S.L. 403.17 Art. 25Method 2 (Alternative Method): Deduction and aggregation method.

(1) The group solvency of the participating insurance or reinsurance undertaking shall be the difference between the following:

(a) the aggregated group eligible own funds, as provided for in sub-regulation (2);

(b) the value in that participating insurance or reinsurance undertaking of the related insurance or reinsurance undertakings and the aggregated group Solvency Capital Requirement, as provided for in sub-regulation (3).

(2) The aggregated group eligible own funds are the sum of the following:

(a) the own funds eligible for the Solvency Capital Requirement of the participating insurance or reinsurance undertaking;

(b) the proportional share of the participating insurance or reinsurance undertaking in the own funds eligible for the Solvency Capital Requirement of the related insurance or reinsurance undertakings.

(3) The aggregated group Solvency Capital Requirement is the sum of the following:

(a) the Solvency Capital Requirement of the participating insurance or reinsurance undertaking;

(b) the proportional share of the Solvency Capital Requirement of the related insurance or reinsurance undertakings.

(4) Where, in a group, the participation in the related insurance or reinsurance undertakings consists, wholly or in part, of an indirect ownership, the value in the participating insurance or reinsurance undertaking of the related insurance or reinsurance undertakings shall incorporate the value of such indirect ownership, taking into account the relevant successive interests, and the items referred to in sub-regulations (2)(b) and (3)(b) shall include the corresponding proportional shares, respectively, of the own funds eligible for the Solvency Capital Requirement of the related insurance or reinsurance undertakings and of the Solvency Capital Requirement of the related insurance or reinsurance undertakings.

(5) Any application for permission to calculate the Solvency Capital Requirement of authorised insurance undertakings, authorised reinsurance undertakings, European insurance undertakings or European reinsurance undertakings in the group, on the basis of an internal model, submitted by the insurance or reinsurance undertaking concerned and its related undertakings, or jointly by the related undertakings of an insurance holding company or mixed financial holding company, shall be submitted to the group supervisor, or where the competent authority is the group supervisor of a group, the competent authority, as applicable, and in such a case the provisions of regulation 23 shall apply mutatis mutandis.

(6) Where the competent authority is one of the authorities responsible for the supervision of an individual insurance or reinsurance undertaking in a group and is not the group supervisor:

(a) in determining whether the aggregated group Solvency Capital Requirement, as set out in sub-regulation (3), appropriately reflects the risk profile of the group, it shall pay particular attention to any specific risks existing at group level which would not be sufficiently covered, because they are difficult to quantify;

(b) it may impose a capital add-on to the aggregated group Solvency Capital Requirement, where the risk profile of the group deviates significantly from the assumptions underlying the aggregated group Solvency Capital Requirement.

(7) Article 37(1) to (5) of the Solvency II Directive, together with the delegated acts and implementing technical standards taken in accordance with Article 37(6), (7) and (8) of the Solvency II Directive, shall apply mutatis mutandis.