The seventh final provision of Law 33/1984, of 2 August, on the Management of Private Insurance, sets out in its number 1, that the provisions of this Law are without prejudice to the commitments made by the Spanish State. under treaties or International Conventions. Number 2 of the same final provision entitles the Government to proceed to the development of the Act in accordance with the commitments arising from those Treaties or Conventions.

The Spanish accession to the European Economic Community raises the need to adapt certain points of the legislation on the Management of Private Insurance to the Directives of that, even though the basic lines of the Law On 2 August the Commission adopted a Regulation of 2 August 1985 and Regulation of 1 August 1985. The adaptation process does not therefore start with the present Royal Decree, nor does it end with it, since the existence of a transitional period applicable to Spain, among others, as regards Directive 78 /473/EEC, on the coordination of legislative, regulatory and administrative provisions on Community co-insurance, gives rise to the need to make the necessary adjustments at a time when the transitional periods for the directive will require it.

The Community provisions which make the amendments introduced by this Royal Decree necessary are Directives 73 /239/EEC and 79 /267/EEC concerning access to the activity of direct insurance other than life and insurance direct of life, respectively.

These directives contain provisions which differ in some respects from the private insurance regulation adopted by Royal Decree 1348/1985 of 1 August, and consequently, it is necessary to make use of the authorization contained in Law 33/1984, which was previously referred to.

Under its virtue, the Advisory Board of Insurance has been heard, in agreement with the State Council, on a proposal from the Ministry of Economy and Finance and after deliberation by the Council of Ministers, at its meeting on 22 August. of 1986,

DISPONGO:

Single item.

Articles 5, 6, 7, 7, 7, 8, 9, 9, 15, 21, 73, 76, 77, 78, 80, 86, 113, 115 and 119, as well as the transitional provision of the Private Insurance Management Regulation, approved by Royal Decree 1348/1985 of 1, are amended. of August, which are drawn up in the following terms:

" Art. 5. No prohibited operations.

1. The insurance entities are prohibited from performing the following operations:

(a) Those without actuarial technical basis.

b) Contracts of participating accounts.

(c) The exercise of any industry or activity and the acceptance of liabilities or the granting of guarantees or guarantees other than those of the insurance business, unless they have obtained authorization from the Ministry Economic and financial affairs and, where appropriate, the competent ministries. The activities referred to in Article 3 (1) (c) do not require this authorisation.

d) The mediation activities between policyholders and other insurance entities, without prejudice to the performance of the employer in the co-insurance scheme (Article 3 of the Law).

2. The authorisation of the Ministry of Economy and Finance referred to in point (c) of the first paragraph of this Article shall be granted provided that the solvency of the insurance institution is not jeopardised. The authorised operations shall be reflected separately in the accounts. '

" Art. 6. Entities and persons subject to this legislation.

1. They are subject to the provisions of private insurance legislation:

(a) Those who practice in Spain the operations or activities referred to in Article 2. of Law and 3. of this Regulation, as well as the organizations constituted with a permanent character for the distribution of the risk coverage or the presentation to insurance companies of common services related to the insurance business, whatever their legal configuration.

(b) Persons and Bodies in charge of the management, representation or administration of the Entities subject to the Law, the professionals who subscribe to the documents provided for in the Law or its accompanying provisions; and persons for whom a prohibition or mandate is legally established.

(c) Natural or legal persons engaged in insurance and reinsurance mediation activities, without prejudice to the provisions of their specific legislation.

(d) Insurance appraisers and commissars and breakdown liquidators, without prejudice to the provisions of their specific legislation.

2. The Autonomous Bodies and the Companies or Entities with the participation of the Public Administrations or their Agencies that carry out operations covered by the Law, must perform them under conditions equivalent to the private entities and shall be fully in line with the specific insurance legislation.

3. The Entities, Societies or Entities referred to in the preceding number shall also be subject to the exercise of their insurance activity, the Insurance Contract Law and the civil jurisdiction. "

" Art. 7. Application Scope.

