Points of entry into resolution in the insurance sector

As the resolution authority, the ACPR is responsible for drawing up a pre-emptive resolution plan for all entities subject to the submission of a pre-emptive recovery plan. The aim of resolution plans is to ensure the continuity of a given group’s “critical” functions in the event of a crisis. These functions are essential for safeguarding economic and financial stability, as well as protecting policyholders.

These pre-emptive resolution plans identify the ‘points of entry’ of insurance (sub-) groups, i.e. the legal entities to which resolution tools and measures will be applied.

Two main approaches can be considered: 

• Single Point of Entry (SPE) where, in the event of a crisis, the resolution procedure centralises the intervention of a single resolution authority at the level of the group’s head.

• Multiple Points of Entry (MPE) where several national resolution authorities intervene, each exercising its resolution powers over a given entity of the group that serves as the point of entry for the relevant jurisdiction.

The decentralised structure of insurance groups, combined with the diversity of legal regimes across and within jurisdictions (due to the wide variety of legal forms and authorisations for insurance undertakings), favours an MPE approach. This approach requires close coordination between resolution authorities to ensure the orderly management of crises and a consistent implementation of resolution tools across various national subgroups.

However, the dynamics of insurance groups may make centralised resolution within each relevant jurisdiction ineffective if resolution tools need to be applied to different entities within the same jurisdiction. Identifying points of entry then involves identifying 'operating companies' ('opco'), which are individual operational entities or subsidiaries that act as main points of entry, as opposed to 'top companies' ('topco'), which refer to groups’ heads that can be non-operating holding companies or parent undertakings conducting operational activities.

This study shows that current governance’s structure of internationally active French insurance groups suggests that MPE-type strategies are generally more relevant, combined with an ‘opco’ approach.