Ownership and organisational requirements

Ownership of (re)insurers

Are there any restrictions on ownership of or investment in (re)insurers in your jurisdiction, including any limits on foreign ownership/investment?

No legal general restrictions apply to the ownership or control of (re)insurers, including in respect of foreign ownership or investment.

However, for the purpose of granting (re)insurance licences, the French Prudential Supervision and Resolution Authority (ACPR) will assess whether the shareholding structure and the quality of the shareholders guarantee sound and prudent management of the company. To this end, as part of the licensing application procedure, an extensive form must be filed in relation to shareholders and ultimate beneficiaries demonstrating that they have a clean track record and providing the ACPR sufficient assurance as to their ownership in a French (re)insurer.

The ACPR can refuse authorisation if the laws, regulations or administrative provisions of a non-European Economic Area (EEA) member state governing one or more natural or legal persons with which the insurer has close links – or difficulties involved in the enforcement of such measures – prevent the effective exercise of its supervisory functions.

What regulations, procedures and eligibility criteria govern the transfer of control of/acquisition of a stake in a (re)insurer?

Acquisitions, disposals and increases or decreases in the direct or indirect ownership of (re)insurers which have their registered office in France are subject to two regimes.

Prior ACPR authorisation Prior ACPR authorisation is required for the acquisition and increase of ownership interests in relation to any transaction that enables a person – acting alone or in concert with other persons – to acquire or increase his or her ownership in a (re)insurer or a parent company of such undertakings with its registered office in France where:

  • such a transaction results in the proportion of voting rights held by that person to exceed 10%, 20%, 33% or 50% of all voting rights of the (re)insurer; or
  • the (re)insurer becomes a subsidiary of that person.

A complete application form (as well as supporting documentation) must therefore be filed with the ACPR. The ACPR must acknowledge receipt within two business days and complete its assessment within 60 business days from the date of acknowledging receipt. The ACPR may ask for additional information no later than 50 business days into the assessment period, suspending such period for a maximum of 20 business days (30 business days in relation to non-EEA or unregulated acquirers) until the additional information is received.

The ACPR assesses the application, notably on the grounds of:

  • the reputation and financial strength of the acquirer;
  • the target undertaking’s ability to fulfil and continue to fulfil the provisions of the French Insurance Code; and
  • the existence of reasonable grounds for suspecting money laundering in relation to the planned transaction.

Prior ACPR notification Prior ACPR notification is required in the event of a disposal or reduction of ownership interests which results in the proportion of voting rights to fall below 10%, 20%, 33% or 50%, or where the undertaking ceases to be a subsidiary.

The ACPR must acknowledge receipt of a complete notification within two business days and has 60 business days from the date of its acknowledgement of receipt to oppose the planned transaction, particularly if it calls into the question the conditions to which the licence of the target entity is subject.

Organisational requirements

Must (re)insurers adopt a certain legal structure in order to operate? If no mandatory company organisation applies, what are the common structures used?

(Re)insurers must be established in the form of one of the three corporate structures (as applicable) provided under the French Insurance Code, namely:

  • a joint stock company;
  • a mutual insurance company; or
  • a European company.

Insurance business may also be carried out by other entities which are governed by the Code of Mutuality or the French Code of Social Security (eg, mutuals or supplementary pension funds).

Do any particular corporate governance requirements apply to (re)insurers, including any eligibility criteria for directors and officers?

Pursuant to the Solvency II Directive, (re)insurers must put in place and maintain an adequate and transparent system of governance which provides for sound and prudent management of the business. The system must include at least an adequate transparent organisational structure with clear allocation and appropriate segregation of responsibilities, and an effective system for ensuring the transmission of information.

(Re)insurers must act prudently and monitor their own risk and solvency on a regular basis. To this end, they must put in place written policies at least in relation to risk management, internal control, internal audit and (where relevant) outsourcing. These policies are reviewed annually and require prior approval by the administrative, management or supervisory body.

(Re)insurers must take reasonable steps to ensure continuity and regularity in the performance of their activities, including the development of contingency plans. Directors and officers are subject to fit and proper criteria, including integrity and professional capacity requirements. To assess whether these criteria are met, the ACPR will take into account the training and professional experience acquired by such persons, including as a board or committee manager. Where a person has exercised previous mandates, competence is presumed from his or her past experience.

Operating requirements

Authorisation procedure

Which (re)insurers must obtain authorisation from the regulator before operating on the market and what is the procedure for doing so?

French undertakings Undertakings which have their head office in France must apply for a (re)insurance licence before conducting (re)insurance activities in France.

To obtaining this licence, they must make initial contacts and file a complete application (in French language) with the French Prudential Supervision and Resolution Authority (ACPR). The application comprises legal, technical and financial sections.

The ACPR must reach its decision within six months from the date of receipt of a complete application. If it does not grant authorisation within that timeframe, the application is deemed to have been rejected.