The provisions of the Law shall apply to all insurance and reinsurance entities, as well as to natural or legal persons engaged in mediation activities, without distinction of nationality, provided they operate in Spain. However, when in fact or in law in the countries of origin of these Entities or persons are required to the Spanish greater guarantees or requirements than the national ones or they are recognized lesser rights, the Ministry of Economy and Finance will have to establish, on a reciprocal basis, other equivalent conditions in their terms or in their effects for those of the country concerned (Article 5 of the Law). Reciprocity shall not apply to insurers and reinsurers whose registered office is situated within the European Economic Community. '

" Art. 8. "Administrative Authorisation" to the Spanish Insurance Entities.

1. Entities that intend to carry out transactions under private insurance legislation must obtain the corresponding authorization from the Ministry of Economy and Finance as a prerequisite and indispensable for exercising them. shall grant, subject to compliance with the requirements laid down in the Law and in this Regulation. Such authorization shall be granted by classes, and at the request of the Entities concerned may be extended to the entire Spanish territory or to another minor area (Article 6, 1, of the Law).

2. The application shall be addressed to the Minister for Economic Affairs and Finance and shall be submitted to the Directorate-General for Insurance directly or through the centres provided for in the Administrative Procedure Act.

3. Public Limited Companies and Mutual Societies at a fixed premium with the application for authorisation shall submit the following documentation:

a) Authentic copy of the deed of constitution duly registered in the Mercantile Register. In the case of Mutua the deed shall include the relationship of partners.

(b) The Statutes for which the Entity is to be governed when they are not in the aforementioned writing of the constitution.

c) Relationship of Directors, Directors or Managers, General Apoderados and those who under any title carry the Company's management.

d) Models of policies, technical bases, and premium rates that you intend to use. This documentation shall not be required for the insurance of railway vehicles; aircraft; hulls of ships or seagoing vessels, lake and river vessels; goods carried, and civil liability for aircraft, vessels or maritime, lake and river vessels. The contribution of technical bases and fees for credit and security insurance will also not be necessary.

e) Notary testimony of the seats in their books of accounts and supporting documents showing the affectivity of the subscription and disbursement of the social capital or the mutual fund in the form provided for in the article 21.6 of this Regulation.

(f) Financial plan detailing for the first three financial years the revenue and expenditure forecasts for each of the classes in which it is to operate, taking into account the average costs incurred in the whole of the undertakings in the sector which cover similar risks to which the applicant intends to cover; reinsurance and full-life conservation projects for each mode of risk or class which ensure the financial solvency of the applicant; The elements constituting the minimum of the guarantee fund and the forecasts for the financial means for the coverage of the commitments and the solvency margin shall be indicated.

4. If the documents submitted contain any subsable defects, the provisions of the Administrative Procedure Law shall apply and if it is not subsable the authorization shall be refused. The grant or refusal shall be made in a reasoned order, which shall be notified to the persons concerned and published in the 'Official State Gazette'. With this Order the government will be in a hurry, with the possibility of an administrative dispute.

5. The application and documents accompanying it, as well as the accounts and supporting documents, shall be drawn up in Spanish. In the case of an Entity domiciled in a Autonomous Community where there is an official language other than Spanish, the language may be used with official translation. In the case of delegations of foreign entities, the application and documentation accompanying them may be written in the official language of their country provided that the translation into Spanish is accompanied by the Office of Interpretation of Languages of the Spanish Ministry of Foreign Affairs.

6. Mutuals and Cooperatives at variable premium shall not be required to accompany technical bases, premium rates or financial plan, but they shall provide the programme of activities provided for in Articles 14.2, (a) of Law and 38.1 (b) of this Regulation. the explanation of how to achieve the qualitative and quantitative homogeneity of the risks, the transferred reinsurance plans and the expected revenue and expenditure for the first three social exercises.

7. Self-employed bodies which are to carry out insurance activities shall certify the provisions which constitute them and indicate the "Official Gazette" in which they have been published. "

" Art. 9. "Administrative authorization" to delegations of foreign entities.

