Brussels, 07/10/2008 (Agence Europe) - On Tuesday 7 October, EU finance ministers discussed the proposal for a “Solvency II” directive aimed at renovating rules applying to the activity of airline insurance and reinsurance companies (see EUROPE 9674). When it comes to the supervision of pan-European groups, two camps oppose each other over the way authority should be shared out between the “home supervisor” and the “host supervisors” (regulators of host countries), that will meet within the future supervisory colleges. Headed by Spain, 14 member states (including Estonia, Latvia, Lithuania, Luxembourg, Poland and Slovenia), themselves joined by the Czech Republic and Belgium, fear their national supervisor will lose weight These countries in fact host on their territory many subsidiaries of foreign banks and only a few head offices of insurance groups. The other camp is, on the other hand, in favour of attributing broader competence to the “home supervisor” in order to facilitate the activity of pan-European groups that have their main seat on national territory.
In a concern to reach compromise, the French EU Presidency has suggested rebalancing the competences of the group's controller and of the subsidiary controllers without hampering the way the support regime of the group works. According to this system, the seat of one group pledges, via a written declaration, to financially assist any of its subsidiaries established in another member state when these subsidiaries experience solvency-related difficulties. The French EU Presidency suggests that: - the controller of the subsidiary should as a last resort take a stance regarding adoption of a programme to restore a subsidiary without bringing the group declaration of support into question; - the imposition of capital add-on requirements should rest on a joint decision-making system between the home supervisor and the host supervisor. On this last point, the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) would be consulted if views between regulators differ, but the final decision would be up to the group controller two years after the first declaration of support for the group. Under specific and well-defined circumstances, the subsidiary controller could even keep the right to take the final decision. On Tuesday, Italy seemed able to accept this compromise proposal.
Noting that the issue was not ripe, ministers called on their ambassadors to the to work “as a matter of urgency” so that results could be obtained at the Ecofin Council, said French Finance Minister Christine Lagarde following the meeting. Three topics should focus attention: the issue of group support, supervision of pan-European insurance groups and how to deal with equity risk. On Tuesday, the British and Czech delegations rejected the French Presidency proposed compromise on equity risk. This proposal would have allowed member states to authorise own fund requirements to be varied depending on how long they have been held.
On the same day, the European Parliament economic and monetary affairs committee voted on first reading on the draft report by Peter Skinner (PES, UK) on the draft Solvency II directive. The amendments adopted relate inter alia to the method of calculating minimum capital requirements, group supervision and group support for its subsidiary. “We have improved the role of the local supervisor”, for example, by imposing additional own fund requirements, the rapporteur told Reuters. The plenary session vote, which has been scheduled for November, will depend on how well the Council discussions go, with the stated aim being first reading adoption of the directive under French Presidency. (M.B./transl.jl/rt)