and of which the head office is located in France or in joint holding financial companies defined in Article L. 334-2, of which the head office is located in France and belonging to a coordinated financial conglomerate whose supervision is »
2° It is inserted in paragraph III, as follows:
"III. - Before any decision under I, the Insurance Companies Committee shall consult with the competent authorities referred to in Articles L. 321-1 and L. 321-1-2 when the following two conditions are met:
« 1° The purchaser is an insurance company registered in another Member State, an approved credit institution or an investment company registered in a Member State or the parent enterprise of such an entity or an institution controlled by a person, physical or legal, who also controls such an entity;
« 2° As a result of the transaction reported to the Insurance Business Committee, the company in which the purchaser plans to hold an interest will become the subsidiary of the purchaser or will be controlled by the purchaser.
"When, under these conditions, the Insurance Companies Committee shall consult with the competent authority, within the meaning of the 11th of Article L. 334-2, it shall have a period of one month to make its observations. Upon request, this period may be extended for one month. »
Chapter IV of title III of book III of the same code is thus amended:
1° The I of Article R. 334-3 is thus completed:
"When the company is not subject to additional monitoring under section L. 334-3 or section L. 334-4, the credit margin is also reduced by the following:
“(a) Participations within the meaning of 2° of Article L. 334-2 that the insurance company holds in credit institutions, investment companies or financial institutions;
“(b) The subordinate receivables and other financial instruments that the insurance company holds on credit institutions, investment companies or financial institutions in which it holds an interest, and which are considered to be equity funds for the calculation of the requirements of equity applicable to the above-mentioned companies and institutions.
"When an interest in a credit institution, an investment company or a financial institution is temporarily held in order to facilitate the remediation and preservation of that entity, the Insurance, Mutual and Provident Institutions Commission may authorize the insurance company not to make the deductions provided for in a and b".
2° In article R. 334-4, after the words: "of article R. 334-3", the words are added: "taking into account the deductions provided for in this article".
3° Section I R. 334-11 is thus completed:
"When the company is not subject to additional monitoring under section L. 334-3 or section L. 334-4, the credit margin is also reduced by the following:
“(a) Participations within the meaning of 2° of Article L. 334-2 that the insurance company holds in credit institutions, investment companies or financial institutions;
“(b) The subordinate receivables and other financial instruments that the insurance company holds on credit institutions, investment companies or financial institutions in which it holds an interest, and which are considered to be equity funds for the calculation of the requirements of equity applicable to the above-mentioned companies and institutions.
"When an interest in a credit institution, an investment company or a financial institution is temporarily held in order to facilitate the remediation and preservation of that entity, the Insurance, Mutual and Provident Institutions Commission may authorize the insurance company not to make the deductions provided for in a and b".
4° In article R. 334-12, after the words: "of article R. 334-11", the words are added: "taking into account the deductions provided for in this article."
5° Au a de l'article R. 334-17, après les mots : « de l'article R. 334-11 », sontadd les mots : « en tenant compte desductions prévues au I de cet article ».
6° The title in section VIII is replaced by the following title: " Provisions relating to the supplementary monitoring of insurance groups".
7° The first paragraph of Article R. 334-41 is thus completed:
"However, when these companies are participating companies of a credit institution, investment company or financial institution, they may, alternatively, present positive adjusted creditworthiness in the manner specified in sections R. 334-49 and R. 334-50. "
8° The second paragraph of Article R. 334-42 is thus supplemented:
"In addition, deductees the participations, subordinate receivables and other financial instruments held on credit institutions, investment companies and financial institutions, and referred to in section I R. 334-3. "
9° Section R. 334-43 is amended as follows:
(a) The words "method #1:" are replaced by the words "method #1: deduction and aggregation".
(b) The words "method #2:" are replaced by the words "method #2: deduction of a requirement".
(c) The last paragraph is as follows:
"For the calculation of adjusted creditworthiness under these two methods, intra-group transactions are disposed of in a manner equivalent to that for the preparation of consolidated or combined accounts referred to in Article L. 345-2. In addition, the shares, receivables and other instruments held on credit institutions, investment companies and financial institutions referred to in I of section R. 334-3 are deducted from eligible credit margins. "
(d) It is inserted a last paragraph, as follows:
"When the company is a participating company of a credit institution, an investment company or a financial institution, the Insurance, Mutual and Provident Institutions Commission is also authorized to apply, alternatively to these two methods, the methods defined in sections R. 334-49 and R. 334-50. "
10° Section R. 334-44 is amended as follows:
(a) In the first paragraph, after the words: "an insurance group company", the words are inserted: "a joint holding company whose coordinator is the Insurance, Mutual and Provident Institutions Supervisory Board".
(b) In the fourth and fifth paragraphs, after the words "insurance group society", the words are inserted: "a joint holding financial company whose co-ordinator is the Insurance, Mutual and Provident Institutions Supervisory Commission".
11° In the first paragraph of article R. 334-45, the following sentence is inserted after the second sentence:
"The company also has risk management procedures and internal controls to identify, measure, supervise and control these operations. "
12° After the article R. 334-45, an article R. 334-46 is inserted as follows:
"Art. R. 334-46. - When a company acquires, at the time of its creation or on the occasion of an acquisition, the quality of an insurance company and that the Insurance, Mutuals and Provident Institutions Supervisory Board is responsible for the prudential supervision of the insurance group concerned, this insurance group corporation is required to transmit to the Insurance Companies Committee, within one month, all the necessary information to the executives The list of this information is set by order of the Minister responsible for the economy.
