S.I. No. 359/1994:

EUROPEAN COMMUNITIES (NON-LIFE INSURANCE) FRAMEWORK REGULATIONS, 1994.

EUROPEAN COMMUNITIES (NON-LIFE INSURANCE) FRAMEWORK REGULATIONS, 1994.

ARRANGEMENT OF REGULATIONS

PART I

Citation and Commencement, Interpretation, Scope and Taking up the Business of Non-Life Insurance

Articles

1. Citation and commencement.

2. Interpretation.

3. Technical adjustments.

4. Scope.

5. Powers of Court.

6. Authorisations.

7. Conditions when applying for authorisations.

8. Notification of conditions and documents.

9. Identities of shareholders.

PART 2

Financial Supervision, Assignment of Policies, Technical Reserves Provisions, Solvency Margin, Valuation of Assets, Register of Assets, Discounting, Related Company, Failure to Comply with Technical Reserves Provisions, Withdrawal/Lapse of Authorisation

10. Financial supervision of insurance undertaking.

11. On the spot verification.

12. Assignment of policies.

13. Technical reserves provisions/solvency margin/valuation of assets/register of assets.

14. Discounting.

15. Transactions with a related company.

16. Failure to comply with technical reserves provisions.

17. Withdrawal/lapse of authorisation.

18. Provisions applying on withdrawal/lapse of authorisation.

19. Notification of reasons for revocation.

PART 3

Qualifying Holdings, Amendment to European Communities (Non-Life Insurance) (Amendment) Regulations, 1991, Obligation of Professional Secrecy/Exchanges of Confidential Information

20. Qualifying holdings.

21. Amendment to European Communities (non-life insurance) Amendment Regulations, 1991.

22. Obligations of professional secrecy/exchanges of confidential information.

PART 4

Choice of Law, General Good Requirements, Notification of Documents, Compulsory Insurance, Policyholder Disclosure

23. Law applicable to insurance contracts.

24. General good requirements.

25. Notification of documents/scales of premiums.

26. Compulsory insurance.

27. Policyholder disclosure rules.

PART 5

Right of Establishment, Freedom to Provide Services, Motor Insurance Business, General Conditions, Prevention of Irregularities

28. Provisions related to right of establishment of a Branch outside the State.

29. Amendment to Branch information.

30. Conditions for establishing a Branch in the State.

31. Amendment to Branch information.

32. Conditions for carrying on insurance business by way of services into another Member State.

33. Conditions for carrying on insurance business by way of services into the State.

34. Provisions related to third party motor liability insurance.

35. Amendment to services information.

36. General conditions related to services and branch insurance business.

37. Prevention of irregularities.

PART 6

Advertising, Winding-up, Statistical Requirements

38. Advertising.

39. Winding-up.

40. Statistical information.

41. Statistical requirements regarding services and branch insurance business.

PART 7

Guarantee Schemes, Fiscal Arrangements, Acquired Rights, Right of Appeal

42. Obligation to join guarantee schemes.

43. Fiscal arrangements.

44. Acquired rights.

45. Application of Regulations to branch under Article 44.

46. Right of appeal to Court.

PART 8

Provisions Related to Branches of Third Country Insurance Undertakings, Rules Applicable to the Assignment of Third Country Branch Policies, Rules Applicable to Health Insurance, Sections 93 and 94 of the Insurance Act, 1936 , Penalties, Fees

47. Third country branch provisions.

48. Application for authorisation.

49. Conditions of admission.

50. Technical reserves.

51. Solvency margin.

52. Guarantee Fund.

53. Annual returns.

54. Application of Articles 16 and 17.

55. Advantages under Article 26 of the First Directive/Application of Article 26 (2), (3) and (4).

56. Assignment of third country branch policies.

57. Health Insurance provisions.

58. Interpretation of Sections 93 and 94 of the Insurance Act, 1936.

59. Penalties.

60. Fees.

ANNEXES

SCHEDULES

S.I. No. 359 of 1994.

EUROPEAN COMMUNITIES (NON-LIFE INSURANCE) FRAMEWORK REGULATIONS 1994.

I, CHARLIE McCREEVY, Minister for Enterprise and Employment, in exercise of the powers conferred on me by section 3 of the European Communities Act, 1972 (No. 27 of 1972), as amended by the European Communities (Amendment) Act, 1993 (No. 25 of 1993), and for the purpose of giving effect to Council Directive No. 73/239/EEC of 24 July, 1973, Council Directive No. 88/357/EEC of 22 June, 1988, Council Directive No. 90/618/EEC of 8 November, 1990, and Council Directive No. 92/49/EEC of 18 June, 1992, hereby make the following Regulations:

PART 1 Citation and Commencement, Interpretation, Scope and Taking up the Business of Non-Life Insurance

1. (1) These Regulations may be cited as the European Communities (Non-Life Insurance) Framework Regulations, 1994, and shall come into operation on the 8th day of December, 1994. However, the provisions of these Regulations affecting the annual returns to be made to the Minister in accordance with Article 13 (11) of these Regulations shall apply in respect of every financial year beginning on or after the 1st day of January, 1995.

(2) These Regulations and the Insurance Acts, 1909 to 1990, Regulations relating to insurance business made under those Acts and Regulations made under the European Communities Act, 1972 , may be cited together as the Insurance Acts and Regulations and shall be construed together as one.

2. (1) In these Regulations, except where the context otherwise requires,--

"authorisation" means--

( a ) authorisation granted by the Minister under these Regulations or under the Regulations of 1976 or the Regulations of 1991 and still in force, or,

( b ) where the context otherwise requires, authorisation granted by the authority charged by law with the duty of supervising the activities of insurance undertakings in a Member State other than the State in accordance with Article 6 of the First Directive as inserted by Article 4 of the Directive.

"branch" means an agency or branch of an insurance undertaking or any permanent presence of an undertaking in the State even if that presence does not take the form of an agency or branch but consists merely of an office managed by the insurance undertaking's own staff or by a person who is independent but has permanent authority to act for the insurance undertaking in the same way as an agency;

"carrying on insurance business by way of establishment" means the covering of a risk by an insurance undertaking in a Member State through a head office or branch situated in that State;

"carrying on insurance business by way of services" means the covering of a risk by an insurance undertaking in a Member State through a head office or branch situated in another Member State;

"the Court" means the High Court;

" the Directive" means EEC Council Directive 92/49/EEC⁽¹⁾;

"the First Directive" means EEC Council Directive 73/239/EEC⁽²⁾;

"the general good" shall be construed in accordance with Article 24 of these Regulations;

"home Member State" means the Member State in which the head office of the insurance undertaking covering a risk is situated;

"insurance undertaking" means--

⁽¹⁾O.J. L228, 11.8.1992, page 1.

⁽²⁾O.J. L228, 16.8.1973, page 3.

( a ) for the purpose of carrying on insurance business in the State by way of establishment: the holder of an authorisation under these Regulations or, as the case may be, under Article 6 of the first Directive as inserted by Article 4 of the Directive or the holder of an authorisation under Article 23 of the First Directive;

( b ) for the purpose of carrying on insurance business by way of services, the holder of an authorisation under these Regulations or, as the case may be, under Article 6 of the First Directive as inserted by Article 4 of the Directive;

"Member State" means a Member State of the European Communities;

"Member State of the branch" means the Member State in which the branch covering a risk is situated;

"Member State of the provision of services" means the Member State in which a risk is situated where it is covered by an insurance undertaking or a branch situated in another Member State;

"Member State where the risk is situated" means--

( a ) the Member State in which the property is situated, where the insurance relates either to buildings or buildings and their contents, in so far as the contents are covered by the same insurance policy,

( b ) the Member State of registration, where the insurance relates to vehicles of any type,

( c ) the Member State where the policyholder took out the policy in the case of policies of a duration of four months or less covering travel or holiday risks, whatever the class concerned,

( d ) the Member State where the policyholder has his habitual residence or, if the policyholder is a legal person, the Member State where the latter's establishment, to which the contract relates, is situated, in all cases not explicitly covered by the foregoing subparagraphs;

"non-life insurance" has the meaning assigned by Article 4 of these Regulations;

"the Regulations of 1976" means the European Communities (Non-Life Insurance) Regulations, 1976 ( S.I. No. 115 of 1976 );

"the Regulations of 1991" means the European Communities (Non-Life Insurance) (Amendment) (No. 2) Regulations, 1991 ( S.I. No. 142 of 1991 );

"the Second Directive" means EEC Council Directive 88/357/EEC⁽³⁾.

⁽³⁾O.J. L172, 4.7.1998, page 1.

(2) In these Regulations a reference to any enactment, Council Directive, order or Regulation includes reference thereto as subsequently amended.

(3) Subject to these Regulations, the provisions of the Insurance Acts and Regulations shall, where applicable and subject to any necessary modifications, apply to all insurance undertakings to which these Regulations relate.

(4) These Regulations shall have effect, any provision to the contrary in any enactment, order of Regulation passed or made before the making of these Regulations notwithstanding.

3. (1) The Minister may by direction give effect to any technical adjustment adopted in accordance with Article 51 of the Directive subject to such conditions as may be specified from time to time by the Minister.

(2) The Minister may issue a direction in writing modifying any requirement of these Regulations or of the Annexes or Schedules in the special circumstances of the case, provided that the direction does not conflict with any provision of the First Directive, the Second Directive or the Directive, or Council Directive 90/618/EEC of 8 November, 1990 (O.J. No. L 330, 29.11.1990, p. 44).

4. (1) Subject to sub-article (2) of this Article, these Regulations apply to insurance business ("non-life insurance") of the classes specified in Part A of Annex I to these Regulations and to undertakings carrying on such insurance.

(2) These Regulations do not apply to--

( a ) the kinds of insurance specified in paragraph 1 of Article 2 of the First Directive,

( b ) the operations specified in paragraph 2 of Article 2 of the First Directive,

( c ) mutual associations excluded from the application of the First Directive by Article 3 thereof.

5. The Court shall have full jurisdiction to deal with any application, appeal or other proceedings before the Court in accordance with any provision of these Regulations and may for this purpose make any interim, interlocutory, mandatory, prohibitory or injunctive or ancillary order as the Court may consider necessary or appropriate for the purposes of these Regulations.

6. (1) An insurance undertaking shall not carry on the business of non-life insurance unless it is the holder of an authorisation.

(2) An authorisation shall be valid throughout the Member States and shall allow an undertaking to carry on insurance business there by way of services and by way of establishment.

(3) For the purposes of the Insurance Acts and Regulations, an insurance undertaking shall be deemed to be or to have been established in the State if--

( a ) it has in the State an office which is open during normal business hours for the transaction of the business for which it is authorised, and

( b ) it employs at such office persons duly qualified to carry on the business transacted and empowered to issue cover for the authorised classes and to settle claims.

(4) An insurance undertaking with its head office outside the territories of the Member States may, notwithstanding anything to the contrary in the Insurance Acts and Regulations, carry on insurance business by way of services into the State in the following classes of Annex I to these Regulations, namely, 4, 5, 6, 7, 11 and 12 and in classes 1 and 10 insofar as they relate to the insurance of passengers in marine and aviation vehicles and carrier's liability respectively--

provided that

( a ) where the business is to be written by a branch of the insurance undertaking situated within the territories of the Member States, the insurance undertaking demonstrates compliance with the solvency margin requirements of Article 25 of the First Directive and provides satisfactory evidence that the branch is authorised to write business in the above-mentioned classes,

( b ) where the business is to be written by an insurance undertaking with no establishment within the territories of the Member States a statement is produced from the supervisory authorities of the State in which the head office of the insurance undertaking is situated attesting that the insurance undertaking complies with the solvency requirements in that State and is authorised to underwrite risks covered by the classes mentioned above,

( c ) in the case of the insurance undertakings mentioned in paragraphs (a) and (b) of this sub-article, the nature of risks it is proposed to cover by way of services shall be disclosed in addition to the information required by those paragraphs.

(5) Where the Minister is satisfied that an undertaking, applying for an authorisation, complies with the appropriate provisions of the Insurance Acts and Regulations, the Minister shall grant that undertaking an authorisation.

(6) An application for an authorisation may be made to the Minister by--

( a ) any undertaking which has established its head office in the State,

( b ) any insurance undertaking which is the holder of an authorisation related to a particular class or classes of insurance and which proposes to extend its business to another class or classes of insurance.

(7) An authorisation shall be granted for a class of insurance mentioned at a reference number in Annex I to these Regulations and specified in the Authorisation and shall relate to the entire of that class, except that, where an applicant for an authorisation desires the authorisation to relate only to part of a class as listed in Part A of Annex I to these Regulations, the authorisation shall relate to that part only, but without prejudice to the Minister's powers to require the full guarantee fund relating to the entire class to which such part belongs, as specified in Part B of Annex II to these Regulations.

(8) The Minister may grant authorisation in respect of any group of classes specified in column (3) of Part D of Annex I to these Regulations in accordance with Part B of that Annex.

(9) An authorisation granted for a particular class or group of classes of insurance shall also be valid for the purpose of covering ancillary risks included in another class if the conditions specified in Part C of Annex I are fulfilled.

(10) An insurance undertaking applying for an authorisation to extend its business to other classes of insurance or to extend an authorisation covering only part of a class as listed in Part A of Annex I to these Regulations shall--

( a ) submit to the Minister a scheme of operations in accordance with the provisions contained in Article 7 (2) (b) of these Regulations in relation to such other classes of insurance or such extension of authorisation, and

( b ) prove to the satisfaction of the Minister that it possesses the solvency margin in accordance with the provisions of Annex II of these Regulations and, where a higher minimum guarantee fund is required, that it possesses such minimum guarantee fund.

(11) The forms of authorisation shall be as specified by the Minister from time to time.

7. (1) Any undertaking applying for an authorisation shall comply with the following provisions:

( a ) It shall be a company limited by shares, a company limited by guarantee or an unlimited company within the meaning (in each case) of the Companies Acts, 1963 to 1990; it may also adopt the form of a European Company (SE) when that has been established.

( b ) An undertaking set up in any public law form may apply for an authorisation provided such body has as its object insurance operations under conditions equivalent to those under which private law insurance undertakings operate.

(2) The undertaking shall also comply with the following provisions:

( a ) It shall limit its operations to the business of insurance and to operations directly arising therefrom, to the exclusion of all other commercial business.

( b ) It shall submit to the Minister a scheme of operations, in accordance with Article 9 of the First Directive to include particulars or proof concerning--

(i) the nature of the risks which the undertaking proposes to cover;

(ii) the guiding principles as to reinsurance;

(iii) the items constituting the minimum guarantee fund;

(iv) estimates of the costs of setting up the administrative services and the organisation for securing business; the financial resources intended to meet those costs and, if the risks to be covered are classified in class 18 in Part A of Annex I to these Regulations, the resources at the insurance undertaking's disposal for the provision of the assistance promised.

( c ) In addition, for the first three financial years it shall submit to the Minister--

(i) estimates of management expenses other than installation costs, in particular current general expenses and commissions;

(ii) estimates of premiums or contributions and claims;

(iii) a forecast balance sheet;

(iv) estimates of the financial resources intended to cover its underwriting liabilities and solvency margin.

( d ) It shall possess the minimum guarantee fund in accordance with the provisions of Part B of Annex II to these Regulations.

( e ) It shall be effectively run by persons of good repute with appropriate professional qualifications or experience.

8. (1) Nothing in these Regulations shall prevent the introduction by the Minister of regulations or administrative provisions concerning the approval of the memorandum and articles of association of an insurance undertaking and communication of documents necessary for the normal exercise of supervision.

(2) Notwithstanding sub-article (1) of this Article, the Minister shall not require the prior approval or systematic notification of general and special policy conditions, scales of premiums, forms and other printed documents which an insurance undertaking intends to use in its dealings with policyholders. The Minister may, however, require notification of such general and special policy conditions, scales of premiums, forms and other aforementioned printed documents.

(3) The Minister may retain or introduce prior notification or approval of proposed increases in premium rates where such notification or approval is operated as part of a general price control system.

9. (1) The Minister shall not grant an authorisation to an undertaking before being informed of the identities of the shareholders or persons who have qualifying holdings, direct or indirect, in that insurance undertaking and of the amounts of such holdings.