1. The Minister of Economy and Finance may grant authorization and subsequent registration in the Special Register to foreign insurance entities to establish delegations in Spain provided that they meet the following conditions:

(a) That in advance of not less than five years they are duly authorized in their country to operate in the classes in which they intend to work in Spain.

b) That they create a general delegation with domicile and permanent establishment in Spain where the accounting and documentation of the activity they develop are preserved.

c) That they appoint a General Delegate, with domicile and residence in Spain, not incourse in the prohibitions of articles 11.2 of Law and 23 of this Regulation, and with the most extensive commercial powers to compel the Entity against third parties and represent it before the Spanish authorities and courts; if the Delegate is a legal person, he must have his registered office in Spain and designate, in turn, to represent it, a natural person who meets the conditions before indicated. Their designation shall be entered in the Register referred to in Articles 40 of Law and 118 of this Regulation. This delegate must obtain, in advance, the acceptance of the Ministry of Economy and Finance, who may revoke it, in application of the principle of reciprocity, for reasons of good repute, technical qualifications or as a sanction, by agreement Use. In any case, the balance sheet and the results of the last three social exercises must be accompanied, which must be audited if there is no control body in the country of origin.

(d) To provide and maintain in their delegation in Spain a fund of amount not less than the paid-up social capital or minimum mutual fund required by Articles 10 of the Law, and 21 and 22 of this Regulation for the Entities Spanish who develop the same activities as will be called permanent fund with the central house.

(e) to provide and maintain in Spain a guarantee fund not less than half the minimum referred to in Articles 25.2 of Law and 80 of this Regulation. The fourth part of the minimum referred to shall be deposited as a caution.

f) That they present a program of activities and the documentation that is determined in the number 3 of this article.

g) To accompany the certificate of the control authority of your country that it complies with the law of the country, especially in terms of solvency margin (article 12 of the Law).

2. The permanent fund referred to in point (d) of the preceding number shall exclusively cover the initial investment of the central house and subsequent extensions or reductions, and shall be computable for the guarantee.

3. The application for authorization must provide the following documentation:

(a) Certification of the authority exercising control of the insurance activity in your country, accrediting of the dates on which it was authorized to operate in each of the classes, of the figure of the social capital or mutual fund of that the solvency margin meets the requirements of the legislation itself and that its technical provisions are properly calculated and covered. If there is no authority in that country for the control of the insurance business, the certification shall be issued by another competent authority. In any case, the balance sheet and the results of the last three social exercises must be accompanied, which must be audited if there is no control body in the country of origin.

(b) A proof of having constituted the security referred to in point (e) of number 1, by deposit, in the Banco de España or in the General Deposit Box at the disposal of the Minister for Economic Affairs and Finance, of securities public issued by the Spanish State, domiciled in Spain, admitted at the average rate of the month preceding the delivery in cash or at par, if they are quoted on this, and the effective value of which is not less than a quarter of the minimum of the fund the security referred to in Article 80.

(c) Programme of activities adjusted to the financial plan provided for in Article 8., 3, (f).

d) Polices, technical bases and rates.

e) Fehaciente testimony of the public deed of constitution duly registered in the Commercial Register.

(f) Notary testimony of the seats in the accounting books that reflect the contribution of the permanent fund.

g) Statutes of the central house, as well as a list of the Administrators and Directors, indicating name, address and nationality.

h) Commitment to submit to Spanish laws.

4. Applications from foreign entities shall apply as provided for in Article 8 (4

.

5. The conditions laid down in points (a), (d) and (e) of No 1 shall not be payable to the delegations of foreign entities whose registered office is located in the European Economic Community. '

" Art. 15. Extension to new classes.

1. Where the extension of the authorisation to new classes of insurance is requested, the documentation provided for in Article 8 shall be provided, as soon as it is applicable, and certification of the agreement adopted by the social body which is competent under its Statutes. In the case of delegations of foreign entities, they shall provide the corresponding certification as provided for in Article 9 (1) (g) of this Regulation. In any event, it shall be justified to have completed the financial guarantees, if appropriate, in accordance with this Regulation.

2. When an extension of territorial scope is requested within Spain, it must be justified to have correctly calculated and covered the technical provisions, solvency margin and guarantee fund and where appropriate, to have the financial guarantees These are required by this Regulation. They shall also provide the documentation provided for in the preceding number, as soon as applicable. "

" Art. 21. Social capital.

