We would like to request clarification on the application of Article 68 of Commission Delegated Regulation (EU) 2015/35 regarding the treatment of participations for the determination of basic own funds of insurance and reinsurance undertakings. Article 68(1) requires that where a single participation (as defined in Article 92(2) of Directive 2009/138/EC) in a financial or credit institution exceeds 10% of the items listed in points (a)(i), (ii), (iv), and (vi) of Article 69, the full value of that participation must be deducted from basic own funds. Article 68(2) applies to all other participations not captured by paragraph 1, where the aggregate value exceeds the 10% threshold. In such cases, only the excess is deducted, and this deduction is made on a pro-rata basis across all such participations (paragraph 4). We would like to confirm whether our understanding regarding the implications of Article 68 is correct based on the following numerical examples: 1) Example 1 – Paragraph 1 case (full deduction) Give that - Tier 1 own funds (relevant items): €90,000 - Participation in Bank A: €9,090 (10.1% of Tier 1) - No other participations in scope we infer from Article 68(1) that the entire €9,090 should be deducted from basic own funds. 2) Example 2 – Paragraph 2 case (pro-rata deduction) Given that - Tier 1 own funds (relevant items): €90,000 - Participation in Bank A: €8,910 (9.9% of Tier 1) - Participation in Bank B: €180 (0.2% of Tier 1) - Aggregate participations = €9,090 (10.1% of Tier 1) we infer from Article 68(2) that only the excess part over 10% of own funds (= €9,090 – €9,000 = €90) should be deducted, allocated to participations A and B in pro-rata basis: Participation A: €90 * €8,910 / (€8,910 + €180) = €88.2 Participation B: €90 * €180 / (€8,910 + €180) = €1.8 This leads to significantly different deductions despite very similar exposures due to the difference between paragraph 1 and paragraph 2 of Article 68. We deduct the full value of participation A (€9,090) in example 1 while deducting only a small part (€88.2) in example 2. Could you please confirm whether our reading of Article 68 is correct in this sense and whether the significant difference in deductions between these scenarios is the intended outcome under the regulation?