(1)

Directive 2009/138/EC of the European Parliament and of the Council (3) has created more risk-based and more harmonised prudential rules for the insurance and reinsurance sector. Some of the provisions of that Directive are subject to review clauses. The application of that Directive has substantially contributed to strengthening the financial system in the Union and rendered insurance and reinsurance undertakings more resilient to a variety of risks. Although very comprehensive, that Directive does not address all identified weaknesses affecting insurance and reinsurance undertakings.

(2)

The COVID-19 pandemic has caused tremendous socio-economic damage and left the economy of the Union in need of a sustainable, inclusive and fair recovery. Likewise, the economic and social consequences of Russia’s war of aggression against Ukraine are still unfolding. This has made the work on the Union’s political priorities even more urgent, in particular ensuring that the economy works for people and attaining the objectives of the European Green Deal. The insurance and reinsurance sector can provide private sources of financing to European businesses and can make the economy more resilient by supplying protection against a wide range of risks. With this dual role, the sector has a great potential to contribute to the achievement of the Union’s priorities.

(3)

As underlined in the Commission’s communication of 24 September 2020‘A Capital Markets Union for people and businesses’, incentivising institutional investors, in particular insurers, to make more long-term investments will be instrumental in supporting re-equitisation in the corporate sector. To facilitate insurers’ contribution to the financing of the economic recovery of the Union, the prudential framework should be adjusted to better take into account the long-term nature of the insurance business. In particular, when calculating the Solvency Capital Requirement under the standard formula, the possibility to use a more favourable standard parameter for equity investments which are held with a long-term perspective should be facilitated, provided that insurance and reinsurance undertakings comply with sound and robust criteria, that preserve policy holder protection and financial stability. Such criteria should aim to ensure that insurance and reinsurance undertakings are able to avoid forced selling of equities intended to be held for the long term, including under stressed market conditions. As insurance and reinsurance undertakings have a wide variety of risk-management tools to avoid such forced selling, those criteria should recognise such variety and not require the legal or contractual ring-fencing of long-term investment assets in order for insurance and reinsurance undertakings to benefit from the more favourable standard parameter for equity investments. In addition, the insurance or reinsurance undertaking’s management should commit to a minimum holding period of the equities that the undertaking invests in through written policies and demonstrate the ability of the undertaking to maintain those equities over that holding period.

(4)

Adjustments that better take into account the long-term nature of the insurance business might lead to an increase in free available capital as a result of the reduction in the Solvency Capital Requirement. Where that is the case, insurance and reinsurance undertakings should consider not to direct freed-up capital towards shareholder distributions or management bonuses, but should strive to direct the freed-up capital towards productive investments in the real economy in order to support the economic recovery and the Union’s broader policy objectives.

(5)

Insurers and reinsurers have the freedom to invest anywhere in the world, and are not limited to the Union. Investments in third countries can also be conducive to general development aid policies of the Union or Member States. Therefore, insurance and reinsurance undertakings should ensure that their investment policy reflects the objectives of the up-to-date EU list of non-cooperative jurisdictions for tax purposes and of Directive (EU) 2015/849 of the European Parliament and of the Council (4) in respect of high-risk third countries.

(6)

In its communication of 11 December 2019 on the European Green Deal, the Commission made a commitment to integrate better into the Union’s prudential framework the management of climate and environmental risks. The European Green Deal is the Union’s new growth strategy, which aims to transform the Union into a modern, resource-efficient and competitive economy with no net emissions of greenhouse gases by 2050. It will contribute to the objective of building an economy that works for people, strengthening the Union’s social market economy, helping to ensure that it is future-ready and that it delivers stability, jobs, growth and investment. In its proposal of 4 March 2020 for a European Climate Law, the Commission proposed to make the objective of climate neutrality and climate resilience by 2050 binding in the Union. That proposal was adopted by the European Parliament and by the Council and it entered into force on 29 July 2021 (5). The Commission’s ambition to ensure global leadership by the Union on the path towards 2050 was reiterated in the 2021 Strategic Foresight Report, which identifies the building of resilient and future-proof economic and financial systems as a strategic area of action.

(7)

The EU sustainable finance framework will play a key role in meeting the targets of the European Green Deal and environmental regulation should be complemented by a sustainable finance framework which channels finance to investments that reduce exposure to climate and environmental risks. In its communication of 6 July 2021 entitled ‘Strategy for Financing the Transition to a Sustainable Economy’, the Commission committed to propose amendments to Directive 2009/138/EC to consistently integrate sustainability risks in risk management of insurers by requiring climate change scenario analysis by insurers.

(8)

A number of legislative acts have recently been proposed and adopted to improve resilience and that contribute to sustainability, in particular in relation to sustainability reporting, including Regulation (EU) 2019/2088 of the European Parliament and of the Council (6), Directive (EU) 2022/2464 of the European Parliament and of the Council (7), and a directive on corporate sustainability due diligence and amending Directive (EU) 2019/1937, all of which affect the insurance and reinsurance sector.

(9)

The further integration of the Union internal market for insurance is a key objective of this amending Directive. The integration of the internal market for insurance increases competition and the availability of insurance products across Member States to the benefit of businesses and consumers. Insurance failures in the Union internal market for insurance since the application of Directive 2009/138/EC emphasise the need for more consistency and convergence of supervision across the Union. The supervision of insurance and reinsurance undertakings operating under the freedom to provide services and the right of establishment should be further improved without undermining the objective of further integrating the internal market for insurance to ensure consistent consumer protection and safeguarding fair competition across the internal market.

(10)

Directive 2009/138/EC excludes certain undertakings from its scope, due to their size. Following the first years of application of Directive 2009/138/EC and with a view to ensuring that it does not unduly apply to undertakings of reduced size, it is appropriate to review those exclusions by increasing those thresholds, so that small undertakings that fulfil certain conditions are not subject to that Directive. As is already the case with insurance undertakings excluded from the scope of Directive 2009/138/EC, undertakings benefitting from such increased thresholds should have the option to keep or seek authorisation under that Directive in order to benefit from the single license provided therein and it should be possible for Member States to subject insurance undertakings that are excluded from the scope of Directive 2009/138/EC to provisions that are similar or identical to the ones provided for in that Directive.

(11)

Directive 2009/138/EC does not apply to an assistance activity where the conditions of Article 6(1) of that Directive are fulfilled. The first condition states that the assistance is to be related to accidents or breakdowns involving a road vehicle which occur in the territory of the Member State of the undertaking providing cover. That provision could imply that a requirement of authorisation as insurer would apply to providers of assistance of road vehicles in the event of an accident or breakdown that occurs just across the border and could unduly disrupt assistance. For this reason, it is appropriate to review that condition. Therefore, the condition under Article 6(1), point (a), of Directive 2009/138/EC should be extended to accidents or breakdowns involving a road vehicle that might occur occasionally in a neighbouring country of the Member State of the undertaking providing cover.

(12)

Information on any applications for authorisation to take up business in a Member State and the outcomes of the assessment of such applications could provide essential information for the assessment of applications in other Member States. Therefore, the supervisory authority concerned should be informed by the applicant about previous rejections or withdrawals of applications for authorisation in another Member State.

(13)

Prior to the granting of authorisation to an insurance or reinsurance undertaking that is a subsidiary undertaking of an undertaking located in another Member State, or that will be under the control of the same legal or physical person as another insurance or reinsurance undertaking located in another Member State, the supervisory authority of the Member State which grants the authorisation should consult the supervisory authorities of any Member States concerned. In view of increased insurance group activities in different Member States, it is necessary to enhance the convergent application of Union law and the exchange of information between the supervisory authorities, in particular before authorisations are granted. Therefore, where several supervisory authorities need to be consulted, any supervisory authority concerned should be allowed to request a joint assessment of an application for authorisation from the supervisory authority of the Member State where the authorisation process of a future insurance or reinsurance undertaking of the group is ongoing. The decision to grant the authorisation remains the competence of the supervisory authority of the home Member State in which the undertaking concerned seeks authorisation. However, the results of the joint assessment should be taken into consideration when making that decision.

(14)

Directive 2009/138/EC should be applied in accordance with the proportionality principle. To facilitate the proportionate application of the Directive to undertakings which are smaller and less complex than the average undertaking, and to ensure that they are not subject to disproportionately burdensome requirements, it is necessary to provide risk-based criteria that allow for their identification.

(15)

It should be possible for undertakings complying with the risk-based criteria to be classified as small and non-complex undertakings in accordance with a simple notification process. Where, within a limited period after such notification, the supervisory authority does not oppose the classification for duly justified reasons linked to the assessment of the relevant criteria, that undertaking should be deemed as small and non-complex undertaking. Once it is classified as a small and non-complex undertaking, in principle, an undertaking should automatically benefit from identified proportionality measures on reporting, disclosure, governance, revision of written policies, calculation of technical provisions, own-risk and solvency assessment, and liquidity risk management plans.

(16)

By way of derogation from the automatic benefit from proportionality measures, where supervisory authorities have serious concerns in relation to the risk profile of an individual small and non-complex undertaking, they should have the power to require the undertaking concerned to refrain from using one or several proportionality measures. Such power can be used where they identify that the Solvency Capital Requirement is no longer complied with, where there is a risk of non-compliance, where the risk profile of an undertaking changes materially, or where the system of governance of an undertaking is ineffective.

