S.L. 403.17 Art. 9Group Solvency: general provisions.

(1) Supervision of the group solvency shall be exercised in accordance with sub-regulations (2) and (3), and regulations 34 to 43.

(2) In the case referred to in regulation 3(2)(a)(i), a participating insurance or reinsurance undertaking in a group, shall ensure that eligible own funds are available in the group which are always at least equal to the group Solvency Capital Requirement as calculated in accordance with regulations 12 to 25.

(3) In the case referred to in regulation 3(2)(b), an authorised insurance undertaking or an authorised reinsurance undertaking in a group, shall ensure that eligible own funds available in the group are always at least equal to the group Solvency Capital Requirement as calculated in accordance with regulation 26.

(4) An undertaking referred to in sub-regulations (2) and (3), shall have procedures in place to identify deteriorating financial conditions within the group and shall notify the group supervisor, without delay, when such deterioration occurs.

(5) An undertaking, as referred to in sub-regulations (2) and (3), shall:

(a) immediately inform the group supervisor, as soon as such undertaking observes that the group Solvency Capital Requirement is no longer complied with, or where there is the risk of non-compliance within the following three months;

(b) within two months from the observation of non-compliance with the group Solvency Capital Requirement, submit a realistic recovery plan for approval by the group supervisor;

(c) take the necessary measures to achieve within six months from the observation of non-compliance with the group Solvency Capital Requirement, which period may be extended for a further three months by the group supervisor, the re-establishment of the level of eligible own funds covering the group Solvency Capital Requirement or the reduction of the risk profile to ensure compliance with the group Solvency Capital Requirement;

(d) submit a progress report to the group supervisor every three months, setting out the measures taken and the progress made to re-establish the level of own funds covering the group Solvency Capital Requirement or to reduce the risk profile to ensure compliance with the group Solvency Capital Requirement, in the event of exceptional adverse situations affecting such undertaking, as declared by EIOPA, and where appropriate in consultation with the European Systematic Risk Board.

(6) Where the competent authority is the group supervisor of a group, the authority:

(a) shall require an authorised insurance undertaking or an authorised reinsurance undertaking, a European insurance undertaking or a European reinsurance undertaking, in a group, which has informed the competent authority as soon as it was observed that the group Solvency Capital Requirement is no longer complied with, or where there is a risk of non-compliance in the following three months, to take the necessary measures to achieve, within six months from the observation of non-compliance with the Solvency Capital Requirement, the re-establishment of the level of eligible own funds covering the Solvency Capital Requirement or the reduction of its risk profile to ensure compliance with the Solvency Capital Requirement;

(b) may, if appropriate extend the period of six months referred to in paragraph (a) by three months;

(c) may, in the event of exceptional adverse situations affecting any of the authorised insurance undertaking, authorised reinsurance undertaking, European insurance undertaking or European reinsurance undertaking, in a group, extend the period set out in paragraph (b) by a maximum period of seven years, taking into account all relevant factors, including the average duration of the technical provisions;

(d) may, request EIOPA to declare the existence of exceptional adverse situations, if any, of the authorised insurance undertaking, authorised reinsurance undertaking, European insurance undertaking or European reinsurance undertaking, in a group, representing a significant share of the market or of the affected lines of business are unlikely to meet one of the requirements set out in paragraph (a);

(e) shall cooperate with EIOPA:

(i) to assess on a regular basis whether the conditions referred to in sub-regulation (7) still apply;

(ii) to declare when an exceptional adverse situation has ceased to exist;

(f) shall require any affected undertaking to submit a progress report setting out the measures taken and the progress made to re-establish the level of eligible own funds covering the group Solvency Capital Requirement or to reduce the risk profile to ensure compliance with the group Solvency Capital Requirement;

(g) shall withdraw the extension referred to in paragraph

(c) where that progress report shows that there was no significant progress in achieving the re-establishment of the level of eligible own funds covering the group Solvency Capital Requirement or the reduction of the risk profile to ensure compliance with the group Solvency Capital Requirement between the date of the observation of non-compliance of the group Solvency Capital Requirement and the date of the submission of the progress report.

(7) For the purposes of this regulation, "exceptional adverse situations" exist where the financial situation of an authorised insurance undertaking, an authorised reinsurance undertaking, a European insurance undertaking or a European reinsurance undertaking, representing a significant share of the market or of the affected lines of business, is seriously or adversely affected by one or more of the following conditions:

(a) a fall in financial markets which is unforeseen, sharp and steep;

(b) a persistent low interest rate environment;

(c) a high-impact catastrophic event.