"The Insurance Companies Committee transmits this information to the Insurance, Mutual and Provident Institutions Commission. » ;
13° After R. 334-46, a section IX is inserted as follows:
“Section IX
“Supplementary monitoring provisions
regulated entities owned by a financial conglomerate
"Art. R. 334-47. - The Insurance, Mutual and Provident Institutions Commission prepares and updates the list of joint holding companies to which it provides additional monitoring.
"Art. R. 334-48. - When, pursuant to sections 334-5 and L. 334-6, a financial conglomerate has been identified, that the entity placed at the head of the group is a joint holding financial company and that the Supervisory Board of Insurance, Mutuals and Provident Institutions is designated as the co-ordinator, the joint holding financial company is required to transmit to the Board of Insurance Companies, within one month after being notified of this appointment
"The Insurance Companies Committee transmits this information to the Insurance, Mutual and Provident Institutions Commission.
"Art. R. 334-49. - The additional requirements for the adequacy of the equity referred to in Article L. 334-8 shall be determined on the basis of the consolidated or combined accounts of the financial conglomerate established in accordance with the provisions of Article L. 345-2.
"They are the result of the difference, calculated on the terms specified by the order of the Minister responsible for the economy, between the equity of the financial conglomerate and the solvency requirements for the various financial sectors of the conglomerate. This difference must be positive.
"Art. R. 334-50. - When designated as coordinator, the Commission for the Control of Insurance, Mutuals and Provident Institutions may, after consultation with the other competent authorities concerned, within the meaning of the 12th of Article L. 334-2, and the financial conglomerate concerned, apply, in place of the method provided for in Article R. 334-49 for the calculation of the additional requirements, one of the following three methods, if considered more
« 1° Method 1: Deduction and aggregation.
"Additional requirements result from the difference between:
“(a) On the one hand, the sum of the equity of all financial sector entities;
“(b) On the other hand, the sum of the solvency requirements of all entities in the financial sector and the accounting value of participation in other entities of the group.
"The solvency requirement of a non-regulated entity is a notional requirement calculated under the sectoral rules that would apply if it were a regulated entity in the sector.
"The difference must be positive.
"2° Method 2: Accounting value/deduction of a requirement.
"Additional requirements result from the difference between:
“(a) On the one hand, the own funds of the parent company or entity located at the head of the financial conglomerate;
“(b) And, on the other hand, the sum of the solvency requirement of the company referred to in a and the accounting value of the company's participation in other entities of the group or the solvency requirements of those entities, the highest amount of the two being retained.
"The solvency requirement of a non-regulated entity is a notional requirement calculated under the sectoral rules that would apply if it were a regulated entity in the sector.
"The difference must be positive.
« 3° Method 3: combination of the three methods.
"When co-ordinating, the Insurance, Mutual and Provident Institutions Commission may, subject to the conditions mentioned in the first paragraph, allow the financial conglomerate to combine two or three of the methods referred to in R. 334-49 and this section.
"An order by the Minister responsible for the economy determines the terms and conditions for calculating the equity and solvency requirements of an entity to be retained as part of the application of methods 1 to 3 referred to in this section.
"Art. R. 334-51. - Without prejudice to the provisions of Article L. 334-16, the Insurance, Mutual and Provident Institutions Commission may, where it is designated as coordinator and if the situation of the financial conglomerate in relation to the adequacy of equity justifies it, request that the additional requirements be covered by prudential elements recognized both by the regulations applicable to the insurance sector and by the regulations applicable to the banking sector and by the investment limits
"Art. R. 334-52. - I. - Regulated entities belonging to a financial conglomerate have coordinated risk management and internal control procedures.
“II. - The risk management procedures mentioned in the preceding paragraph relate to:
« 1° Periodic approval and review, by the governing bodies at the financial conglomerate level, of strategies and policies for the overall risks involved;
« 2° The satisfaction of regulatory requirements for equity adequacy and the existence of procedures to anticipate the impact of development strategies on the risk profile and requirements for equity;
« 3° Procedures to ensure that risk monitoring devices are adapted to the organization of the financial conglomerate and that the measures put in place within each entity, to ensure that the risks can be measured, monitored and controlled at the conglomerate level, are consistent.
"III. - The internal controls established shall enable:
« 1° Identify and measure all significant risks and determine a level of equity appropriate to risks;
« 2° Identify, measure, supervise and control intra-group transactions and risk concentration through appropriate reporting and accounting procedures.
"IV. - Regulated entities belonging to a financial conglomerate have an internal control system for the production of data or information intended to allow for further monitoring. »
Existing insurance group companies are required to transmit to the Insurance Business Committee, within two months of the coming into force of this Order, all the information necessary to assess the honesty, competence and experience of their leaders specified by the order set out in Article R. 334-46 of the Insurance Code.
The Insurance Companies Committee transmits this information to the Insurance, Mutual and Provident Institutions Commission.
The Minister of Economy, Finance and Industry is responsible for the execution of this Order, which will be published in the Official Journal of the French Republic.
Done in Paris, September 19, 2005.
Dominique de Villepin
By the Prime Minister:
Minister of Economy,
finance and industry,
Thierry Breton