(17)

It is appropriate that proportionality measures are available also to undertakings that are not classified as small and non-complex undertakings, but for which some of the requirements of Directive 2009/138/EC are too costly and complex, in view of the risks involved in the business carried out by such undertakings. Those undertakings should be permitted to use proportionality measures on the basis of a case-by-case analysis and following prior approval by their supervisory authorities.

(18)

A proper implementation of the proportionality principle is crucial to avoiding an excessive burden on insurance and reinsurance undertakings. For that reason, insurance and reinsurance undertakings should only report to their supervisory authorities when there is a change to the scope of the proportionality measures they apply.

(19)

Captive insurance undertakings and captive reinsurance undertakings which only cover risks associated with the industrial or commercial group to which they belong, present a particular risk profile that should be taken into account when defining some requirements, in particular on own-risk and solvency assessment, disclosures and the related empowerments for the Commission to further specify the rules on such requirements. Moreover, captive insurance undertakings and captive reinsurance undertakings should also be able to benefit from the proportionality measures when they are classified as small and non-complex undertakings.

(20)

It is important that insurance and reinsurance undertakings maintain a healthy financial position. For that purpose, Directive 2009/138/EC provides for financial supervision with respect to an undertaking’s state of solvency, the establishment of technical provisions, its assets and its eligible own funds. However, the system of governance of an undertaking is also an important factor in ensuring that the undertaking maintains its financial health. To that end, supervisory authorities should be required to carry out regular reviews of the system of governance as part of their financial supervision of insurance and reinsurance undertakings.

(21)

Supervisory authorities should be entitled to receive from each supervised insurance and reinsurance undertaking and their groups, at least every three years, a regular narrative report with information on the business and performance, system of governance, risk profile, capital management and other relevant information for solvency purposes. In order to simplify that reporting requirement for insurance and reinsurance groups, it should be possible, subject to certain conditions, to submit the information of the regular supervisory report relating to the group and its subsidiaries in an aggregated way for the whole group.

(22)

It should be ensured that small and non-complex undertakings are prioritised when supervisors grant exemptions and limitations to reporting. For that type of entity, the process of notification that applies for the classification as a small and non-complex undertaking should ensure that there is enough certainty as regards the use of exemptions and limitations to reporting.

(23)

Reporting and disclosure deadlines should be clearly laid down in Directive 2009/138/EC. However, it should be recognised that exceptional circumstances such as health emergencies, natural catastrophes and other extreme events could make it impossible for insurance and reinsurance undertakings to submit such reports and disclosures within the established deadlines. Therefore, the Commission should be empowered to extend the deadlines under such circumstances after having consulted the European Supervisory Authority (European Insurance and Occupational Pensions Authority) (EIOPA), established by Regulation (EU) No 1094/2010 of the European Parliament and of the Council (8).

(24)

Directive 2009/138/EC provides that supervisory authorities are to assess whether any new person appointed to manage an insurance or reinsurance undertaking or to perform a key function is fit and proper. However, those who manage the undertaking or perform a key function should be fit and proper on a continuous basis. In the case of non-compliance with the fit and proper requirements, supervisory authorities should have the power to take measures, such as, where appropriate, removing the person concerned from the relevant position.

(25)

As insurance activities could trigger or amplify risks for financial stability, insurance and reinsurance undertakings should incorporate macroprudential considerations and analysis in their underwriting, investment, and risk management activities. This could include taking into account the potential behaviour of other market participants, macroeconomic risks, such as credit cycle downturns or reduced market liquidity, or excessive concentrations at market level in certain asset types, counterparties or sectors.

(26)

Where requested by the supervisory authority, insurance and reinsurance undertakings should be required to factor any relevant macroprudential information provided by the supervisory authorities into their own-risk and solvency assessment. In order to ensure the consistent application of such additional macroprudential requirements, EIOPA should develop draft regulatory technical standards that specify the criteria to be taken into account by supervisory authorities when identifying the undertakings to which the measure applies. The supervisory authorities should analyse the results of the own-risk and solvency assessment of insurance and reinsurance undertakings that are requested to take macroprudential considerations into account within their jurisdictions, aggregate them and provide input to insurance and reinsurance undertakings on the elements that should be considered in their future own-risk and solvency assessments, particularly as regards macroprudential risks. Member States should ensure that, where they entrust an authority or body with a macroprudential mandate, the outcome and the findings of macroprudential assessments by the supervisory authorities are shared with that macroprudential authority.

(27)

In line with the Insurance Core Principles adopted in 2011 by the International Association of Insurance Supervisors, national supervisory authorities should be able to identify, monitor and analyse market and financial developments that could affect insurance and reinsurance undertakings or insurance and reinsurance markets, and should use that information in the supervision of individual insurance or reinsurance undertakings. In carrying out those tasks, supervisory authorities should, where appropriate, use information from, and insights gained by other supervisory authorities.

(28)

Bodies or authorities with a macroprudential mandate are in charge of the macroprudential policy for their national insurance and reinsurance market. The macroprudential policy can be pursued by the supervisory authority or by another authority or body entrusted with that purpose.

(29)

Good coordination between supervisory authorities and the relevant bodies and authorities with a macroprudential mandate is important for identifying, monitoring and analysing possible risks to the stability of the financial system that could affect insurance and reinsurance undertakings, and for taking measures to effectively and appropriately address those risks. Cooperation between authorities should also aim to avoid any form of duplicative or inconsistent action.

(30)

The exchange of information between supervisory authorities and tax authorities should not be prevented. Such exchanges should be in line with national law and, where the information originates in another Member State, it should only be exchanged with the express agreement of the relevant authority from which the information originates.

(31)

Directive 2009/138/EC requires insurance and reinsurance undertakings to have, as an integrated part of their business strategy, a periodic own-risk and solvency assessment. Some risks, such as climate change risks, are difficult to quantify or they materialise over a period that is longer than the one used for the calibration of the Solvency Capital Requirement. Those risks can be better taken into account in the own-risk and solvency assessment. Where insurance and reinsurance undertakings have material exposure to climate change risks, they should be required to carry out, within appropriate intervals and as part of the own-risk and solvency assessment, analyses of the impact of long-term climate change risk scenarios on their business. Such analyses should be proportionate to the nature, scale and complexity of the risks inherent in the business of the undertakings. In particular, while the assessment of the materiality of exposure to climate change risks should be required from all insurance and reinsurance undertakings, long-term climate change scenario analyses should not be required for small and non-complex undertakings.

(32)

Undertakings should develop and monitor the implementation of specific plans to address the financial risks arising from sustainability factors. Where a group is required to draw up such a plan at the level of the group, it should be ensured that the requirement to draw up plans at individual level are waived for insurance and reinsurance subsidiaries of the group if all relevant aspects of those subsidiaries are reflected in the plan at the level of the group.

(33)

Directive 2009/138/EC requires the disclosure, at least annually, of essential information through the solvency and financial condition report. That report is targeted at policy holders and beneficiaries on the one hand, and analysts and other market professionals on the other hand. In order to address the needs and the expectations of those two different groups, the content of the report should be divided into two parts. The first part, addressed mainly to policy holders and beneficiaries, should contain the key information on business, performance, capital management and risk profile. The second part, addressed to market professionals, should contain detailed information on the business and on the system of governance, specific information on technical provisions and other liabilities, the solvency position as well as other data relevant for specialised analysts.

(34)

It is possible for insurance and reinsurance undertakings to adjust the relevant risk-free interest rate term structure for the calculation of the best estimate in line with the spread movements of their assets after supervisory approval (‘matching adjustment’) or in line with the average spread movement of assets held by insurance and reinsurance undertakings in a given currency or country (‘volatility adjustment’). The part of the solvency and financial condition report targeted at policy holders and beneficiaries should only contain the information that is expected to be relevant to the decision-making of an average policy holder or beneficiary. While insurance and reinsurance undertakings should publicly disclose the impact of not applying the matching adjustment, the volatility adjustment and the transitional measures on risk-free interest rates and on technical provisions on their financial positions, such disclosure should not be assumed to be relevant to the decision-making of an average policy holder or beneficiary. Such disclosure should therefore be included in the part of the solvency and financial condition report targeted at market professionals and not in the part targeted at policy holders and beneficiaries.

(35)

Disclosure requirements should not be excessively burdensome for insurance and reinsurance undertakings. To this end, some simplifications and proportionality measures should be included in Directive 2009/138/EC, in particular where they do not jeopardise the readability of the data provided by insurance and reinsurance undertakings. Furthermore, Directive 2013/34/EU of the European Parliament and of the Council (9) should be amended so that it is possible for small and non-complex undertakings to limit their sustainability reporting according to the simplified SME sustainability reporting standards laid down in that Directive.

(36)

In order to guarantee the highest degree of accuracy of the information disclosed to the public, some elements of the solvency and financial condition report should be subject to audit. Such audit requirement should at least cover the balance sheet assessed in accordance with the valuation criteria set out in Directive 2009/138/EC.

(37)

As small and non-complex undertakings are not expected to be relevant for the financial stability of the Union, it is appropriate to include an exemption from the requirement of auditing the solvency and financial condition report for those undertakings. Similarly, because of the particular risk profile and specificity of captive insurance undertakings and captive reinsurance undertakings, it is appropriate not to impose on them the audit requirement. However, it should be possible for Member States that already apply audit requirements to all undertakings or to elements of the solvency and financial condition report other than the balance sheet, to continue applying such requirements.

(38)

It should be acknowledged that, although beneficial, the auditing requirement would be an additional burden for every undertaking. Therefore, annual reporting and disclosure deadlines for insurance and reinsurance undertakings and for insurance and reinsurance groups should be extended in order to give them sufficient time to produce audited reports.

