On 18 June 20151 we reported on the European Commission’s adoption of its first third country equivalence decisions under Solvency II, which granted Switzerland, Australia, Bermuda, Brazil, Canada, Mexico and the US full or partial equivalence.
Those decisions were delegated acts that required approval by both the Council of the EU, in its configuration as the European Economic and Financial Affairs Council (ECOFIN), and the European Parliament. That approval has now been given in respect of Switzerland and the delegated act can now be published in the Official Journal of the EU. It will enter into force 20 days after publication.
What does this mean?
For UK firms which have Swiss holding companies, sister companies or reinsurance contracts with Swiss authorised counterparties:
- Reinsurance with Swiss-regulated counterparties is to be treated in the same way as reinsurance with EU counterparties.
- There is no requirement to convert the Swiss capital requirements and capital resource calculations into Solvency II calculations.
- If the group supervisor is the Swiss regulator (FINMA) then the Prudential Regulation Authority (PRA) must rely on the group supervision by FINMA rather than conducting group supervision itself.
In summary, this full equivalence decision means that navigating the interaction of Swiss and EU regulatory regimes is likely to be significantly easier than in other third country jurisdictions.