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?
There are no specific ownership restrictions, but the Central Bank of Ireland pays particular attention to the direct and indirect ownership structure of applicants for authorisation. It will not grant an authorisation if, taking into account the need to ensure the sound and prudent management of the undertaking, it is not satisfied as to the qualifications of the owner(s). The Central Bank seems to prefer applications where ownership is held by one or more financial institutions or vested in a wide spread of owners. Close links rules also apply.
What regulations, procedures and eligibility criteria govern the transfer of control of/acquisition of a stake in a (re)insurer?
The European Union (Insurance and Reinsurance) Regulations 2015 provide that the Central Bank of Ireland must be notified in advance of certain acquisitions and disposals of qualifying holdings, both direct and indirect, in (re)insurers. A ‘qualifying holding’ is a direct or indirect holding that represents 10% or more of the capital of, or voting rights in, the (re)insurer, or makes it possible to exercise a significant influence over the management of the (re)insurer.
In the case of acquisitions, a proposed acquirer may not directly or indirectly acquire a qualifying holding without having previously notified the Central Bank of the size of the intended holding, and it must provide sufficient information to enable the Central Bank to consider the proposed acquisition. A specific Acquiring Transaction Notification Form is required.
A similar process applies where an entity which already holds a qualifying holding seeks to increase the size of its holding so that its holding would either reach or exceed a prescribed percentage level of 20%, 33% or 50%, or so that the undertaking would become its subsidiary.
An acquisition may only be completed where either the Central Bank has notified the proposed acquirer that it does not oppose the proposed acquisition or, by the end of the assessment period, the Central Bank has not notified it of its opposition.
In the case of the disposal of a qualifying holding or the disposal of part of the qualifying holding, where the remaining holding would fall to or below one of the prescribed percentage levels or would be such that the (re)insurer would no longer be a subsidiary of the disposer, there is a prior notification requirement only.
Must (re)insurers adopt a certain legal structure in order to operate? If no mandatory company organisation applies, what are the common structures used?
To obtain authorisation as an Irish head office, the European Union (Insurance and Reinsurance) Regulations 2015 require a (re)insurer to be a designated activity company (DAC), a public limited company, a company limited by guarantee, an unlimited company or a Societas Europaea, and have its head office and registered office in Ireland. The most common legal structure for (re)insurers in Ireland is a DAC.
Do any particular corporate governance requirements apply to (re)insurers, including any eligibility criteria for directors and officers?
The Central Bank of Ireland’s Corporate Governance Requirements for Insurance Undertakings 2015 apply to all insurers authorised by the Central Bank (including reinsurers, but excluding captives). Among other things, the requirements deal with the composition of the board, roles of the chair, CEO, directors (including executive, non-executive and independent non-executive), chief risk officer and other matters, such as the risk appetite, meetings and committees. Additional obligations are placed on (re)insurers deemed to be ‘high impact’ under the Central Bank’s Probability Risk and Impact System (PRISM) regime. A separate set of requirements applies to captives.
Directors and other senior officers also fall within the scope of the Central Bank’s Fitness and Probity Regime, under which persons performing a wide range of functions in a (re)insurer are required to possess a level of fitness (ie, competence and capability) and probity (ie, honesty, ethical judgment and integrity, and financial soundness) befitting the relevant role.
Click here to view the full article.