(2) The Minister shall not grant an authorisation if, after taking into account the requirement to ensure the sound and prudent management of an insurance undertaking, the Minister is not satisfied as to the qualifications of the shareholders or members.

(3) The Minister may require information concerning all shareholders irrespective of the size of their holding.

(4) For the purpose of this Article--

a "qualifying holding" means a direct or indirect holding in an insurance undertaking which represents10 per cent. or more of the capital or of the voting rights or which makes it possible to exercise a significant influence over the management of the undertaking in which a holding subsists.

PART 2 Financial Supervision, Assignment of Policies, Technical Reserves Provisions, Solvency Margin, Valuation of Assets, Register of Assets, Discounting, Related Company, Failure to Comply with Technical Reserves Provisions, Withdrawal or Lapse of Authorisation

10. (1) The financial supervision of an insurance undertaking, including the carrying on of insurance business either by way of services or through branches, shall be the sole responsibility of the home Member State.

(2) Where the head office of the insurance undertaking is situated in the State the Minister shall be responsible for verification with respect to the insurance undertaking's entire business, its state of solvency, the establishment and maintenance of technical reserves and corresponding covering assets in accordance with the Insurance Acts and Regulations.

(3) Every insurance undertaking shall have administrative and accounting procedures and internal control mechanisms which in the opinion of the Minister are sound and adequate.

11. (1) Where an insurance undertaking whose head office is situated in the State carries on insurance business through a branch situated in another Member State, the Minister may, after having informed the supervisory authorities of the Member State of the branch, be empowered to carry out on-the-spot verification of the information required to ensure the financial supervision of the insurance undertaking.

(2) The supervisory authorities of the Member State of the branch may participate in such verification where the law of the Member State of the branch so allows.

(3) Where an insurance undertaking whose head office is situated in another Member State carries on insurance business through a branch situated in the State, the Minister may, after having been informed by the supervisory authorities of that Member State, allow the supervisory authorities of the head office Member State to carry out on-the-spot verification of the Information required to ensure the financial supervision of the insurance undertaking.

(4) The Minister may, in order to ensure compliance with this Article, provide for participation in such verification by the appointment of authorised officers under the Insurance Acts and Regulations.

(5) The Minister shall take all appropriate measures in order to be satisfied that an insurance undertaking is complying or has the ability to continue to comply with its obligations under the Insurance Acts and regulations and applicable administrative provisions and, in particular, with the scheme of operations referred to in Article 7 (2) (b) of these Regulations.

(6) The Minister may, in addition, seek such information regarding insurance contracts which are effected through or held by intermediaries and any person concerned shall provide such information to the Minister.

12. (1) For the purposes of Section 13 of the Assurance Companies Act, 1909, and subject to the provisions of section 36 of the Insurance Act, 1989 , and of these Regulations, the following provisions shall have effect:

( a ) An insurance undertaking transacting business in the State, proposing to assign all or part of its portfolio of insurance contracts concluded under the right of establishment or freedom to provide services in the State to an insurance undertaking established in the territory of a Member State, may apply to the Court, by petition, for an Order sanctioning the scheme of assignment.

( b ) An insurance undertaking whose head office is situated in the State may, after prior consultation with the Minister, assign all or part of its portfolio of insurance policies including insurance business carried on either by way of services or establishment, to an insurance undertaking established in the State or in another Member State. The assignment shall not be effected unless the supervisory authorities of that insurance undertaking or, where appropriate, the supervisory authorities of the Member State referred to in Article 26 of the First Directive, certify that the insurance undertaking possesses the necessary solvency margin after taking the assignment into account.

( c ) Where a branch, established in another Member State, whose head office is situated in the State proposes to assign all or part of its portfolio of insurance policies covering insurance business carried on either by way of services or establishment, the Minister shall consult the supervisory authority of the Member State of the branch.

( d ) An insurance undertaking whose head office is situated in the State may not assign all or part of its portfolio of insurance policies to an undertaking, established in another Member State, whose head office is not situated in the territory of a Member State.

(2) ( a ) In the cases referred to in paragraphs (b) and (c) of sub-article (1) of this Article, the assignment shall not be effected without obtaining the agreement of the supervisory authorities of the Member States of the branch and the supervisory authorities of the Member States in which the risks are situated.

( b ) Where the supervisory authorities have not given a response indicating consent to or an opinion on the proposed assignment within three months of receiving notification of the assignment, the assignment shall be deemed to be agreed.

(3) Where the Minister is consulted in accordance with Article 12 (3) or (4) of the Directive, the Minister shall have a period of three months from the date of consultation by the supervisory authorities of the home Member State within which to issue a response to those authorities.

(4) Where the Minister has not given a response indicating consent to or an opinion on the proposed assignment at the expiry of the period referred to in sub-article (3) of this Article, the assignment shall be deemed to be agreed.

(5) An assignment effected in accordance with this Article shall be published subject to the provisions of sub-article (1) of this Article by advertisement once in Iris Oifigiúil and once in each of two daily newspapers published in the State and published in the Member State where the risk is situated in accordance with the law of that Member State.

(6) An assignment effected in accordance with this Article shall be valid against the policyholders, the insured persons and any other person having rights and obligations arising out of the policies assigned.

13. (1) Each insurance undertaking shall establish and maintain:

( a ) technical reserves in respect of all underwriting liabilities assumed by it. The amount of such technical reserves shall be determined in accordance with the rules laid down in Council Directive 91/674/EEC⁽⁴⁾;

( b ) an adequate solvency margin and guarantee fund in respect of its entire business in accordance with Annex II to these Regulations.

(2) All Assets of an insurance undertaking shall be valued in accordance with Annex III to these Regulations for all purposes of the Insurance Acts and Regulations which require a determination of the value of assets to be made.

(3) Notwithstanding sub-articles (1) and (2) of this Article, if more than 90 per cent. of the gross premiums written in any accounting class of insurance business adopted for the purposes of the annual returns is reinsured, then the insurance undertaking will be required to maintain technical reserves representing a minimum of 10 per cent. of gross premium income or 10 per cent. of gross technical reserves relating to such business, whichever is the greater, in that class and to hold assets representing that amount accordingly. However, insurance undertakings may reinsure without limit any individual risk.

⁽⁴⁾O.J. L374, 31.12.1991, page 7.

(4) Technical reserves may, subject to sub-article (3) be established and maintained after the deduction of reinsurance cessions, provided such reinsurance arrangements are acceptable to the Minister. However, any reduction in technical reserves arising from reinsurance shall be restricted to the extent of the insurance risk transferred under the reinsurance arrangements. Where the reinsurance arrangements are not acceptable, the Minister may require that, in respect of the insurance contracts covered by such arrangements, reserves be maintained before the deduction of reinsurance cessions.

(5) Each insurance undertaking shall cover its technical reserves by equivalent assets valued in accordance with the Rules set out in Annex III to these Regulations. The matching Rules set out in Annex IV to these Regulations shall apply to such assets.

(6) An insurance undertaking with its head office in the State shall establish and maintain in the territories of the Member States assets of an amount equivalent to the amount of its technical reserves relating to risks situated within those territories.

(7) An insurance undertaking with its head office outside the territories of the Member States shall establish and maintain in the State assets of an amount equivalent to the amount of its technical reserves in the State.

(8) The documents of title of the assets localised in the State or the territories of the Member States in accordance with sub-articles (6) and (7) of this Article shall be held in those territories (or the State as the case may be) and, in the case of an insurance undertaking having its head office outside the territories of the Member States, the authorised agent shall have full authority to dispose of those assets in the name of the insurance undertaking in accordance with any direction from the Minister.

(9) For the purposes of applying sub-articles (5) and (6) of this Article an asset shall be regarded as being localised in the territories of the Member States (or the State as the case may be) as follows:

( a ) a tangible asset, where it is situated in the territories of the Member States (or the State as the case may be);

( b ) an asset consisting of a claim against a debtor:

(i) in any case where the debtor is an incorporated company, where the head office of that company is situated in the territories of the Member States (or the State as the case may be);

(ii) in any case where the debtor is an unincorporated body of persons, where the body of persons is resident or ordinarily resident in the territories of the Member States (or the State as the case may be);

(iii) in any case where the debtor is an individual, where the individual is resident or ordinarily resident in the territories of the Member States (or the State as the case may be);

( c ) an asset consisting of a listed investment, where it is listed or dealt in a regulated Market in the territories of the Member States (or the Irish Stock Exchange as the case may be);

( d ) an asset consisting of an unlisted investment issued by an incorporated company, where the head office of the company is situated in the territories of the Member States (or the State as the case may be);

( e ) an asset consisting of an approved security where the issuer is established in the territories of the Member States (or the State as the case may be).

(10) For the purposes of applying sub-articles (5) and (6) of this Article a risk shall be deemed to be situated in the territories of the Member States or the State (as the case may be) as follows:

( a ) property consisting of buildings or buildings and their contents, in so far as the contents are covered by the same policy or other instrument of insurance, if the property is situated in the territories of the Member States (or the State as the case may be);

( b ) vehicles, including land vehicles, railway rolling stock, aircraft, sea, river and canal vessels, if the vehicle is registered in the territories of the Member States (or the State as the case may be);

( c ) travel or holiday risks, whatever the class concerned, if the policy or other instrument of insurance is issued in the territories of the Member States (or the State as the case may be);

or, in any other case, if the policyholder is ordinarily resident in the territories of the Member States (or the State as the case may be) or if the policyholder is a legal person and the establishment to which the policy or other instrument of insurance relates to is situated in the territories of the Member States (or the State as the case may be).

(11) An insurance undertaking, whose head office is situated in the State, shall furnish to the Minister annually or at such more frequent intervals as the Minister may request such information in such form and manner as the Minister may require, together with statistical documents which are deemed necessary for supervision purposes and in particular in order to verify the state of solvency of the insurance undertaking with respect to its entire business.

(12) For the purposes of sub-article (11) of this Article, the insurance undertaking shall, in addition, furnish to the Minister annually, or at such more frequent intervals as the Minister may request such information in such form and manner as the Minister may require in order to verify that the technical reserves referred to in this Article are being maintained.

(13) Every insurance undertaking shall keep a register showing the assets representing the technical reserves required by these Regulations in respect of insurance business carried on in the State in each class by the insurance undertaking and shall furnish to the Minister a certificate of the value of these assets on the closing date for which the accounts and balance sheets of the insurance undertaking are furnished to the Minister, such values being those in such accounts and balance sheets.

(14) The register shall be maintained at the principal office of the insurance undertaking in the State and shall contain up-to-date details of the assets representing the reserves in respect of non-life insurance business carried on in the State.

(15) The register shall be open for inspection by an officer or officers of the Minister during normal business hours.

14. (1) Implicit discounting or deduction, including discounting or deduction by way of financial reinsurance, whether resulting from the placing of a present value on a provision for an outstanding claim which is expected to be settled later at a higher figure or otherwise effected, such discounting or deduction is prohibited.

(2) However, explicit discounting or deduction, including by way of financial reinsurance, to take account of investment income is permitted for the purpose of the accounts to be submitted to the Minister in accordance with the European Communities (Non-Life Insurance Accounts) Regulations, 1977, subject to any conditions which the Minister may from time to time deem necessary. In particular, the following conditions shall apply:

( a ) the expected date for the settlement of claims shall be on average at least four years after the accounting date;

( b ) the discounting or deduction shall be effected on a recognised prudential basis; any change in that basis shall be notified, in advance, to the Minister;

( c ) when calculating the total cost of settling claims, an undertaking shall take account of all factors that could cause increases in that cost;

( d ) an undertaking shall have adequate data at its disposal to construct a reliable model of the rate of claims settlements;

( e ) the rate of interest used for the calculation of present value shall not exceed a prudent estimate of the investment income from assets invested as a provision for claims during the period necessary for the payment of such claims. Moreover, it shall not exceed either of the following:

-- a rate derived from the investment income from such assets over the preceding five years;

-- a rate derived from the investment income from such assets during the year preceding the balance sheet date.

(3) When discounting or effecting deduction, including such discounting or deduction by way of financial reinsurance, an undertaking shall, in notes accompanying the accounts to be submitted to the Minister in accordance with the European Communities (Non-Life Insurance Accounts) Regulations, 1977, disclose the total amount of provisions before discounting or deduction, the categories of claims which are discounted or from which deductions have been made and, for each category of claims, the methods used, in particular the rates used for the estimates referred to in sub-article (2), paragraphs (c) and (e), and the criteria adopted for estimating the period that will elapse before the claims are settled.

(4) The permission of explicit discounting or deduction as specified above shall at all times be at the Minister's discretion.

15. (1) Prior to entering into any transaction of a material nature with a related company or companies, including in particular, the provision of loans to and acceptance of loans from a related company or companies, an insurance undertaking shall submit to the Minister a draft of any contract or agreement which is to be entered into by the insurance undertaking in relation to the transaction.

(2) In this Article--

"related company" has the meaning assigned to it in accordance with Annex III to these Regulations.

16. (1) Where an insurance undertaking whose head office is situated in the State fails to comply with Article 13 of these Regulations the Minister may, after notifying the supervisory authorities of the Member States in which the risks underwritten by the insurance undertaking are situated, apply to the Court for an order, which the Court is empowered to make, prohibiting the free disposal of the insurance undertaking's assets.

(2) Where the solvency margin of an insurance undertaking whose head office is situated in the State falls below the minimum amount required by Articles 3 and 4 of Part A of Annex II to these Regulations the Minister shall require that a plan be submitted by the insurance undertaking for the Minister's approval for the restoration of a sound financial position.

(3) In a case referred to in sub-article (2) of this Article, where it appears to the Minister that the financial situation of the insurance undertaking will deteriorate further, the Minister may apply to the Court for an order, which the Court is empowered to make, restricting or prohibiting the free disposal of the insurance undertaking's assets. In that case, the Minister shall notify the supervisory authorities of the Member States where the insurance undertaking carries on insurance business of this fact and of any order of the Court. The Minister may also request the supervisory authorities of those Member States to take the same measures pursuant to this sub-article.

(4) Where the solvency margin of an insurance undertaking whose head office is situated in the State falls below the guarantee fund referred to in Part B of Annex II to these Regulations, the Minister shall require the insurance undertaking to submit for approval a short-term finance scheme. The Minister may also apply to the Court for an order, which the Court is empowered to make, restricting or prohibiting the free disposal of the assets of the insurance undertaking. In that case, the Minister shall notify the supervisory authorities of the Member States where the insurance undertaking carries on insurance business of this fact and of any order of the Court. The Minister may also request the supervisory authorities of those Member States to take the same measures pursuant to this sub-article.

(5) The Minister may apply to the Court for such further orders as may be necessary in order to safeguard the interests of insured persons, in the cases referred to in sub-articles (1) to (4) of this Article.

(6) Where the head office supervisory authority of an insurance undertaking situated in another Member State requests the Minister to take measures related to the restriction or prohibition of the free disposal of the assets located in the State of the insurance undertaking, the Minister may apply to the Court for an order, which the Court is empowered to make, restricting or prohibiting the free disposal of the assets located in the State of the insurance undertaking.

(7) The Court may make such order for the purposes of this Article as the Court may think fit.

17. An authorisation held by an undertaking whose head office is situated in the State may be revoked by the Minister if the Minister is satisfied that the holder--

( a ) has not used the authorisation for the last twelve months, has expressly renounced the authorisation or has ceased to carry on business covered by the authorisation for more than six months;

( b ) no longer fulfils the conditions required by the Insurance Acts and Regulations for the granting of an authorisation;

( c ) has been unable, within the time allowed, to take the measures contained in the restoration plan or finance scheme referred to in Article 16 of these Regulations, or

( d ) fails seriously in its obligations under the Insurance Acts and Regulations.

18. Where an authorisation is revoked under Article 17 of these Regulations, the following provisions shall apply:--

( a ) the Minister shall notify the revocation to the supervisory authorities of the other member States in which the undertaking carries on business;

( b ) the Minister shall, in conjunction with the supervisory authorities of the other Member States in which the undertaking carries on business, restrict the free disposal by the undertaking of its assets in accordance with Article 16 (1), 16 (3) and 16 (4) of these Regulations;

( c ) the Minister may take further measures to safeguard the interests of persons insured by the insurance undertaking and may for this purpose apply to the Court for such order as to the Court may seem fit.

