S.L. 403.23 Art. 15Transitional measures on the transitional adjustment to the relevant risk-free interest rate term structure.

(1) An authorised insurance undertaking or an authorised reinsurance undertaking may, subject to the prior approval of the competent authority, apply a transitional adjustment to the relevant risk-free interest rate term structure with respect to admissible insurance and reinsurance obligations.

(2) Where the authorised insurance undertaking or authorised reinsurance undertaking has received an approval pursuant to sub-regulation (1), such undertaking shall calculate the adjustment for each currency as a portion of the difference between:

(a) the interest rate as determined by the authorised insurance or reinsurance undertaking in accordance with Article 20 of Directive 2002/83/EC as at 31 December 2015; and

(b) the annual effective rate, calculated as the single discount rate that, where applied to the cash flows of the portfolio of admissible insurance and reinsurance obligations, results in a value that is equal to the value of the best estimate of the portfolio of admissible insurance and reinsurance obligations where the time value of money is taken into account using the relevant risk-free interest rate term structure referred to in Article 77(2) of the Solvency II Directive.

(3) Where the authorised insurance undertaking or authorised reinsurance undertaking has received an approval pursuant to sub-regulation (1), the interest rate structure referred to in sub-regulation (2)(a) shall be determined using the methods used by the authorised insurance or reinsurance undertaking as at 31 December