(39)

EIOPA Guidelines on reporting for financial stability purposes already lay down criteria to identify insurance and reinsurance undertakings that are relevant for the stability of the financial systems in the Union.

(40)

It should be ensured that the methods for calculating technical provisions of contracts with options and guarantees are proportionate to the nature, scale and complexity of the risks faced by the insurer. In that regard, some simplifications should be provided.

(41)

The cost of capital should be decreased compared to the level set at the time of adoption of Directive 2009/138/EC and the delegated acts adopted pursuant to that Directive, while maintaining a sufficient level of prudence and protection of policy holders. In addition, the calculation of the risk margin should account for the time dependency of risks and reduce the amount of the risk margin in particular for long-term liabilities, thereby reducing the sensitivity of the risk margin to interest rate changes. Therefore, an exponential and time-dependent element should be introduced.

(42)

Directive 2009/138/EC requires that the amount of eligible own funds necessary to support the insurance and reinsurance obligations be determined for the purposes of the calculation of the risk margin and that the Cost-of-Capital rate be equal to the additional rate, above the relevant risk-free interest rate, that an insurance or reinsurance undertaking would incur holding that amount of eligible own funds. Directive 2009/138/EC also requires that the Cost-of-Capital rate be reviewed periodically. For that purpose, the reviews should ensure that the Cost-of-Capital rate remains risk-based and does not exceed 5 %.

(43)

The determination of the relevant risk-free interest rate term structure should balance the use of information derived from relevant financial instruments with the ability of insurance and reinsurance undertakings to hedge interest rates derived from financial instruments. In particular, it can happen that smaller insurance and reinsurance undertakings do not have the capacities to hedge interest rate risk with instruments other than bonds, loans or similar assets with fixed cash-flows. The relevant risk-free interest rate term structure should therefore be extrapolated for maturities where the markets for bonds are no longer deep, liquid and transparent. However, the method for the extrapolation should make use of information derived from relevant financial instruments other than bonds, where such information is available from deep, liquid and transparent markets for maturities where the bond markets are no longer deep, liquid and transparent. To ensure certainty and harmonised application while also allowing for timely reaction to changes in market conditions, the Commission should adopt delegated acts to specify how the new extrapolation method should apply. In light of current market conditions, the starting point for the extrapolation for the euro at the date of entry into force of this amending Directive should remain at the same level as its level on 31 December 2023, namely at a maturity of 20 years.

(44)

The determination of the relevant risk-free interest rate term structure has a significant impact on the solvency position in particular for life insurance undertakings with long-term liabilities. In order to avoid a disruption to the existing insurance business and to allow for a smooth transition to the new extrapolation method, it is necessary to provide for a phasing-in mechanism. Such phasing-in mechanism should aim to avoid market disruption and provide a transparent path to the final extrapolation method.

(45)

Directive 2009/138/EC provides for a volatility adjustment, which seeks to mitigate the effect of exaggerations of bond spreads and is based on reference portfolios for the relevant currencies of insurance and reinsurance undertakings and, in the case of the euro, on reference portfolios for national insurance markets. The use of a uniform volatility adjustment for entire currencies or countries can lead to benefits in excess of a mitigation of exaggerated bond spreads, in particular where the sensitivity of relevant assets of those insurance and reinsurance undertakings to changes in credit spreads is lower than the sensitivity of the relevant best estimate to changes in interest rates. In order to avoid such excessive benefits from the volatility adjustment, the volatility adjustment should be subject to supervisory approval and its calculation should take into account undertaking-specific characteristics related to the spread sensitivity of assets and the interest rate sensitivity of the best estimate of technical provisions. Moreover, minimum conditions for the use of the volatility adjustment should be introduced as an additional safeguard. Member States, some of which already subject the use of the volatility adjustment to a supervisory approval process, should have the option to extend the conditions for approval to include an assessment against the underlying assumptions of the volatility adjustment. In light of the additional safeguards, insurance and reinsurance undertakings should be allowed to add up to an increased proportion of 85 % of the risk-corrected spread derived from the representative portfolios to the basic risk-free interest rate term structure.

(46)

Where an insurance or reinsurance undertaking invests in debt instruments which have a better credit quality than the debt instruments contained in the representative portfolio for the calculation of the volatility adjustment, the volatility adjustment might overcompensate the loss of own funds caused by widening bond spreads and might lead to undue volatility in the own funds. With the objective of offsetting the artificial volatility caused by such overcompensations, insurance and reinsurance undertakings should be able to apply, in such cases, for a modification of the volatility adjustment that takes into account information on the undertaking’s specific investments in debt instruments.

(47)

Directive 2009/138/EC provides for a country component in the volatility adjustment that aims to ensure that exaggerations of bond spreads in a specific country are mitigated. However, the activation of the country component is based on an absolute threshold and a relative threshold with respect to the risk-adjusted spread of the country, which can lead to cliff-edge effects and therefore increase the volatility of own funds of insurance and reinsurance undertakings. In order to ensure that exaggerations of bond spreads in a specific Member State whose currency is the euro are mitigated effectively, the country component should be replaced by a macro component which is to be calculated on the basis of the differences between the risk-corrected spread for the euro and the risk-corrected spread for the country. In order to avoid cliff-edge effects, the calculation should avoid discontinuities with respect to the input parameters.

(48)

In order to take account of developments in the investment practices of insurance and reinsurance undertakings, the Commission should be empowered to adopt delegated acts to set out criteria for the eligibility of assets to be included in the assigned portfolio of assets where the nature of the assets could lead to diverging practices with respect to the criteria for the application and the calculation of the matching adjustment.

(49)

In order to ensure that the same treatment is applied to all insurance and reinsurance undertakings calculating the volatility adjustment, or to take account of market developments, the Commission should be empowered to adopt delegated acts specifying the calculation of undertaking-specific elements of the volatility adjustment. For currencies other than the euro, the calculation of currency-specific elements of the volatility adjustment should take account of the possibility of cash-flow matching across pairs of pegged currencies of Member States, under the condition that it consistently reduces the currency risk.

(50)

For the purpose of calculating their own funds under Regulation (EU) No 575/2013 of the European Parliament and of the Council (10), institutions which belong to financial conglomerates that are subject to Directive 2002/87/EC of the European Parliament and of the Council (11) could be permitted not to deduct their significant investments in insurance or reinsurance undertakings, provided that certain criteria are met. There is a need to ensure that prudential rules applicable to insurance or reinsurance undertakings and credit institutions allow for an appropriate level playing field between banking-led and insurance-led financial groups. Therefore, insurance or reinsurance undertakings should also be permitted not to deduct from their eligible own-fund participations in credit and financial institutions, subject to similar conditions. In particular, either group supervision in accordance with Directive 2009/138/EC or supplementary supervision in accordance with Directive 2002/87/EC should apply to a group encompassing both the insurance or reinsurance undertaking and the related institution. In addition, the participation in the institution should be an equity investment of strategic nature for the insurance or reinsurance undertaking and supervisory authorities should be satisfied as to the level of integrated management, risk management and internal controls regarding the entities in the scope of group supervision or supplementary supervision.

(51)

The existing limits imposed on the level of the symmetric adjustment restrict the ability of that adjustment to mitigate potential pro-cyclical effects of the financial system and to avoid a situation in which insurance and reinsurance undertakings are unduly forced to raise additional capital or sell their investments as a result of unsustained adverse movements in financial markets, such as the ones triggered by the COVID-19 pandemic. Therefore, the symmetric adjustment should be amended so that it allows for larger changes to the standard equity capital charge and further mitigates the impact of sharp increases or decreases in stock markets.

(52)

To enhance the proportionality within the quantitative requirements, insurance and reinsurance undertakings should be granted the possibility to calculate the capital requirement for immaterial risks in the standard formula with a simplified approach for a period of no more than three years. Such a simplified approach should allow undertakings to estimate the capital requirement for an immaterial risk on the basis of an appropriate volume measure which varies over time. That approach should be based on common rules and subject to common criteria for the identification of immaterial risks.

(53)

Insurance and reinsurance undertakings that use the matching adjustment have to identify, organise and manage the assigned portfolio of assets and obligations separately from other parts of the business and are therefore not permitted to meet risks arising elsewhere in the business using the assigned portfolio of assets. However, the separated management of the portfolio does not result in an increase in correlation between the risks within that portfolio and those within the rest of the undertaking. Therefore, insurance and reinsurance undertakings which use the matching adjustment should be allowed to calculate their Solvency Capital Requirement on the basis of the assumption of full diversification between the assets and liabilities of the portfolio and the rest of the undertaking, unless the portfolios of assets covering a corresponding best estimate of insurance or reinsurance obligations form a ring-fenced fund.

(54)

The need to properly reflect extremely low and negative interest rates in the insurance supervision has arisen due to what has been witnessed in recent years on the markets. This should be achieved via a recalibration of the interest rate risk sub-module to reflect the existence of a negative yield environment. At the same time, the methodology to be used should not result in unrealistically large decreases in the liquid part of the curve and that could be avoided by providing for an explicit floor to represent a lower bound of negative interest rates. In line with interest rates dynamics, the Commission should aim at introducing a floor that is term dependent rather than flat, to the extent that the available market data allows for a robust risk-based calibration of such term-dependency.

