Skip to main content
European Insurance and Occupational Pensions Authority

1211

Q&A

Question ID: 1211

Regulation Reference: (EU) No 2015/2011 - lists of regional governments & local authorities, exposures to be treated as to central government

Topic: Other

Article: 109(2)

Status: Final

Date of submission: 09 Mar 2017

Question

Are guarantees given by regional governments and local authorities to be treated as exposures guaranteed by the central government and be assigned a probability of default equal to 0 %?

Background of the question

Art. 109a para. 2 point (a) of Directive 2009/138/EG;
Art. 1 of COMMISSION IMPLEMENTING REGULATION (EU) 2015/2011;
Recital 42 and Art. 180(2) point (a), Art. 199 para. 8, 10, 11 of Commission Delegated Regulation (EU) 2015/35;
point 2.2 (b) sentence 2 of the Final report on public consultation No. 14/057

EIOPA answer

The answer below is based on the following assumptions:
a. an exposure A is fully, unconditionally and irrevocably guaranteed by a counterparty B listed in the implementing act adopted pursuant to point (a) of Article 109a(2) of Directive 2009/138/EC
b. Exposure A is  denominated in the domestic currency of B
c. the guarantee arrangement for exposure A complies with Articles 209 to 215 DA
Under these assumptions the insurance and reinsurance undertaking should assign a probability of default equal to 0%.