1. The public limited liability companies and the insurance cooperatives referred to in Articles 15.1 (b) and (c) of Law and 40.1, (b) and (c) of this Regulation shall have a registered capital, in accordance with the classes in which they operate, less than the following: Group I, 320,000,000 pesetas; group II, 160,000,000 pesetas; group III, 80,000,000 pesetas; group IV, 40,000,000 pesetas, and group V, 500,000,000 pesetas. For the Cooperatives of Article 15.1 (a) of the Law, this capital shall be 2,000,000 pesetas. The subscribed capital must be paid at least 50 per 100.

2. Group I shall comprise the class of life; group II shall comprise the classes of caution, credit and all those in which the risk of civil liability is covered; group III shall comprise classes of accidents, sickness, travel assistance and all those who cover damage to things and are not specifically included in other groups; group IV shall comprise all branches of service which are not specifically included in other groups, and group V comprise the activity exclusively reinsurer. The Ministry of Economy and Finance, heard by the Advisory Board of Insurance, will classify those that may be in doubt (article 10.1 and 2 of the Law).

3. For Entities which only practice insurance in Group IV and limit their activity to a territorial area with less than 2,000,000 inhabitants, half of the capital provided for in the preceding numbers will be sufficient (Article 10.4 of the law).

4. Entities carrying out business in several direct insurance classes other than those of life or contracts in combination shall have the capital corresponding to the class in the largest group (Article 10.5 of the Act).

5. The minimum percentage paid out in number 1 refers to the registered capital as a whole, not to the amount of each share. This percentage must be respected overall in subsequent amendments.

6. Increases and reductions in social capital shall be justified by the corresponding public deed and notarial testimony of the seats in the official books of accounts. In addition, the following documents must be provided:

(a) When the disbursement is made through cash contributions, it will always be carried out through Banks, Savings Banks or other authorized deposit entities, and original or legalized copies of the fees will be filed in which the person making the income is concretized. The Ministry of Economic Affairs and Finance may accept other means of proof which show the reality of the disbursement in an undoubted manner.

b) When the disbursement is made by the contribution of real estate, flat at scale of the same. Memory and technical description signed by the collegiate architect, certification of the Land Registry on the ownership of the insurance institution and charges and, where appropriate, the participation of the common elements and expert assessment carried out by a professional officially authorised for such purposes, without prejudice to its possible review by the Ministry of Economic Affairs and Finance and the resources to be carried out.

(c) When the disbursement is made through the contribution of shares listed on the Stock Exchange or Bolsin, the corresponding 'Official Gazette'. If they are not listed on the Stock Exchange, a study of the theoretical value of the action performed by Entity or professional officially authorized for these purposes, without prejudice to the review and resources, should be provided, as the previous number has. The Directorate-General for Insurance may also require such a study when it is listed on the Stock Exchange if it considers that there are circumstances which may have determined an excessive price. In any case, the financial, commercial and personal relationships between the company whose shares are provided and the one that receives them as social capital should be explained in detail.

(d) In any other case of non-cash contribution, descriptive memory and expert assessment made by an entity or professional officially authorised for such purposes which justifies the value of the contribution shall be submitted without prejudice to its possible review by the Ministry of Economic Affairs and Finance and the resources that come from it.

(e) When the disbursement is made from the regularization or update accounts, the original or legalized copy of the tax inspection report shall be submitted in accordance with the regularization or update if the check has already been performed.

7. The Ministry of Economic Affairs and Finance may check the securities of the assets provided, and in the event of insufficiency it may require the Entity to reduce the share capital or to provide other additional assets.

8. In all cases of variation in the share capital, certification issued by the secretary of the administrative board shall be accompanied by the agreement of the President of the Entity in which the foreign participation in that capital is specified, both before and after the variation, and also be accompanied by photocopy of the administrative authorisations which have been necessary in their case.

9. In any document that is quoted the social capital figure must be made reference to the subscribed and the paid-up. "

" Art. 73. Ownership and status of investments.

1. The assets and securities in which the technical provisions are invested shall have to belong in full domain to the insurance institution, which shall have the free disposal of the same.

2. The investment of technical provisions resulting from operations under Law 33/1984 of 2 August on the Management of Private Insurance must be maintained in Spain, with the exception of securities denominated in foreign currency and investments of the technical provisions relating to insurance agreed in foreign currency. In other special cases as required, the Ministry of Economy and Finance may authorise its maintenance abroad.