19. Any decision to revoke an authorisation under Article 18 shall be supported by precise reasons and notified to the insurance undertaking in question.

PART 3 Qualifying Holdings, Amendment to European Communities (Non-Life Insurance) (Amendment) Regulations, 1991, Obligation of Professional Secrecy/Exchanges of Confidential Information

20. (1) Notwithstanding the provisions of the Companies Acts, 1963 to 1990, any person who proposes to acquire either directly or indirectly, a qualifying holding in an insurance undertaking, shall first notify the Minister indicating the size of the proposed qualifying holding. Such person shall, in addition, be under an obligation to notify the Minister where it is proposed to increase such qualifying holding so that the percentage levels of the voting rights or capital which that person holds, reaches or exceeds any of the percentage levels referred to in sub-article (4) of this Article so that the insurance undertaking would become that person's subsidiary.

(2) The Minister shall have a period of three months from the date of notification referred to in sub-article (1) of this Article within which to oppose the proposed acquisition where, in view of the necessity to ensure sound and prudent management of the insurance undertaking in question, the Minister is not satisfied as to the suitability of the person referred to in sub-article (1) of this Article.

(3) Any person who proposes to dispose, either directly or indirectly, of a qualifying holding in an insurance undertaking, shall first notify the Minister indicating the size of the proposed qualifying holding. Such person shall, in addition, be under an obligation to notify the Minister if it is proposed to decrease such qualifying holding so that the percentage levels of the voting rights or capital which that person holds falls below any of the percentage levels referred to in sub-article (4) of this Article so that the insurance undertaking would cease to be that person's subsidiary.

(4) The percentage levels referred to in sub-articles (1) and (3) are 20 per cent, 33 per cent or 50 per cent.

(5) An insurance undertaking which becomes aware of any acquisitions or disposals of holdings in its capital so that such holdings exceed or fall below any of the percentage levels referred to in sub-article (4) of this Article shall inform the Minister of such acquisitions or disposals. In addition, the insurance undertaking shall, at such times as may be specified by the Minister and at least once a year, notify the Minister of the names of shareholders or members possessing qualifying holdings and the size of such holdings by reference, for example, to information received at annual general meetings of shareholders or members or as a result of compliance with the Companies Acts, 1963 to 1990. The Minister may, at any time, require information concerning all shareholders irrespective of the size of their holding.

(6) If the Minister has reason to believe that the control exercised by the person or persons referred to in sub-article (1) of this Article is likely to operate against the prudent and sound management of an insurance undertaking, the Minister may apply to the Court for such order, for the purposes of putting an end to that situation, by way of injunction, suspension of the exercise of the voting right attaching to the shares held by the shareholders or members in question or otherwise as the Court shall think fit.

(7) The Court, acting under sub-article (6) of this Article, may make such order in relation to the matter as may appear to be necessary.

(8) Sub-article (6) of this Article shall also apply to persons who fail to comply with the notification requirements referred to in sub-article (1) of this Article. If a holding is acquired contrary to the provisions of this Article the Court may, on the application of the Minister, in addition to any other order which it may make, order the suspension of the corresponding voting rights or the nullity of votes cast.

(9) In this Article--

"control" means the relationship between a parent undertaking and a subsidiary, as defined in Article 1 of Council Directive 83/349/EEC⁽⁵⁾, or a similar relationship between any natural or legal person and an undertaking;

"qualifying holding" has the meaning assigned to it by Article 9 (4) of these Regulations.

"parent undertaking" means a parent undertaking as defined in Articles 1 and 2 of Council Directive 83/349/EEC;

"subsidiary" means a subsidiary undertaking as defined in Articles 1 and 2 of Council Directive 83/349/EEC; any subsidiary of a subsidiary undertaking shall also be regarded as a subsidiary of the undertaking which is those undertakings' ultimate parent undertaking;

21. Article 14 of the Regulations of 1976 as amended by Article 4 of the European Communities (Non-Life Insurance) (Amendment) Regulations, 1991 ( S.I. No. 5 of 1991 ), is hereby amended by the substitution in sub-article (8) of the following paragraph for paragraph (a):

"(8) ( a ) Every insurance undertaking which is underwriting risks included in Class 14 in Part A of the Annex (referred to subsequently in these Regulations as 'credit insurance') shall, subject to paragraph (d) of this sub-article, set up an equalisation reserve for the purpose of offsetting any technical deficit or above-average claims ratio arising in that class for a financial year."

22. (1) Every person to whom this Article is applicable, including auditors and other experts working or who have worked for or acting or who have acted on behalf of the Minister, shall be bound by the obligation of professional secrecy.

(2) The obligation of professional secrecy means that, subject to the succeeding sub-article of this Article, no confidential information received in the performance of duties may be divulged to any person or authority whatsoever, except in such form as will ensure that individual insurance undertakings cannot be identified, except by order of a Court in criminal proceedings. Nevertheless, where an insurance undertaking has been declared bankrupt or is being compulsorily wound up, confidential information which does not concern third parties involved in attempts to rescue the undertaking may be divulged where ordered by a court in civil or commercial proceedings.

⁽⁵⁾O.J. L193, 18.7.1983, page 1.

(3) Sub-articles (1) and (2) of this Article shall not prevent the competent authorities of different Member States from exchanging information in accordance with the Directives applicable to insurance undertakings. Such information when so exchanged shall be subject to the conditions of professional secrecy laid down in these sub-articles.

(4) The Minister may conclude co-operation agreements, providing for exchanges of information, with the competent authorities of third countries only if the information disclosed is subject to guarantees of professional secrecy at least equivalent to those provided for in this Article.

(5) Where the Minister receives confidential information in accordance with sub-articles (1), (2) and (3) of this Article the Minister may use it only--

( a ) to check that the conditions governing the taking up of the business of insurance are met and to facilitate monitoring of the conduct of such business, especially with regard to the monitoring of technical reserves, solvency margins, administrative and accounting procedures and internal control mechanisms,

( b ) to impose sanctions, or

( c ) in court proceedings initiated under Article 46 of these Regulations or under special provisions, provided for in Council Directives adopted in the field of insurance undertakings.

(6) Sub-articles (1), (2) and (5) of this Article shall not preclude the exchange of information within the State, where there are two or more competent authorities in the State, or between Member States or between competent authorities and--

( a ) authorities responsible for the official supervision of credit institutions and other financial organisations and the authorities responsible for the supervision of financial markets,

( b ) bodies involved in the liquidation and bankruptcy of insurance undertakings and in other similar procedures, and

( c ) persons responsible for carrying out statutory audits of the accounts of insurance undertakings and other financial institutions,

in the discharge of their supervisory functions, or the disclosure to bodies which administer compulsory winding-up proceedings or guarantee funds of information necessary to the performance of their duties. The information received by those authorities, bodies and persons shall be subject to the conditions of professional secrecy laid down in sub-articles (1) and (2).

(7) In addition, notwithstanding sub-articles (1), (2) and (5) of this Article, the Minister may in accordance with the law of the State authorise the disclosure of certain information to other authorities responsible for the supervision of credit institutions, financial institutions, investment services and insurance companies and to inspectors acting on behalf of those authorities.

(8) The disclosures may be made only where necessary for reasons of prudential control.

(9) The information received under sub-articles (3) and (6) of this Article and that obtained by means of on-the-spot verification in accordance with Article 11 of these Regulations may never be disclosed in the cases referred to in this sub-article except with the express consent of the competent authorities which disclosed the information or of the competent authorities of the Member State in which on-the-spot verification was carried out.

PART 4 Choice of Law, General Good Requirements, Notification of Documents, Compulsory Insurance, Policyholder Disclosure

23. (1) The law applicable to a contract of insurance which covers risks situated within the State or within other Member States shall be determined in accordance with the following provisions:

( a ) Where the habitual residence or central administration of a policyholder is within the territory of the Member State where the risk is situated, the law applicable to the insurance contract shall be the law of that Member State; however where the law of that Member State so allows, the parties may choose the law of another country.

( b ) Where the habitual residence or central administration of a policyholder is not in the Member State where the risk is situated, the parties to the insurance contract may choose to apply either the law of the Member State in which the risk is situated or the law of the country of the policyholder's habitual residence or central administration.

( c ) Where a policyholder pursues a commercial, industrial or professional activity and where the contract covers two or more risks relating to these activities and situated in different Member States, the freedom of choice of the law applicable to the contract extends to the laws of those Member States and of the country of the policyholder's habitual residence or central administration.

( d ) Notwithstanding paragraphs (b) and (c) of this sub-article, where the Member States referred to in those paragraphs grant greater freedom of choice of the law applicable to the contract, the parties may take advantage of this freedom.

( e ) Notwithstanding paragraphs (a), (b) and (c) of this sub-article, where the risks covered by the contract are limited to events occurring in a Member State other than the Member State where the risk is situated the parties may always choose the law of the former State.

( f ) In the case of large risks referred to in Article 5 of the Regulations of 1991, the parties to the contract may choose the law of any country.

( g ) Notwithstanding paragraphs (a) to (f) of this sub-article, where all the other elements relevant to the situation at the time of the choice are connected with one Member State only, nothing shall prejudice the application of the mandatory rules of the law of that Member State, from which the law of that Member State allows no derogation by means of a contract.

( h ) (i) The choice of law referred to in the preceding paragraphs of this Article must be expressed or demonstrated with reasonable certainty by the terms of the contract or the circumstances of the case.

(ii) If that is not so, or if no choice has been made, the contract shall be governed by the law of the country, from amongst those considered in the relevant subparagraphs of this Article, with which it is most closely connected.

(iii) Nevertheless, a severable part of the contract which has a closer connection with another country, from amongst those considered in the relevant subparagraphs of this sub-article may by way of exception be governed by the law of that other country. The contract shall be rebuttably presumed to be most closely connected with the Member State in which the risk is situated.

(iv) Where a Member State includes several territorial units, each of which has its own rules of law concerning contractual obligations, each unit shall be considered as a country for the purposes of identifying the applicable law.

(2) ( a ) Nothing in this article shall restrict the application of the rules of the law of the forum in a situation where they are mandatory irrespective of the law otherwise applicable to the contract.

( b ) Where the law of a Member State so stipulates, the mandatory rules of the law of the Member State in which the risk is situated or of the Member State imposing the obligation to take out insurance may be applied if and insofar as, under the laws of those States, those rules must be applied whatever the law applicable to the contract.

( c ) Where the contract covers risks situated in more than one Member State, the contract is considered for the purposes of applying this paragraph as constituting several contracts each relating to only one Member State.

(3) Subject to the preceding sub-paragraphs of this Article, the laws of the State relating to the general rules of private international law shall be applied to the insurance contracts covered by these Regulations.

24. In conformity with the general good in accordance with the law of the European Communities, an insurance undertaking shall, in particular, comply with the following criteria--

( a ) the provisions of the Health Insurance Act, 1994 , applicable to the carrying on of health insurance business in the State,

( b ) the provisions of the Road Traffic Act, 1961 , and Regulations under the European Communities Act, 1972 , relating to the insurance of mechanically propelled vehicles,

( c ) the provisions of the Consumer Information Act, 1978 , applicable to insurance contracts and the marketing and selling of insurance products,

( d ) the provisions of the Sale of Goods and Supply of Service Act, 1980, applicable to insurance contracts and the marketing and selling of insurance products,

( e ) the provisions of the Motor Insurance Advisory Board (Establishment) Order, 1984, relating to the statistical requirements of the Board,

( f ) provisions related to the supervision and regulation of insurance intermediaries under the Insurance Acts and Regulations,

( g ) provisions contained in consumer credit legislation adopted by the State,

( h ) any other requirements which the Minister may prescribe by regulations for the general good, and the Minister in so prescribing may have regard to provisions in Codes of Conduct and Practice related to the marketing and selling of insurance and to the content of insurance proposals.

25. (1) The Minister shall not make provisions requiring the prior approval or systematic notification of general and special policy conditions, scales of premiums, forms and other printed documents which an insurance undertaking intends to use in its dealing with policyholders. The Minister may, however, require notification of the general and special policy conditions and other documents considered necessary for the purposes of verifying compliance with laws, Regulations and administrative provisions concerning insurance contracts. A notification requirement shall not constitute a prior condition for an insurance undertaking to carry on business in the State.

(2) The Minister may retain or introduce prior notification or approval of proposed increases in premium rates where such notification or approval is operated as part of a general price control system.

26. (1) ( a ) Every compulsory contract of insurance shall be in accordance with the specific provisions relating to that insurance laid down in accordance with the laws of the State.

( b ) In the case of conflict between the law of the Member State in which the risk is situated and the law of the Member State which imposes the obligation to take out insurance the law of the latter shall prevail.

( c ) Notwithstanding Article 23 of these Regulations, the law applicable to compulsory contracts of insurance shall be the law of the Member State which imposes the obligation to take out insurance.

( d ) Subject to sub-article (3) of this Article, Article 23 (2) (c) of these Regulations shall apply where the insurance contract provides cover in several Member States of which at least one imposes an obligation to take out insurance.

( e ) Where an undertaking is carrying on compulsory insurance it shall notify the relevant authorities of any cessation of cover and such cessation may be invoked against injured third parties in the circumstances laid down by the law of the State.

( f ) The supervisory authorities shall accept as proof that the insurance obligation has been fulfilled a certificate the content of which is in conformity with the specific provisions relating to that insurance in accordance with the law of the State.

(2) Notwithstanding anything to the contrary in the Insurance Acts and Regulations, the Minister shall be informed of the general and special conditions of any insurance contract related to compulsory insurance before any such contract of insurance is issued.

27. (1) An insurance undertaking or, as the case may be, an insurance intermediary with whom a person seeking insurance deals directly, shall, before any insurance contract is concluded, notify persons seeking insurance and in writing, where requested, of the following, as appropriate--

( a ) the law applicable to the contract where the parties do not have a choice of law, or

( b ) that the parties to the contract are free to choose the applicable law and in this case the law which the insurance undertaking proposes to choose;

and shall also so notify such persons of the arrangements for handling policyholders' complaints concerning insurance contracts including the existence of a complaints body, without prejudice to a person's right of recourse to legal proceedings.

(2) Sub-article (1) of this Article shall apply only in the case of natural persons.

(3) The rules for implementing the provisions of sub-article (1) of this Article shall be determined in accordance with the law of the Member State in which the risk is situated.

(4) Where the risk is situated in the State, the insurance contract documents shall, subject to Section 108 of the Insurance Act, 1936 , which provides for the issue of documents in the Irish language, be provided by the insurance undertaking in the English language.

(5) Where an insurance undertaking is carrying on insurance business by way of services or by way of establishment, persons seeking insurance shall, before any insurance contract is concluded, be notified of the Member State in which the head office or, where appropriate, the branch with which the insurance contract is to be concluded is situated.

(6) Any documents issued to the policyholder shall contain the information referred to in sub-article (5) of this Article.

(7) The provisions of sub-articles (5) and (6) of this Article shall not apply in the case of large risks within the meaning of Article 5 of the Regulations of 1991.

(8) The contract of insurance or other document granting insurance cover together with the insurance proposal form where it is binding upon the policyholder shall specify the address of the head office, or, where appropriate, of the branch of the insurance undertaking granting cover.

(9) In the case of the coverage of risk, other than carrier's liability, classified under class 10 of Annex I to these Regulations, an insurance undertaking referred to in Article 34 of these Regulations shall specify in the documents referred to in sub-article (8) of this Article the name and address of the representative of the insurance undertaking referred to in Article 34 (7) of these Regulations.

PART 5. Right of Establishment, Freedom to Provide Services, Motor Insurance Business, General Conditions, Prevention of Irregularities

28. (1) An insurance undertaking with a head office in the State proposing to establish a branch in another Member State shall notify the Minister of its proposal.

(2) The notification referred to in sub-article (1) of this Article shall provide the following information--

( a ) the Member State within the territory of which the insurance undertaking proposes to establish the branch;

( b ) a scheme of operations setting out, inter alia, the types of business envisaged and the structural organisation of the branch;

( c ) the address in the Member State of the branch from which documents may be obtained and to which they may be delivered, being the address to which all communications to the authorised agent of the branch are sent;

( d ) the name of the authorised agent of the branch being a person possessing sufficient powers to bind the insurance undertaking in relation to third parties and to represent it in relations with the authorities and Courts of the Member State of the branch.

