1.Member States shall, taking into account the information required inpursuant paragraphto 3Article 35(3) and the principles set out in paragraph 4 of Articlethat 35,Article, require insurance and reinsurance undertakings to disclose publicly, on an annual basis, a report on their solvency and financial condition.
The solvency and financial condition report shall consist of two parts, clearly identified and disclosed jointly. The first part shall consist of information specifically targeted at policy holders and beneficiaries, and the second part shall consist of information targeted at market professionals.
1a.The part of the solvency and financial condition report consisting of information targeted at policy holders and beneficiaries shall contain the following information:
(a)a brief description of the business and the performance of the undertaking;
(b)a brief description of the capital management and the risk profile of the undertaking, including in relation to sustainability risks; and
(c)a statement of whether the undertaking discloses the plans referred to in Article 19a or Article 29a of Directive 2013/34/EU.
1b. ThatThe part of the solvency and financial condition report consisting of information targeted at market professionals shall contain the following information, either in full or by way of references to equivalent information, both in nature and scope, disclosed publicly under other legal or regulatory requirements:
(a)a description of the business and the performance of the undertaking;
(c)a description, separately for each category of risk, of the risk exposure, concentration, mitigation and sensitivity;
(b)a description of the system of governance and an assessment of its adequacy for the risk profile of the undertaking;governance;
(c)(d) a description, separately for assets, technical provisions,provisions and other liabilities, of the bases and methods used for their valuation, together with an explanation of any major differences in the bases and methods used for their valuation in financial statements;valuation;
(d)(e) a description of the capital management,management and the risk profile, including at least the following:
(i)the structure and amount of own funds, and their quality;
(ii)the amounts of the Solvency Capital Requirement and of the Minimum Capital Requirement;
However, and without prejudice to any disclosure that is mandatory under any other legal or regulatory requirements, Member States may provide that, although the total Solvency Capital Requirement referred to in paragraph 1(e)(ii) is disclosed, the capital add-on or the impact of the specific parameters the insurance or reinsurance undertaking is required to use in accordance with Article 110 need not be separately disclosed during a transitional period ending no later than 31 December 2020.
(iii)for insurance and reinsurance undertakings relevant for the stability of the financial systems in the Union, information on risk sensitivity;
(iv)(iii) the option set out in Article 304 used for the calculation of the Solvency Capital Requirement;
(v)(iv) information allowing a proper understanding of the main differences between the underlying assumptions of the standard formula and those of any internal model used by the undertaking for the calculation of its Solvency Capital Requirement;
(vi)(v) the amount of any non-compliance with the Minimum Capital Requirement or any significant non-compliance with the Solvency Capital Requirement during the reporting period, even if subsequently resolved, with an explanation of its origin and consequences as well as any remedial measures taken.taken;
(e)an indication of whether the undertaking has any material exposure to climate change risks following the materiality assessment referred to in Article 45a(1), and, where relevant, if it has put in place any actions;
(f)a statement of whether the undertaking discloses the plans referred to in Article 19a or Article 29a of Directive 2013/34/EU;
(g)the elements referred to in Article 44(2c), point (d).
1c.1a. Where the matching adjustment referred to in Article 77b is applied, the description referred to in paragraph 1(d)1b, point (c), and points (d)(i) and (ii), of this Article shall includealso a description ofdescribe the matching adjustment and of the portfolio of obligations and assigned assets to which the matching adjustment is applied, as well as a quantification of the impact of a change to zero of the matching adjustment on the undertaking'sundertaking’s financial position.
The description referred to in paragraph 1(d)1b, point (c), and points (d)(i) and (ii), of this Article shall also includecontain a statement on whether the volatility adjustment referred to in Article 77d is used by the undertaking andand, a quantification of the impact of a change to zero ofwhere the volatility adjustment onis used, it shall disclose the undertaking'sfollowing financial position.information:
(a)a quantification of the impact of a change to zero of the volatility adjustment on the undertaking’s financial position;
(b)for each relevant currency or, as applicable, country, the volatility adjustment calculated in accordance with Article 77d and the corresponding best estimates for insurance or reinsurance obligations.
