Question ID: 1057
Regulation Reference: (EU) No 2015/35 - supplementing Dir 2009/138/EC - taking up & pursuit of the business of Insurance and Reinsurance (SII)
Article: 254-257
Status: Final
Date of submission: 27 Nov 2018
Question
Let's assume that there is an undertaking which acquired in December 2014 and February 2015 securitisation positions issued in November 2014 and January 2015. In 2016 insurance undertaking still holds securitisation positions in its portfolio.
Is undertaking oblige to meet requirements from articles 254-257 of Delegated Regulation even if the securitisation positions were bought before 1st of January 2016 i.e. before application of the Solvency II regime?
EIOPA answer
Articles 254-257 of Delegated Regulation derive from the empowerment in Article 135(2) of the Solvency II Directive, which provides the following:
"The Commission shall adopt delegated acts in accordance with Article 301a laying down:
(a) the requirements that need to be met by undertakings that repackage loans into tradable securities and other financial instruments (originators or sponsors) in order for an insurance or reinsurance undertaking to be allowed to invest in such securities or instruments issued after 1 January 2011, including requirements that ensure that the originator, sponsor or original lender retains, on an ongoing basis, a material net economic interest, which, in any event, shall not be less than 5%;
(b) qualitative requirements that must be met by insurance or reinsurance undertakings that invest in such securities or instruments;
(c) the specifications for the circumstances under which a proportionate additional capital charge may be imposed when the requirements laid down under points (a) and (b) of this paragraph have been breached, without prejudice to Article 101(3)."
Considering that the dates of issuance referred are later than 1 January 2011, the requirements in the mentioned articles of the Solvency II Delegated Regulation would be applicable since the entrance into force of Solvency II.