(3) ( a ) An insurance undertaking with a head office in the State which intends to carry on insurance business in respect of the coverage of a risk classified under class 10 of Annex I to these Regulations, other than carrier's liability, by way of a branch in another member State shall submit a declaration to the Minister attesting that the insurance undertaking has become a member of the national bureau and the national guarantee fund of the Member State of the branch.

( b ) In this sub-article--

"national bureau" means a national insurers' bureau as defined in Article 1 (3) of Council Directive 72/166/EEC⁽⁶⁾;

"national guarantee fund" means the body referred to in Article 1 (4) of Council Directive 84/5/EEC⁽⁷⁾.

⁽⁶⁾O.J. L103, 2.5.1972, page 1.

⁽⁷⁾O.J. L8, 11.1.1984, page 17.

(4) The Minister shall, within three months of receipt of all the information referred to in sub-articles (2) and (3) of the Article, furnish such information to the supervisory authority of the member State of the branch and the Minister shall notify the insurance undertaking concerned accordingly.

(5) The Minister shall also furnish a certificate attesting if such be the case that the insurance undertaking possesses the minimum solvency margin calculated in accordance with Annex II to these Regulations.

(6) Where the Minister has reason--

( a ) to believe that the administrative structure of the insurance undertaking, or the financial situation of the insurance undertaking is inadequate, or

( b ) to doubt the good repute or professional qualifications or experience of the directors or manager or the authorised agent, taking into account the forecast business plan,

the Minister shall not be required to furnish the information referred to in sub-articles (2) and (3) of this Article to the supervisory authority of the Member State of the branch.

(7) Where the Minister decides to refuse to furnish the information referred to in sub-articles (2) and (3) of this Article to the supervisory authority of the Member State of the branch the Minister shall notify the insurance undertaking of the grounds for such refusal within three months of receipt of all the information in question.

(8) An insurance undertaking may appeal against a refusal or failure to furnish the information in question to the Court.

29. Where an insurance undertaking established in the State intends to change the information given in respect of Article 28 (2) (b), (c) or (d) of these Regulations, it shall furnish a notification of any such change to the Minister and to the supervisory authorities of the Member State of the branch at least one month before making the change in order, having regard to the proposed changes, for the Minister to exercise the Minister's functions in accordance with sub-articles (4), (6), (7) and (8) of Article 28 of these Regulations and for the supervisory authorities of the Member State of the branch to inform the Minister of the conditions under which, in the interest of the general good as applied in that Member State, having regard to the proposed changes, the insurance business may be carried on in that State.

30. Where an insurance undertaking not established in the State intends to carry on insurance business by way of a branch in the State, and where the supervisory authorities of that insurance undertaking have furnished to the Minister the appropriate information referred to in sub-article (2) of Article 28 of these Regulations, together with a declaration (where appropriate) attesting that the insurance undertaking has become a member of the Motor Insurers' Bureau of Ireland and the guarantee fund referred to in Article 1 (4) of Council Directive 84/5/EEC (in this Part referred to as "the guarantee fund") and a certificate attesting that the insurance undertaking possesses the minimum solvency margin calculated in accordance with Annex II to these Regulations, the Minister shall, within two months of receiving the information referred to in this Article and before the branch commences business, notify the supervisory authority of the home Member State of the conditions under which, in the interest of the general good, the insurance business may be carried on in the State.

31. Where an insurance undertaking with a branch established in the State intends to change the information given in respect of Article 28 (2) (b), (c) or (d) of these Regulations, it shall furnish a notification of any such change to the Minister at least one month before making the change in order that, having regard to the proposed changes, the requirements of Article 30 of these Regulations may be fulfilled.

32. (1) An insurance undertaking established in the State which intends to carry on business by way of services for the first time in one or more other Member States shall send a notification to the Minister indicating the nature of the risks which the insurance undertaking proposes to cover.

(2) The Minister shall, within one month of the notification provided for in sub-article (1) of this Article, furnish the following information to the supervisory authorities of the Member State or Member States within the territories of which the insurance undertaking intends to carry on insurance business by way of services:

( a ) a certificate if such be the case attesting that the insurance undertaking possesses the minimum solvency margin in accordance with Annex II to these Regulations;

( b ) the classes of insurance which the insurance undertaking has been authorised to offer, and

( c ) the nature of the risks which the insurance undertaking proposes to cover in the Member State or Member States within the territories of which the insurance undertaking intends to carry on insurance business by way of services.

(3) The Minister shall, at the same time, notify the insurance undertaking concerned accordingly.

(4) The insurance undertaking may commence carrying on insurance business by way of services from the date certified by the Minister of the notification of the information referred to in sub-article (2) of this Article.

(5) Where the Minister refuses to furnish the information referred to in sub-article (2) of this Article within the period laid down, the Minister shall notify the insurance undertaking of the grounds for the refusal within the same period.

33. (1) An insurance undertaking may carry on insurance business by way of services into the State on or after the date on which the supervisory authority of its home Member State certify that they have communicated to the Minister the appropriate information referred to in paragraphs (a), (b) and (c) of sub-article (2) of Article 32 of these Regulations.

(2) Where an insurance undertaking intends to carry on insurance business by way of services into the State, the Minister shall, in order to give effect to the provisions contained in Article 24 of these Regulations, notify the supervisory authority of the home Member State of the conditions under which, in the interest of the general good, the insurance business may be carried on in the State.

34. (1) The provisions of this Article shall apply to an insurance undertaking which intends to provide services into the State in respect of the coverage of a risk classified under class 10 of Annex I to these Regulations, other than carrier's liability.

(2) The insurance undertaking shall become a member of and participate in the financing of the Motor Insurers' Bureau of Ireland and of the guarantee fund.

(3) The insurance undertaking shall submit a declaration to the Minister attesting that the insurance undertaking has become a member of the Motor Insurers' Bureau of Ireland and of the guarantee fund.

(4) The insurance undertaking shall not be required to make any payment or contribution to the Motor Insurers' Bureau of Ireland or the guarantee fund other than by reference to its gross premium income in respect of the coverage of risks in class 10 of Annex I to these Regulations, other than carrier's liability, underwritten in the State by way of services, or in respect of the number of risks underwritten in the State by way of services in that Class.

(5) The insurance undertaking shall become a party to the Declined Cases Agreement or comply with rules concerning the cover of aggravated risks, insofar as they apply to insurance undertakings established in the State.

(6) The insurance undertaking shall ensure that persons pursuing claims arising out of events occurring in the State are not placed in a less favourable situation as a result of the fact that the undertaking is covering a risk, other than carrier's liability, in class 10 of Annex I to these Regulations by way of the provision of services rather than through an establishment situated in the State.

(7) For this purpose, the insurance undertaking shall appoint a representative resident or established in the State who shall collect all necessary information in relation to third party motor claims and shall possess sufficient powers to represent the insurance undertaking in relation to persons suffering injury or damage who could pursue claims, including the acceptance of service on behalf of the insurance undertaking of proceedings in respect of such claims and the payment of such claims. The representative shall represent the insurance undertaking before the Courts and authorities of the State in relation to those claims.

(8) The insurance undertaking shall notify the Minister of the name and address of the representative referred to in sub-article (7) of this Article.

(9) The representative shall also represent the insurance undertaking in relation to confirming the existence and validity, or otherwise, of motor vehicle liability insurance policies before the competent authorities of the State.

(10) The representative shall not be required to undertake activities on behalf of the insurance undertaking which appointed the representative other than those set out in sub-articles (8) and (9) of this Article.

(11) The representative shall not carry on the business of direct insurance in the State on behalf of the said insurance undertaking.

(12) The appointment of the representative shall not, in itself, constitute the establishment of a branch.

(13) The representative shall not constitute an establishment as defined in Article 2 (c) of the Second Directive.

35. Where an insurance undertaking intends to amend the information provided in accordance with sub-article (1) of Article 32 of these Regulations, it shall be subject to the appropriate procedures laid down in accordance with sub-articles (1), (2), (3), (4), and (5) of Article 32 of these Regulations. The insurance undertaking shall also be subject to the procedures laid down in accordance with Articles 33 and 34 of these Regulations.

36. (1) The Minister may require the information required to be furnished in respect of an insurance undertaking which carries on business in the State by way of a branch or by way of provision of services to be supplied in the Irish and English language.

(2) The Minister shall not make provisions requiring the prior approval or systematic notification of general and special policy conditions, scales of premiums or forms and other printed documents which an insurance undertaking with a branch established in the State or providing services into the State intends to use in its dealings with policyholders.

(3) The Minister may require the non-systematic notification of the general and special policy conditions and other documents necessary for the purposes of verifying compliance with the law (including relevant provisions in these Regulations) concerning insurance contracts. A notification shall not constitute a prior condition for an insurance undertaking to carry on insurance business by way of branch establishment or by way of services into the State.

37. (1) Where an insurance undertaking is carrying on insurance business by way of branch establishment or by way of services into the State, it shall submit to the Minister, on request, all documents which the Minister considers necessary for the purposes of implementing this Article insofar as an insurance undertaking with a head office established in the State is also required to do so.

(2) Where an insurance undertaking carrying on insurance business by way of branch establishment or by way of services into the State does not comply with the Insurance Acts and Regulations, the Minister shall by direction require the insurance undertaking to do so.

(3) Where an insurance undertaking fails to comply with a direction referred to in sub-article (2) of this Article, the Minister shall inform the supervisory authorities of the home Member State so that they may take all appropriate measures in accordance with Article 40 (4) of the Directive.

(4) If, after invoking the procedures of sub-article (3) of this Article, the measures taken against the insurance undertaking carrying on insurance business by way of services into the State or by way of branch establishment are, in the opinion of the Minister, not adequate and the insurance undertaking continues to contravene the Insurance Acts and Regulations, the Minister may, after informing the supervisory authorities of the home Member State, apply to the Court for such order as to the Court may seem fit, in order to prevent further infringements of the Insurance Acts and Regulations, including in so far as is necessary and in accordance with the Insurance Acts and Regulations, the prevention of that undertaking from continuing to conclude new insurance contracts within the State.

(5) Nothing in this Article shall affect any other powers of the State to proceed against insurance undertakings transacting business in the State for failing to comply with the laws of the State, including the possibility of preventing insurance undertakings from continuing to conclude new insurance contracts within the State.

(6) Any order of the Court under sub-article (4) or measure adopted by the Minister pursuant to this Article shall be communicated to the insurance undertaking and shall be supported by the precise grounds for the adoption of the measure.

(7) Where the supervisory authorities of another Member State request the Minister to take appropriate measures in accordance with Article 40 (4) of the Directive in relation to failure to comply with the laws of that State by an insurance undertaking established in the State and which is carrying on insurance business by way of services into the former Member State or by way of a branch establishment, the Minister may apply to the Court for an order enforcing such compliance and shall communicate accordingly to the supervisory authorities of the Member State of provision of services or the Member State of the branch.

PART 6 Advertising, Winding-up, Statistical Requirements

38. An insurance undertaking may advertise its services, through all available means of communication in the State, subject to any rules governing the form and content of such advertising adopted in the interest of the general good.

39. In the event of an insurance undertaking being wound up, commitments arising from contracts underwritten in the course of carrying on insurance business by way of services or through a branch establishment shall be met in the same way as those arising under that insurance undertaking's other insurance contracts, without distinction of nationality, as far as the insured and the beneficiaries are concerned.

40. (1) An insurance undertaking with its head office in the State shall inform the Minister separately in respect of transactions effected by it by way of establishment and those effected by it by way of services of the amount of the premiums, claims and commissions, without deduction of reinsurance and shall so inform the Minister in respect of a Member State where such transactions are effected and in respect of each group of classes specified in sub-article (3) of this Article and also, with regard to the risk, other than carrier's liability, classified under class 10 of Annex I, of the frequency and the average cost of claims without deduction of reinsurance.

(2) The groups of classes referred to in sub-article (1) of this Article are as follows:

(i) accident and sickness (1 and 2),

(ii) motor insurance (3, 7 and 10, the figures relating to class 10, other than carrier's liability, being given separately),

(iii) fire and other damage to property (8 and 9),

(iv) aviation, marine and transport (4, 5, 6, 7, 11 and 12),

(v) general liability (13),

(vi) credit and suretyship (14 and 15),

(vii) other classes (16, 17 and 18).

(3) The Minister shall forward the information provided in accordance with sub-articles (1) and (2) of this Article within a reasonable period of time and in aggregate form to the supervisory authorities of each of the Member States which so requests.

41. (1) The Minister may request the supervisory authority of the home Member State of an insurance undertaking which carries on insurance in the State by way of services or by way of branch establishment, to submit the appropriate information referred to in sub-article (1) of Article 40 and other appropriate information in order that the statistical needs of the State may be fulfilled.

(2) The Minister may, in addition, in the interest of the general good, require an insurance undertaking which has its head office in the territory of another Member State and is transacting insurance business in the State to supply such statistical information in such form and manner as the Minister may specify from time to time.

PART 7 Guarantee Schemes, Fiscal Arrangements, Acquired Rights, Right of Appeal

42. Insurance undertakings carrying on business by way of services into the State or by way of branch establishment in the State, including, if necessary, those insurance undertakings referred to in sub-article (4) of Article 6 of these Regulations shall join and participate in the Insurance Compensation Fund established in accordance with the Insurance Act, 1964 , and any other scheme established under the Insurance Acts and Regulations designed to guarantee the payment of insurance claims to insured persons and injured third parties on the same terms as insurance undertakings with head offices in the State.

43. (1) Every insurance contract for which the risk is situated in the State shall be subject to the indirect taxes and parafiscal charges on insurance premiums payable under the laws of the State.

(2) Notwithstanding anything to the contrary in the Insurance Acts and Regulations and for the purposes of this Article, the moveable property contained in a building situated in the territory of the State, except for goods in commercial transit, shall be a risk situated in the State, even though the building and its contents are not covered by the same insurance policy.

(3) The law applicable to the contract under the provisions of Article 23 of these Regulations shall not affect the fiscal arrangements applicable.

44. An insurance undertaking which has commenced business by way of a branch establishment in the State before the coming into operation of provisions adopted in implementing these Regulations shall be presumed to have been subject to the procedure laid down in accordance with Article 10 (1) to (5) of the First Directive.

45. A branch referred to in Article 44 of these Regulations shall be subject from the date of entry into force of provisions adopted in implementing these Regulations to the relevant provisions laid down in accordance with these Regulations.

46. Any decision, direction, requirement or request given or made by the Minister under these Regulations may, within twenty-one days from the day on which it was notified to the person concerned be appealed to the Court.

PART 8 Provisions Related to Branches of Third Country Insurance Undertakings, Rules Applicable to the Assignment of Third Country Branch Policies, Rules Applicable to Health Insurance, Section 93 and 94 of the Insurance Act, 1936 , Penalties, Fees

47. Articles 47 to 56 of these Regulations apply to non-life insurance undertakings whose head office is not in a Member State ("a third country undertaking").

48. (1) An application for an authorisation may be made to the Minister by a third country undertaking which proposes to establish a branch in the State.

(2) A branch of a third country undertaking authorised to undertake insurance in the State may apply to extend its business to classes of insurance for which it is not authorised or to part of such classes.

49. An insurance undertaking having its head office situated outside the territories of the Member States applying for an authorisation to establish a branch in the State shall fulfil at least the following conditions:

( a ) it is entitled to undertake insurance business under the law of the State where its head office is situated;

( b ) it establishes a branch in the State;

( c ) it undertakes to maintain at the place of management of the branch in the State accounts specific to the business which it undertakes in the State and to keep at that place all the records relating to the business transacted in the State;

( d ) it designates an authorised agent for such purposes as the Minister may require and is approved by the Minister;

( e ) it possesses in the State assets of an amount equal to at least one-half of the minimum amount required by Article (3) of Part B of Annex II to these Regulations in respect of an undertaking to which that Article applies and deposits with the Court one-fourth of that minimum amount as security;

(f) it undertakes to keep a margin of solvency in accordance with Annex II to these Regulations;

( g ) it submits a scheme of operations in accordance, insofar as is applicable, with Article 7 (2) (b) of these Regulations as if it were an insurance undertaking to which that Article applies.