2.The description referred to in paragraph 1b, point (e)(i) of paragraph 1(d)(i), shall include an analysis of any significant changes as compared to the previous reporting period and an explanation of any major differences in relation to the value of such elements in financial statements, and a brief description of the capital transferability.
The disclosure of the Solvency Capital Requirement referred to in paragraph 1b, point (e)(ii)(d)(ii), of paragraphthis 1Article shall show separately the amount calculated in accordance with Chapter VI, Section 4, Subsections 2 and 3 and any capital add-on imposed in accordance with Article 37 or the impact of the specific parameters the insurance or reinsurance undertaking is required to use in accordance with Article 110, together with concise information on its justification by the supervisory authority concerned.
The disclosure of the Solvency Capital Requirement shall be accompanied, where applicable, by an indication that its final amount is still subject to supervisory assessment.
3.Captive insurance undertakings shall not be required to disclose the part targeted at policy holders and beneficiaries and shall only be required to include in the part targeted at market professionals the quantitative data required by the implementing technical standards referred to in Article 56 provided that those undertakings meet the following conditions:
(a)the insured persons and beneficiaries are legal entities of the group of which the captive insurance undertaking is part or natural persons eligible to be covered under that group’s insurance policies and the business covering natural persons eligible to be covered under the group insurance policies remains below 5 % of technical provisions;
(b)the insurance obligations of the captive insurance undertaking do not consist of any compulsory third-party liability insurance.
4.Captive reinsurance undertakings shall not be required to disclose the part targeted at policy holders and beneficiaries and they shall only be required to include in the part targeted at market professionals the quantitative data required by the implementing technical standards referred to in Article 56, provided that those undertakings meet the following conditions:
(a)the insured persons and beneficiaries are legal entities of the group of which the captive reinsurance undertaking is part or natural persons eligible to be covered under that group’s insurance policies and the business covering natural persons eligible to be covered under the group insurance policies remains below 5 % of technical provisions;
(b)the insurance contracts underlying the reinsurance obligations of the captive reinsurance undertaking do not relate to any compulsory third-party liability insurance;
(c)loans in place with the parent or any group company, including groups cashpools do not exceed 20 % of total assets held by the captive reinsurance undertaking; and
(d)the maximum loss resulting from the gross technical provisions can be deterministically assessed without using stochastic methods.
5.By way of derogation from paragraph 1, reinsurance undertakings may choose not to disclose the part of the solvency and financial condition report targeted at policy holders and beneficiaries.
6.By way of derogation from paragraph 1b of this Article, small and non-complex undertakings may disclose only the quantitative data required by the implementing technical standards referred to in Article 56 in the part of the solvency and financial condition report consisting of information targeted at other market professionals, provided that they disclose a full report containing all the information required in this Article every three years.
7.Member States shall ensure that insurance and reinsurance undertakings publicly disclose and submit to the supervisory authority the information referred to in this Article on an annual or less frequent basis within 18 weeks of the end of the undertaking’s financial year.
8.As part of the report referred to in paragraph 1 of this Article, insurance and reinsurance undertakings shall be required to disclose the impact of using, for the purpose of determining the technical provisions set out in Article 77, the risk-free interest rate term structure determined without the application of the transitional for the extrapolation as referred to Article 77e(1), point (aa), instead of the relevant risk-free interest rate term structure.
However, by way of derogation from the first subparagraph, the disclosure requirement shall not apply to a currency for which any of the following applies:
(a)the share of future cash flows associated with insurance or reinsurance obligations in that currency relative to all future cash flows associated with insurance or reinsurance obligations does not exceed 5 %;
(b)with respect to future cash flows associated with insurance or reinsurance obligations in that currency, the share of future cash-flows pertaining to maturities where the relevant risk-free interest rate term structure is extrapolated relative to all future cash flows associated with insurance or reinsurance obligations does not exceed 10 %.