During the year we have agreed to sell a block of insurance business (annuity) to a third party and the underlying direct contractual obligations to customers will be transferred to the purchaser through a court approved legal process. As per the LOG guidance when calculating the Lapses/surrender rate contracts (C0010/R0010) and Lapse/surrender rate volume (C0010/R0020) we should use the number of contracts and technical provisions balance at the beginning of the period as the denominator.

In this scenario, if we used the number of contracts and technical provisions at the beginning of the period in the calculation it would distort the rate and volume lapses measures because beginning of the period numbers include the contracts and related technical provisions of the policies transferred under the sale.

As such, we are proposing to exclude the contracts and related technical provisions of the policies transferred under the sale from denominator when calculating the rate and volume lapses measure for S.41.01 purposes.

Can EIOPA confirm if they agree with this approach?