(55)

The Commission has bundled all empowerments provided for under Directive 2009/138/EC in Commission Delegated Regulation (EU) 2015/35 (12). That approach has worked well for the implementation of that Directive and made ensuring compliance with that Delegated Regulation easier. Therefore, Delegated Regulation (EU) 2015/35 should remain in force and all necessary amendments under existing empowerments as well as the implementation of new empowerments under this Directive should be effected exclusively as amending acts to Delegated Regulation (EU) 2015/35. Where such amendments are to be bundled in the future into one or more amending delegated acts, the Commission, in accordance with paragraph 31 of the Interinstitutional Agreement of 13 April 2016 on Better Law-Making (13), in the course of the consultations in the preparation of such delegated acts, also indicates which empowerments are considered to be substantively linked, for which the Commission is expected to provide objective justifications based on the substantive link between two or more empowerments.

(56)

As part of the supervisory review process, it is important for supervisory authorities to be able to compare information across the insurance and reinsurance undertakings they supervise. Partial and full internal models allow to capture the individual risk of an undertaking better and Directive 2009/138/EC allows insurance and reinsurance undertakings to use them for determining capital requirements without limitations stemming from the standard formula. Supervisory authorities would benefit from access also to estimates of the Solvency Capital Requirements determined in accordance with the standard formula in order to make comparisons across undertakings and to make comparisons for a given undertaking over time. All insurance and reinsurance undertakings using a full or partial internal model should therefore regularly report to their supervisory authorities an estimate of the Solvency Capital Requirement determined in accordance with the standard formula. Such an estimate should appropriately reflect the methods and underlying assumptions of the standard formula facilitating a proper supervisory assessment. In order to avoid an excessive burden for undertakings when determining the estimate, they should be allowed to make use of information derived from the relevant simplifications in the standard formula laid down in Directive 2009/138/EC and the delegated acts adopted pursuant to that Directive. Where such a simplified approach is used to determine the estimate of the Solvency Capital Requirement, the underlying assumptions should be clearly explained to the satisfaction of supervisory authorities.

(57)

Directive 2009/138/EC provides for the possibility for insurance and reinsurance undertakings to calculate their Solvency Capital Requirement with an internal model subject to supervisory approval. Where an internal model is applied, that Directive does not prevent an insurance or reinsurance undertaking from taking into account the effect of credit spread movements on the volatility adjustment in its internal model. As the use of the volatility adjustment can lead to benefits in excess of a mitigation of exaggerated bond spreads in the calculation of the best estimate, such excessive benefits can also distort the calculation of the Solvency Capital Requirement where the effect of credit spread movements on the volatility adjustment is taken into account in the internal model. In order to avoid such distortion, the Solvency Capital Requirement should be floored, where supervisory authorities allow insurance and reinsurance undertakings to take into account the effect of credit spread movements on the volatility adjustment in their internal model, at a level below which benefits on the Solvency Capital Requirement in excess of a mitigation of exaggerated bond spreads are expected to occur.

(58)

Insurance and reinsurance undertakings should be incentivised to build resilience for crisis situations. Where insurance and reinsurance undertakings take into account the effect of credit spread movements on the volatility adjustment in their internal model, while also considering the effect of credit spread movements on the macro volatility adjustment, this could undermine in a severe manner any incentives to build up resilience for crisis situations. Insurance and reinsurance undertakings should therefore be prevented from taking into account a macro volatility adjustment in their internal model.

(59)

Considering the nature, scale and complexity of the risks, supervisory authorities should be able to collect relevant macroprudential information on the investment strategy of insurance and reinsurance undertakings, analyse it together with other relevant information that might be available from other market sources, and incorporate a macroprudential perspective in their supervision of insurance and reinsurance undertakings. This could include supervising risks related to specific credit cycles, economic downturns and collective or herding behaviour in investments.

(60)

It is necessary to deal in an efficient manner with deteriorating financial positions of insurance and reinsurance undertakings, or breaches of regulatory requirements by those undertakings, and to prevent the escalation of problems. Supervisory authorities should therefore have the power to impose preventive measures. Such preventive powers should, however, be consistent with the ladder of intervention and the supervisory powers already provided for in Directive 2009/138/EC for similar circumstances, including supervisory powers provided for in the supervisory review process laid down in Article 36 of that Directive. Such preventive powers should not lead to a new pre-defined intervention trigger ahead of the Solvency Capital Requirement, laid down in Title I, Chapter VI, Section 4, of that Directive. Supervisory authorities should assess each situation individually and decide upon the need for preventive measures on the basis of the circumstances, the situation of the undertaking and their supervisory judgment.

(61)

Directive 2009/138/EC provides for the mutual recognition and enforcement in all Member States of decisions concerning the reorganisation or winding-up of insurance undertakings. That Directive ensures that all assets and liabilities of the undertaking, regardless of the country in which they are situated, are dealt with in a single process in the home Member State and that creditors in the host Member States are treated in the same way as creditors in the home Member State. In order to achieve an effective resolution, the provisions on reorganisation and winding-up laid down in Directive 2009/138/EC should apply in the event of use of the resolution tools, both where those tools are applied to insurance and reinsurance undertakings and where they are applied to other entities covered by the resolution regime. Those provisions should therefore be amended accordingly.

(62)

Directive 2009/138/EC provides for an extension of the recovery period in cases of breaches of the Solvency Capital Requirement where EIOPA has declared the existence of exceptional adverse situations. The declarations can be made following requests by national supervisory authorities, who are required to consult the European Systemic Risk Board (ESRB) established by Regulation (EU) No 1092/2010 of the European Parliament and of the Council (14), where appropriate before the request. The consultation with the ESRB in a decentralised manner by national supervisory authorities is less efficient than a consultation with the ESRB in a centralised manner by EIOPA. In order to ensure an efficient process, it should be EIOPA, and not the national supervisory authorities, that consults the ESRB before the declaration of the existence of exceptional adverse situations, where the nature of the situation allows such prior consultation.

(63)

Directive 2009/138/EC requires insurance and reinsurance undertakings to inform the supervisory authority concerned immediately where they observe a failure to comply, or a risk of non-compliance in the following three months, with the Minimum Capital Requirement. However, that Directive does not specify when the non-compliance with the Minimum Capital Requirement or the risk of non-compliance in the following three months can be observed and undertakings could delay informing supervisory authorities until the end of the relevant quarter when the calculation of the Minimum Capital Requirement to be formally reported to the supervisory authority takes place. In order to ensure that supervisory authorities receive timely information and are able to take necessary action, insurance and reinsurance undertakings should be required to immediately inform the supervisory authorities of a failure to comply with the Minimum Capital Requirement or a risk of non-compliance also where this has been observed on the basis of estimations or calculations between two dates of official calculations of the Minimum Capital Requirement, in the relevant quarter.

(64)

The protection of the interests of insured persons is a general objective of the prudential framework that should be pursued by supervisory authorities at every stage of the supervisory review process, including in cases of breaches or likely breaches of requirements by insurance or reinsurance undertakings that could give rise to the withdrawal of authorisation. That objective should be pursued before and after the withdrawal of authorisation, and consideration should be given to any legal implications for insured persons that could result from that withdrawal.

(65)

Supervisory authorities should be equipped with tools to prevent the materialisation of risks for the financial stability in insurance markets, limit pro-cyclical behaviours by insurance and reinsurance undertakings and mitigate negative spillover effects within the financial system and into the real economy.

(66)

Recent economic and financial crises, in particular the crisis ensuing from the COVID-19 pandemic, have demonstrated that a sound liquidity management by insurance and reinsurance undertakings can prevent risks for the stability of the financial system. For that reason, insurance and reinsurance undertakings should be required to strengthen liquidity management and planning, especially in the context of adverse situations affecting a large part or the totality of the insurance and reinsurance market.

(67)

Where insurance and reinsurance undertakings with particularly vulnerable profiles, such as those having liquid liabilities, holding illiquid assets, or with liquidity vulnerabilities, which can affect the overall financial stability, do not appropriately remedy the situation, national supervisory authorities should be able to intervene to reinforce the liquidity position of those undertakings.

(68)

Supervisory authorities should have the necessary powers to preserve the solvency position of specific insurance or reinsurance undertakings during exceptional situations such as adverse economic or market events affecting a large part or the totality of the insurance and reinsurance market, in order to protect policy holders and preserve financial stability. Those powers should include the possibility to restrict or suspend distributions to shareholders and other subordinated creditors of a given insurance or reinsurance undertaking before an actual breach of the Solvency Capital Requirement occurs. Those powers should be applied on a case-by-case basis, respect common risk-based criteria and not undermine the functioning of the internal market.

(69)

As the restriction or the suspension of the distribution of dividends and other bonuses would affect, even on a temporary basis, the rights of shareholders and other subordinated creditors, supervisory authorities should duly take into account the principles of proportionality and necessity when taking such measures. Supervisory authorities should also ensure that none of the measures adopted entails disproportionate adverse effects on the whole or parts of the financial system in other Member States or in the Union as a whole. In particular, supervisory authorities should only restrict capital distributions within an insurance and reinsurance group in exceptional circumstances, and when duly justified to preserve the stability of the insurance and reinsurance market and of the financial system as a whole.

(70)

In exceptional circumstances, insurance undertakings can be subject to significant liquidity risks. Therefore, supervisory authorities should have the power to temporarily suspend redemption rights on life insurance policies of such undertakings concerned by significant liquidity risks for a short period and only as a last resort measure. Such exceptional measure should be used with a view to preserving the collective policy holder protection, namely the protection of all policy holders, including those who might be indirectly affected by such risks.

