Answers to the European Commission on the ... - Eiopa - Europa

absolute floor
(expressed in
euros - see
9.116)
Undertaking not
viable or has no
reasonable
prospect of
being able <strong>to</strong>
pay
policyholders’
benefits as <strong>the</strong>y
fall due.
Additional control measure
Additional
control
measure
admissible
assets
covering
technical
provisions
plus SCR
business. Failing <strong>to</strong> do so leads <strong>to</strong> <strong>the</strong> winding-up of <strong>the</strong>
company.
2. The undertaking should explore options for
rehabilitation, restructuring, or compromises with credi<strong>to</strong>rs.
Supervisors should consider partially or wholly s<strong>to</strong>pping <strong>the</strong>
insurer from writing new business 122 , and be entitled <strong>to</strong>
s<strong>to</strong>p <strong>the</strong> undertaking from transferring funds <strong>to</strong> persons
o<strong>the</strong>r than policyholders, unless <strong>the</strong> undertaking or its
owners present a credible written plan <strong>to</strong> <strong>the</strong> supervisory
authority for res<strong>to</strong>ring capital within 3 months <strong>to</strong> <strong>the</strong> MCR.
However, res<strong>to</strong>ring capital <strong>to</strong> <strong>the</strong> level of MCR does not
prolong <strong>the</strong> maximum time for res<strong>to</strong>ring capital <strong>to</strong> <strong>the</strong> level
of SCR in control levels 2 or 3.
3. Supervisors should ensure that insolvency proceedings
(for example for <strong>the</strong> withdrawal of <strong>the</strong> license and
dissolution of <strong>the</strong> insurance undertaking) are commenced.
This will depend on <strong>the</strong> national company or insolvency
legislation, but will typically take place where assets are
less than liabilities (with liabilities being assessed at <strong>the</strong>ir
expected present value without hidden margins or capital
buffers).
4. For <strong>the</strong> transitional period described in para. 15.10. A
<strong>the</strong> supervisory authority should have <strong>the</strong> power of
discretion <strong>to</strong> decide if it is appropriate <strong>to</strong> take ultimate
action at a breach of <strong>the</strong> MCR.
supervisory <strong>to</strong>olkit for additional control measures
rules-based
Having enough technical provisions and <strong>the</strong> MCR would be
useless if <strong>the</strong> technical provisions, <strong>the</strong> MCR and <strong>the</strong> SCR
were not covered by sufficient and adequate assets. In this
case, <strong>the</strong> supervisory authority should require <strong>the</strong>
undertaking <strong>to</strong> submit a credible written detailed plan for
<strong>the</strong> undertaking <strong>to</strong> return with sufficient and adequate
assets within 6 months.
Meanwhile, <strong>the</strong> supervisor should closely moni<strong>to</strong>r <strong>the</strong> way
<strong>the</strong> undertaking’s assets are streamlined, and, if necessary,
prohibit <strong>the</strong> buying or selling of some particular assets or
classes of assets.
122 It should be stressed that new business includes both renewals of existing business as well as new contracts.
181