3. The transferable securities in which such investment materializes shall be deposited free of charge in banks, savings banks and other financial intermediaries authorised for that purpose.

4. In any event, the investments referred to in No 1 shall be included in the name of the direct insurer. The proof of ownership and deposits of these investments shall be kept at the registered office of the Entity in Spain. "

" Art. 76. Obligation to have the solvency margin available.

1. The insurance institutions shall have in each financial year the solvency margin of a non-committed own equity, deducted from the intangible assets, in the amount resulting from the application of all transactions in Spain or beyond, the rules laid down in this regulation.

2. The delegations in Spain of foreign entities whose registered office is located within the scope defined in Article 9. 5 shall not be affected by the obligation laid down in the preceding number.

3. The remaining delegations of foreign entities will comply with the provisions of the number 1, based on their operations in Spain. The assets representing the solvency margin, up to the amount of the guarantee fund, must be located in Spain and the excess of the minimum amount of the solvency margin may be located in other countries of the European Economic Community. "

" Art. 77. Uncommitted own estate.

1. The non-committable own equity for these purposes includes the following items, deducted from the intangible elements specified in point 2 of this Article:

a) The paid-up share capital or the mutual fund.

b) Half of the subscribed capital part outstanding.

c) The stock issue premium reserve, the differences for asset updates, the equity reserves, and the provision for the deviation from claims.

d) The part of the credit balance of the Loss and Earnings account that is intended to increase the Entity's own funds.

e) The creditor balance of the permanent fund with the central house for foreign company delegations.

f) The passive spill payable to the mutualists, with the limit of 50 per 100 of the net quotas for direct insurance cancellations. This sum may not exceed 50 per 100 of the uncommitted own equity assessed prior to the incorporation of this item.

g) Capital gains resulting from the underestimation of asset items and the overestimation of liabilities to the extent that such capital gains are not exceptional and have been accepted from the general direction insurance, upon request and justification by the Entity.

(h) 50 per 100 of the future profits, which relate exclusively to the life class, calculated by multiplying the arithmetic average of the profits earned over the last five years by a factor representing the the average residual duration of the contracts, and which shall be fixed by the Ministry of Economy and Finance without exceeding 10.

(i) Discounted commissions that are technically outstanding, with the policy limit of 3.5 per 100 of the risk capital, and the amount of the discounted commissions, if any, activated.

(j) 75 per 100 of the excess of the current risk provision calculated by the systems provided for in Articles 57.1 (b) and (c) above the amount that would result from the policy-to-policy system provided for in point (a) of that Article. The amount calculated shall not exceed 20 per 100 of the solvency margin.

2. Non-material items to be deducted include all deferred amortization expenses included in the balance sheet asset, the debtor balance of the Loss and Earnings Account and the active balances of regularization and updating. of Balances and, in general, the handicaps resulting from the overestimation of the assets or the underestimation of the liabilities. '

" Art. 78. Minimum amount of solvency margin in insurance other than life insurance.

1. On the basis of insurance contracts other than those covered by the life class, the minimum amount of the solvency margin shall be determined either on the basis of the annual amount of the premiums or contributions, or on the basis of the claims of the three Last social exercises. The minimum amount of the solvency margin shall be equal to that which is higher than those obtained by the above procedures.

2. Where undertakings essentially cover one or more of the risks of storm, stone and frost, the last seven social years shall be taken into account as a reference period for the average amount of claims. It is understood that this is the case where the premiums for those risks are at least 75 per 100 of the total of those issued by the Entity.

3. The amount of the solvency margin on the basis of premiums shall be determined as follows:

(a) The concept of premiums or quotas shall include those issued by direct insurance in the financial year provided for, plus external surcharges to the premium, net of cancellations, plus premiums accepted in reinsurance in the same year. exercise.

(b) Up to 1,000,000,000 premiums shall be applied for 18 per 100, and the excess shall, if any, be applied by 16 per 100, with both results.

(c) The amount obtained as referred to in the preceding paragraph shall be multiplied by the ratio existing in the financial year referred to in the amount of the net claims for reinsurance transferred and backed up and the gross amount of such claims, without this relationship in any case being less than 50 per 100.