(71)

Recent failures of insurance and reinsurance undertakings operating cross-border have underlined the need for supervisory authorities to be better informed on activities conducted by those undertakings. Therefore, insurance and reinsurance undertakings should be required to notify the supervisory authority of their home Member State of any material changes affecting their risk profile in relation to their ongoing cross-border insurance activities, and that information should be shared with the supervisory authorities of the host Member States concerned.

(72)

Under Directive 2009/138/EC EIOPA has the power to set up and coordinate collaboration platforms to enhance collaboration between the relevant supervisory authorities where an insurance or reinsurance undertaking carries out, or intends to carry out, activities which are based on the freedom to provide services or the right of establishment. However, in view of the complexity of the supervisory issues dealt with within those platforms, in several cases, supervisory authorities fail to reach a common view on how to address issues related to an insurance or reinsurance undertaking which is operating on a cross-border basis. In the event that the supervisory authorities involved in the collaboration platforms cannot reach an agreement on issues related to an insurance or reinsurance undertaking which is operating on a cross-border basis, EIOPA should have the power to settle the disagreement in accordance with Article 19 of Regulation (EU) No 1094/2010.

(73)

Cooperation and information-sharing between the supervisory authority of the home Member State that granted authorisation to an insurance or reinsurance undertaking and the supervisory authorities of the Member States where that undertaking pursues activities by establishing branches or by providing services, should be strengthened in order to better prevent potential problems affecting consumer rights and to enhance the protection of policy holders across the Union. That enhanced cooperation is particularly important where there are significant cross-border activities, and should increase transparency and the regular mandatory exchange of information between supervisory authorities concerned. Such exchange should be sufficiently informative and include all relevant information coming from the supervisory authority of the home Member State, in particular regarding the outcome of the supervisory review process related to the cross-border activity and the financial condition of the undertaking. To ensure smooth access to and efficient exchange of available supervisory data, reports on the supervisory review process, and other relevant information in relation to undertakings carrying out significant cross-border activities, and taking into account the need to limit administrative burden, digital information-sharing tools should be used. Therefore, such information could be channelled through the existing digital collaboration tools put in place by EIOPA.

(74)

Where the supervisory authority of a host Member State has serious concerns regarding the solvency position of an insurance or reinsurance undertaking which carries out significant cross-border activities in its territory, it should have the power to request the carrying out of a joint on-site inspection together with the supervisory authority of the home Member State, where there is a non-compliance with the Solvency Capital Requirement or the Minimum Capital Requirement. The supervisory authority of the home Member State should coordinate the joint on-site inspection and should invite all relevant national supervisory authorities as well as EIOPA. All supervisory authorities involved should agree on the objectives of the on-site inspection before it is carried out. By the end of the inspection, they should also form a shared view on the necessary supervisory measures to be taken. The supervisory authority of the home Member State should inform all supervisory authorities concerned about the follow-up to the on-site inspection. Where supervisory authorities disagree on whether it is necessary to carry out a joint on-site inspection, EIOPA should have the power to settle the disagreement in accordance with Article 19 of Regulation (EU) No 1094/2010.

(75)

Under Directive 2009/138/EC, insurance or reinsurance undertakings are not required to provide information on the conduct of their business to the supervisory authorities of the host Member States in a timely manner. Such information can only be obtained by requesting it from the supervisory authority of the home Member State. However, such an approach does not ensure access to information within a reasonable period. Therefore, the supervisory authorities of the host Member States should have the power to directly request information from insurance or reinsurance undertakings, where the supervisory authority of the home Member State fails to provide the information in a timely manner. That power should not prevent the voluntary transmission of information from insurance and reinsurance undertakings to the supervisory authorities of host Member States.

(76)

In order to be identified as an insurance holding company, a parent company must, in particular, have, as its main business, the acquisition and holding of participations in subsidiary undertakings, where those subsidiary undertakings are exclusively or mainly insurance or reinsurance undertakings, or third-country insurance or reinsurance undertakings. Currently, supervisory authorities have different interpretations as to the meaning of ‘exclusively or mainly’ in that context. Therefore, the definition of an insurance holding company should be amended and clarified, taking into account similar amendments to the definition of a financial holding company as referred to in Regulation (EU) No 575/2013 for the banking sector. In particular, in order for an undertaking to be classified as an insurance holding company, its main business should be related to acquiring and holding insurance or reinsurance undertakings, providing ancillary services to related insurance or reinsurance undertakings, or carrying out other unregulated financial activities. Supervisory authorities should have the power to conclude that such a criterion is fulfilled, irrespective of the undertaking’s own stated corporate purpose or object.

(77)

In some cases, within a group subject to group supervision in accordance with Article 213(2), points (a), (b) or (c), of Directive 2009/138/EC, participations in insurance and reinsurance subsidiary undertakings that are located in a third country are held through an intermediate unregulated holding company. Even if this intermediate unregulated holding company does not have any insurance or reinsurance subsidiary undertaking whose head office is located in the Union, it is important that it can be treated similarly to an insurance holding company or a mixed financial holding company and be included in the group solvency calculations. Therefore, a definition of holding companies of third-country insurance and reinsurance undertakings should be introduced in order to allow groups to take into account related third-country undertakings when calculating the group Solvency Capital Requirement.

(78)

In some cases, several insurance and reinsurance undertakings form a de facto group and behave as such, although they do not meet the definition of a group as set out in Article 212 of Directive 2009/138/EC. Therefore, Title III of that Directive does not apply to such insurance and reinsurance undertakings. In such cases, in particular for horizontal groups with no capital links between different undertakings, the group supervisors should have the power to identify the existence of a group. Objective criteria should also be provided to make such an identification. In the absence of changes in the groups’ specificities, it is expected that groups which are already subject to group supervision will continue being subject to such supervision.

(79)

Insurance and reinsurance groups are free to decide on the specific internal arrangements, distribution of tasks and organisational structure within the group as they see fit to ensure compliance with Directive 2009/138/EC. However, in a few cases, such arrangements and organisational structures can jeopardise effective group supervision. Therefore, group supervisors should have the power - in exceptional circumstances and after consulting EIOPA and the other supervisory authorities concerned - to require changes to those arrangements or organisational structures. Group supervisors should duly justify their decisions and explain why the existing arrangements or structures obstruct and jeopardise effective group supervision.

(80)

Group supervisors might decide to exclude an undertaking from group supervision, in particular when such an undertaking is deemed of negligible interest with respect to the objectives of group supervision. EIOPA has noted diverging interpretations on the criterion of negligible interest, and has identified that, in some cases, such exclusions result in complete waivers of group supervision or in supervision at the level of an intermediate parent company. It is therefore necessary to clarify that decisions to exclude that would result in complete waivers of group supervision or in supervision at the level of an intermediate parent company should only be made in very exceptional circumstances and that group supervisors should consult EIOPA before making such decisions. Criteria should also be introduced so that there is more clarity as to what should be deemed as negligible interest with respect to the objectives of group supervision.

(81)

Decisions not to include an undertaking in the scope of group supervision can be based on various provisions laid down in Directive 2009/138/EC. Amendments to Article 214(2) of that Directive aiming to specify the concept of ‘negligible interest’ should therefore not affect the existing possible basis for making decisions of exclusions from group supervision pursuant to point (c) of that paragraph, where the Member State has transposed Article 214 of that Directive in such a way that it allows for the exclusion of the ultimate parent undertaking where the latter has all of the following characteristics: it remains subject to supervision of the supervisory authority pursuant to the law of that Member State, holds no authorisation to take up the business of insurance or reinsurance, does not provide the insurance or reinsurance subsidiaries in the group with ancillary services, has by-laws expressly precluding the undertaking from performing central coordination of its insurance or reinsurance subsidiaries in accordance with the law of the Member State strictly limiting the scope of activities of the undertaking, and there is an intermediate entity established in the territory of a Member State actively managing the insurance or reinsurance subsidiaries in the group.

(82)

There is a lack of clarity regarding the types of undertaking in respect of which method 2, namely a deduction and aggregation method defined in Directive 2009/138/EC, can be applied when calculating group solvency, which is detrimental to the level playing field. Therefore, it should be clearly specified which undertakings can be included in the group solvency calculation through method 2. Method 2 should only apply to insurance and reinsurance undertakings, third-country insurance and reinsurance undertakings, undertakings belonging to other financial sectors, mixed financial holding companies, insurance holding companies, and other parent undertakings the main business of which is to acquire and hold participations in subsidiary undertakings, where those subsidiary undertakings are exclusively or mainly insurance or reinsurance undertakings, or third-country insurance or reinsurance undertakings.

(83)

In some insurance or reinsurance groups, an intermediate parent undertaking other than an insurance or reinsurance undertaking or a third-country insurance or reinsurance undertaking acquires and holds participations in subsidiary undertakings where those subsidiary undertakings are exclusively or mainly third-country insurance or reinsurance undertakings. Under current rules, if those intermediate parent undertakings do not hold a participation in at least one insurance or reinsurance subsidiary undertaking which has its head office in the Union, they are not treated as insurance holding companies for the purposes of group solvency calculation, although the nature of their risks are very similar. Therefore, the rules should be amended so that such holding companies of third-country insurance and reinsurance undertakings are treated in the same manner as insurance holding companies for the purposes of group solvency calculation.

