Exemption from quarterly quantitative templates

Exemption from quarterly quantitative templates where the provision of such information would represent a disproportionate workload

Overview of the measure

As well as annual submissions to the ACPR, the Solvency II directive calls for quarterly submissions of quantitative reports across a reduced scope.

 

Institutions may be able to claim exemption from this requirement for quarterly submissions where the provision of such information would represent a disproportionate workload given the nature, scale and complexity of the risks inherent in the institution’s business.

 

However, the directive specifies that the population granted such exemption by the ACPR may not exceed a 20% share of the French market, and that priority must be given to the smallest institutions. An ACPR instruction (see below) sets out the following thresholds for exemption from the requirement to submit quarterly information, based on the size of the institution’s or the group’s balance sheet and the nature of its business:

Nature of businessMaximum balance sheet size (EUR billions)
Life only8
Reinsurance only4
Non-life only0,5
MixedMinimum (8 ; 0,5 × total technical provisions/ non-life technical provisions) 

In other words, for mixed institutions and groups, if balance sheet assets exceed EUR 8 billion, this threshold is applicable; otherwise, the threshold of EUR 0.5 billion is applied to that portion of their balance sheet that corresponds to non-life business according to the following formula: balance sheet size x non-life technical provisions/total technical provisions.

A page containing comprehensive information on the precise terms of application of these thresholds is available on the ACPR website.

In simplified terms, these thresholds apply to groups and institutions as follows:

  1. Institutions not belonging to a group will be exempted, without the need to apply for authorisation, if their total balance sheet assets fall below the thresholds.
  2. The same applies to groups whose total consolidated or combined balance sheets fall below the thresholds, as well as institutions belonging to those groups.
  3. Institutions whose balance sheet assets fall below the thresholds but which belong to a group whose consolidated or combined balance sheet assets exceed the thresholds may also claim exemption provided that they meet both of the following criteria: o the individual institution represents less than 5% of the consolidated or combined balance sheet o exempted institutions belonging to the same group together represent no more than 15% of the consolidated or combined balance sheet
  4. Institutions and groups whose balance sheet assets exceed the thresholds may not claim exemption.

Exempted institutions must nevertheless calculate and submit quarterly reports on the MCR.

 

Regulatory references

Exemption measures in relation to quarterly information submissions are laid down in Articles L.355-1 and R.355-3 of the Insurance Code, applicable to institutions covered by each of the three codes, which transpose Articles 35 and 254 of Directive 2009/138/EC, known as “Solvency II”.

The terms of this authorisation are clarified in two ACPR instructions:

Content of the application

Only institutions falling under point 3 above may apply for authorisation.

 

All the institutions in a given group applying for exemption are invited to submit their applications at the same time.

 

The precise terms of application are laid down in the second of the aforementioned instructions. In summary, the application must give reasons for the request for exemption in light of the directive and the instruction. In particular, it must provide evidence that the balance sheets of the institution and the group to which it belongs meet the criteria laid down in the instruction.

Procedure

Applications may be submitted to the ACPR with effect from 1 January 2016, and must be submitted at least seven months before the start of the period to which the information relates.

 

The ACPR will reach its authorisation decision no later than three months before the start of the period in question.

 

The following automatic and temporary exemptions are planned for 2016:

  • All institutions whose balance sheet assets fall below the thresholds will automatically be exempted, whether or not they belong to a group.
  • If none of the institutions making up a group reach these thresholds, the group and all its member institutions are exempted.

Updated on: 06/07/2018 15:09