Skip to main content
Logo
European Insurance and Occupational Pensions Authority
 

7118

Q&A

Question ID: 7118

Regulation Reference: (EU) No 2015/35 - supplementing Dir 2009/138/EC - taking up & pursuit of the business of Insurance and Reinsurance (SII)

Topic: Solvency Capital Requirement (SCR)

Article: article 171a(1)(e)

Status: Final

Date of submission: 07 Oct 2020

Question

We have the following problem with regards to the Long-Term Equity (LTE) qualification. The market value of one position considered as LTE has sharply increased since the beginning of 2020 (about +20%), which implies that some internal limits (sectorial limit and limit per name) are exceeded. So for the sake of good risk management, we wish to sell a part of this position to respect these limits. The point is that our average holding period of the LTE portfolio is 3,5 years (with the global intention not to sell until an average holding period of 5 years). It means that according to the article 171a paragraph 1 sub-paragraph e of RD 2015/35, we are not allowed to sell if we don’t want to lose the global LTE qualification. We are therefore asking here for an exception to this point given the reasons underlying the sale, that is to say that we are asking for the autorization to sell without impacting the LTE qualification. Many thanks in advance. 

EIOPA answer

According to Article 171a (e) of the Commission Delegated Regulation (EU) 2015/35, if the average holding period of the sub-set is lower than 5 years (that is the case described), the undertaking cannot sell any equity investments within the sub-set until the average holding period exceeds 5 years, even if the average holding period of the portfolio remain unchanged. No exception can be made in this case.