I. Context A non-life insurance undertaking (the Undertaking) holds real estate (the Property) as part of its investment portfolio in accordance with the prudent person principle set out in Article 132 of Directive 2009/138/EC (available at: Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (the Solvency II Directive). The Property serves as the Undertaking's registered headquarters and principal place of business. In addition to long-term leasing, the Undertaking generates rental income from the Property through short-term accommodation arrangements. Revenues from these short-term accommodation activities are minimal compared to the Undertaking's total insurance premiums and are used to cover the Property's maintenance and operating costs. The classification of such short-term accommodation activities may be subject to differing regulatory assessments. Such activities may be regarded as constituting "other commercial business" within the meaning of Article 18(1)(a) of the Solvency II Directive, requiring that such activities be conducted through a separate legal entity. Alternatively, they may be regarded as part of the economic management of an investment asset, i.e., operations arising directly from the business of insurance, and therefore permissible within the Undertaking itself, without the need to establish a separate legal entity for that purpose. This issue is of practical significance because national supervisory authorities may adopt different positions on whether such activities must be structurally separated from the Undertaking. Where existing EU-level guidance does not expressly address this specific factual situation, supervisory authorities of certain Member States may treat any short-term accommodation activity as prohibited "other commercial business," while supervisory authorities of other Member States may permit it as ancillary investment management, provided it does not jeopardise the Undertaking's solvency. This divergence creates legal uncertainty and may undermine the consistent application of the Solvency II framework across Member States. A related issue concerns whether the duration of a lease arrangement should, itself, determine the regulatory classification of the activity. Both long-term and short-term leasing constitute the granting of usage rights in real estate in exchange for consideration. It is not evident that the shorter duration of a lease agreement should reclassify what is normally considered as permissible investment management into prohibited "other commercial business," particularly where the activity is minor in scale and does not clearly affect the Undertaking's solvency. The Undertaking’s primary objective is to preserve and increase the value of the Property as an investment asset, rather than to operate an independent hospitality business. The accommodation activities are conducted exclusively within the Property, which also serves as the Undertaking's registered headquarters, and do not extend to any other premises or locations. The Undertaking does not provide a full hospitality service package (e.g., catering, reception, leisure facilities). There is no dedicated organisational unit for the accommodation activities. The income generated is accounted for as investment income. Where the management of the Property is limited to the granting of usage rights for consideration without significant additional services, the question arises whether such activity should qualify as investment management regardless of the lease term. The Property, where the Undertaking's registered headquarters are located, historically includes a residential section comprising several apartments within the same building. These apartments are utilised for the following purposes directly connected to the Undertaking's business and investment operations: (a) accommodating the Undertaking's employees when travelling to the headquarters on business trips; (b) providing temporary accommodation in connection with the settlement of property insurance claims (e.g., housing policyholders displaced by insured events); (c) long-term lease to legal entities; and (d) also short-term rental of apartments that are not otherwise occupied for the purposes set out in points (a) to (c) above. The ability to utilise the Property's residential units for short-term accommodation serves not only to maximise the return on the investment asset and offset its carrying costs, but also to directly support the operational efficiency of the Undertaking's insurance business conducted at its headquarters. In particular, the co-location of the residential section within the headquarters building enables the Undertaking to house employees travelling on business to its headquarters and, critically, to provide immediate temporary accommodation to policyholders displaced from their homes as a result of insured events, thereby reducing the overall cost of claims handling and settlement. The accommodation activities are limited to the Undertaking's own headquarters and are not carried out at separate, standalone premises. II. Relevant Legal Framework and Case Law Article 18(1)(a) of Solvency II Directive requires Undertakings to limit their objects to the business of insurance and operations arising directly therefrom, to the exclusion of all other commercial business. Article 132 of Solvency II Directive establishes the prudent person principle and the general principle of freedom of investment, under which the Solvency II framework does not restrict the scope of investment operations to particular activities or categories of assets. The Court of Justice of the European Union (the Court) has addressed the scope of Article 18(1)(a) in two directly relevant cases: In Case C-241/97 (Försäkringsaktiebolaget Skandia; available at: Judgment od the court 20 April 1999 in Case C-241/97), the Court addressed the scope of the exclusivity principle in the context of insurance undertakings' investment activities. The Court held that "the wording of (Article 8(1)(b)) does not prohibit insurance undertakings from holding, as their free assets, shares in a company carrying on business other than insurance business". The Court further clarified that "the purpose of the prohibition preventing insurance undertakings from carrying on commercial business other than insurance business <...