50. An insurance undertaking authorised under Article 49 of these Regulations shall establish and maintain technical reserves adequate to cover the underwriting liabilities assumed in the State in accordance with Articles 13 and 21 of these Regulations.

51. (1) Subject to sub article (2) of this Article, Annex II and Article 16 (2) of these Regulations shall apply to an undertaking to which this Article applies.

(2) In calculating a solvency margin for the purposes of this Article, account shall be taken only of the premiums or contributions and claims pertaining to the business effected by the insurance undertaking in the State or in another Member State, as appropriate.

(3) The assets representing the solvency margin shall be retained in the State up to the amount of the guarantee fund required by Part B of Annex II to these Regulations and any excess shall be retained either in the State or in another Member State.

52. (1) Subject to sub-article (2) of this Article, Part B of Annex II to these Regulations shall apply to an insurance undertaking to which this Article applies.

(2) The amount of a minimum guarantee fund shall not be less than one-half of the minimum required under Article (3) of Part B of Annex II to these Regulations and the deposit lodged under Article 49 (e) of these Regulations shall be reckoned in calculating the amount of a guarantee fund for the purposes of this Article.

53. Save as provided in Article 55 of these Regulations, Article 13(11) of these Regulations shall, insofar as is applicable, apply to an undertaking to which this Article applies as if the insurance undertaking was one whose head office is situated in the State.

54. Articles 16 and 17 of these Regulations shall apply to an undertaking to which this Article applies subject to the following modifications, namely, that the references in Articles 16 and 17 to another Member State shall be construed as references to the Member State in which the insurance undertaking in question first commenced to carry on business.

55. An undertaking which, having obtained an authorisation from a Member State and subsequently obtained an authorisation from one or more Member States to establish other branches therein may apply to the Minister for one or more of the advantages specified in Article 26 of the First Directive, as amended by Article 12 of Council Directive 84/641/EEC⁽⁸⁾, and Article 26 (2), (3) and (4) shall apply in such a case.

56. (1) Subject to the provisions of section 13 of the Assurance Companies Act, 1909, section 36 of the Insurance Act, 1989 , and these Regulations and following consultation with the Minister an insurance undertaking to which Part 8 of these Regulations applies may assign all or part of its portfolio of insurance policies in accordance with the following sub-articles of this Article.

(2) Where a branch established in the State of an insurance undertaking whose head office is not situated in the territory of a Member State, proposes to assign all or part of its portfolio of insurance policies covering insurance business to an assignee established in the State, the assignment shall not be effected unless the assignee possesses the necessary solvency margin after taking the assignment into account or, where appropriate, the supervisory authorities of the Member State referred to in Article 26 of the First Directive certify that the assignee possesses the necessary solvency margin after taking the assignment into account.

(3) Where a branch established in the State of an insurance undertaking whose head office is not situated in the territory of a Member State, proposes to assign all or part of its portfolio of insurance policies covering insurance business to an assignee with a head office in another Member State, the assignment shall not be effected unless the supervisory authorities of the head office Member State certify that the assignee possesses the necessary solvency margin after taking the assignment into account.

⁽⁸⁾O.J. L339, 27.12.1984, page 21.

(4) A branch established in the State of an insurance undertaking whose head office is not situated in the territory of a Member State may not assign all or part of its portfolio of insurance policies covering insurance business to an undertaking, established in another Member State, whose head office is not situated in the territory of a Member State.

(5) In the cases referred to in sub-articles (2) and (3) of this Article, the assignment shall not be effected without obtaining the agreement of the supervisory authorities of the Member States in which the risks are situated if different from the Member State where the branch is established.

(6) Where the supervisory authorities of the Member States in which the risks are situated have not given a response indicating consent to or an opinion on the proposed assignment to the Minister within three months of receiving notification of the assignment, the assignment shall be deemed to be agreed.

(7) Where the Minister is consulted in accordance with Article 53 (4) and (5) of the Directive, the Minister shall have a period of three months from the date of consultations by the supervisory authorities of the home Member State within which to issue an opinion on or consent to the proposed assignment.

(8) Where the Minister has not given a response indicating an opinion on or consent to the proposed assignment at the expiry of the period referred to in sub-article (7) of this article, the assignment shall be deemed to be agreed.

(9) An assignment effected in accordance with this Article shall be published subject to the provisions of sub-article (1) of this Article by advertisement once in Iris Oifigiúil and once in each of two daily newspapers published in the State and published in the Member State where the risk is situated in accordance with the law of that Member State.

(10) An assignment effected in accordance with this Article shall be valid against the policyholders, the insured persons and any other persons having rights or obligations arising out of the insurance policies assigned.

57. (1) Notwithstanding anything to the contrary in the Insurance Acts and Regulations, health insurance contracts included in class 2 of Part A of Annex I to these Regulations which serve as a partial or complete alternative to health insurance cover provided by the statutory social security system shall comply with the general good requirements of the State.

(2) In this Article--

the "general good" includes a requirement that such insurance contracts referred to in sub-article (1) of this Article provide for open enrolment, community rating and lifetime cover, in accordance with any enactment for the time being in force.

58. For the purposes of sections 93 and 94 of the Insurance Act, 1936 , and whenever the context so requires, every insurance policy, bond, certificate or other instrument of insurance issued by an insurance undertaking or syndicate carrying on business either by way of services or by way of establishment in respect of risks situated in the State shall be deemed to be issued in the State, and all moneys which become or may become due and payable by such insurance undertaking or syndicate under such insurance policy shall be payable and paid in the State, unless the policy otherwise provides.

59. (1) Insurance undertakings and all persons concerned shall comply with these Regulations including any applicable decision, direction, requirement or request of the Minister thereunder.

(2) A person who fails to comply with any provision of these Regulations shall be guilty of an offence and shall be liable on summary conviction to a fine not exceeding £1,500.

(3) If, after conviction of an offence, a person continues to contravene the provision, that person shall be guilty of an offence on each day on which the contravention continues and shall be liable on summary conviction to a fine not exceeding £1,500 for each such offence.

(4) Where an offence under these Regulations is committed by a body corporate and is proved to have been so committed with the consent or connivance of or to be attributable to any neglect on the part of a director, manager, secretary or other officer of the body corporate, the director, manager, secretary or other officer or any person purporting to act in such capacity shall, as well as the body corporate, be guilty of an offence and shall be liable to be proceeded against and punished accordingly.

(5) A prosecution for an offence under these Regulations may be brought by the Minister.

60. (1) An application to the Minister for an authorisation under these Regulations shall be in writing and shall, when filled in and completed by or on behalf of the applicant for such authorisation, be sent by post to or left with the Secretary of the Department of Enterprise and Employment and shall be accompanied by--

( a ) if the application is by an undertaking mentioned in Article 6 (6) (a) of these Regulations, a fee of £4,000,

( b ) if the application is by an insurance undertaking mentioned in Article 6 (6) (b) of these Regulations, a fee of £1,000,

( c ) if the application is by an insurance undertaking mentioned in Article 6 (6) (a) of these Regulations which proposes to establish a branch outside the State, a fee of £2,000,

( d ) if the application is by an undertaking mentioned in Article 48 (1) of these Regulations, a fee of £2,000,

( e ) if the application is by an undertaking mentioned in Article 48 (2) of these Regulations, a fee of £1,000,

(2) The Minister may, by order, amend any amount specified in paragraphs (a) to (e) of sub-article (1) of this Article.

ANNEX I

A. Classification of risks according to classes of insurance

1. Accident

-- fixed pecuniary benefits

-- benefits in the nature of indemnity

-- combinations of the two

-- injury to passengers

2. Sickness

-- fixed pecuniary benefits

-- benefits in the nature of indemnity

-- combinations of the two

3. Land Vehicles (other than railway rolling stock)

All damage to or loss of

-- land motor vehicles

-- land vehicles other than motor vehicles

4. Railway rolling stock

All damage to or loss of railway rolling stock

5. Aircraft

All damage to or loss of aircraft

6. Ships (sea, lake and river and canal vessels)

All damage to or loss of

-- river and canal vessels

-- lake vessels

-- sea vessels

7. Goods in transit (including merchandise, baggage, and all other goods)

All damage to or loss of goods in transit or baggage, irrespective of the form of transport

8. Fire and natural forces

All damage to or loss of property (other than property included in classes 3,4,5,6 and 7) due to

-- fire

-- explosion

-- storm

-- natural forces other than storm

-- nuclear energy

-- land subsidence

9. Other damage to property

All damage to or loss of property (other than property included in classes 3, 4, 5, 6 and 7) due to hail or frost, and any event such as theft, other than those mentioned under 8

10. Motor vehicle liability

All liability arising out of the use of motor vehicles operating on the land (including carrier's liability)

11. Aircraft liability

All liability arising out of use of aircraft (including carrier's liability)

12. Liability for ships (sea, lake and river and canal vessels)

All liability arising out of the use of ships, vessels or boats on the sea, lakes, rivers or canals (including carrier's liability)

13. General liability

All liability other than those forms mentioned under Nos. 10, 11 and 12

14. Credit

-- insolvency (general)

-- export credit

-- instalment credit

-- mortgages

-- agricultural credit

15. Suretyship

-- suretyship (direct)

-- suretyship (indirect)

16. Miscellaneous financial loss

-- employment risks

-- insufficiency of income (general)

-- bad weather

-- loss of benefits

-- continuing general expenses

-- unforeseen trading expenses

-- loss of market value

-- loss of rent or revenue

-- indirect trading losses other than those mentioned above

-- other financial loss (non-trading)

-- other forms of financial loss

17. Legal expenses

Legal expenses and costs of litigation

18. Touring assistance

Assistance for persons who get into difficulties while travelling, while away from home or while away from their permanent residence

The risks included in a class may not be included in any other class except in the cases referred to in Part C.

B. Description of authorisations granted for more than one class of insurance

Where the authorisation simultaneously covers:

( a ) Classes Nos. 1 and 2, it shall be named "Accident and Health Insurance";

( b ) Classes Nos. 1 (fourth indent), 3, 7 and 10, it shall be named "Motor Insurance";

( c ) Classes Nos. 1 (fourth indent), 4, 6, 7 and 12, it shall be named "Marine and Transport Insurance";

( d ) Classes Nos. 1 (fourth indent), 5, 7 and 11, it shall be named "Aviation Insurance";

( e ) Classes Nos. 8 and 9, it shall be named "Insurance against Fire and other Damage to property";

( f ) Classes Nos. 10, 11, 12 and 13, it shall be named "Liability Insurance";

( g ) Classes Nos. 14 and 15, it shall be named "Credit and Suretyship Insurance";

( h ) All classes, it shall be named at the choice of the Member State in question, which shall notify the other Member States and the Commission of its choice.

C. Ancillary risks

An undertaking obtaining an authorisation for a principal risk belonging to one class or a group of classes may also insure risks included in another class without an authorisation being necessary for them if they:

-- are connected with the principal risk,

-- concern the object which is covered against the principal risk, and

-- are covered by the contract insuring the principal risk.

However, the risks included in classes 14, 15 and 17 in Part A of this Annex may not be regarded as risks ancillary to other classes. Nonetheless, the risk included in class 17 (legal expenses insurance) may be regarded as an ancillary risk of class 18 where the conditions laid down in the first paragraph are fulfilled, where the main risk relates solely to the assistance provided for persons who fall into difficulties while travelling, while away from their permanent residence.

Legal expenses insurance may also be regarded as an ancillary risk under the conditions set out in the first paragraph where it concerns disputes arising out of, or in connection with, the use of sea-going vessels.

D. Correspondence between classes of non-life insurance licensed under the Insurance Act, 1936 , and the classes of the Annex to Council Directive 73/239/EEC

ANNEX II

PART A

Solvency Margin

1. An insurance undertaking whose head office is situated in the State shall establish an adequate solvency margin in respect of its entire business in accordance with this Annex.

2. The solvency margin shall correspond to the assets of the insurance undertaking, free of all foreseeable liabilities, less any intangible items, and in calculating the amount of the solvency margin the following shall be considered:

( a ) the paid up share capital or, in the case of a mutual insurance undertaking, the effective initial fund plus any members' accounts which meet all the following criteria:

(i) the memorandum and articles of association must stipulate that payments may be made from these accounts to members only insofar as this does not cause the solvency margin to fall below the required level, or, after the dissolution of the insurance undertaking, if all the insurance undertaking's other debts have been settled;

(ii) the memorandum and articles of association must stipulate, with respect to any such payments for reasons other than the individual termination of membership, that the competent authorities must be notified at least one month in advance and can prohibit the payment within that period and

(iii) the relevant provisions of the memorandum and articles of association may be amended only after the competent authorities have declared that they have no objection to the amendment, without prejudice to the criteria stated in (a) and (b);

( b ) one-half of the unpaid share capital or the initial fund, once the paid-up part reaches 25 per cent. of that share capital or fund,

( c ) reserves (including both statutory reserves and free reserves) not corresponding to underwriting liabilities,

( d ) any carry-forward of profits,

( e ) in the case of a mutual or mutual-type association with variable contributions, any claim which it has against its members by way of a call for supplementary contribution, within the financial year, up to one-half of the difference between the maximum contributions and the contributions actually called in, and subject to a limit of 50 per cent. of the margin,

( f ) at the request of, and upon proof being shown to the Minister by the insurance undertaking, any hidden reserves resulting from underevaluation of assets insofar as such hidden reserves are not of an exceptional nature.

( g ) with the consent of the Minister, preferential share capital and subordinated loan capital up to 50 per cent. of the margin, no more than 25 per cent. of which shall consist of subordinated loans with a fixed maturity, or fixed-term preferential share capital, if the following minimum criteria are met:

(i) in the event of the bankruptcy or liquidation of the insurance undertaking, binding agreements must exist under which the subordinated loan capital or preferential share capital ranks after the claims of all other debts outstanding at the time have been settled.

Subordinated loan capital must fulfil the following additional conditions:

(ii) only fully paid-up funds may be taken into account;

(iii) for loans with a fixed maturity, the original maturity must be at least five years. No later than one year before the repayment date the insurance undertaking must submit to the competent authorities for their approval a plan showing how the solvency margin will be kept at or brought to the required level at maturity, unless the extent to which the loan may rank as a component of the solvency margin is gradually reduced during at least the last five years before the repayment date. The Minister may authorise the early repayment of such loans provided application is made by the issuing insurance undertaking and its solvency margin will not fall below the required level;

(iv) loans the maturity of which is not fixed must be repayable only subject to five years' notice unless the loans are no longer considered a component of the solvency margin or unless the prior consent of the Minister is specifically required for early repayment. In the latter event the insurance undertaking must notify the Minister at least six months before the date of the proposed repayment, specifying the actual and required solvency margins both before and after that repayment. The Minister shall authorise repayment only if the insurance undertaking's solvency margin will not fall below the required level;

(v) the loan agreement must not include any clause providing that in specified circumstances, other than the winding-up of the insurance undertaking, the debt will become repayable before the agreed repayment dates;

(vi) the loan agreement may be amended only after the competent authorities have declared that they have no objection to the amendment;

( h ) securities with no specified maturity date and other instruments that fulfil the following conditions, including preferential shares other than those mentioned in the preceding indent, up to 50 per cent. of the margin for the total of such securities and the subordinated loan capital referred to in the preceding indent:

( a ) they may not be repaid on the initiative of the bearer or without the prior consent of the competent authority;

( b ) the contract of issue must enable the insurance undertaking to defer the payment of interest on the loan;

( c ) the lender's claim on the insurance undertaking must rank entirely after those of all non-subordinated creditors;

( d ) the documents governing the issue of the securities must provide for the loss-absorption capacity of the debt and unpaid interest, while enabling the insurance undertaking to continue its business;

( e ) only full paid-up amounts may be taken into account.

3. ( a ) Subject to sub-paragraph (b), the solvency margin shall be determined on the basis either of the annual amount of premiums or contributions, or of the average burden of claims for the preceding three financial years.