4. The amount of the solvency margin on the basis of claims shall be determined as follows:

(a) The amount of claims shall include those paid by direct business in the financial year covered and in the two preceding financial year (six in the risks referred to in number 2), without deduction of any given reinsurance or regressed; claims paid for reinsurance acceptances, and provisions for outstanding claims for direct business and accepted reinsurance incorporated at the close of the financial year referred to.

(b) The amount of the sum obtained pursuant to (a) shall be deducted from the amount of the claims incurred in the periods referred to in paragraph 1, plus that of the outstanding claims provisions of the closing date from the previous year to the three-year period covered by both direct and accepted business.

(c) To the third of the figure resulting from paragraph (b), with the limit of 700,000,000 pesetas, the 26 per 100 shall be applied, and the excess, if any, shall be applied on 23 per 100, with both results in addition. In the case of the risks referred to in issue 2, the seventh shall apply instead of the third.

(d) The amount obtained pursuant to paragraph (c) shall be multiplied by the ratio existing in the financial year referred to in the amount of the net claims for reinsurance transferred and backed up and the gross amount of such claims, without this relationship in any case being less than 50 per 100.

5. The percentages referred to in paragraphs (b) of number 3 and (c) of number 4 shall be reduced by two thirds in the case of health insurance. This reduction will also be applied for sickness insurance when it is administered according to the same technique as life insurance and the following circumstances are also given:

a) That premiums are calculated on the basis of morbidity tables according to mathematical methods.

b) That an aging reserve is constituted.

(c) A premium supplement intended to constitute a sufficient margin of security shall be collected.

d) That the insurer cannot terminate the contract before the third annual maturity.

e) That contracts are expected to increase premiums or reduce benefits.

6. The Ministry of Economy and Finance shall regularly adapt, in order to maintain monetary equivalence, the figures set out in numbers 3, b) and 4, c) of this Article. '

" Art. 80. Guarantee fund.

1. The third part of the minimum amount of the solvency margin laid down in accordance with Articles 78 and 79 is the guarantee fund, which shall not be less than 100, 50, 37,5, 20 and 125 million pesetas, for the entities operating respectively, in the classes referred to in Groups I to V provided for in Article 10 (2) of the Law (Article 25.2 of the Law).

2. For mutual societies with a passive and cooperative spill regime, the minimum guarantee fund shall be three quarters of the requirement for the remaining Entities operating in the same cases (Article 25.3 of the Act).

3. In the cases referred to in Article 10 (3) (a) and (4) of the Act, the minimum guarantee fund shall be reduced by the same proportion as those precepts reduce the share capital.

4. For mutual societies with a passive and cooperative spill system, the minimum guarantee fund shall be three quarters of the requirement for the remaining Entities of its class, and shall be exempt from that minimum of the Mutual Societies referred to in that Article. a scheme where the annual collection of premiums or contributions does not exceed 50,000,000 pesetas for the entities operating in the life field, and of the total of 125,000,000 pesetas for which they operate in the other classes, except those for civil liability, credit and caution.

5. The guarantee fund payable during the operation of the Entity, as provided for in Article 25, 1 of the Law, shall apply from the moment its amount exceeds the figure of social capital, mutual fund or permanent fund of the central house. corresponding to the respective Entity.

6. 50 per 100 of the guarantee fund, and in any event its minimum amount, shall be constituted by the elements referred to in points (a) to (e) of Article 77.1 of this Regulation. "

" Art. 86. Causes of revocation of the administrative authorization.

1. The administrative authorisation granted for the exercise of the insurance and reinsurance activity shall be revoked in the following cases:

a) At the request of the Entity itself.

b) When the Entity ceases to comply with any of the requirements established by the Law for the granting of the authorization.

(c) Where a short-term rehabilitation or recovery plan authorised by the Ministry of Economy and Finance has not achieved its objectives within the time limits specified.

