Book III: Companies

Where insurance and reinsurance undertakings use external credit assessments for the calculation of prudential technical provisions and the Solvency Capital Requirement, they shall, as part of their risk management, verify the appropriateness of those assessments by using supplementary assessments where appropriate.

The risk management function of insurance and reinsurance undertakings that use a partial or full internal model approved in accordance with Articles L. 352-1 and R. 352-14 covers the tasks of designing, implementing, testing and validating the internal model, monitoring the documentation of this model and any changes made to it, analysing the performance of this internal model and producing summary reports on this analysis. The main purpose of the…

The internal assessment of risk and solvency referred to in Article L. 354-2 shall cover at least: a) The overall solvency requirement, taking into account the specific risk profile, the approved risk tolerance limits and the business strategy of the undertaking; b) Ongoing compliance with the capital requirements referred to in Chapter II of this Title and the requirements concerning prudential technical provisions set out in Section 2 of Chapter…

In order to assess the overall solvency requirement referred to in Article R. 354-3, undertakings shall put in place procedures which are proportionate to the nature, scale and complexity of the risks inherent in their business and which enable them to identify and assess the risks to which they are exposed, or to which they could be exposed. Undertakings shall demonstrate the appropriateness of the methods they use for this…

Insurance and reinsurance undertakings applying the equalisation adjustment referred to in Article R. 351-4, the volatility adjustment referred to in Article R. 351-6 or the transitional measures referred to in Articles L. 351-4 and L. 351-5 shall assess their compliance with the capital requirements referred to in Article R. 354-3, both taking into account and without taking into account such adjustments, corrections and transitional measures.

Where an internal model is used, the internal risk and solvency assessment reconciles the internal risk measures with the required solvency capital.

Internal risk and solvency assessment is an integral part of the business strategy of insurance and reinsurance companies. These undertakings systematically take it into account in their strategic decisions. The undertakings shall carry out this internal assessment at least once a year and in the event of any significant change in their risk profile. They shall inform the Autorité de contrôle prudentiel et de résolution of the conclusions of each…

The internal control system referred to in Article L. 354-2 includes at least administrative and accounting procedures, an internal control framework, appropriate information arrangements at all levels of the company and a compliance function referred to in Article L. 354-1.

The purpose of the compliance function referred to in Article L. 354-1 is, in particular, to advise the Chief Executive Officer or the Management Board, as well as the Board of Directors or the Supervisory Board, on all matters relating to compliance with the laws, regulations and administrative provisions governing the taking up and pursuit of the business of insurance and reinsurance. This function also aims to assess the possible…

The internal audit function referred to in Article L. 354-1 assesses in particular the adequacy and effectiveness of the internal control system and the other elements of the system of governance. This function is performed objectively and independently of the operational functions. The conclusions and recommendations of the internal audit, together with the proposals for action arising from each of them, are communicated to the Board of Directors or the…