( b ) In the case of an insurance undertaking which substantially underwrites only one or more of the risks of credit, storm, hail, frost, the preceding seven years shall be taken as the period for the reference for the average burden of claims.

4. Subject to the provisions of Part B of this Annex the amount of the solvency margin shall be equal to the higher of the following two results:--

( a ) First result (premium basis):

(i) the premiums or contributions (inclusive of charges ancillary to premiums or contributions) due in respect of all direct business in the last financial year for all financial years, shall be aggregated;

(ii) to this aggregate there shall be added the amount of premiums accepted for all reinsurance in the last financial year;

(iii) from this sum there shall be deducted the total amount of premiums or contributions cancelled in the last financial year, as well as the total amount of taxes and levies pertaining to the premiums or contributions entering into the aggregate;

(iv) the amount so obtained shall be divided into two portions, the first portion extending up to 10 million units of account, the second comprising the excess: 18 per cent. and 16 per cent. of these portions respectively shall be calculated and added together;

(v) the first result shall be obtained by multiplying the sum calculated in accordance with clauses (i) to (iv) by the ratio existing in respect of the last financial year between the amount of claims less reinsurance recoverable and the gross amount of claims, but this ratio may in no case be less than 50 per cent.

( b ) Second result (claims basis):

(i) the amounts of claims paid in respect of direct business (without any deduction of claims recoverable from reinsurers and retrocessionaires) in the periods referred to in paragraph 4 of this Annex shall be aggregated;

(ii) to this aggregate there shall be added the amount of claims paid in respect of reinsurance or retrocessions accepted during the same periods;

(iii) to this sum there shall be added the amount of provisions or reserves for outstanding claims established at the end of the last financial year both for direct business and for reinsurance acceptances;

(iv) from this sum there shall be deducted the amount of recoveries effected during the periods referred to in paragraph 3 of this Annex;

(v) from the sum then remaining there shall be deducted the amount of provisions or reserves for outstanding claims established at the commencement of the second financial year preceding the last financial year for which there are accounts, both for direct business and for reinsurance acceptances;

(vi) one-third or one-seventh of the amount so obtained according to the period of reference established in paragraph 3 of this Annex shall be divided into two portions, the first extending up to seven million units of account and the second comprising the excess; 26 per cent. and 23 per cent. of these portions respectively shall be calculated and added together;

(vii) the second result shall be obtained by multiplying the sum calculated in accordance with this paragraph by the ratio existing in respect of the latest financial year between the amount of claims less reinsurance recoverable and the gross amount of claims, but this ratio may in no case be less than 50 per cent.

5. The fractions applicable to the portions referred to in paragraph 4 of this Annex shall each be reduced to a third in the case of health insurance practised on a similar technical basis to that of life assurance, if--

( a ) the premiums paid are calculated on the basis of sickness tables according to the mathematical method applied in life insurance;

( b ) a reserve is set up for increasing age;

( c ) an additional premium is collected in order to set up a safety margin of an appropriate amount;

( d ) the insurer may only cancel the contract before the end of the third year of insurance at the latest;

( e ) the contract provides for the possibility of increasing premiums or reducing payment even for current contracts.

ANNEX II

PART B

Guarantee Fund

1. This Part of the Annex shall be subject to the provisions of the European Communities (Non-Life Insurance) (Amendment) Regulations, 1991 ( S.I. No. 5 of 1991 ).

2. Subject to Article 4, the amount of the guarantee fund shall be equal to one-third of the solvency margin required to be established by Part A of this Annex.

3. The amount of the guarantee fund shall not be less than--

( a ) 1,400,000 ECU in a case where all or some of the risks included in that class are covered, as respects an undertaking for which the annual amount of premiums of contributions due in the class listed in Part A of Annex I at reference number 14 for each of the preceding three financial years exceeded 2,500,000 ECU or 4 per cent. of the total amount of premiums or contributions receivable by that undertaking,

( b ) 400,000 ECU in a case where all or some of the risks included in any one of the classes listed in Part A of Annex I at reference numbers 10, 11, 12, 13 and 15 and (as respects undertakings other than those referred to in paragraph (a)) reference number 14 are covered, and

( c ) 400,000 units of account in a case where all or some of the risks included in one of the classes listed in Part A of Annex I at reference numbers 10, 11, 12, 13, 14, or 15 are covered,

( d ) 300,000 units of account in a case where all or some of the risks included in one of the classes listed in Part A of Annex I at reference numbers 1, 2, 3, 4, 5, 6, 7, 8, 16 and 18 are covered,

( e ) 200,000 units of account in a case where all or some of the risks included in one of the classes listed in Part A of Annex I at reference numbers 9 or 17 are covered.

4. Where the business carried on by an insurance undertaking covers several classes or several risks, only that class or risk for which the highest amount is required shall be taken into account in establishing the appropriate minimum amount under Article 3 of Part B of this Annex.

5. In the case of mutual associations and mutual type associations, the amount of the minimum guarantee fund required by Article 3 of Part B of this Annex may be reduced by one-fourth on application to the Minister.

6. ( a ) Where an insurance undertaking carrying on credit insurance is required to increase the fund referred to in Article 3 (c) to 1,400,000 ECU, such undertaking shall have:

(i) a period of three years in which to bring the fund up to 1,000,000 ECU,

(ii) a period of five years in which to bring the fund up to 1,200,000 ECU,

(iii) a period of seven years in which to bring the fund up to 1,400,000 ECU,

( b ) The periods referred to in paragraph (a) of this sub-article shall run from the date from which the conditions referred to in Article 3 (a) are fulfilled.

ANNEX III

VALUATION OF ASSETS

1. Interpretation

1. In this Annex, unless the context otherwise requires--

"approved credit institution" means a credit institution as defined in Article 1 of the first Council Directive on the co-ordination of laws, regulations and administrative provisions relating to the taking up and pursuit of the business of credit institutions (77/780/EEC)⁽⁹⁾ authorised in a Member State or other institution approved by the Minister;

"approved financial institutions" means any of the following--

( a ) the Central Bank of a Member State,

( b ) the European Bank for Reconstruction and Development,

( c ) the European Investment Bank,

⁽⁹⁾O.J. L322, 17.12.1977, page 30.

( d ) the European Communities,

( e ) the International Bank for Reconstruction and Development,

( f ) the International Finance Corporation,

( g ) the International Monetary Fund,

( h ) such other institution as may be approved by the Minister;

"approved securities" means any of the following--

( a ) securities of the Government (including Savings Certificates),

( b ) securities guaranteed as to capital and interest by the Government,

( c ) stocks, securities or mortgages issued by and charged on all or any of the property or revenues of a local authority in the State,

( d ) any loan to, or deposit with, an approved credit institution or an approved financial institution,

( e ) any securities issued or guaranteed by, and any deposits of cash with any government, public or local authority or nationalised industry or undertaking, which belongs to Zone A as defined in the Council Directive on a solvency ratio for credit institutions (89/647/EEC)⁽¹⁰⁾;

( f ) any loan to a Member State, to a regional or local authority in a Member State, or to an international organisation of which one or more Member States are members;

"asset" includes part of an asset;

"building society" means a building society within the meaning of the Building Societies Act, 1989 ;

"company" includes any body corporate;

⁽¹⁰⁾O.J. L386, 30.12.1989, page 14.

"computer equipment" means the electro-mechanical and electronic units which make up a computer configuration;

"contract for differences" means a contract the object of which is to secure a profit or avoid a loss by reference to fluctuations in the value or price of a financial asset or in an index of such assets;

"debenture" includes debenture stock and bonds, whether constituting a charge on assets or not, and loan stock or notes;

"debt" includes an obligation to pay a sum of money under a negotiable instrument but only includes payments under derivative instruments to the extent that these are unconditionally guaranteed;

"dependant" has the meaning assigned to it in paragraph (2);

"derivative instrument" means a futures contract, an option or a contract for differences;

"equity share" means a share of equity share capital;

"equity share capital" in relation to a company, means its issued share capital excluding any part thereof which, neither as respects dividends nor as respects capital, carries any right to participate beyond a specified amount in a distribution;

"futures contract" means a contract calling for the delivery of a financial asset at the end of a designated period of time at a price agreed upon when the contract is made;

"fixed interest securities" means securities which under their terms of issue provide for fixed amounts of interest;

"guarantee fund" means any scheme designated to guarantee the payment of insurance claims to insured persons and injured third parties;

"industrial and provident society" means any society registered (or deemed to be registered) under the Industrial and Provident Societies Acts, 1893 to 1978;

"life assurance business assets" and "life assurance business liabilities" mean respectively assets of a life assurance company which are, for the time being, identified as representing the life assurance fund or funds maintained by the company in respect of its life assurance business and liabilities of the company which are attributable to its life assurance business;

"listed" means, in relation to an investment

( a ) that there has been granted and not withdrawn a listing in respect of that investment on a stock exchange recognised by the Minister or

( b ) that dealings in that investment are effected regularly in a regulated market recognised by the Minister and

"unlisted" shall be construed accordingly;

"life assurance" means assurance of a class specified in Annex I to the European Communities (Life Assurance) Framework Regulations, 1994;

"middle market quotation" means

( a ) in relation to an investment for which two prices are quoted in the official list published for the relevant market, the average of the two prices so quoted for the relevant date or, if no official list has been published for that day, for the most recent day prior to that day for which the official list has been published, and

( b ) in relation to an investment for which one price is quoted in the official list published for the relevant market, the price so quoted for the relevant date or, if no official list has been published for that day, for the most recent day prior to that day for which the official list has been published, and

( c ) in any other case, the nearest equivalent to the average referred to in paragraph (a) which is published or can be reasonably ascertained from information which is published;

"non-life insurance" means insurance of a class specified in Annex I to these Regulations;

"non-life business assets" and "non-life business liabilities" mean respectively assets of a non-life insurance company which are, for the time being, identified as representing the non-life insurance liabilities of the undertaking in respect of its non-life insurance business and liabilities of the undertaking which are attributable to its non-life insurance business;

"option" means a contract in which the writer of the option grants the buyer the right, but not the obligation, to purchase from or sell to the writer a financial asset either within a specified period or on a specified date at a price agreed upon when the contract is made;

"price/earnings ratio" means a price/earnings ratio (net) estimated in respect of an index appropriate to the application involved;

"proper valuation" means, in relation to land, a valuation made by a qualified value not more than one year before the relevant date which determined the amount which would be realised at the time of the valuation on an open market sale of the land free from any mortgage or charge;

"qualified valuer" in relation to any particular type of land in any particular area, means

( a ) a person who is a fellow of the Society of Chartered Surveyors in the Republic of Ireland or the Royal Institution of Chartered Surveyors and either:

(i) has knowledge of and experience in the valuation of that particular type of land in that particular area, or

(ii) has knowledge of and experience in the valuation of land and has taken advice from a valuer who is he is satisfied has knowledge of and experience in the valuation of that particular type of land in that particular area, or

( b ) a person who is approved for the time being by the Minister for the purposes of these Regulations;

"regulated market" has the meaning given to it in Article 1 of Council Directive 92/49/EEC;

"the Regulations of 1976" means the European Communities (Non-Life Insurance) Regulations, 1976 (S.I. 115 of 1976);

"the Regulations of 1984" means the European Communities (Life Assurance) Regulations, 1984 (S.I. 57 of 1984);

"the Regulations of 1986" means the European Communities (Life Assurance Accounts Statements and Valuation) Regulations, 1986 (S.I. 437 of 1986);

"related company" means, in relation to an insurance undertaking

( a ) a dependant of the insurance undertaking, or

( b ) a company of which the insurance undertaking is a dependant, or

( c ) a dependant of a company of which the insurance undertaking is a dependant;

"relevant date" means, in relation to the valuation of any assets for any purpose for which this Annex applies, the date when the asset falls to be valued for that purpose;

"salvage right" means any right of an insurance undertaking under a contract of insurance to take possession of and to dispose of property by virtue of the fact that the undertaking has made a payment or has become liable to make a payment in respect of a loss thereof;

"securities" has the meaning assigned to it by section 2 of the Central Bank Act, 1971 ;

"share" includes stock;

"technical reserves" mean the amount, net of the amount recoverable by the undertaking under contracts of reinsurance ceded by it (but excluding any rights of recovery in respect of insurance liabilities already discharged by the undertaking), set aside by insurance undertakings to meet their liabilities under insurance contracts;

"UCITS" means undertakings for collective investment in transferrable securities co-ordinated within the meaning of EC Council Directive 85/611/EEC⁽¹¹⁾;

⁽¹¹⁾O.J. L375, page 3 and

O.J. L100, 19.4.1988, page 31.

2. For the purposes of these Regulations, a company is a dependant of another company if it is

( a ) a subsidiary undertaking of that other company and "subsidiary undertaking" shall be construed in accordance with Article 4 of the European Communities (Companies: Group Accounts) Regulations, 1992 (S.I. 201 of 1992)

( b ) that other company, either alone or with any associate or associates, is entitled to exercise, or control the exercise of 20 per cent. or more of the equity voting rights at any general meeting of the first mentioned company, or

( c ) the first-mentioned company is a dependant of any company which is that other company's dependant.

3. For the purposes of these Regulations, a debt of an insurance undertaking shall be regarded as secured to the extent that--

( a ) it is fully secured on an asset or assets for the valuation of which provision is made in this Part of these Regulations; and

( b ) the value of the asset or assets providing the security (after deducting reasonable expenses of sale) is sufficient to enable the debt (and any other obligation secured on the asset or assets which has priority to or ranks equally with the debt) to be discharged in full.

2. Application

1. An undertaking may cover its technical reserves only with the following categories of assets:

A. Investments

( a ) debt securities, bonds and other money and capital market instruments;

( b ) loans;

( c ) shares and other variable yield participations;

( d ) units in undertakings for collective investment in transferable securities and other investment funds;

( e ) land, buildings and immovable property rights;

B. Debts and Claims

(f) debts owed by reinsurers;

( g ) deposits with and debts owed by ceding undertakings;

( h ) debts owed by policyholders and intermediaries arising out of direct and reinsurance operations;

( i ) claims arising out of salvage and subrogation;

( j ) tax recoveries;

( k ) claims against guarantee funds;

C. Others

( 1 ) tangible fixed assets, other than land and buildings;

( m ) cash at bank and in hand, deposits with credit institutions and any other bodies authorised to receive deposits;

( n ) deferred acquisition costs;

( o ) accrued interest and rent, other accrued income;

2. Notwithstanding paragraph 1, in exceptional circumstances an insurance undertaking may, with the prior approval of the Minister, cover temporarily its technical reserves with other categories of assets, subject to section 2 (4) of this Annex.

3. Any asset to which this Annex applies (other than cash) for the value of which no provision is made in this Part shall be left out of account for the purposes specified in paragraph (1) above.

4. The assets covering the technical provisions shall take account of the type of business carried on by an undertaking in such a way as to secure the safety, yield and marketability of its investments which the undertaking will ensure are diversified and adequately spread.

5. All assets must be valued on a prudent basis, allowing for the risk of any amounts not being realisable. Assets shall be valued net of any debts arising out of their acquisition.

6. Where in accordance with this section of the Annex the value of any asset is to be not greater than any specified amount and, in all the circumstances of the case, it appears that the asset is of a lesser value than that amount, such lesser value shall be the value of the asset.

7. ( a ) If the Minister is not satisfied as to the value of any asset or assets submitted to him he shall notify the undertaking accordingly.

( b ) Failing agreement between the undertaking and the Minister on the value placed on the asset or assets by the undertaking, the Minister may call on an independent expert for the purposes of expressing an opinion on the value of the asset or assets in question.

( c ) The independent expert appointed in accordance with sub-paragraph (b) shall have regard to the provisions of these Regulations.

( d ) The valuation placed on the asset or assets by the independent expert shall be final.

( e ) The costs of any such independent valuation shall be borne by the undertaking.

8. Notwithstanding the provision of paragraph 7, the Minister may appoint an independent expert for the purpose of expressing an opinion on the value of any asset or assets of an undertaking.

9. Derivative instruments may be used in connection with assets covering the technical reserves insofar as they contribute to a reduction of investment risks or facilitate efficient portfolio management.

10. Transferrable securities which are not dealt in on a regulated market may be accepted as cover for technical reserves if they can be realised in the short term.