(84)

Directive 2009/138/EC and Delegated Regulation (EU) 2015/35 provide four methods of inclusion in the group solvency calculation of undertakings belonging to other financial sectors, including methods 1 and 2 set out in Annex I to Directive 2002/87/EC. That leads to inconsistent supervisory approaches and an uneven playing field, and generates undue complexity. Therefore, rules should be simplified so that undertakings belonging to other financial sectors always contribute to the group solvency by using the relevant sectoral rules regarding the calculation of own funds and capital requirements. Those own funds and capital requirements should simply be aggregated to the own funds and capital requirements of the insurance and reinsurance part of the group.

(85)

Under current rules, participating insurance and reinsurance undertakings are granted limited possibilities to use simplified calculations for the purpose of determining their group solvency when method 1, namely accounting consolidation-based method, is used. This generates a disproportionate burden, in particular when groups hold participations in related undertakings that are very small in size. Therefore, subject to prior supervisory approval, participating undertakings should be allowed to integrate related undertakings whose size is immaterial in their group solvency by using simplified approaches.

(86)

It is unclear how the concept of encumbrance, which should be taken into account when classifying own-fund items into tiers, applies to insurance holding companies and mixed financial holding companies which do not have policy holders and beneficiaries as direct clients. Therefore, minimum criteria should be introduced to allow for the identification of cases where an own-fund item issued by an insurance holding company or a mixed financial holding company is clear of encumbrances.

(87)

The scope of the undertakings which should be taken into account when calculating the floor for the group Solvency Capital Requirement should be consistent with the scope of undertakings contributing to the eligible own funds that are available to cover the consolidated group Solvency Capital Requirement. Therefore, when calculating the floor, third-country insurance and reinsurance undertakings included through method 1 should be taken into account.

(88)

The formula for calculating the minimum consolidated group Solvency Capital Requirement might lead to situations where that minimum is close, or even equal, to the consolidated group Solvency Capital Requirement. Where, in such cases, a group does not comply with the minimum consolidated group Solvency Capital Requirement but still complies with its Solvency Capital Requirement at group level calculated on the basis of consolidated data, supervisory authorities should only use the powers which are available where the group Solvency Capital Requirement is not complied with.

(89)

For the purposes of group solvency calculation, insurance holding companies and mixed financial holding companies should be treated as insurance or reinsurance undertakings. That implies calculating notional capital requirements for such undertakings. However, such calculations should never imply that insurance holding companies and mixed financial holding companies are required to comply with those notional capital requirements at the individual level.

(90)

There is no legal provision specifying how to calculate group solvency when a combination of method 1 and method 2 is used. That leads to inconsistent practices and uncertainties, in particular in relation to the way of calculating the contribution to the group Solvency Capital Requirement of insurance and reinsurance undertakings included through method 2. Therefore, it should be clarified how group solvency is to be calculated when a combination of methods is used. To that end, no material risk stemming from such undertakings should be ignored in the calculation of the group solvency. However, in order to avoid material increases in capital requirements and to preserve a level playing field for insurance or reinsurance groups at global level, it should be clarified that, for the purpose of calculating the consolidated group Solvency Capital Requirement, no equity risk capital charge is to be applied to such holdings. For the same reason, a currency risk capital charge should only be applied to the value of those holdings that is in excess of the Solvency Capital Requirements of those related undertakings. Participating insurance or reinsurance undertakings should be allowed to take into account diversification between that currency risk and other risks underlying the calculation of the consolidated group Solvency Capital Requirement.

(91)

Currently, group supervisors can determine thresholds above which intra-group transactions and risk concentration are deemed significant on the basis of Solvency Capital Requirements, technical provisions, or both. However, other risk-based quantitative or qualitative criteria, for instance eligible own funds could also be appropriate for determining the thresholds. Therefore, group supervisors should have more flexibility when defining a significant intra-group transaction or a significant risk concentration.

(92)

Insurance holding companies and mixed financial holding companies can be parent undertakings of insurance or reinsurance groups. In that case, the application of group supervision is required on the basis of the consolidated situation of such holding companies. As the insurance or reinsurance undertakings controlled by such holding companies are not always able to ensure compliance with the requirements on group supervision, it is necessary to ensure that group supervisors have the appropriate supervisory and enforcement powers to ensure compliance by groups with Directive 2009/138/EC. Therefore, similar to amendments to Directive 2013/36/EU of the European Parliament and of the Council (15) introduced by Directive (EU) 2019/878 of the European Parliament and of the Council (16) for credit and financial institutions, group supervisors should have a minimum set of powers over holding companies, including the general supervisory powers that are applicable to insurance and reinsurance undertakings for the purposes of group supervision.

(93)

For the purposes of policy holder protection, all insurance groups operating in the Union, regardless of the location of the head office of their ultimate parent undertaking, should be treated equally in the application of group supervision under Title III of Directive 2009/138/EC. Where insurance and reinsurance undertakings are part of a group whose parent undertaking has its head office in a third country that is not deemed equivalent or temporarily equivalent in accordance with Article 260 of that Directive, exercising group supervision is more challenging. Group supervisors might decide to apply so-called ‘other methods’ in accordance with Article 262 of that Directive to such groups. However, those methods are not clearly defined and the objectives that those other methods should achieve are uncertain. If not addressed, that issue could lead to unwanted effects on the level playing field between groups whose ultimate parent undertaking is located in the Union and groups whose ultimate parent undertaking is located in a non-equivalent third country. Therefore, the purpose of the other methods should be further specified, including a minimum set of measures that group supervisors should consider. In particular, those methods should warrant the same level of protection for all policy holders of insurance or reinsurance undertakings which have their head office in the Union, irrespective of the location of the head office of the ultimate parent undertaking of the group to which such insurance or reinsurance undertakings belong.

(94)

Commission Delegated Regulation (EU) 2019/981 (17) introduced a preferential treatment for long-term investments in equity. The duration-based equity risk submodule, which also aims at reflecting the lower risk of investing over a longer time horizon, but is of very limited use in the Union, is subject to criteria that are stricter than those applicable to long-term equity investments. Therefore, the new prudential category of long-term equity investments appears to obviate the need for the existing duration-based equity risk submodule. As there is no need to keep two distinct preferential treatments which have the same objective of rewarding long-term investments, the duration-based equity risk submodule should be deleted. However, in order to avoid a situation whereby that deletion leads to adverse effects, a grandfathering clause should be provided for with respect to insurers which are currently applying the duration-based equity risk submodule.

(95)

Achieving the environmental and climate ambitions of the European Green Deal requires the channelling of large amounts of investments from the private sector, including from insurance and reinsurance undertakings, towards sustainable investments. The provisions of Directive 2009/138/EC on capital requirements should not impede sustainable investments by insurance and reinsurance undertakings but should reflect the full risk of investments in environmentally harmful activities. Therefore, there is a need to assess whether the available evidence on risk differentials between environmentally or socially harmful and other investments is sufficient to justify a differentiated prudential treatment. In order to ensure an appropriate assessment of the relevant evidence, EIOPA should monitor and report by 1 March 2025 on the evidence on the risk profile of environmentally or socially harmful investments. Where appropriate, EIOPA’s report should advise on changes to Directive 2009/138/EC and to the delegated and implementing acts adopted pursuant to that Directive. It should be possible for EIOPA to also inquire whether it would be appropriate that certain environmental risks, other than climate change-related risks, should be taken into account and how. For instance, if evidence so suggests, EIOPA could analyse the need for extending scenario analyses as introduced by this Directive in the context of climate change-related risks to other environmental risks.

(96)

Climate change is affecting the frequency and severity of natural catastrophes, both of which are likely to further increase due to environmental degradation and pollution. This could also change the exposure of insurance and reinsurance undertakings to natural catastrophe risk and render invalid the standard parameters for natural catastrophe risk set out in Delegated Regulation (EU) 2015/35. In order to ensure that there is no persistent discrepancy between the standard parameters for natural catastrophe risk and the actual exposure of insurance and reinsurance companies to such risks, EIOPA should review regularly the scope of the natural catastrophe risk module and the calibrations of its standard parameters. For that purpose, EIOPA should take into account the latest available evidence from climate science and, where discrepancies are found, it should submit an opinion to the Commission accordingly.

(97)

The requirements set out in Article 308b(12) of Directive 2009/138/EC should be amended to ensure consistency with the banking framework and a level playing field in the treatment of exposures to Member States’ central governments or central banks denominated and funded in the domestic currency of any Member State. For that purpose, a grandfathering regime for such exposures should be introduced to exempt the relevant exposures from spread and market concentration risk capital charges, provided that the exposures were incurred before 1 January 2023.

(98)

In some cases, insurance or reinsurance groups heavily rely on the use of the transitional measure on the risk-free interest rates and of the transitional measure on technical provisions. Such reliance might misrepresent the actual solvency position of the group. Therefore, insurance or reinsurance groups should be required to disclose the impact on their solvency position of assuming that own funds stemming from those transitional measures are not available to cover the group Solvency Capital Requirement. Supervisory authorities should also have the power to take appropriate measures so that the use of the measures appropriately reflects the financial position of the group. However, those measures should not affect the use by related insurance or reinsurance undertakings of those transitional measures when calculating their individual Solvency Capital Requirement.

(99)

Directive 2009/138/EC provides for transitional measures for the risk-free interest rates and for technical provisions which are subject to supervisory approval and which apply with respect to contracts that give rise to insurance and reinsurance obligations that were concluded before 2016. While the transitional measures should encourage undertakings to comply with that Directive as soon as possible, the application of transitional measures approved for the first time long after 2016 is likely to slow down the path to compliance with that Directive. Such approval of the use of those transitional measures should therefore be restricted to cases where an insurance or reinsurance undertaking becomes for the first time subject to the rules of Directive 2009/138/EC or where an undertaking has accepted a portfolio of insurance or reinsurance contracts and the transferring undertaking applied, before the transfer, a transitional measure with respect to the obligations relating to that portfolio.

