Section III: Own funds

The core capital referred to in Article L. 351-6 is made up of the following elements: 1° The excess of assets over prudential liabilities, valued in accordance with sections 1 and 2 of this chapter; 2° Subordinated liabilities. The surplus referred to in 1° is reduced by the amount of its own shares held by the insurance or reinsurance undertaking. Where appropriate, original own funds shall be adjusted taking into…

The ancillary own funds referred to in article L. 351-6 consist of items other than core own funds which may be called up to absorb losses. Ancillary own funds may include the following items, insofar as they are not elements of own funds: a) The unpaid portion of share capital or the initial fund which has not been called up; b) Letters of credit and guarantees; c) Any other legally…

The amounts of ancillary own funds items to be taken into account to determine prudential own funds within the meaning of Article L. 351-6 are subject to the prior approval of the Autorité de contrôle prudentiel et de résolution. The amount allocated to each item of ancillary own funds reflects the loss-absorbing capacity of the item concerned and is based on prudent and realistic assumptions. Where a fixed nominal value…

Surplus funds consist of accumulated profits which have not yet been made available for distribution to policyholders, contract beneficiaries and reinsured undertakings. These surplus funds are not considered as insurance and reinsurance commitments insofar as they meet the criteria set out in 1° of article R. 351-23.

I.-Equity items are classified into three tiers. This classification depends on whether they are basic own funds or ancillary own funds and on the following characteristics of permanent availability and subordination: a) The item is available, or can be called upon on demand, to absorb losses completely, whether as a going concern or in the event of liquidation ; b) in the event of liquidation, the full amount of the…

I.-Components of original own funds are classified in Tier 1 when they de facto have the characteristics mentioned in a and b of I of Article R. 351-22, taking into account the factors mentioned in II of Article R. 351-22. The list and classification criteria for own funds classified as Tier 1 are defined in Articles 69,70 and 71 of Commission Delegated Regulation (EU) No 2015/35 of 10 October 2014….

Insurance and reinsurance undertakings must classify their own-fund items on the basis of the criteria defined in Article R. 351-23. To this end, they shall refer, where appropriate, to the list of own-fund items referred to in Articles 69 to 79 of Commission Delegated Regulation (EU) No 2015/35 of 10 October 2014. Where a capital item does not fall within that list, it shall be assessed and classified by the…

Without prejudice to Article R. 351-24, the following classifications are applied for the purposes of this section: 1° The surplus funds referred to in Article R. 351-21 are classified in level 1 ; 2° Letters of credit and guarantees held in trust by an independent trustee for the benefit of insurance creditors and provided by credit institutions are classified in level 2; 3° Any future claims that mutual insurers or…

With regard to compliance with the Solvency Capital Requirement, the eligible amounts of Tier 2 and Tier 3 elements are subject to quantitative limits. These limits are defined in Article 82 of Commission Delegated Regulation (EU) No 2015/35 of 10 October 2014. Regarding compliance with the Minimum Capital Requirement, the amount of basic own-fund items eligible to cover the Minimum Capital Requirement that are classified in Tier 2 is subject…

I.-Without prejudice to the application of the provisions of Article R. 351-23, original own funds items are included in Tier 1 original own funds for a maximum period of ten years after 1 January 2016, if these items: a) Were issued before 18 January 2015 ; b) At 31 December 2015, could be used in accordance with the provisions of Chapter IV of Title III of Book III of the…