(d) By expiration, when the Entity has not commenced its activity within one year, from the date of granting the authorization, or when its lack of real activity is verified in one or more branches, directly or in combination in the terms determined by the number 6 of this article, for a period of two years. The expiry shall apply only to the classes in which the inactivity occurred and shall also take place in the case of total disposal of the portfolio of one or more branches.

e) As a sanction, pursuant to Articles 44 and 45, in relation to 29, 1, e), and 43, 6, j), of Law, and 124, j), and 125, 2, c) of this Regulation.

f) By dissolution of the Entity.

g) Loss of 50 per 100 of the fund required by Articles 12, d), of Law, and 9. º, 1, of this Regulation.

h) When the delegation does not reach the guarantee fund and is not re-enabled under Articles 42 of the Act and 120 of this Regulation.

2. The Government may also agree to revoke the authorisation granted to foreign and/or Spanish entities with majority foreign participation in application of the principle of reciprocity or where appropriate Extraordinary national interest. The provisions of the delegations of foreign entities will not apply to those whose registered office is located in the European Economic Community, nor will it be for the Spanish with majority foreign participation if they are comes from countries of that Community.

3. Where any of the reasons for revocation provided for in paragraphs (b) and (d) of No 1 occurs, the Ministry of Economic Affairs and Finance, before agreeing to revoke it, may grant a period of not more than six months for the institution to (Article 29 (1) to (3) of the Law). Where the cause is as provided for in point (g), the provisions of Article 89 (1) of this Regulation shall apply.

4. The revocation of the authorization may affect a single class or all those in which the Entity operates, as well as all or part of the territorial scope of its action (Article 29, 4, of the law).

5. The assumption that the Entity has left the registered office, notified to the Directorate-General for Insurance, and does not appear before it within 10 days of the date of the date of the date of its notification, shall be deemed to be in paragraph 1 (b) of this Article. was placed to do so by means of a notice published in the 'Official Gazette of the State'.

6. The expiry of the activity referred to in point (d) of No 1 shall apply even if a reduced number of policies is maintained, provided that a clear lack of new production is evident in the situation of the Entity. for one year. The authorisation of delegations of foreign entities shall automatically lapse and without the need for an administrative declaration when the central house has ceased its activities in the country of origin. '

" Art. 113. Administrative authorization for Reinsurance Entities.

1. They may only accept reinsurance operations:

(a) Spanish public limited liability companies which have the sole purpose of reinsurance and are incorporated in accordance with the provisions of the legislation in force.

(b) Foreign reinsurance entities or groupings of foreign reinsurance undertakings operating in their own country and establishing permanent delegation in Spain.

(c) Limited companies, national or foreign fixed-premium companies, which are authorized for the practice of direct insurance in Spain in the same classes as those of the same classes as those of the authorization.

(d) Foreign insurance and reinsurance entities or groups of foreign insurance and reinsurance undertakings which operate in their own country and do not have any delegation or establishment in Spain or, having such a delegation, directly accept them from their headquarters (article 37, 1 of the Law). For entities whose registered office is located within the European Economic Community, such operations may be carried out directly from the head office or from the agencies or branches of such entities established in any of the Member States of the European Economic Community.

2. The entities referred to in points (a) and (b) of the preceding number shall require authorization from the Ministry of Economic Affairs and Finance, which shall give rise to the registration in the special register of insurance institutions, as provided for in Article 37 (2) of the Law. In order to obtain such authorisation, they shall, where appropriate, comply with the specific legislation for the control of changes and shall always comply with the following requirements:

(a) Spanish public limited companies having as their sole purpose reinsurance. They must have a registered capital of not less than 500,000,000 pesetas, paid up at least 50 per 100, as provided for in Article 21 of this Regulation, and must comply with the other requirements of direct insurers for obtain the administrative authorization, which shall enable it to operate in reinsurance in all classes of insurance without limitation of territorial scope, being relieved to present the documents referred to in point (d) of Article 8. Regulation.

b) Delegations of foreign entities. They shall comply with the requirements laid down in Article 9. of this Regulation and other applicable to the delegations of foreign entities, except as provided for in point (d) of Article

.

3. Institutions falling under point (c) of No 1 may be authorised by the Ministry of Economic Affairs and Finance to accept reinsurance in other classes as a general rule where the circumstances of the market so provide (Article 37, 3) of the Law).

