1.Where an own-fund item has been classified into one of the three tiers based on the criteria set out in Title I, Chapter IV, Section 2 by an insurance or reinsurance undertaking that is included in the calculation of the group solvency, the own-fund item shall be classified in the same tier at group level provided that all of the following additional requirements are met:
the undertaking concerned complies with Articles 71, 73 and 77 of this Regulation;
the own-fund item is clear of encumbrances, including within the meaning of Article 222(6) of Directive 2009/138/EC, and is not connected with any other transaction, which when considered with the own-fund item could result in that own-fund item not satisfying the requirements set out in Article 94 of that Directive at group level.
2.For the purposes of point (a) of paragraph 1:
the term ‘Solvency Capital Requirement’ in Articles 71, 73 and 77 of this Regulation shall mean both the Solvency Capital Requirement of the undertaking that has issued the own-fund item and the group Solvency Capital Requirement;
the term ‘Minimum Capital Requirement’ in Articles 71, 73 and 77 of this Regulation shall mean both the Minimum Capital Requirement of the undertaking that has issued the own-fund item and one of the following minimums:
where method 1 is used, the minimum for the group Solvency Capital Requirement as calculated in accordance with the second subparagraph of Article 230(2) of Directive 2009/138/EC,
where a combination of methods 1 and 2 is used, the minimum determined in accordance with Article 341 of this Regulation.
3.For the purposes of this Article, the term ‘insurance or reinsurance undertaking’ in Title I, Chapter IV, Section 2 shall mean both the participating insurance or reinsurance undertaking and the insurance or reinsurance undertaking belonging to the group that has issued the own-fund item.
4.Notwithstanding paragraph 1, where an insurance or reinsurance undertaking has included in Tier 2 an own-fund item which would qualify for inclusion in Tier 1 in accordance with Article 73(1), point (j), that classification shall not prohibit the classification of the same own-fund item in Tier 1 at group level, provided that the limit set out in Article 82(3) is complied with at group level.
5.Notwithstanding paragraph 2, point (a), for own-fund items issued by an insurance or reinsurance undertaking before it became part of the group, the term ‘Solvency Capital Requirement’ in Articles 71, 73 and 77 of this Regulation shall be understood as referring only to the Solvency Capital Requirement of that related undertaking, where the undertaking has been a related undertaking of the group for less than two financial years and is included in the calculation of the group solvency.
The first subparagraph shall only apply where the group has been subject to group supervision for at least three years, and the participating insurance or reinsurance undertaking, the insurance holding company or mixed financial holding company demonstrates in the own-risk and solvency assessment that it will be able to comply with its group Solvency Capital Requirement without such own-fund items, once the related undertaking has been part of the group for more than two financial years.