Question ID: 2231
Regulation Reference: (EU) No 2015/35 - supplementing Dir 2009/138/EC - taking up & pursuit of the business of Insurance and Reinsurance (SII)
Topic: Group Own funds
Article: Article 223 of the Solvency II Directive; Article 331(1)(b) of the Delegated Regulation
Status: Final
Date of submission: 18 Dec 2020
Question
EIOPA’s Answer to Question ID 2224 submitted on 26 November 2020 describes the amounts to be deducted to the own funds at individual level to reflect the existence of an encumbrance. We ask, for the same specific corporate structure described in the Q&A 2224, and considering that a group solvency calculation is performed at the level of insurer B, if the group own funds at the level of insurer B should also be reduced to reflect the existence of an encumbrance?
Background of the question
EIOPA’s Answer to Question ID 2224 submitted on 26 November 2020
EIOPA answer
When calculating group solvency at the level of insurer B, any own funds eligible for the group SCR arising out of reciprocal financing shall not be taken into account. The holding company A is a participating undertaking and is not consolidated within the scope for the group solvency calculation.
However, based on Article 223 of the Solvency II Directive on intra-group creation of capital and Article 331(1)(b) of the Delegated Regulation about free from encumbrances of group own funds, any direct and indirect reciprocal financing between insurers B, C and the participating undertaking A would have to be eliminated when determining the group solvency position.
The encumbered own fund items resulting from such direct and indirect reciprocal financing with the holding company A should therefore be deducted from the group reconciliation reserve on the basis of Article 331(1)(b) of the Delegated Regulation , i.e. the amount of the investment of insurer B in the holding company A and the investment of insurer C in the holding company A.