Chapter IV: Governance system

Insurance and reinsurance undertakings shall review the written policies referred to in Article L. 354-1 at least once a year. These policies shall be subject to the prior approval of the Board of Directors or the Supervisory Board, as the case may be. They shall be adapted to take account of any significant change affecting the system or the area concerned. For each of the attributions of the administrative, management…

I.-The risk management system referred to in Article L. 354-2 comprises the strategies, processes and information procedures needed to identify, measure, monitor, manage and report, on an ongoing basis, the risks, at individual and aggregate levels, to which undertakings are or could be exposed, as well as the interdependencies between these risks. This system shall be integrated into the organisational structure and decision-making procedures of the undertaking and duly taken…

I.-As regards asset and liability management, insurance and reinsurance undertakings regularly assess the sensitivity of their prudential technical provisions and own funds to the assumptions underlying the extrapolation of the relevant risk-free interest rate curve mentioned in Article R. 351-3. II – Where the equalisation adjustment referred to in Article R. 351-4 is applied, undertakings shall regularly assess the sensitivity of their prudential technical provisions and eligible own funds to…

As regards investment risk, insurance and reinsurance undertakings must be able to demonstrate that they comply with the provisions of Chapter III of this Title.

Insurance and reinsurance undertakings shall structure the risk management function referred to in Article L. 354-1 in such a way as to facilitate the implementation of the risk management system.

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.