11. Loans to bodies or companies (other than to State authorities, international organisations, local or regional authorities) and to natural persons may be accepted as cover for technical reserves only if there are sufficient guarantees as to their security.

3. Shares in and debts due from dependants

1. Subject to paragraph 2 below, the value of any share in a dependant of an insurance undertaking shall be not greater than that part of the net asset value of the dependant which would be payable in respect of the share if the dependant were in liquidation and the net asset value were the amount distributable to the shareholders in the winding-up.

2. In valuing an asset of an insurance undertaking which consists of shares in another company which is a dependant, any part of that value which arises from an interest by that other company, direct or indirect, in the shares of the insurance undertaking shall be left out of account.

3. In this section--

"net asset value" means, in relation to a dependant, the amount by which the value of its assets, as determined in accordance with section 4 of this Annex, exceeds the amount of its liabilities as determined in the case of a dependant which is an insurance undertaking, in accordance with section 4 of this Annex.

4. The value of any debt due, or to become due to an insurance undertaking from a dependant (other than a debt to which section 5 (3) of this Annex applies) shall be the amount which would be reasonably be expected to be recovered in respect of that debt (due account being taken of any security held in respect thereof) if the dependant were in liquidation and:

( a ) in the case of a dependant which is an insurance undertaking, the amount realised from its assets and the amount of its liabilities in the liquidation were equal to the value of those assets and the amount of those liabilities, as determined in accordance with section 4 of this Annex, and

( b ) in the case of a dependant which is not an insurance undertaking, the amount realised from its assets in the liquidation was equal to the value of those assets, as determined in accordance with the said section 4.

5. Any share in a dependant--

( a ) in which there is no excess of assets over liabilities as is mentioned in paragraph 3, or

( b ) in relation to which an insurance undertaking cannot reasonably ascertain the amount of the liabilities of the dependant for the purposes of paragraph 3,

shall be left out of account for the purposes for which this Annex applies.

6. Where an insurance undertaking is unable to determine the value of any debt due or to become due to the undertaking from a dependant because it cannot reasonably ascertain the amount of the liabilities of the dependant for the purpose of ascertaining what would reasonably be expected to be recovered in respect of that debt in accordance with paragraph 4, the debt shall be left out of account for the purposes for which this Part applies.

4. Valuation of assets and liabilities of dependants

1. This Section shall apply with respect to the determination of the value of the assets and the amount of the liabilities of a dependant for the purposes of section 3.

2. In the case of a dependant which is an insurance undertaking, whether or not it is authorised by the Minister:

( a ) subject to paragraph 3 and paragraph 4 of Schedule 1, the value of its assets shall be determined in accordance with this Part;

( b ) subject to sub-paragraphs (c), (d), (e), (f) and (g) the amount of its liabilities shall be determined in accordance with Council Directive 91/674/EEC⁽¹²⁾;

( c ) where the dependant carries on non-life insurance business, its non-life insurance business liabilities shall be deemed to include an amount equal to whichever is the greater of 400,000 units of account or a solvency margin calculated in accordance with Annex II to these Regulations;

( d ) where the dependant carries on life assurance business, its life assurance business liabilities shall be deemed to include whichever is the greatest of the following three amounts:

(i) an amount ("the first amount") which is one-sixth of the solvency margin that would be arrived at by regarding the dependant as having its head office in the State (whether it has or not) and applying Part B of Annex II to the European Communities (Life Assurance) Framework, Regulations 1994;

(ii) an amount which is six times the first amount, reduced by the implicit figure within the meaning of sub-paragraph (e);

(iii) 800,000 units of account;

( e ) for the purposes of sub-paragraph (d) (ii) the implicit figure is:

(i) in the case of a dependant having its head office in the State, the amount of any implicit items relating to future profits, zillmerising (as defined in the European Communities (Life Assurance) Framework Regulations, 1994), or hidden reserves which the dependant is permitted to count by virtue of a direction under Article 3 of these Regulations and the application of Article 2 (f) of Part A of Annex II to these Regulations and Annex VI of the European Communities (Life Assurance) Framework Regulations, 1994;

⁽¹²⁾O.J. L374, 31.12.1991.

(ii) in the case of a dependant having its head office elsewhere than in the State, the amount of any implicit items relating to future profits or zillmerising which would be arrived at by regarding the dependant as having its head office in the State and as having received a direction under Article 3 of these Regulations and by applying Article 2 (f) of Part A of Annex II to these Regulations and Annex VI of the European Communities (Life Assurance) Framework Regulations, 1994;

( f ) in any case where the dependant is required to establish a life assurance business fund or funds under the Insurance Acts and Regulations its life assurance business liabilities shall be deemed to be not less than the value of the assets representing that fund or funds;

( g ) for the purpose of this Section, an insurance undertaking includes a reinsurance undertaking.

3. In the case of a dependant which is not an insurance undertaking:

( a ) the value of its assets shall be determined in accordance with this Part, subject to the provisions of and the modifications provided for in paragraphs 3 and 4 of Schedule 1;

( b ) subject to paragraph 4, assets of the dependant which are of a relevant description shall be taken into account only to the extent that their value does not exceed the permitted limit applicable to the dependant in relation to those assets; and

( c ) any equipment leased by the dependant exclusively to any person other than its subsidiary or holding company or a subsidiary of its holding company shall be valued as a debt for the purposes of this Part.

4. Where

( a ) the dependant is an insurance undertaking and has assets of a relevant description which are not non-life insurance business assets or is not an insurance undertaking and has assets of a relevant description;

( b ) the value of such assets exceeds the permitted limit applicable to the dependant in relation to those assets, and

( c ) the insurance undertaking has no assets of the same description of the relevant class, or has assets of the same description of the relevant class and their value is less than the permitted limit applicable to the insurance undertaking in relation to those assets, then, for the purpose of determining the value of the assets of the dependant, there shall be added to the permitted limit applicable to the dependant in relation to the assets referred to in sub-paragraph (a) an amount equal to the supplementary amount determined in accordance with Part 1 of Schedule 1.

5. In this section and Schedule1--

"assets of a relevant description" means assets of a description specified in Part 1 of Schedule 2 or, in the case of a dependant which is not an insurance undertaking, assets which would be of such a description if it were an insurance undertaking;

"the insurance undertaking" means an insurance undertaking the value of whose shares in or debts due or to become due from the dependant are being determined in accordance with section 3 of this Annex.

"permitted limit" means, in relation to assets of a relevant description:

( a ) in the case of the insurance undertaking, or a dependant which carries on insurance business, an amount equal to the percentage of net technical reserves applicable in relation to assets of that description in accordance with Article 13 of these Regulations and

( b ) in the case of a dependant which is not an insurance undertaking, an amount equal to the percentages specified in Schedule 2 with respect to assets of that description, of the liabilities of the dependant, other than liabilities to the insurance undertaking or any other related company of the insurance undertaking;

and references to assets held by any company being of the same description as assets held by a dependant mean:

(i) in relation to land of the dependant of a description specified in paragraph 1 of Schedule 2, any interest of that other company in that land,

(ii) in relation to assets of the dependant of a description specified in paragraph 2 of Schedule 2, any debt due or to become due to that other company which is secured on the land on which the debt due or to become due to the dependant is secured, and

(iii) in relation to assets of the dependant of a description specified in paragraphs 3 to 15 of Schedule 2, assets of that other company which, if held by the dependant, would be assets of that description.

6. Save as otherwise provided in paragraph 3 (5) of Schedule 1, references in this Article and in Schedule 1 to assets of the insurance undertaking being of a relevant class mean:

( a ) where this section and Schedule 1 are being applied for the purpose of determining the value of a non-life insurance business asset of the insurance undertaking, assets of the insurance undertaking which are non-life insurance business assets, and

( b ) in any other case, assets of the insurance undertaking which are not non-life insurance business assets.

7. Where the insurance undertaking cannot reasonably ascertain in accordance with the provisions of this section:

( a ) the value of any asset of the dependant, or

( b ) the amount of the permitted limit applicable in relation to any asset or category of assets of the dependant, that asset or that part of those assets shall be left out of account in determining the value of the assets of the dependant under this section.

5. Debts and other rights

1. Debts owed by and claims against a third party must be valued net of all amounts owed to the same third party.

2. Subject to paragraph (1) above the value of any debt due, or to become due, to an undertaking, other than a debt to which section 3 (4) above, paragraph 3, 4, 5, 6 or 7 of this section or section 10 or 12 applies, shall be:

( a ) in the case of any such debt with a specified payment date or dates (other than a debt between related companies) which is due, or will become due, within twelve months of the relevant date the amount which can reasonably be expected to be recovered in respect of that debt (due account being taken of any security being held in respect thereof and of the terms and conditions thereof); and

( b ) in the case of any other such debt, the amount which would reasonably be paid by way of consideration for an immediate assignment of the debt taking account of

(i) whether the debt is a debt between related companies;

(ii) any security held in respect thereof;

(iii) the terms and conditions for payment thereof;

Provided that, in determining the amounts referred to in sub-paragraphs (a) and (b), no account shall be taken (i) of any debts outstanding for more than three months, arising out of direct insurance operations, which are owed by policyholders and intermediaries or (ii) any letter of credit.

3. Any debt due or to become due to the undertaking:

( a ) from an intermediary in respect of money advanced on account of commission to which that intermediary is not absolutely entitled at the relevant date, or

( b ) in respect of unpaid share capital of the company, or

( c ) under a letter of credit,

shall be left out of account for the purposes for which this Annex applies.

4. Subject to paragraph 1 above the value of any debt due, or other rights of, the insurance undertaking under any contract of reinsurance to which the insurance undertaking is a party (other than a debt to which section 3 (4) applies) shall be the amount which can reasonably be expected to be recovered in respect of that debt or right provided that no account shall be taken of any debts arising out of reinsurance operations which are owed by intermediaries and which have been outstanding for more than three months.

5. The value of any claim under a guarantee fund shall be the amount that can reasonably be expected to be recovered in respect of that claim.

6. The value of any salvage right or subrogation right of the undertaking shall be the amount which can reasonably be expected to be recovered by virtue of the exercise of such rights.

7. The value of any debt due to, or other rights of, the undertaking under any claim for the recovery of tax shall be the amount that can reasonably be expected to be recovered in respect of such claim.

6. Land

1. The value of any land of an undertaking (other than land held by the undertaking as security for a debt or to which paragraph 2 below applies) shall be not greater than the amount which (after deduction of the reasonable expenses of sale) would be realised if the land were sold at a price equal to the most recent proper valuation of that land which has been provided to the undertaking and any such land of which there is no proper valuation shall be left out of account for the purposes for which this Part applies.

2. The value of any interest in property which is determinable upon the death of any person or upon the happening of some other future event shall be the amount which would reasonably be paid by way of consideration for an immediate assignment thereof.

7. Equipment

1. The value of any computer equipment of an undertaking:

( a ) in the financial year of the undertaking in which it is purchased, shall be not greater than three-quarters of the cost thereof to the undertaking;

( b ) in the first financial year thereafter, shall be not greater than one-half of that cost;

( c ) in the second financial year thereafter, shall be not greater than one-quarter of that cost; and

( d ) in any subsequent financial year, shall be left out of account for the purposes for which this Part applies.

2. The value of any office machinery (other than computer equipment), furniture, motor vehicles and other equipment of an undertaking, shall be, in the financial year of the undertaking in which it is purchased, not greater than one-half of the cost thereof and shall be, in any subsequent financial year, left out of account for the purposes for which this Annex applies.

8. Unlisted Securities

1. This section does not apply to the valuation of shares in a dependant of the undertaking.

2. The value of any unlisted security which is dealt in on a recognised stock exchange shall be an amount not greater than the middle market quotation.

3. The value of any unlisted equity share, other than a share to which paragraph 2 applies, shall be not greater than:

( a ) where the company in which the share is held has been carrying on business for more than three financial years, the multiple of the price/earnings ratio for the relevant date (or, if no price/earnings ratio has been published for that date, for the most recent date prior to that date for which a price earnings ratio has been published) and the proportionate amount attributable to that share of the average amount of the profits of the company for the last three financial years; and

( b ) where the company has been carrying on business for less than three but more than one financial year, the multiple of such price earnings ratio and the proportionate amount attributable to that share of the average amount of the profits of the company for its two financial years or the profits of the company in its only financial year (as the case may be).

4. For the purposes of this Article the average amount of the profits of a company for any specified years shall be the amount represented in the formula

P -- L

Y

where:

( a ) P is the aggregate amount of the profits of the company after provision for taxation in each of the specified years,

( b ) L is the aggregate amount of any losses made by the company after provision for taxation in any of the specified years in which there were not profits, and

( c ) Y is the number of years specified, no account being taken of any profit or loss brought forward from any year preceding the specified years.

5. In this section, the proportionate amount attributable to any share of the average amount or the amount of the profits of the company in which the share is held for any specified years shall be the amount which could reasonably be expected to be received in respect of that share if the average amount or the amount (as the case may be) of the profits in question were available for distribution by the company among its shareholders.

6. Where the value of any share would otherwise be determined in accordance with the provisions of paragraph 3 but cannot be so determined because the amount of the profits of, or the amount of losses incurred by, the company in the last financial year cannot be reasonably ascertained, then the value of that share shall be determined:

( a ) in the case of a company which has been carrying on business for not less than four financial years, by reference to the average amount of the profits of the company for the three financial years preceding the last financial year; and

( b ) in the case of a company which has been carrying on business for less than four but more than two financial years, by reference to the average amount or the amount (as the case may be) of the profits of the company in any specified years other than the last financial year.

7. Any share to be valued in accordance with paragraphs 3 to 6 shall be left out of account for the purposes for which this Part applies if:

( a ) no amount is attributable thereto in accordance with paragraph 3 or the share is not realisable in the short term,

( b ) the company in which the share is held has been carrying on businesses for less than one financial year, or

( c ) the value of the share cannot be ascertained in accordance with paragraphs 3 to 6 because the amount of the profits of, or the amount of the losses incurred by, the company in any of the specified years cannot reasonably be ascertained and no provision is made for its valuation in paragraph 6.

8. The value of any unlisted share other than one to which paragraph 2 or 3 applies shall be the amount which would reasonably be paid by way of consideration for an immediate transfer of that share.

9. If, in all the circumstances of the case, it appears that any share to be valued in accordance with paragraphs 2 to 6 is of a lesser value than that amount, such lesser value shall be the value of the asset.

10. The "price earnings ratio" used should be disclosed in a note to Form 9 (Asset Analysis) of the European Communities Non-Life Insurance (Accounts) Regulations, 1977.

9. Unit Trusts/UCITS

The value of any holding of units, or other beneficial interest, under:

( a ) a unit trust to which section 31 of the Capital Gains Tax Act, 1975 , as amended by section 34 of the Finance Act, 1977 , relates or

( b ) a unit trust which is an authorised unit trust scheme within the meaning of section 4 of the Unit Trusts Act, 1990 , or

( c ) a collective investment scheme approved by the Central Bank under Section 256 (8) of the Companies Act, 1990 , and Section 9 of the Unit Trusts Act, 1990 , or

( d ) a scheme falling within the Council Directive on the co-ordination of laws, regulations and administrative provisions relating to undertakings for collective investments in transferrable securities ("UCITS") No. 85/611/EEC,

shall be the price at which the managers under the unit trust or UCITS would purchase the holding of units or other beneficial interest if required to do so.

10. Listed investments

1. The value of any listed debenture which is not a debenture issued by a dependant of the undertaking, and of any listed share which is not a share in such a dependant nor a share in any body specified in section 12 (2) of this Annex, shall be the middle market quotation.

2. Where the listing of any listed debenture or listed share, the value of which falls to be determined in accordance with this section, was suspended at a relevant date, then for the purpose or purposes for which that date was the relevant date:

( a ) if that suspension was in force for a period in excess of ten days, the debenture or share shall be left out of account, and

( b ) if that suspension was in force for a period not exceeding ten days, the value of that debenture or share shall be the lower of:

(i) the middle market quotation on the day before the day of suspension came into force, and

(ii) the middle market quotation on the day after the day the suspension was terminated.