(100)

In order to take account of market developments and supplement certain detailed technical aspects of this Directive, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union (TFEU) should be delegated to the Commission in respect of the criteria for identifying small and non-complex undertakings and groups, the treatment of risk posed by crypto-assets in the market risk sub-module, clarifications concerning long-term investments, the criteria for limited supervisory reporting for captive insurance and reinsurance undertakings, the prudent deterministic valuation of the best estimate, the application of the simplified approach for the purpose of calculating group solvency, the information to be included in the group regular supervisory report, and extending reporting deadlines in exceptional circumstances. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making. In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States’ experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.

(101)

To ensure the harmonised application of this Directive, EIOPA should develop draft regulatory technical standards to further specify the factors to be considered by supervisory authorities for the purpose of identifying the relationship between different undertakings that could form part of a group. The Commission should supplement this Directive by adopting the regulatory technical standards developed by EIOPA by means of delegated acts pursuant to Article 290 TFEU and in accordance with Articles 10 to 14 of Regulation (EU) No 1094/2010. The Commission should also be empowered to adopt implementing technical standards developed by EIOPA regarding some specific methodological elements pertaining to the prudent deterministic valuation of the best estimate for life obligations by means of implementing acts pursuant to Article 291 TFEU and in accordance with Article 15 of Regulation (EU) No 1094/2010.

(102)

Since the objectives of this Directive, namely to provide incentives for insurers to contribute to the long-term sustainable financing of the economy, to improve risk-sensitivity, to mitigate excessive short-term volatility in insurers’ solvency positions, to enhance the quality, consistency and coordination of insurance supervision across the Union and improve protection of policy holders and beneficiaries, and to better address the potential build-up of systemic risk in the insurance sector, cannot be sufficiently achieved by the Member States but can rather, by reason of their scale and effects, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality as set out in that Article, this Directive does not go beyond what is necessary in order to achieve those objectives.

(103)

The United Kingdom became a third country on 1 February 2020 and Union law ceased to apply to and in the United Kingdom on 31 December 2020. Given that Directive 2009/138/EC has several provisions that address the specifics of particular Member States, where such provisions specifically concern the United Kingdom, they have become obsolete and should therefore be deleted.

(104)

The calibrations used for the delegated acts and implementing acts adopted by the Commission are often based on data that is heavily influenced by the inclusion of data from the United Kingdom market. Therefore, all calibrations that are input for the calculations of the Solvency Capital Requirement and the Minimum Capital Requirement should be reviewed to determine whether they are unduly dependent on data from the United Kingdom market and, where applicable, such data should be eliminated from the relevant data sets, unless no other data is available.

(105)

It should be ensured that the prudential treatment of investments in securitisation, including simple, transparent and standardised (STS) securitisation, appropriately reflects the actual risks, and that capital requirements associated with such investments be risk-oriented. To that end, the Commission should assess the appropriateness of existing calibrations for investments in securitisation that are set out in the delegated acts adopted pursuant to Directive 2009/138/EC, taking into account available market data, and their consistency with capital requirements that are applicable to investments in other fixed-income securities. On the basis of such an assessment, and where appropriate, the Commission should consider amending the delegated act setting capital requirements applicable to investments in securitisation. Such amendments, which should be risk-based and evidence-based, could include the introduction of a more granular set of risk factors depending on the ranking of the securitisation tranches, or differentiating between different types of non-STS securitisation depending on their risks.

(106)

Directive 2009/138/EC should therefore be amended accordingly,

(1)

in Article 2(3), point (a)(iv) is replaced by the following:

;

(2)

in Article 4(1), points (a), (b) and (c) are replaced by the following:

;

(3)

Article 6 is amended as follows:

(4)

in Article 8, point (3) is deleted;

(5)

Article 13 is amended as follows:

(6)

in Article 18(1), the following point is added:

;

(7)

in Article 23(1), the following point is added:

;

(8)

in Article 24(2), second subparagraph, the words ‘Directive 2004/39/EC’ are replaced by the words ‘Directive 2014/65/EU’;

(9)

Article 25 is amended as follows:

(10)

in Article 25a, the words ‘the European Supervisory Authority (European Insurance and Occupational Pensions Authority) (“EIOPA”) established by Regulation (EU) No 1094/2010 of the European Parliament and of the Council (1)’ are replaced by the word ‘EIOPA’;

(11)

in Article 26, the following paragraph is added:

(12)

in Article 29, paragraphs 3 and 4 are replaced by the following:

(13)

the following articles are inserted:

(14)

in Article 30(2), the first subparagraph is replaced by the following:

‘Financial supervision pursuant to paragraph 1 shall include verification, with respect to the entire business of the insurance and reinsurance undertaking, of its system of governance, of its state of solvency, of the establishment of technical provisions, of its assets and of the eligible own funds, in accordance with the rules laid down or practices followed in the home Member State under provisions adopted at Union level.’

(15)

Article 35 is amended as follows:

(16)

the following articles are inserted:

(17)

in Article 36(2), point (a) is replaced by the following:

;

(18)

Article 37 is amended as follows:

(19)

in Article 40, the following paragraphs are added:

‘The members of the administrative, management and supervisory bodies of the insurance or reinsurance undertaking shall at all times be of good repute and possess collectively sufficient knowledge, skills and experience to perform their duties.

Members of the administrative, management and supervisory bodies shall not have been convicted of any serious or repeated offences relating to money laundering or terrorist financing or other offences that would bring into question their good repute, in, at least, the ten years preceding the year in which they are or would be performing their duties in the undertaking.’

(20)

Article 41 is amended as follows:

(21)

in Article 42, paragraphs 2 and 3 are replaced by the following:

(22)

Article 44 is amended as follows:

(23)

Article 45 is amended as follows:

(24)

the following article is inserted:

(25)

Article 51 is replaced by the following:

(26)

the following article is inserted:

(27)

Article 52 is amended as follows:

(28)

in Article 53, paragraph 4 is replaced by the following:

(29)

in Article 56 the following paragraph is added:

‘EIOPA shall develop IT solutions for the procedures, formats and templates referred to in the second paragraph, including for instructions.’

(30)

in Article 58(3), points (a) and (b) are replaced by the following:

(*11)  Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (OJ L 302, 17.11.2009, p. 32).’;"

(31)

in Article 60(1), point (a), the words ‘point 2 of Article 1a of Directive 85/611/EEC’ are replaced by the words ‘Article 2(1), point (b), of Directive 2009/65/EC’;

(32)

in Article 62, first paragraph, the first sentence is replaced by the following:

‘Where the influence exercised by the persons referred to in Article 57 is likely to operate against the sound and prudent management of an insurance or reinsurance undertaking, Member States shall require the supervisory authority of the home Member State of that undertaking in which a qualifying holding is held, sought or increased to take appropriate measures to put an end to that situation.’

(33)

in Article 63, second paragraph, the words ‘Directive 2004/39/EC’ are replaced by the words ‘Directive 2014/65/EU’;

(34)

in Article 64, the following paragraph is added:

‘The first, second and third paragraphs of this Article shall not prevent the supervisory authorities from publishing the outcome of stress tests carried out in accordance with Article 34(4) of this Directive or Article 32 of Regulation (EU) No 1094/2010 or from transmitting the outcome of stress tests to EIOPA for the purposes of the publication by EIOPA of the results of Union-wide stress tests.’

(35)

in Article 68(1), the following subparagraph is inserted after the first subparagraph:

‘Article 64, first paragraph, and Article 67 shall not prevent the exchange of information between supervisory authorities and tax authorities in the same Member State to the extent that such exchange is allowed by national law. Where that information originates in another Member State, it shall only be exchanged with the express agreement of the authority from which the information originates.’

(36)

in Article 70, paragraph 1 is amended as follows:

(37)

in Article 72(1), the introductory wording is replaced by the following:

(38)

Article 77 is amended as follows:

(39)

Article 77a is replaced by the following:

(40)

in Article 77b(1), the following subparagraph is added:

‘For the purposes of the first subparagraph, point (i), a group life contract shall be considered to be a single contract.’

