1.The supervisory authority shall approve the use of the proportionality measure provided for in Article 77(8) of Directive 2009/138/EC by an insurance and reinsurance undertaking that is not classified as small and non-complex undertaking, where all of the following conditions are met:
the supervisory authority concludes, on the basis of the supervisory review process, that the undertaking:
is able to withstand any current or future risks;
is not subject to on-going supervisory measures to remedy material non-compliance with Directive 2009/138/EC;
the supervisory authority concludes that the undertaking does not have a complex business model, taking into account its business strategy, its business plan, the complexity of the insurance products offered and its investment portfolio;
the undertaking meets all of the following conditions, subject to paragraphs 2 and 3:
the technical provisions from life activities, gross of the amounts recoverable from reinsurance contracts and special purpose vehicles, as referred to in Article 76 of Directive 2009/138/EC, are not higher than EUR 12 000 000 000;
the undertaking does not represent more than 5 % of the life market or non-life market of the home Member State of the undertaking, where the life market share is based on gross technical provisions and the non-life market share is based on gross written premiums;
the supervisory authority has not identified unresolved material concerns arising from the system of governance of the undertaking;
the undertaking is able to demonstrate that the use a prudent deterministic valuation is proportionate in relation to the nature, scale and complexity of the risks arising from the obligations for which the undertaking seeks to apply that valuation;
the time value of options and guarantees, measured based on the prudent harmonised reduced set of scenarios, of the contracts where the prudent deterministic valuation is applied represent less than 5 % of the Solvency Capital Requirement.
Where an insurance or reinsurance undertaking is granted the approval referred to in the first subparagraph, Article 34a(2) and (3), shall apply.
The supervisory authority shall withdraw the approval granted to an insurance or reinsurance undertaking that is not classified as small and non-complex undertaking to use the proportionality measure provided for in Article 77(8) of Directive 2009/138/EC, where any of the conditions set out in the first subparagraph are no longer fulfilled during at least one year.
2.Paragraph 1, first subparagraph, point (c)(i), shall only apply to life undertakings and to undertakings pursuing both life and non-life activities whose technical provisions related to the life activities represent 20 % or more of the total technical provisions gross of the amounts recoverable from reinsurance contracts and special purpose vehicles, as referred to in Article 76 of Directive 2009/138/EC.
3.Notwithstanding paragraph 1, first subparagraph, supervisory authorities may still approve the use of the proportionality measure provided for in Article 77(8) of Directive 2009/138/EC to an insurance and reinsurance undertaking which does not meet the condition set out in point (c) of that paragraph, where they conclude, on the basis of the elements of the supervisory review process that are relevant for this proportionality measure, that the risk profile of the undertaking is sufficiently low.