3. For the purposes of paragraph 2, a day which is a Saturday or Sunday or a bank holiday shall be disregarded.

11. Deferred acquisition costs

Acquisition costs deferred shall be recorded as an asset and the amount deferred shall be consistent with the calculation of the unearned premium reserve.

12. Other assets

1. The value of any approved securities shall be:

( a ) in the case of listed securities, the middle market quotation together with any interest accrued thereon;

( b ) in the case of securities which are not transferable the amount payable on a surrender or redemption of such securities at the relevant date; and

( c ) in any other case, the amount which would reasonably be paid by way of consideration for an immediate transfer or assignment thereof.

2. The value of shares in any building society or industrial and provident society shall be the amount which would reasonably be paid by way of consideration for an immediate transfer or assignment thereof.

3. (1) This section shall apply to any approved derivative instrument in respect of which the following conditions are satisfied:--

( a ) it is traded on a regulated market or the counter party is an approved credit institution or other institution approved by the Minister; and

( b ) that the underlying assets are admissible assets as described in column 1 of Schedule 2; and

( c ) it contributes to reduction of investment risks or facilitates efficient portfolio management; and

( d ) having regard to the nature and amount of assets which it holds and to its liabilities, the company will have, at the settlement date and (if applicable) in the relevant fund, assets to fulfil its obligations under that instrument.

(2) Subject to paragraph (3) below, the value of rights under a derivative instrument to which this section applies shall be--

( a ) in the case of a listed derivative instrument, the amount which would reasonably be paid by way of consideration for an immediate transfer or assignment thereof; or

( b ) in the case of an unlisted derivative instrument which the insurance underwriting--

(i) has entered into with an approved counterparty, and

(ii) reasonably believes may be readily closed out by entering into a further approved derivative instrument with an approved counterparty,

the amount that would reasonably be paid by way of consideration for closing out that instrument;

(3) There shall be deducted from the amount calculated in accordance with paragraph 2 above the amount of any cash or other assets as shall at the relevant date have been paid or transferred to the insurance undertaking in respect of that instrument.

(4) In this section, approved derivative instrument means:

( a ) a contract for differences under which the amount payable by either party is calculated by references to fluctuations in the value of--

(i) an asset for the valuation of which provision is made in this Annex to these Regulations; or

(ii) income from such an asset; or

(iii) an index of such assets, or income therefrom, the value of which is determined on the basis of an arithmetric average of the value of the assets which comprise the index; or

(iv) an index in respect of which a derivative instrument is listed; or

( b ) a futures contract or an option where any of the property to be acquired or disposed of is an asset for the valuation of which provision is made in this Annex to these Regulations.

(5) For the purposes of this section--

"approved counterparty" means an approved credit institution or other institution approved by the Minister.

13. Assets that may be taken into account only to a specified extent

1. This section shall not apply to any approved securities or to any interest accrued thereon except insofar as it relates to the limitations applied to any loans to, or deposits with any one approved credit institution specified in Schedule 2.

2. Assets or categories of assets of an undertaking of any of the descriptions specified in Schedule 2 shall be taken into account, for the purpose of representing the technical reserves, only to the extent that the value of those assets or categories of assets does not exceed:

( a ) for an individual asset of a description specified in column 1, Part I, an amount equal to the percentage of the technical reserves specified in column 2 for an asset of that description;

( b ) for the aggregate of assets of a description specified in column 1, Part I, an amount equal to the percentage of the technical reserves specified in column 3 for assets of that description;

( c ) for the aggregate of the assets of a description specified in column 1, Part II, an amount equal to the percentage of the net premium income of the undertaking specified in column 3 (other than premiums in respect of treaty reinsurance accepted) for the twelve months preceding the relevant date.

3. In no case shall the aggregate of the assets of a description specified in column 1, Part III, of Schedule 2 exceed that proportion of the technical reserves specified in column 2 of that Part.

4. Without prejudice to paragraph 2 of this section an undertaking may hold amounts of the assets in Schedule 2 which exceed the percentage limits specified, if it so wishes, but the amount of such excess assets cannot be put forward by the undertaking as representing the technical reserves.

5. For the purposes of paragraph 2 above an undertaking's aggregate exposure in the case of derivative instruments shall be calculated as follows:

( a ) where an undertaking is a party to a derivative instrument which (wholly or in part), is or has the equivalent effect to a futures contract which--

(i) provides for the acquisition of assets;

(ii) is listed and provides for the disposal of assets; or

(iii) is not listed but provides for the disposal of assets to an approved credit institution within a year;

for the purposes of determining its aggregate exposure, the undertaking shall be deemed at the valuation date to have acquired or disposed of such assets;

( b ) where the undertaking is a party to a derivative instrument which is (wholly or in part) an option which

(i) provides for the acquisition of assets;

(ii) is listed and provides for the disposal of assets; or

(iii) is not listed put provides for the disposal of assets to an approved credit institution within a year;

and it is prudent at the valuation date to assume that such option will be exercised, for the purposes of determining its aggregate exposure, the undertaking shall be deemed to have acquired or disposed of such assets at that date;

( c ) where an undertaking is a party to a derivative instrument which (wholly or in part) is or has the equivalent effect to a contract for differences the value of which depends to a significant extent upon fluctuations in the value of, or income from, particular assets, for the purposes of determining its aggregate exposure, the undertaking shall be deemed to have achieved the effect of such contract for differences by entering into appropriate options or futures contract in respect of those assets, and such options or futures contracts shall be dealt with in accordance with paragraphs (a) and (b) above;

( d ) the amount of the aggregate exposure of the undertaking to assets of any particular description shall be the value of such assets held by the undertaking (if any) adjusted to take account of assets which the undertaking is deemed to have acquired or disposed of by the application of paragraphs (a) to (c) above.

6. In this section:

"the net premium income" of an undertaking for any specific period means the gross amounts, first recorded in the undertaking's books during that period as paid or due to the undertaking by way of premiums, less any rebates, refunds and commission so recorded during that period as allowed or paid on those gross amounts or on any such gross amounts so recorded in any previous period.

7. For the purposes of this section, the amount of liabilities of an insurance undertaking shall be determined in accordance with the rules laid down in Directive 91/674/EEC.

SCHEDULE 1

VALUE OF DEPENDANTS

PART I

THE SUPPLEMENTARY AMOUNT

"1. Subject to paragraph 2 (1), the supplementary amount in relation to assets of a relevant description held by a dependant of the insurance undertaking shall be determined in accordance with the following formula:

in which:

(A) is the supplementary amount;

(B) is the amount by which the value of assets of that description held by the dependant, excluding any non-life insurance business assets of the dependant, if it is an insurance undertaking, exceeds the permitted limit applicable to the dependant in relation to those assets;

(C) is the aggregate of the amount specified in B and of the amounts by which the value of assets of the same description held by other relevant dependants, excluding any non-life insurance business assets of a dependant which is an insurance undertaking, exceeds respectively the permitted limits applicable to such other relevant dependants in relation to those assets;

(D) is:

( a ) where the insurance undertaking holds no assets of the same description of the relevant class, the amount of the permitted limit that would be applicable to the insurance undertaking in relation to such assets were it to hold them; and

( b ) where the insurance undertaking holds assets of the same description of the relevant class, the amount by which the permitted limit applicable to the insurance undertaking in relation to those assets exceeds the value of those assets.

2. (1) Where for the purpose of determining any supplementary amount in accordance with paragraph 1 the insurance undertaking cannot reasonably ascertain:

( a ) the value of any asset of a relevant dependant, or

( b ) the amount of the permitted limit applicable in relation to any asset of a relevant dependant, the asset in question shall be left out of account for that purpose.

(2) In this Part of the Schedule:

"relevant dependant" means:

( a ) where this Schedule is being applied in relation to the determination of the value of a share in, or debt due or to become due from a dependant of the insurance undertaking which is a non-life insurance business asset of the insurance undertaking, any dependant of the insurance undertaking:

(i) a share in which, or in any company of which it is a dependant is a non-life insurance business asset of the insurance undertaking, or

(ii) from which a debt is due, or will become due, to the insurance undertaking which is a non-life insurance business asset of that undertaking; and

( b ) in any other case, any dependant of the insurance undertaking:

(i) a share in which, or in any company of which it is a dependant, is not a non-life insurance business asset of the insurance undertaking, or

(ii) from which a debt is due, or will become due, to the insurance undertaking which is not a non-life insurance business asset of that undertaking.

PART 2

FURTHER PROVISIONS AND MODIFICATIONS OF THE REGULATIONS APPLICABLE WITH RESPECT TO THE DETERMINATION OF THE VALUE OF DEPENDANTS

3. (1) This paragraph applies where, for the purpose of ascertaining the value of the assets of the subject company under section 4 of this Annex, any determination falls to be made in accordance with the said Section 4 of the value of the assets of a dependant of the insurance undertaking, a share in which, or a debt due or to become due from which, is an asset of the subject company; any references herein to a determination of the value of assets of a dependant to which this paragraph applies are references to any such determination.

(2) Section 4 (4) of Annex III to these Regulations shall not apply with respect to determination of the value of assets of a dependant to which this paragraph applies.

(3) Where, in the case of a determination of the value of assets of a dependant to which this paragraph applies:

( a ) the dependant is an insurance undertaking and has assets of a relevant description which are not non-life insurance business assets or is not an insurance undertaking and has assets of a relevant description,

( b ) the value of such assets exceeds the permited limit applicable to the dependant in relation to those assets, and

( c ) any controller of the dependant has no assets of the same description of the relevant class, or has assets description of the relevant class and their value is less than the permitted limit applicable to that controller in relation to those assets:

then, for the purposes of such determination there shall be added to the permitted limit applicable to the dependant in relation to the assets referred to in subparagraph (a) an amount equal to the supplementary amount or, if there is more than one such controller, to the aggregate of the supplementary amounts, determined with respect to any such controller in accordance with Part 1 of this Schedule, subject, where the controller is not the insurance undertaking, to the modifications specified in subparagraph (5).

(4) In this paragraph--

"a controller" means, in relation to a dependant:

( a ) the insurance undertaking,

( b ) the subject company, if it is an insurance undertaking, and

( c ) a dependant of the insurance undertaking which is an insurance undertaking and of which the subject company is a dependant.

(5) Where subparagraph (3) is being applied in relation to a controller, other than the insurance undertaking:

( a ) Part 1 of this Schedule, as applied in accordance with the said subparagraph (3), shall have effect as if, for the reference to the insurance undertaking, there were substituted references to the controller, and

( b ) the references to assets being of a relevant class in the said subparagraph (3) and in Part 1 of this Schedule, as so applied, shall be construed as referring to non-life insurance business assets of the controller, if the said subparagraph (3) is being applied in connection with the determination of the value of a non-life insurance business asset of the controller, and to assets which are not non-life insurance business assets of the controller, in any other case.

4. The modifications of these Regulations applicable (in addition to that specified in paragraph 3 (2) with respect to the determination of the value of the assets of the subject company where it is not an insurance undertaking are as follows:

( a ) these Regulations shall apply to the subject company as if it were an insurance undertaking and its assets were being valued for the purpose specified in Section 2 (1) of this Annex;

( b ) Section 13 of this Annex shall not apply.

5. In this Schedule--

"subject company" means the dependant of the insurance undertaking the value of whose assets is being determined in accordance with Section 4 (2) or (3) of this Annex (as the case may be).

SCHEDULE 2

ASSETS TO BE TAKEN INTO ACCOUNT ONLY TO A SPECIFIED EXTENT

PART 1

PART II

PART III

PART IV

18. In this Schedule, a company is connected with another company if it is--

( a ) a subsidiary of that other company, or

( b ) a holding company of that other company, or

( c ) a subsidiary of the holding company of that other company.

ANNEX IV

MATCHING RULES

The currency in which an insurance undertaking's commitments are payable shall be determined in accordance with the following rules:

1. Where the cover provided by a contract is expressed in terms of a particular currency, the insurance undertaking's commitments are considered to be payable in that currency.

2. Where the cover provided by a contract is not expressed in terms of any currency, the insurance undertaking's commitments are considered to be payable in the currency of the country in which the risk is situated. However, the insurance undertaking may choose the currency in which the premium, is expressed if there are justifiable grounds for exercising such a choice.

This could be the case if, from the time the contract is entered into, it appears likely that a claim will be paid in the currency of the premium and not in the currency of the country in which the risk is situated.

3. The currency in which the insurance undertaking must provide cover will be either that which it will use in accordance with experience acquired or, in the absence of such experience, the currency of the country in which it is established:

-- for contracts covering risks classified under classes 4, 5, 6, 7, 11, 12 and 13 (producers' liability only), and

-- for contracts covering the risks classified under other classes where, in accordance with the nature of the risks, the cover is to be provided in a currency other than that which would result from the application of the above procedures.

4. Where a claim has been reported to an insurance undertaking and is payable in a specified currency other than the currency resulting from application of the above procedures, the insurance undertaking's commitments shall be considered to be payable in that currency, and in particular the currency in which the compensation to be paid by the insurance undertaking has been determined by a court judgement or by agreement between the insurance undertaking and the insured.

5. Where a claim is assessed in a currency which is known to the insurance undertaking in advance but which is different from the currency resulting from application of the above procedures, the insurance undertaking may consider its commitments to be payable in that currency.

6. Insurance undertakings will not be required to cover their technical reserves by matching assets if application of the above procedures would result in the undertaking being obliged in order to comply with the matching principle, to hold assets in a currency amounting to not more than 7% of the assets existing in other currencies.

However:

( a ) in the case of technical reserve assets to be matched in Irish pounds, Greek drachmas and Portuguese escudos, this amount shall not exceed:

-- 2 million ECU from 1 January, 1993 to 31 December, 1998;

( b ) in the case of technical reserve assets to be matched in Belgian Francs, Luxembourg Francs and Spanish Pesetas, this amount shall not exceed 2 million ECU during a transitional period ending 31 December, 1996.

From the end of the transitional periods defined under (a) and (b), the general regime shall apply for those currencies, unless the Council of the European Communities decides otherwise.

7. Undertakings need not apply the matching principle where commitments are payable in a currency other than the currency of one of the Member States, if investments in that currency are regulated, if the currency is subject to transfer restrictions or if, for similar reasons, it is not suitable for covering technical reserves.

8. Insurance undertakings may hold non-matching assets to cover an amount not exceeding 20 per cent. of their commitments in a particular currency.

9. Whenever under the preceding procedure a commitment has to be covered by assets expressed in the currency of a Member State, this requirement shall also be considered to be satisfied when up to 50% of the assets, or such other level as the Minister may approve, are expressed in ecus.

10. For the purpose of these Rules references to assets in a currency shall be construed as references to assets expressed in or capable of being realised (without exchange risk) in that currency; and an asset is capable of being realised (without exchange risk) in a currency if it is reasonably capable of being realised in that currency without risk that changes in exchange rates would reduce the cover for its liabilities in that currency.

GIVEN under my Official Seal, this 29th day of November, 1994.

CHARLIE McCREEVY,

Minister for Enterprise and

Employment.

EXPLANATORY NOTE.

These Regulations give effect to the Third Non-Life Insurance Framework Directive (92/49/EEC -- O. J. No. L 228/1) which institutes a single authorisation system of supervision of insurance undertakings operating throughout the European Communities whereby insurance undertakings transacting business on either a cross-border or branch basis will be subject to overall supervisory control of the supervisory authority where their head offices are located.

The Regulations require non-life insurance undertakings to furnish information and statistical documents necessary for supervision purposes to the Minister. The Regulations introduce revised rules for the valuation of underwriting liabilities and assets and revised requirements for localisation of assets. The regulations provide that any significant increase or decrease in shareholdings in an insurance undertaking will be notified in advance to the Minister.

The Regulations also include certain information requirements which insurance undertakings must disclose to policyholders when an insurance contract is being effected. Insurers underwriting third party motor insurance will continue to be subject to existing requirements including the necessity for services insurers to appoint a claims representative in the State to handle third-party insurance claims.

The Regulations incorporate a number of consumer protection measures including provisions which oblige insurance undertakings to comply with the general good requirements of the State as specified.

These Regulations have the effect of amending or modifying certain provisions of the Insurance Acts, 1909 to 1990, and previous Regulations made under the European Communities Act, 1972 .