Question ID: 125
Regulation Reference: Guidelines on submission of information to NCAs (Preparatory phase)
Article: 35
Status: Final
Date of submission: 13 Jul 2015
Question
Under Group IFRS, all subsidiaries (undertakings/participations that are dominantly influenced) are consolidated on a line for line basis. Under "Solvency II value" column of the balance sheet, only a certain number group undertakings are actually consolidated on a line for line basis in accordance with the accounting consolidation based method (for example insurance undertakings, insurance holding companies etc), with the balance of undertakings being consolidated using the equity accounting method. When mapping Group IFRS to “Statutory accounts value” column in the Solvency II balance sheet, the instructions state: “Where an item does not exist under [IFRS or] local GAAP it should be filled with nil, however the items existing under [IFRS or] local GAAP but reported differently should be reclassified as far as it is possible to follow the Solvency II balance sheet split”. (“[ ]” added by author for emphasis).
The question is , when mapping Group IFRS to the "Statutory accounts value" column in Solvency II balance sheet is the requirement to reclassify the IFRS consolidated balance sheet for those subsidiaries that are equity accounted for the "Solvency II value" column, but consolidated on a line for line basis under Group IFRS? [It feels counter-intuitive to actually do this reclassification, and the work involved could be significant, and hence does not meet the requirement of “should be reclassified as far as it is possible”]. Please could you advise.
EIOPA answer
The column of Statutory Accounts in the Balance sheet should reflect the financial statements, IFRS or any other local GAAP. In case of groups it is acknowledge that the scope of consolidation may be different. This is one of the reasons why the public disclosure template will not include the Statutory Accounts column. In this case, the statutory accounts do not need to be recalculated considering the different scope, the group should report the existing statutory accounts and provide the NCA with an explanation of material differences between the scope of financial consolidated accounts and those used for the consolidated data determined in accordance with Article 335 of the Delegated Regulation. In the exceptional case where there is no group statutory accounts at all the specific situation will have to be discussed with the NCA. Please note also the Instructions for S.02.01 as published in Annex III of the Final Report on the Reporting TS stating on the statutory accounts column: "This column is by default mandatory. In the specific cases where the group does not produce official financial statements according to local GAAP or IFRS the specific situation should be discussed with the group supervisor."