> is in particular to protect the interests of insured persons against the risks which the exercise of such business could entail for the solvency of those undertakings". The Court also noted that "there is a risk that certain investments might compromise the solvency of insurance undertakings" but that "in order to guard against such a risk, it is for the national supervisory authorities of the home Member State to maintain <...> financial supervision of insurance undertakings". The foregoing is directly relevant to the question at hand, as it confirms that the exclusivity principle does not constitute an absolute prohibition but rather a risk-based safeguard, the application of which must be assessed in light of the undertaking's solvency position and the protection of policyholders' interests. In Case C-109/99 (ABBOI), available at: Judgment of the court 21 September 2000 in Case C-109/99), the Court held that "any economic activity other than insurance business and operations arising directly therefrom constitutes commercial business liable to engender losses capable of jeopardising the solvency of an insurance undertaking". At the same time, the Court held that Article 8(1)(b) of Directive 73/239 "does not preclude mutual benefit societies engaged solely in insurance business from creating between themselves a body with legal personality and legal autonomy <..>] which engages in commercial business, provided that the capital subscribed to that body by those societies does not exceed the value of their free assets and provided that, in each case, the society's liability is limited to the value of its capital contribution". The foregoing case law suggests that the regulatory assessment of whether a given activity constitutes prohibited "other commercial business" should take into account the actual financial risk posed to the solvency of the insurance undertaking. EIOPA Q&A No. 2434 (available at: European Insurance and Occupational Pensions Authority response to question No. 2434) is of particular relevance. In that response, the European Commission (the Commission) stated that the Solvency II framework does not restrict the scope of investment operations to particular activities or categories of assets, and that Article 133 of Solvency II Directive establishes the general principle of freedom of investments. The Commission further confirmed that it is for supervisory authorities to assess, on a case-by-case basis, whether operations pertain to the insurance business or directly arise therefrom. While the Commission's response addresses the distinction between conducting commercial activities within the Undertaking itself and investing in companies carrying out such activities, it does not provide sufficiently clear guidance on the specific situation where an Undertaking economically manages its own investment real estate through short-term accommodation activities as an ancillary element of investment portfolio management. The Commission's response in Q&A No. 2434 addresses the distinction between conducting commercial activities within the Undertaking itself and investing in a subsidiary conducting such activities. However, it leaves open the question of whether the economic management of investment real estate, including residual short-term accommodation use generating immaterial revenues, constitutes "other commercial business" prohibited under Article 18(1)(a), or whether it falls within the scope of permissible investment management under Article 132. Clarification of this point would contribute to the consistent application of the Solvency II framework across Member States. III. The differences in interpretation and EU Law Dimension Differences in interpretation may arise between national supervisory authorities and insurance undertakings regarding the qualification of such activities under the Solvency II regulatory framework. The essence of the differences concerns whether the relevant activity should be: (a) qualified as an activity related to (ancillary to) insurance operations; or (b) considered as "other commercial activity" which should be conducted through a separate legal entity. Given that this issue concerns the scope of the Undertaking’s permitted activities and their interpretation under Solvency II Directive, it is of importance not only at the national level but also at the level of the European Union. This issue has a European Union law dimension, because: (a) similar situations may arise in other Member States; (b) national supervisory authorities may adopt differing approaches regarding the use of investment assets held by the undertakings. (c) the interpretation may affect the freedom of establishment or the freedom to provide services in other Member States of the European Union; (d) the issue concerns the uniform application of the Solvency II regulatory framework. The question therefore arises whether the economic management of an investment asset (such as real estate serving as the undertaking's registered headquarters), including the earning of rental income through short-term accommodation arrangements that are insignificant in proportion to the overall activities of the Undertaking and do not jeopardise its solvency, constitutes "operations arising directly from” insurance business within the meaning of Article 18(1)(a), or whether such activities must in all cases be structurally separated from the Undertaking regardless of their scale and impact. In the absence of clear EU-level guidance on this point, which is not fully addressed by the existing Q&A No. 2434, national supervisory authorities may adopt different approaches, which may affect the consistent application of the Solvency II framework and equal regulatory conditions across Member States.

This question has been rejected because the matter it refers to has been answered in Q&A 2434. According to this Q&A, it is for the supervisory authority to assess whether the operations of an insurance undertaking pertain to insurance business within the meaning of Article 18(1)(a) of Directive 2009/138/EC.