As of 1 January 2016 the new risk-based Solvency II regime has become applicable. To finalise its implementation under national law, the French insurance supervision authority (Autorité de contrôle prudentiel et de resolution – “ACPR”) has published in its official register, on 21 December 2015 and on 18 January 2016, various instructions and notices concerning the Solvency II regime: All of these guidelines cover the three pillars of the Solvency II regime:

Regulatory requirements relating to Pillar 1

Instruction n°2016-I-01 relates to the thresholds for the submission of the quarterly reporting for insurance undertakings that fall within the scope of Solvency II regime. Article 5 of the instruction establishes various thresholds that must be considered by insurance companies depending on (i) their licence for the classes of insurance and (ii) their balance sheet when exceeding a determined threshold. These thresholds must be reached during three (3) consecutive exercises starting on January 1st 2014, in which case, insurance undertakings are exempted of the quarterly reporting for the fourth year.

The notice on the calculation of the group solvency specifies the provisions for the calculation of the group solvency especially concerning entities from third countries and also the practical application of the “mutatis mutandis” principle provided for under the Solvency II regime.

Regulatory requirements relating to Pillar 2

Instruction n° 2015-I-28 lays down conditions for insurance undertakings who want to proceed at the level of any subsidiary of the group with the Own Risk and Solvency Assessment (“ORSA“). These insurance undertakings have to submit a written request to the ACPR and complete an application file. The application file must contain (i) a list of legal entities covered by the single supervisory report of the ORSA, (ii) the reasons for choosing to proceed with the ORSA at subsidiary level in view of the size, structure and the complexity of risks of the subsidiaries, (iii) the involvement of the boards of directors or supervisory boards of the relevant subsidiaries in the process of preparing and signing off the single ORSA report and (iv) information about the content and structure of the ORSA report. The organisation of the report should permit to identify sections corresponding to individual assessments.

The notice on the internal model provides insurance undertakings with detailed guidelines on how the internal models should be implemented and focuses on the eligibility criteria to be complied with by insurance undertaking for the internal model, methodology, validation and documentation of the internal model.

The notice on the Own Risk and Solvency Assessment clarifies the regulatory requirements concerning the ORSA. This notice develops the governance aspects of the ORSA by involving the board of directors or supervisory boards of insurance undertaking with the steering of the ORSA process, documents that must be provided relating to the ORSA, such as the ORSA report to the ACPR or the internal policies to the ORSA. This notice also specifies three (3) assessment criteria for the ORSA which are (i) overall solvency needs, (ii) continuous compliance with regulatory capital requirements and (iii) continuous compliance with the technical provisions. Finally, this notice provides guidelines to implement the ORSA at the group level.

The notice on the governance system provides insurance undertakings with detailed guidelines on all the aspect of the Solvency II governance. Especially, the implementation of key functions, the prudent person principle and the implementation of the governance at the group level under the Solvency II regime.

Regulatory requirements relating to Pillar 3

Instruction n° 2015-I-27 lays down conditions for insurance undertakings to publish a single report on the solvency and the financial situation at the group level. To this end, companies have to submit a written request at least five (5) months before the end of the relevant financial year to the ACPR. The request must be completed with an application file which must contain (i) a list of legal entities covered by the single report, (ii) a description of the process for preparing the single document and (iii) information about the content and structure of the report, in particular, information concerning each subsidiary should be part of the information concerning the group.

Instruction n° 2015-I-29 relates to insurance or reinsurance undertakings using the internal model which have to report each trimester to the ACPR all non-material modifications made to the internal model within a definite calendar. Non-material modifications are communicated in a report displaying the quantitative and qualitative impacts of the changes to the General Secretariat of the ACPR.

The notice on the communication of information to the supervisory authority and to the publicclarifies the content of the Solvency and Financial Condition Report (“SFCR”) and the Regular Supervisory Report (“RSR”).

Instruction n°2016-I-04 relating to the reporting for purposes of financial stability emphasises that data provided by insurance undertakings must accurately reflect the best assessment of the financial and operational situation of the company.

Instruction n°2016-I-05 relates to the transmission by insurance and reinsurance undertakings of prudential documents to the ACPR. The documents that must be communicated to the General Secretariat of the ACPR are (i) the SFCR, (ii) the RSR and (iii) the ORSA.

These instructions and notices came into force on 1 January 2016 or at their date of publication when published after the 1st January 2016.