Question ID: 890
Regulation Reference: (EU) No 2015/35 - supplementing Dir 2009/138/EC - taking up & pursuit of the business of Insurance and Reinsurance (SII)
Article: 328
Status: Final
Date of submission: 06 Oct 2016
Question
We have a question in relation to the opinion below:
https://eiopa.europa.eu/Publications/Opinions/20160127_EIOPA%20opinion_combination%20of%20methods.pdf
Relevant paragraphs for the question of hybrid limits appear to be # 2,3 and 6,7.
We struggle with the following example:
Say an insurance group uses the consolidated method for 50% of its business and aggregation/deduction for the other 50% and issues all capital instruments out of the top company.
Are they then really limited for Tier 2 to just 50% of the SCR of the consolidated part as #7 would suggest?
EIOPA answer
The opinion you are referring to addresses unintended consequences that the use of a combination of methods may lead to. In your example, as a strict application of method 1 rules, the tier limits used to assess the eligibility of capital instruments would be determined only on the basis of the consolidated part of the group SCR.
Paragraph 9 of the opinion provides that in certain specific situations, the group supervisor may need to allow specific solutions to avoid unjustified disadvantages. Paragraph 10 provides conditions which, according to EIOPA, should be satisfied when considering specific solutions. Paragraph 11 provides that those specific situations should be properly discussed with and approved by the group supervisor.
If you consider being in such a specific situation, please discuss the matter with your group supervisor.