In order to grant a licence, the ACPR will assess, notably:

  • the fitness and properness, expertise and experience of the persons running or overseeing the undertaking;
  • the administrative, technical and financial resources of the undertaking to meet the objectives of its business plan (ie, its scheme of operations); and
  • the share capital structure and quality of the shareholders.

On the grounds of the ‘single licence’ principle, (re)insurers duly licensed in France may passport their licence in other EU countries on either a freedom-of-services or freedom-of-establishment basis.

Foreign undertakings (Re)insurers which have their head office in an EU member state other than France can apply the single licence principle and operate (re)insurance business in France on the basis of their home member state licence, subject to compliance with the passporting procedure as implemented in their home member state.

Non-EU insurers may carry on insurance business in France only having established a French subsidiary or branch, and having obtained a licence from the ACPR. Non-EU reinsurers are not subject to prior ACPR licensing requirements and may carry on reinsurance business in France subject to specific obligations (eg, the obligation to post collateral with French cedents).

Financial requirements

What are the minimum capital and solvency requirements for (re)insurers operating in your jurisdiction?

(Re)insurers must comply, at all times, with the minimum capital and solvency requirements provided under the Solvency II Directive.

Do any other financial requirements apply?

Although not strictly speaking financial requirements, (re)insurers are subject to specific rules in relation to their investments, which must comply with the ‘prudent person’ principle and additional specific rules (as the case may be).

Personnel qualifications

Are personnel of (re)insurers subject to any professional qualification requirements?

(Re)insurers must ensure that all persons effectively running the undertaking or having other key functions fulfil the specific requirements applicable to them at all times.

Requirements for insurers Persons managing and administering insurers (including members of the board and key function holders) are subject to integrity and professional capacity requirements. To assess whether such conditions are fulfilled, the ACPR will take into account the training and professional experience acquired by such persons, including as a board or committee manager. Where a person has exercised previous mandates, competence is presumed from his or her past experience.

Requirements for reinsurers Similar professional qualifications as those applicable to insurers apply to persons managing and administering reinsurers (including members of the board and key function holders).

Business plan

What rules and requirements govern the business plans of (re)insurers?

As part of the licence application, (re)insurers must submit a business plan (also known as a ‘scheme of operations’), including:

  • detailed projections on revenue, losses, technical results, net results, technical provisions and solvency data;
  • a description of contemplated activities (eg, the nature of the risks covered, target clients, prices, distributions modalities and contemplated reinsurance programme); and
  • the administrative, technical and financial resources.

For three years following authorisation, the (re)insurer must provide the ACPR with an update each semester on its progress towards implementation of the scheme of operations.

Risk management

What risk management systems and procedures must (re)insurers adopt?

Pursuant to the Solvency II Directive, (re)insurers must have in place an effective risk-management system comprising strategies, processes and reporting procedures necessary to identify, measure, monitor, manage and report – on a continuous basis – the risks at an individual and aggregated level, to which they are or could be exposed, and their interdependencies. In particular, the risk-management system must comprise policies addressing:

  • underwriting and reserving;
  • asset liability management;
  • investments;
  • liquidity and concentration risk management;
  • operational risk management; and
  • reinsurance and other risk-mitigation techniques.

The risk-management system must be effective and well integrated in the organisational structure and decision-making processes, and a risk-management function – structured in such a way as to facilitate the implementation of the risk-management system – must be provided for.

Reporting and disclosure

What ongoing regulatory reporting and disclosure requirements apply to (re)insurers?

(Re)insurers are subject to numerous reporting requirements, mainly stemming from the Solvency II Directive – Pillar 3 requirements. Some of these requirements can be fulfilled by the parent company on behalf of the group. For example, the Own Risk and Solvency Assessment  and the Solvency and Financial Conditions Report can – subject to prior ACPR authorisation – cover the group and the totality or a subsection of the entities comprising the group. Other reports, including the Regular Supervisory Report and the Actuarial Report, must be filed both on a solo basis and at group level; while the National Specific Statements must be prepared on a solo basis only.

Other requirements

Do any other operating requirements apply in your jurisdiction?

The ACPR has issued numerous recommendations which directly impose operating requirements on (re)insurers and additional reporting obligations (eg, in relation to unclaimed life insurance contracts) may apply.


What are the consequences of non-compliance with the operating requirements applicable to (re)insurers?

(Re)insurers that fail to comply with applicable legal and regulatory requirements may be subject to:

  • disciplinary penalties determined by the ACPR – ranging from a warning to a withdrawal of licence and/or a fine up to a maximum amount of €100 million; and/or
  • criminal penalties – for example, the carrying on of (re)insurance activities in France without authorisation is a criminal offence punishable by a fine of up to €375,000 and other penalties (eg, prohibition to conduct business in France) if committed by a legal person.

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