Articles R.931-10-42 of the Social Security Code, R.212-54 of the Mutual Insurance Code and R.332-20-1 of the Insurance Code each stipulate in identical terms that the realisable value of real estate and units or shares of unlisted real estate companies held by insurance institutions must be determined on the basis of five-yearly appraisals carried out by an appraiser approved by the ACPR.
Between these five-yearly appraisals, the value of an asset is estimated annually and certified by an appraiser also approved by the ACP.

Instruction 2014-I-07 specifies and defines the framework for the new appraiser approval procedure.

Reference texts :

Instruction 2017-I-09 and its annexes

– Annexe I : Statement and information sheets

• Information sheet 1 : List of real estate assets
• Information sheet 2 : Overview of the real estate appraiser
• Information sheet 3 : Overview of the central real estate appraiser
• Information sheet 4 : Undertaking by the real estate appraiser
• Information sheet 5 : Undertaking by the central real estate appraiser 

– Annexe II : Schedule of sales

Pursuant to the aforementioned articles, undertakings must, before signing off their annual financial statements, have undertaken the five-yearly appraisal, or updated values between appraisals, of the real estate assets covered by the aforementioned articles, whether located in France or abroad.

The approval procedure for real estate appraisers and central real estate appraisers includes the following:

• Submission of an application to the ACPR:

Insurance institutions must send the following to the ACPR by post (DAAR-SOA – real estate appraisals unit; for questions, e-mail): expertises-immo@acpr.banque-france.fr.

• • The statement to be completed by the insurance institution
  • Information sheet 1: List of real estate assets
  • Information sheet 2: Overview of the real estate appraiser
  • And/or Information sheet 3: Overview of the central real estate appraiser
  • Information sheet 4: Undertaking by the real estate appraiser
  • And/or Information sheet 5: Undertaking by the central real estate appraiser

• Applications for approval must be submitted at least two months before the appraiser is engaged.
• The ACP is deemed to have approved the appraiser within two months of receiving the completed application including the statement, information sheet 1 and information sheets 2 or 3, 4 or 5 depending on the specific engagement.
• Approval applies to the five-yearly appraisal applied for followed by related interim updates.
• Appraisers must be approved by the ACPR before appraisals are carried out. Failure to follow this procedure will result in the appraised value of the asset being deemed non-compliant with regulatory provisions.

IMPORTANT INFORMATION:

• Appraisers are not accredited: the ACPR does not provide lists of appraisers.
• Insurance entities are free to choose any appraiser, provided it has:
  • the assumed technical expertise and sufficient resources to fulfil the planned engagement;
  • the assumed dual independence: applications for approval must confirm the presumption that the appraiser is independent of the insurer that is engaging it and has no interest in the asset to be appraised.
• Institutions must take care to regularly rotate appraisers, who may not appraise the same asset twice in succession.
• Central appraisers appraise units or shares of real estate companies. Their role is to analyse the total value of real estate companies based on appraisals of individual assets and to calculate the value of units or shares. Basic appraisals are undertaken by one or more appraisers, also known as primary appraisers, who must meet the same independence and expertise criteria as those required for central appraisers. The latter must check that five-yearly appraisals and interim updates of the underlying assets are conducted under conditions similar to those laid down in this instruction.
• The schedule of sales must be submitted annually.

Monitoring of appraisals

Insurance institutions must enclose with their annual submission to the ACPR the results of appraisals and updates, in accordance with templates previously in force.

Special procedure: appraisals to determine the balance sheet value of real estate assets

Reference texts :

IMPORTANT INFORMATION

This is considered a special type of appraisal.

• There are rules governing the choice of appraiser(s), timescales and associated formalities. The ACPR chooses the appraiser tasked with appraising each of the assets listed. The undertaking has 15 days to opt for a second appraisal by an appraiser chosen by it. Following notification, the appraiser(s) has (have) three months to issue their conclusions. Where a second appraisal is obtained and the conclusions disagree, a third appraiser is appointed. Appraisal fees are borne by the supervised institution.
• The value resulting from the appraisal constitutes the asset’s realisable value.

This value may be recognised as the asset’s balance sheet value within the limits and conditions laid down in each case by the ACPR. In this case, it constitutes the new purchase price, with any difference between the identified value and the previous balance sheet value recognised in the income statement.