Parent undertaking outside the EEA: absence of equivalence
36.—(1) This regulation applies where—
(a)a parent undertaking of an insurance undertaking or reinsurance undertaking established in the EEA has its head office in a third country; and
(b)both of the following conditions are satisfied—
(i)the Commission has not adopted a delegated act under Article 260(3) of the solvency 2 directive determining that the prudential regime of the third county is equivalent to Title 3 of the Solvency 2 Directive; and
(ii)either—
(aa)the Commission has not adopted a delegated act under Article 260(5) of the Solvency 2 Directive determining that the prudential regime of the third country is temporarily equivalent to Title 3 of the Solvency 2 Directive; or
(bb)if such a delegated act has been adopted, the group contains an insurance undertaking or reinsurance undertaking in an EEA State with a balance sheet total that exceeds the balance sheet total of the parent undertaking situated in the third country.
(2) The PRA must apply either of the following methods of supervision to the group—
(a)rules implementing Articles 218 to 235, and 244 to 258, of the Solvency 2 Directive; or
(b)any other method which—
(i)ensures appropriate supervision of the insurance undertakings and reinsurance undertakings in the group; and
(ii)ensures the objectives of group supervision (as set out in Title 3 of the Solvency 2 Directive) are achieved.
(3) Where the PRA applies the rules referred to in paragraph (2)(a)—
(a)the rules must be applied at the level of the insurance holding company, mixed financial holding company, third-country insurance undertaking or third-country reinsurance undertaking; and
(b)for the sole purpose of the group solvency calculation, the parent undertaking must be treated as if it were an insurance undertaking or reinsurance undertaking subject to the conditions as laid down in Subsections 1, 2 and 3 of Section 3 of Chapter 6 of Title 1 of the Solvency 2 Directive as regards—
(i)the own funds eligible for the solvency capital requirement; and
(ii)either of—
(aa)a solvency capital requirement determined in accordance with the principles of Article 226 of the Solvency 2 Directive where the parent undertaking is an insurance holding company; or
(bb)a solvency capital requirement determined in accordance with the principles of Article 227 of the Solvency 2 Directive where the parent undertaking is a third-country insurance undertaking or third-country reinsurance undertaking.
(4) The reference in paragraph (2)(b) to any other method includes—
(a)requiring the group to establish an insurance holding company or mixed financial holding company with its head office in the EEA State; and
(b)applying the requirements of Title 3 of the Solvency 2 Directive to the insurance undertakings and reinsurance undertakings in the group headed by that insurance holding company or mixed financial holding company.
(5) Before applying another method under paragraph (2)(b), the PRA must—
(a)consult the other supervisory authorities concerned in the supervision of the group; and
(b)where the PRA is not acting as the group supervisor, agree the method with the supervisor acting as the group supervisor.
(6) Where the PRA applies another method under paragraph (2)(b), the PRA must notify the European Commission and the other supervisory authorities concerned.