4. The entities referred to in point (d) of No 1 shall not require authorisation to operate exclusively for reinsurance acceptance, but shall comply with the specific legislation for the control of changes which, where applicable, applies to them. However, the transfers to certain entities may be prohibited in application of the principle of international reciprocity set out in Article 5 of the Law. Reciprocity shall not apply to entities whose registered office is situated within the European Economic Community. '

" Art. 115. Retention sessions and contracts.

1. Insurance and reinsurance entities shall freely establish their reinsurance plans and the corresponding retention periods shall be related to their economic capacity for the appropriate technical-financial balance of the Company.

2. The direct insurance entities that also accept reinsurance, if as a result of this activity have repeatedly unfavorable results, the Ministry of Economy and Finance may agree to reduce, select, change the conditions and even temporarily delete such activity.

3. In the cases referred to in the earlier numbers, before the decision is taken, the case shall be heard with a hearing of the Entity concerned. '

" Art. 119. Promotion of insurance.

1. The Ministry of Economic Affairs and Finance, in coordination with the other competent authorities, shall encourage the contracting with Spanish insurance companies of transport insurance or any other class resulting from exports and Spanish imports.

2. Vessels, aircraft and vehicles registered or registered in Spain or goods of any kind located on Spanish territory shall not be insured abroad with the sole exception of goods under international transport. The Spanish residents of Spain as regards their persons or their responsibilities, unless they are on an international trip and for the duration of the trip, will not be able to secure abroad. However, the Minister for Economic Affairs and Finance may authorise the insurance abroad of goods, persons and liabilities on an exceptional basis and for specific operations. The provisions of this number shall be without prejudice to the possibility of covering risks with insurers established in other countries of the European Economic Community, by means of the co-insurance, in the terms indicated.

3. It is also prohibited to stipulate in Spain direct insurance operations in foreign entities that are not legally established in Spain or to do so with agents or representatives who work for them.

4. The Government, acting on a proposal from the Ministry of Economic Affairs and Finance, may authorise and regulate the hiring of foreign currency insurance, as well as the reinsurance of such transactions in accordance with the technical provisions of the principle of congruence. (article 41 of the Law).

5. The authorization referred to in the preceding number shall be generally granted for the insurance of the carriage of goods under international transport. "

" FIFTH TRANSIENT DISPOSITION

1. The Entities that the publication of this Law are authorized to carry out operations in the field of life and in other classes may continue to consign these operations, but they must keep separate accounts for that and these and have as (a) minimum social capital, a mutual fund, a permanent fund of the central house, a solvency margin and a guarantee fund equal to the requirements for the life class, plus those corresponding to the other branches in which they operate (transitional provision, sixth the Law).

2. The separate accounting requirement referred to in the preceding number shall be met by the separation of the activity consisting of life insurance on the one hand, and the remaining insurance, on the other, to the following concepts:

a) Profit and loss account.

b) Solvency margin and guarantee fund, as well as its component elements.

c) Technical visions and their investment.

3. For the purposes of the preceding number, the following rules shall be taken into account:

(a) The common items or items that require it shall be charged according to accounting criteria previously communicated to the Control Agency, which may prohibit their use by means of a reasoned decision. If a criterion is adopted, the Entity shall keep it, unless it provides reasons for its variation, in which case it shall communicate them to that body before the end of the financial year.

(b) The insured for each of the two activities may not participate in the results obtained in the other.

(c) The results of the year in each activity shall be attributed exclusively to the accounts belonging to the respective solvency margin.

(d) If the solvency margin, guarantee fund and technical provisions of both activities are covered, changes in the affectation to one or the other may be made for the excess, prior to communication to the control body.

(e) In the event of a failure of either of the two solvency margins, the measures envisaged for such a situation will be applied to the activity, whatever the situation of the other. Such measures may include the authorisation to make a change of imputation to the activity of the consignments which are necessary to reduce or avoid that insufficiency.

4. The provisions of the preceding numbers must be completed for the first time on the occasion of the closure of the financial year at 31 December 1986.

5. The Entities referred to in number 1 of this provision who wish to establish delegations in other countries may only do so to operate in classes other than those of life. "

Given in Palma de Mallorca to August 22, 1986.

JOHN CARLOS R.

The Minister of Economy and Finance,

CARLOS SOLCHAGA CATALAN