Solvency of Insurance Undertakings (Mueller-Report) - Eiopa

A number of members of the working group believe that the Directive should provide for thepossibility to involve an actuary or another expert who would have to certify that based onreasonable actuarial assumptions, adequate surpluses can also be expected in future. Thesupervisory authority then decides on the acceptance as own funds, without being bound by theexpert opinion. It should in particular be allowed to refuse acceptance of future surpluses if it isobvious that the source of surpluses will at some point in the future run dry.5.2.8 Amount of the difference between the unzillmered or only partiallyzillmered, and the zillmered mathematical provision in life insurance.The working group does not feel that this regulation must be changed.5.3 Composition of the guarantee fund and the minimum guaranteefundUp to now, there have been special provisions in life insurance only as to which own funds are tomake up the minimum guarantee fund and the guarantee fund. Article 20 of the first life insuranceDirective stipulates in paragraph 1 that the minimum guarantee fund must be made up fully, andthe guarantee fund at 50 % by own funds as per article 18, nos. 1 and 2. There is not suchrestriction in non-life insurance. Here, all own funds under article 16 (1) of the first non-lifeinsurance directive are admissible.The working group is of the opinion that the present regulation should be maintained as regardscoverage of the guarantee fund. However, the situation is different with respect to the minimumguarantee fund where the great majority takes the view that at least the minimum guarantee fundshould be covered by real own funds only, i. e. the paid-up share capital or the paid-up initial fund,the reserves and the profits carried forward. A few delegations believe, however, that hiddenreserves and own funds substitutes should also be admissible as components to a limited extent.5.4 Preliminary resultThe working group thinks that new regulations should refer not only to the solvency margin, butalso to the composition of the margin and the guarantee fund.The definition of ’own funds’ is to be reviewed. Supervisory authorities should have the possibilityto check also the own funds included in the catalogue to see whether they are actually suitable to beused as a safety cushion in the individual circumstances.Besides, the working group’s overall opinion is that the admissible own funds listed in the catalogueof the directive will also in future be used to cover the margin and the guarantee funds, but to amuch lower degree than up to now, and with respect to some elements only subject to otherconditions being met, e. g. approval by an actuary or any other expert regarding acceptance offuture profits.- 39 -