(41)

Article 77d is amended as follows:

(a)

paragraphs 1 to 4 are replaced by the following: ‘1.   Member States shall ensure that an insurance or reinsurance undertaking may apply a volatility adjustment to the relevant risk-free interest rate term structure to calculate the best estimate referred to in Article 77(2) subject to prior approval by the supervisory authorities where at least the following conditions are met: (a) the volatility adjustment for a given currency is applied in the calculation of the best estimate of all insurance and reinsurance obligations of the undertaking denominated in that currency where the relevant risk-free interest rate term structure used to calculate the best estimate for those obligations does not include a matching adjustment as referred to in Article 77b; (b) the undertaking demonstrates to the satisfaction of the supervisory authority that it has adequate processes in place to calculate the volatility adjustment pursuant to paragraphs 3 and 4 of this Article. 1a.   Notwithstanding paragraph 1 of this Article, insurance and reinsurance undertakings that applied a volatility adjustment to the relevant risk-free interest rate term structure to calculate the best estimate referred to in Article 77(2) before 29 January 2026 may, without prior approval by the supervisory authority, continue applying a volatility adjustment provided that they comply with the conditions for prior approval under paragraph 1 of this Article as of 30 January 2027. 1b.   Member States shall ensure that supervisory authorities have the power to require an insurance or reinsurance undertaking to stop applying a volatility adjustment to the relevant risk-free interest rate term structure to calculate the best estimate referred to in Article 77(2) where the undertaking no longer meets the conditions for prior approval laid down by national law in accordance with paragraph 1 of this Article. When an undertaking restores compliance with those conditions, it may request prior approval from the supervisory authorities to apply a volatility adjustment to the relevant risk-free interest rate term structure to calculate the best estimate pursuant to paragraph 1 of this Article. 1c.   Insurance and reinsurance undertakings may, subject to prior approval by the supervisory authority, apply an undertaking-specific adjustment to the risk-corrected spread of the currency referred to in paragraph 3, where: (a) the risk-corrected spread exceeded the risk-corrected spread calculated on the basis of the undertaking’s portfolio of investments in debt instruments for the four quarterly reporting periods prior to the reporting date; and (b) the information that is inherent to the relevant assets of the undertaking and that is reported by the undertaking in line with Article 35(1) to (4) is of sufficient quality to allow a robust and reliable calculation of that adjustment. The adjustment shall correspond to the lower of 105 % and the ratio of the risk-corrected spread calculated based on the undertaking’s portfolio of investments in debt instruments and the risk-corrected spread calculated on the basis of the reference portfolio for the relevant currency. The risk-corrected spread based on the undertaking’s portfolio of investments in debt instruments shall be calculated in the same manner as the risk-corrected spread based on the reference portfolio for the relevant currency, but using undertaking-specific data on the weights and the average duration of the relevant sub-classes within the undertaking’s portfolio of investments in debt instruments for the relevant currency. Where the adjustment is applied, the volatility adjustment shall not be increased by the macro volatility adjustment referred to in paragraph 4. Insurance and reinsurance undertakings shall immediately stop applying the adjustment when it increases the risk-corrected spread of the currency referred to in paragraph 3 for two consecutive quarterly reporting periods. 2.   For each relevant currency, the volatility adjustment to the relevant risk-free interest rate term structure shall be based on the spread between the interest rate that could be earned from a reference portfolio of investments in debt instruments for that currency and the rates of the relevant basic risk-free interest rate term structure for that currency. The reference portfolio of investments in debt instruments for a currency shall be representative for the assets which are denominated in that currency and in which insurance and reinsurance undertakings invest to cover the best estimate for insurance and reinsurance obligations denominated in that currency. 3.   The amount of the volatility adjustment to risk-free interest rates for a currency shall be calculated as follows: VAcu= 85 % · CSSRcu · RCScu where: (a) VAcu is the volatility adjustment for a currency cu ; (b) CSSRcu is the credit spread sensitivity ratio of an insurance or reinsurance undertaking for the currency cu ; (c) RCScu is the risk-corrected spread for the currency cu . VAcu shall apply to the relevant risk-free interest rates of the term structure that are not derived by means of extrapolation in accordance with Article 77a. Where the extrapolated part of the relevant risk-free interest rates takes into account information from financial instruments other than bonds pursuant to Article 77a(1), VAcu shall also apply to risk-free interest rates derived from those financial instruments. The extrapolation of the relevant risk-free interest rate term structure shall be based on those adjusted risk-free interest rates. CSSRcu shall not be negative and not be higher than one. It shall take values lower than one where the sensitivity of the assets of an insurance or reinsurance undertaking in a currency to changes in credit spreads is lower than the sensitivity of the technical provisions of that undertaking in that currency to changes in interest rates. RCScu shall be calculated as the difference between the spread referred to in paragraph 2 and the portion of that spread that is attributable to a realistic assessment of expected losses or unexpected credit or other risk of the assets. The portion of the spread that is attributable to a realistic assessment of expected losses, unexpected credit risk or any other risk shall be calculated as a percentage of spreads. That percentage shall decrease as spreads increase and shall at least differentiate the following three cases: (a) where spreads do not exceed their long-term average; (b) where spreads exceed their long-term average but do not exceed twice their long-term average; (c) where spreads exceed twice their long-term average. The risk correction shall never exceed an appropriate percentage of the long-term average spreads. By way of derogation from the first subparagraph, insurance and reinsurance undertakings having their head office in a Member State with a currency pegged to the euro which complies with the detailed criteria for the adjustments for currencies pegged to the euro for the purpose of facilitating the calculation of the currency risk sub-module, as established pursuant to Article 111(1), point (p), when calculating the volatility adjustment to risk-free interest rates for the pegged currency and the volatility adjustment to risk-free interest rates for the euro, shall be allowed to calculate a single CSSRcu for both their local currency and the euro, by jointly taking into account the assets and liabilities denominated in euro and their local currency. 4.   Without prejudice to paragraph 1c, the volatility adjustment for the euro shall be increased by a macro volatility adjustment. The macro volatility adjustment shall be calculated as follows: VAEuro,macro= 85 %·CSSREuro·max(RCSco- 1,3·RCSEuro;0)·ωco where: (a) VAEuro,macro is the macro volatility adjustment for a country co ; (b) CSSREuro is the credit spread sensitivity ratio of an insurance or reinsurance undertaking for the euro; (c) RCSco is the risk-corrected spread for the country co ; (d) RCSEuro is the risk-corrected spread for the euro; (e) ωco is the country adjustment factor for country co . CSSREuro shall be calculated as the credit spread sensitivity ratio of an insurance or reinsurance undertaking for the euro in accordance with paragraph 3. RCSco shall be calculated in the same way as the risk-corrected spread for the euro under paragraph 3, but based on a reference portfolio that is representative for the assets which insurance and reinsurance undertakings are investing in to cover the best estimate for insurance and reinsurance obligations of products sold in the insurance market of that country and denominated in euro. RCSEuro is calculated as the risk-corrected spread for the euro in accordance with paragraph 3. The country adjustment factor referred to in the first subparagraph, point (e), shall be calculated as follows: ωco= max(min (((RCSco*-0,6 %)/0,3 %);1);0) Where RCSco* is the risk-corrected spread for the country co as referred to in the first subparagraph, point (c), multiplied by the percentage of investments in debt instruments relative to total assets held by insurance and reinsurance undertakings authorised in country co . 4a.   To calculate the spread underlying the volatility adjustment, for each currency and each country, the spread referred to in paragraphs 2 and 4 shall be the value weighted sum of the average currency spread on government bonds and the average currency spread on bonds other than government bonds, loans, and securitisations. For the purposes of that calculation, the respective weights shall be the ratio of the value of government bonds included in the reference portfolio of assets for that currency or country and the value of all assets included in that reference portfolio, and the ratio of the value of bonds other than government bonds, loans and securitisations included in the reference portfolio of assets for that currency or country and the value of all assets included in that reference portfolio.’ ;

(42)

Article 77e is amended as follows:

(43)

Article 86 is amended as follows:

(44)

in Article 92, paragraphs 1a and 2 are replaced by the following:

(*12)  Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on the prudential requirements of investment firms and amending Regulations (EU) No 1093/2010, (EU) No 575/2013, (EU) No 600/2014 and (EU) No 806/2014 (OJ L 314, 5.12.2019, p. 1).’;"

(45)

in Article 95, the second subparagraph is replaced by the following:

‘For that purpose, insurance and reinsurance undertakings shall, where applicable, refer to the list of own-fund items referred to in Article 97(1).’

(46)

in Article 96, the first paragraph is replaced by the following:

‘Without prejudice to Article 95 and Article 97(1), for the purposes of this Directive the following classifications shall be applied:

(47)

in Article 105, the following paragraph is added:

(48)

the following article is inserted:

(49)

in Article 106, paragraph 3 is replaced by the following:

(50)

Article 109 is replaced by the following:

(51)

Article 111 is amended as follows:

(52)

in Article 112, paragraph 7 is replaced by the following:

(53)

in Article 122, the following paragraph is added:

(54)

Article 132 is amended as follows:

(55)

in Article 133(3), the words ‘Directive 85/611/EEC’ are replaced by the words ‘Directive 2009/65/EC’;

(56)

the following article is inserted:

(*13)  Directive (EU) 2025/1 of the European Parliament and of the Council of 27 November 2024 establishing a framework for the recovery and resolution of insurance and reinsurance undertakings and amending Directives 2002/47/EC, 2004/25/EC, 2007/36/EC, 2014/59/EU and, (EU) 2017/1132 and Regulations (EU) No 1094/2010, (EU) No 648/2012, (EU) No 806/2014 and (EU) 2017/1129 (OJ L, 2025/1, 8.1.2025, ELI: http://data.europa.eu/eli/dir/2025/1/oj).’;"

(57)

Article 138(4) is amended as follows:

(58)

Article 139 is replaced by the following:

(59)

Article 141 is replaced by the following:

(60)

in Article 144, the following paragraph is added:

(61)

in Title I, the following chapter is inserted:

(62)

in Article 145, paragraph 2 is amended as follows:

(63)

Article 149 is replaced by the following:

(64)

the title of Chapter VIII, Section 2A, is replaced by the following:

‘Notification, significant cross-border activities and collaboration platforms’

(65)

in Article 152a, paragraph 2 is replaced by the following:

(66)

the following articles are inserted:

(67)

Article 152b is amended as follows:

(68)

Article 153 is replaced by the following:

(69)

Article 212 is amended as follows:

(70)

Article 213 is amended as follows:

(71)

the following articles are inserted:

(72)

Article 214 is amended as follows: