Key Benefits:
Minister of Economy, Finance and Industry,
Having regard to Directive 2002/87/EC of the European Parliament and the Council of 16 December 2002 on the supplementary monitoring of credit institutions, insurance companies and investment companies owned by a financial conglomerate;
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;
Based on the advice of the Advisory Committee on Legislation and Financial Regulation dated February 25, 2005,
Stop it!
In Article A. 321-2 of the Insurance Code, after the words: "The persons mentioned in Article A. 321-1 I (f)" are added the words: "and those referred to in Articles R. 334-46 and R. 334-48".
(a) It is created an article A. 334-6 as follows:
"Art. A. 334-6. - The statement of operations referred to in R. 334-45 is attached to the file referred to in A. 344-14, Appendix II. The undertaking subject to supplementary supervision shall also present, provided that it is not included in the documents described in Annex II to Article A. 344-14 or, where applicable, described in statement G 22 provided for in Article A. 344-14-1, the transactions, carried out directly or indirectly between the companies of the group to which it belongs, greater than 5% of the equity or 0.5% of the technical provisions of the group as calculated This table must isolate the following transactions: loans, transactions relating to eligible elements for credit margin, investments, the status of transfers of internal assets to the group (including sales of non-listed property or securities) and commitments of a defined amount received or given off-statement. Each of these transactions must be declared by specifying the sale company, the purchaser company, the book value in the first, the selling price and the reference that made it possible to establish it.
"The new transactions referred to in this article are reported at the end of each quarter within 30 days to the Insurance, Mutual and Provident Institutions Commission.
"In addition, in all cases, redemptions or refunds of subordinate securities and borrowings made directly or indirectly between related companies of the same group are declared without delay by the company subject to additional supervision. »
(b) In chapter IV of Title III of Book II of the Insurance Code, after Article A. 334-6, a section IX is inserted as follows:
“Section IX
“Supplementary monitoring provisions
regulated entities owned by a financial conglomerate
"Art. A. 334-7. - The activities of a group are carried out mainly in the financial sector within the meaning of Article L. 334-5 when the ratio between the total balance of the entities of the financial sector group and the total balance of the group is greater than 40%.
"Art. A. 334-8. - I. - The activities of a group in a financial sector are important within the meaning of Article L. 334-5 when the average value of the two reports mentioned below exceeds 10%:
" - the relationship between the total balance sheet of the sector and the total balance sheet of the financial sector entities of the group;
" - the relationship between the solvency requirements of that sector and the total solvency requirement of the group's financial sector entities.
"For this calculation, solvency requirements are calculated in accordance with the provisions of the sectoral rules:
“—for companies in the insurance sector, by chapter IV of title III of Book III of this Code, chapter I of title III of Book IX of the Social Security Code and chapter II of title I of Book II of the Code of Mutuality;
" - for companies in the banking and investment services sector, by regulations No. 91-05, No. 95-02 and No. 97-04 of the Banking and Financial Regulatory Committee;
" - for portfolio management companies that are not already included in the requirements of the banking sector and investment services, by Article 322-8 of the General Regulation of the Autorité des marchés financiers.
"The financial sector with the lowest average is considered the least significant financial sector.
“II. - The activities of a group in a financial sector are also important within the meaning of Article L. 334-5 when the total balance sheet of the least important financial sector within the group exceeds 6 billion euros.
"III. - If a group meeting the conditions referred to in 1 and 2 of Article L. 334-5 does not reach the threshold referred to in I, but reaches the threshold referred to in II of this Article, the competent authorities concerned defined in Article L. 334-2 may agree not to consider this group as a financial conglomerate or to apply it only the provisions relating to the adequacy of the funds defined in Articles 34 to 347 The decisions taken pursuant to this paragraph shall be notified to the other competent authorities.
"Art. A. 334-9. - I. - For the calculation of the ratios referred to in Article A. 334-7 and Article A. 334-8, the competent authorities concerned may, by mutual agreement:
“(a) Exclude an entity of this calculation, in the cases referred to in Article A. 334-16;
“(b) Decide that a group may not be identified as a financial conglomerate if the thresholds mentioned in sections A. 334-7 and A. 334-8 have not been met for three consecutive years and do not take this respect into account in the event of a significant change in the structure of the group;
"(c) In exceptional circumstances, either replace the criterion based on the total balance sheet with the criterion of income structure or the criterion of off-balance sheet activities or both criteria, or incorporate one or both of these criteria, if they consider that they are of particular interest for the purpose of the complementary monitoring of financial conglomerates.
"When a financial conglomerate has been identified, the decisions referred to in a and b are taken on the basis of a proposal made by the coordinator of the financial conglomerate.
“II. - When, for a financial conglomerate subject to supplementary monitoring, the thresholds referred to in Article A. 334-7 and Article A. 334-8 become less than 40% and 10%, respectively, of the thresholds set at 35% and 8% apply for the following three years.
" Similarly, when the threshold referred to in Article A. 334-8 becomes less than 6 billion euros, a lower threshold of 5 billion euros applies for the next three years.
"During this period, the co-ordinator may, with the agreement of the relevant authorities, decide that supplementary monitoring no longer applies to the financial conglomerate considered, to the extent that the ratios or amounts do not rise above the normal thresholds.
"Art. A. 334-10. - The calculations for the balance sheet referred to in sections A. 334-7 to A. 334-9 shall be based on the consolidated or combined accounts of the group.
"If these accounts are not available, the coordinator may authorize the financial conglomerate to use the aggregated accounts. In this case, companies in which participation is held shall be taken into account in the amount of their balance sheet corresponding to the aggregate share held by the group.
"Art. A. 334-11. - In accordance with Article L. 334-5, the control board, as coordinator, may decide to subject a subgroup of a financial conglomerate to the supplementary monitoring, provided that the financial conglomerate to which this subgroup belongs does not meet the requirements of the complementary monitoring or that the distribution of its own funds is not appropriate to the objectives of the complementary monitoring.
"Art. A. 334-12. - Pursuant to Article L. 334-9, the coordinator shall be appointed from among the competent authorities of the States parties to the European Economic Area Agreement according to the following criteria:
“1. When a regulated entity is placed at the head of the financial conglomerate, the coordinator is the authority responsible for the prudential oversight of that entity.
“2. When a joint holding financial company is placed at the head of the financial conglomerate, the co-ordinator is the responsible authority for the prudential supervision of the subsidiary regulated entity of the joint holding financial company and meets the following conditions:
“(a) When the joint holding financial company is the parent company of several regulated entities having their head office in States parties to the agreement on the European Economic Area, the entity is registered in the State in which the joint holding financial company has its head office;
“(b) When regulated subsidiary entities of the joint holding financial company have their headquarters in the same state and operate in different financial sectors, the entity operates in the largest financial sector;
"(c) When no regulated subsidiary entity of the joint holding financial company has been approved in the State where it has its head office, the entity has the highest balance sheet in the largest financial sector.
“3. When several joint holding financial companies with their headquarters in different States parties to the European Economic Area Agreement are placed at the head of the financial conglomerate and each has at least one registered subsidiary regulated entity in the State of their headquarters, the coordinator is the responsible authority for the prudential supervision of the regulated entity carrying on its activities in the largest financial sector or of the regulated entity that owns the highest balance sheet if
“4. In all other cases, the co-ordinator is the responsible authority for the prudential oversight of the regulated entity that has the highest balance in the largest financial sector.
"The competent authorities concerned may, by mutual agreement and after receiving the opinion of the financial conglomerate, derogate from these criteria and designate another competent authority as a coordinator if it appears inappropriate to apply them, taking into account the structure of the financial conglomerate and the relative importance of its activities in the different states.
"Art. A. 334-13. - Cooperation between competent authorities provided for in Article L. 334-13 shall be carried out under the following conditions:
« 1° Without prejudice to their respective responsibilities, any competent authority shall communicate, on its own initiative or at the request of another competent authority, any useful information that would enable the latter to exercise its prudential functions, as part of the complementary monitoring of financial conglomerates.
"The competent authorities collect and exchange information that contributes to the exercise of this complementary monitoring. This information includes the structure of the group, the main entities of the financial conglomerate and the competent authorities of these regulated entities, the financial conglomerate strategy and its financial situation, as well as its major shareholders and leaders, the risk management system and the internal control system. They also relate to procedures for collecting and verifying information from the entities of the financial conglomerate, the difficulties encountered by them, as well as the major sanctions and exceptional measures taken against them by the competent authorities.
« 2° Without prejudice to their respective responsibilities, before making a decision concerning the prudential functions of other competent authorities, the competent authorities concerned shall consult and exchange information on the modification of the structure of the shareholding, the organization or management of the regulated entities of a financial conglomerate requiring the approval or authorization of the competent authorities, as well as on the main sanctions and exceptional measures envisaged by the competent authorities.
"In the event of an emergency, or where such consultation may jeopardize the effectiveness of the decision, a competent authority may decide not to consult with its counterparts, subject to the prompt notification of that decision.
« 3° The Supervisory Commission cooperates closely with other competent authorities to seek the effectiveness of the sanctions or measures adopted in accordance with Articles L. 334-16 and L. 334-17.
"Art. A. 334-14. - I. - When the entity at the head of a financial conglomerate, whose control commission is the coordinator, has its head office in another Member State or in another State Party to the agreement on the European Economic Area, the supervisory committee may invite the competent authorities of that State, on the one hand, to request that entity to provide them with any information relevant to the fulfilment of its coordination mission, within the meaning of Article 10
"The monitoring committee shall, at the request of a coordinator of another Member State or another State Party to the Agreement on the European Economic Area, communicate any information useful to the fulfilment of the mission of that coordinator, as defined in Article L. 334-11.
“II. - When the supervisory board is the audit authority referred to in Article L. 334-18, it shall consult with the other competent authorities concerned. It also consults, before making a decision, the Committee of Financial Conglomerates set out in Article 21 of Directive 2002/87/EC of the European Parliament and of the Council of 16 December 2002 to take into account the guidelines developed by this Committee.
"Art. A. 334-15. - I. - The solvency requirements for the various financial sectors of the financial conglomerate are:
“(a) Requirements for regulated entities whose head office is located in France, as provided for in chapter IV of title II of Book III of this Code, chapter I of title III of Book IX of the Code of Social Security, chapter II of title I of Book II of the Code of Mutuality, by-laws No. 91-05 and No. 95-02 of the Committee on Banking and Financial Regulation and Article 322-8 of the General Regulations of the Autorité
“(b) Requirements equivalent to those mentioned in a, for regulated entities whose head office is located outside France and for insurance organizations, investment companies and credit institutions having their seat in a State that is not a party to the European Economic Area Agreement, and
"(c) Conceptual solvency requirements for unregulated entities under the rules applicable to regulated entities in the financial sector to which they belong.
“II. - For the purposes of section R. 334-49, the financial conglomerate's own funds are:
“(a) The elements referred to in sections R. 334-3, R. 334-11, R. 334-17 and R. 334-42, except those in the following paragraph, calculated in accordance with the rules specified in these provisions and on the basis of the consolidated or combined accounts of the financial conglomerate, and
“(b) The elements included, according to specific rules, in the prudential equity of entities under the banking sector and investment services.
"For the purpose of admitting prudential elements into the financial conglomerate's own funds, the control board, as coordinator, takes into account the actual availability and transferability of funds between the various entities of the financial conglomerate.
"III. - For the application of methods 2 and 3 defined in section R. 334-50, the clean funds and solvency requirements of an entity are determined from its annual accounts in accordance with the provisions of the order in section R. 334-49.
"They are taken into account in the competition of the share of capital owned directly or indirectly by the entities of the financial conglomerate or, where there is no capital link, for the part determined by the control commission, after consultation with the other relevant authorities, depending on the liability arising from the relationship between the entity and other entities of the financial conglomerate.
"In addition, when the entity has a solvency deficiency, this deficit is taken into account in full. However, in the event that the liability of the parent holding a share of capital is limited, strictly and unambiguously, to that share of capital, the control board may decide to admit that the entity's deficit is taken into account on a proportional basis.
"Intragroup transactions are eliminated in a manner equivalent to the one provided for in the preparation of consolidated or combined accounts referred to in Article L. 345-2.
"Art. A. 334-16. - The co-ordinator may decide not to include a particular entity within the scope of calculating the additional requirements for the adequacy of equity in the following cases:
“(a) It is located in a State that is not a party to the agreement on the European Economic Area where legal obstacles prevent the transfer of the necessary information;
“(b) It has a negligible interest in the objectives of complementary monitoring;
"(c) Its inclusion in the calculation perimeter is inappropriate in relation to the objectives of this complementary monitoring. In this case, the coordinator consults, except urgently, other relevant authorities.
"However, if several entities are to be excluded on the basis of b, but collectively they have a significant interest, they are included in the calculation scope.
"When the coordinator does not include a regulated entity within the scope of calculation in one of the cases referred to in points b and c and that the entity has its seat in a State Party to the Agreement on the European Economic Area, the entity that is at the head of the financial conglomerate must provide to the competent authorities of that State, at their request, any information that facilitates the monitoring of the regulated entity. »
In chapter IV of Book III of the Insurance Code, an article A. 344-14-1 is added as follows:
"Art. A. 344-14-1. - When pursuant to section L. 334-9, the supervisory board is the coordinator of the complementary monitoring of regulated entities belonging to a financial conglomerate, the regulated entity headed by the financial conglomerate shall, by 30 April, provide a record constituted in accordance with the schedule to this section each year.
"When the financial conglomerate does not have a regulated entity placed at its head, the file is transmitted by the holding financial company or by the regulated entity designated by the control commission after consultation with the other competent authorities defined at 11° of section L. 334-2 and the financial conglomerate.
"The file is certified by the legal representative of the entity transmitting the file, as follows: "This document, comprising x numbered slips, shall be certified, subject to the application of the penalties provided for in Article L. 310-28 of the Insurance Code, in accordance with the writings of the entities belonging to the financial conglomerate, and the provisions of Title IV of Book III of the same Code. »
A N N E X E
I. The record is based on the accounts of the last fiscal year. Subject to the adaptations provided for in II, it shall include:
(a) The items listed in Appendix I to section A. 344-14. However, where it is used, as provided in section R. 334-41, to calculate the adjusted margin in the same way as the additional requirements of a financial conglomerate's own funds, the G2 is not provided and the information provided in that statement is included in the G20 statement as follows:
(b) State G20 - Additional requirements
equity adequacy
A first table shows the solvency requirements of the financial sector as defined in II of Article A. 334-14, with a minimum distinguishing between the insurance requirements of the banking and investment services sector.
A second table shows the specific funds of the financial conglomerate defined in Article A. 334-14 with their decomposition by category of equity and by distinguishing cross-sectoral capital, insurance and banking and investment services.
(c) State G21 - Risk Concentrations
Table A: risk of counterparty
The table shows, for each counterparty and in accordance with the model below, the aggregate amount of risk on this counterparty, including financial instruments, loans, guarantees and bonds, insurance or reinsurance contracts. However, insurance investments are excluded for which the investment risk is fully supported by insured persons, or whose counterparty is a member state of the OECD or an international public body of which one or more Member States of the European Union are members. In addition, there are only considerations for which the aggregated gross amount exceeds 300 million euros or 10% of the equity of the financial conglomerate. A counterpart is either an isolated company, or several companies belonging to the same group within the meaning of 1° of Article R. 332-13. The table shows the aggregate amount of counterpart risks for the insurance sector, on the one hand, for the banking sector and investment companies, on the other. To this end, it is considered that the joint holding financial company belongs to the largest financial sector.
You can see the table in the OJ
n° 220 of 21/09/2005 text number 14
Table B: risk of equity and real estate investments
You can see the table in the OJ
n° 220 of 21/09/2005 text number 14
(d) State G22 - Significant intragroup transactions
Any intra-group transaction that exceeds 5% of the solvency requirements for the financial sector of the financial conglomerate must be reported. For each intragroup transaction subject to the reporting obligation, the characteristics of the transaction are indicated in the following model.
You can see the table in the OJ
n° 220 of 21/09/2005 text number 14
For commitments in the table of commitments received and given or out-of-balance, the amount is the amount in these accounting statements.
Any set of intragroup transactions of the same type must also be reported when the total amount of these transactions exceeds the same threshold. For each type of intragroup transaction subject to this reporting obligation, the total amount of transactions is indicated.
II. - The Supervisory Commission shall, after consultation with other relevant authorities and the financial conglomerate, define the appropriate reporting thresholds.
After consultation with the other relevant authorities defined in the 11th of Article L. 334-2 and the financial conglomerate, it determines the other risk categories to be included in G21, taking into account the structure of the financial conglomerate and its risk management.
4
The present order will be issued in the Official Journal of the French Republic.
Done in Paris, September 19, 2005.
Thierry Breton
