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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?
Ownership rules apply when:
- an undertaking seeks authorisation for the taking up of the (re)insurance business; and
- a holding in a (re)insurer is acquired, disposed of or reduced in the course of the ongoing insurance business.
Under these rules, undertakings must notify the home member state’s supervisory authority of the identities of any persons that have qualifying holdings in that undertaking (ie, a direct or indirect holding in an undertaking which represents 10% or more of the capital or the voting rights, or which makes it possible to exercise a significant influence over the management of that undertaking) and of the amounts of those holdings.
The supervisory authority may refuse authorisation if it is unsatisfied as to the qualifications of that person when considering the need to ensure the sound and prudent management of (re)insurer insurance.
Further, any natural or legal person or such persons acting in concert that have taken a decision either to acquire, directly or indirectly, a qualifying holding in a (re)insurer or increase such a qualifying holding in a (re)insurer so that the proportion of the voting rights or the capital held reaches or exceeds 20%, 30% or 50%, or the (re)insurer becomes its subsidiary, must first notify the supervisory authority in writing of the (re)insurer in which they are seeking to acquire or increase a qualifying holding, indicating the size of the intended holding along with relevant information.
The same applies in case any natural or legal person that has taken a decision to dispose of or reduce, directly or indirectly, that person's qualifying holding in a (re)insurer so that the proportion of the voting rights or the capital held would fall below 20%, 30% or 50%, or the (re)insurer would cease to be a subsidiary of that person.
On becoming aware of them, the (re)insurer must inform the supervisory authority of their home member state of any acquisitions or disposals of holdings in its capital that cause those holdings to exceed or fall below any of the aforementioned thresholds.
The supervisory authorities may oppose the proposed acquisition only if there are reasonable grounds for doing so or if the information provided by the proposed acquirer is incomplete.
Further, at least once a year (re)insurers must inform the supervisory authority of its home member state of the names of shareholders and members which possess qualifying holdings and the sizes of such holdings.
What regulations, procedures and eligibility criteria govern the transfer of control of/acquisition of a stake in a (re)insurer?
Must (re)insurers adopt a certain legal structure in order to operate? If no mandatory company organisation applies, what are the common structures used?
Every undertaking for which authorisation is sought must adopt one of the legal forms of life and non-life insurers, as well as reinsurer as set out in Annex III of EU Directive 2009/138/EU (Solvency II), depending on the member state in which authorisation is sought.
The most common structure is public limited companies.
Do any particular corporate governance requirements apply to (re)insurers, including any eligibility criteria for directors and officers?
Corporate governance requirements (Re)insurers must have an effective governance system in place which provides for sound and prudent business management. That system must include an adequate transparent organisational structure with clearly allocated and appropriately segregated responsibilities, and must transmit information effectively. It must also comply with fit and proper requirements, as well as those regarding risk management, internal control, internal auditing, actuarial functions and outsourcing.
The system must be proportionate to the nature, scale and complexity of the operations of the (re)insurer and subject to regular internal review.
(Re)insurers must have written policies covering at least risk management, internal control, internal audit and, where relevant, outsourcing, and must ensure that those policies are implemented.
Further, they must have at least four specific governance functions, including risk management, internal auditing, compliance and actuarial.
Eligibility criteria for directors and officers (Re)insurer must ensure that the professional qualifications, knowledge and experience of all persons who effectively run the undertaking or have other key functions are at all times adequate to enable sound and prudent management (fit) and are of good repute and integrity (proper).
To that end, (re)insurers must establish, implement and maintain documented policies and adequate procedures.
The assessment of whether a person is fit includes an evaluation of the person's professional and formal qualifications, knowledge and relevant experience within the (re)insurance sector, other financial sectors or other businesses, and takes into account the respective duties allocated to that person and, where relevant, their insurance, financial, accounting, actuarial and management skills. The assessment of whether members of the administrative, management or supervisory body are fit takes account of the respective duties allocated to individual members to ensure:
- appropriate diversity of qualifications; and
- knowledge and relevant experience for managing and overseeing the undertaking in a professional manner.
The assessment of whether a person is proper includes an assessment of that person's honesty and financial soundness based on evidence regarding their character, personal behaviour and business conduct, including any relevant criminal, financial and supervisory aspects.
(Re)insurers must notify the supervisory authority of any changes to the identity of the persons who effectively run the undertaking or are responsible for other key functions, along with all information required to assess whether any new persons appointed to manage the undertaking are fit and proper. Further, they must notify their supervisory authority if any of said persons have been replaced because they can no longer fulfil said requirements.
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