What changed between the plenary report and the adopted text

Removed:1. For insurance and reinsurance undertakings other than low-risk profile undertakings and captive insurance undertakings and captive reinsurance undertakings, the balance sheet disclosed as part of the solvency and financial condition report ▌shall be subject to an audit requirement.

Removed:▌

Removed:2a. Member States may extend the scope of the audit requirement to other elements of the solvency and financial condition report.

Removed:3. The audit shall be carried out by a statutory auditor or an audit firm, in accordance with the applicable international standards, unless this Directive, or delegated acts adopted pursuant to it establish other principles and requirements for the assessment of any item of the balance sheet. Statutory auditors and audit firms, when performing this task, shall comply with the duties of auditors set out in Article 72.

Removed:4. A separate report, including a description of the nature, and the results, of the audit, prepared by the statutory auditor or the audit firm shall be submitted together with the solvency and financial condition report to the supervisory authority by the insurance and reinsurance undertakings.’;

Removed:(28) Article 52 is amended as follows:

Removed:(a) in paragraph 1, the following points (e) and (f) are added:

Removed:‘(e) the number of insurance and reinsurance undertakings, divided by low-risk profile undertakings and others, using simplifications or other proportionality measures and the proportionality measures used by each undertaking;

Removed:(f) the number of groups, divided by low-risk profile group and others, using simplifications or other proportionality measures and the proportionality measures used by each group.’;

Removed:(b) in paragraph 2, the following point (f) is added:

Removed:‘(f) for each Member State, the number of insurance and reinsurance undertakings and the number of groups, divided by low-risk profile undertakings and others using simplifications or other proportionality measures and the simplifications and other proportionality measures used by each undertaking.’;

Removed:(c) paragraph 3 is replaced by the following:

Removed:‘3. EIOPA shall provide the information referred to in paragraph 2 to the European Parliament, to the Council and to the Commission, together with a report outlining the degree of supervisory convergence in the use of capital add-ons and in the use of proportionality measures between supervisory authorities in the different Member States.’;

Removed:(29) in Article 53, paragraph 4 is replaced by the following:

Removed:‘4. Paragraphs 1 and 2 of this Article shall not apply to the information referred to in Article 51(1), point (c).’;

Removed:(30) in Article 56, the first paragraph is replaced by the following:

Removed:‘The Commission shall adopt delegated acts, in accordance with Article 301a, that further specify the information that insurance and reinsurance undertakings are required to disclose. The Commission may adopt delegated acts in accordance with Article 301a to change the deadlines laid down in Article 51(7), provided that a change is necessary due to sanitary emergencies, natural catastrophes and other extreme events.’;

Removed:(31) in Article 58(3), points (a) and (b) are replaced by the following:

Removed:‘(a) situated or regulated outside the Union; or

Removed:(b) a natural or legal person not subject to supervision under this Directive, Directive 2009/65/EC of the European Parliament and of the Council*, Directive 2013/36/EU , or Directive 2014/65/EU.

Removed:______________________________________

Removed:* Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (OJ L 302, 17.11.2009, p. 32).’;

Removed:(32) in Article 60(1), point (a), the words ‘point 2 of Article 1a of Directive 85/611/EEC’ are replaced by the words ‘Article 2(1), point (b), of Directive 2009/65/EC’;

Removed:(33) in Article 62, first paragraph, the first sentence is replaced by the following:

Removed:‘Where the influence exercised by the persons referred to in Article 57 is likely to operate against the sound and prudent management of an insurance or reinsurance undertaking, Member States shall require the supervisory authority of the home Member State of that undertaking in which a qualifying holding is held, sought or increased to take appropriate measures to put an end to that situation.’;

Removed:(34) in Article 63, second paragraph, the words ‘Directive 2004/39/EC’ are replaced by the words ‘Directive 2014/65/EU’;

Removed:(34a) in Article 64, the following paragraph is added:

Removed:'The first three paragraphs of this Article shall not prevent the competent authorities from publishing the outcome of stress tests carried out in accordance with Article 34(4) of this Directive or Article 32 of Regulation (EU) No 1094/2010 or from transmitting the outcome of stress tests to EIOPA for the purpose of the publication by EIOPA of the results of Union-wide stress tests.';

Removed:(35) in Article 72(1), the words ‘Article 51 of Directive 78/660/EEC, Article 37 of Directive 83/349/EEC or Article 31 of Directive 85/611/EEC’ are replaced by the words ‘Article 34 or 35 of Directive 2013/34/EU or Article 73 of Directive 2009/65/EC’;

Removed:(36) Article 77 is amended as follows:

Removed:(a) the first subparagraph of paragraph 5 is replaced by the following:

Removed:‘Where insurance and reinsurance undertakings value the best estimate and the risk margin separately, the risk margin shall be calculated by determining the cost of providing an amount of eligible own funds equal to the time-adjusted Solvency Capital Requirement necessary to support the insurance and reinsurance obligations over the lifetime thereof. The adjustment of the Solvency Capital Requirement consists of an exponential and time-dependent element.’;

Removed:(b) the following paragraphs 5a, 6 and 7 are added:

Removed:‘5a. The Cost-of-Capital rate referred to in paragraph 5 shall be assumed to be equal to 4,5 %.

Removed:6. Where insurance and reinsurance contracts include financial options and guarantees, the methods used to calculate the best estimate shall appropriately reflect that the present value of cash flows arising from those contracts may depend both on the expected outcome of future events and developments and on potential deviations of the actual outcome from the expected outcome in certain scenarios.

Removed:7. Notwithstanding paragraph 6, insurance and reinsurance undertakings that are classified as low-risk profile undertakings and undertakings that have obtained prior supervisory approval may use a prudent deterministic valuation of the best estimate for life obligations with options and guarantees that are not deemed material.’;

Removed:(37) Article 77a is replaced by the following:

Removed:‘Article 77a Extrapolation of the relevant risk-free interest rate term structure

Removed:1. The determination of the relevant risk-free interest rate term structure referred to in Article 77(2) shall make use of, and be consistent with, information derived from relevant financial instruments. That determination shall take into account relevant financial instruments of those maturities where the markets for those financial instruments are deep, liquid and transparent. As of the first maturity (the ‘first smoothing point’) where markets for those financial instruments are not deep, liquid or transparent, the relevant risk-free interest rate ▌shall be extrapolated in accordance with the third subparagraph. The first smoothing point for a currency shall be the longest maturity for which all of the following conditions are met:

Removed:(a) the markets for financial instruments of that maturity are deep, liquid and transparent;

Removed:(b) the percentage of outstanding bonds of that or a longer maturity among all outstanding bonds denominated in that currency is sufficiently high.

Removed:The extrapolated part of the relevant risk-free interest rate term structure shall be based on forward rates converging smoothly from one or a set of forward rates in relation to the longest maturities for which the bonds can be observed in a deep, liquid and transparent market to an ultimate forward rate (UFR).

Removed:The extrapolated forward rates shall be equal to a weighted average of a liquid forward rate and the UFR. The liquid forward rate shall be based on one or a set of forward rates in relation to the longest maturities for which the relevant financial instrument can be observed in a deep, liquid and transparent market. For maturities of at least 40 years past the first smoothing point the weight of the UFR shall be at least 80%.

Removed:The extrapolated part of the relevant risk-free interest rates shall take into account information from financial instruments other than bonds ▌where the markets for those financial instruments are deep liquid and transparent.

Removed:▌

Removed:2a. Notwithstanding paragraph 1, where the market conditions referred to in paragraph 1, first subparagraph, points (a) and (b), are similar to those present on ... [date of entry into force of this amending Directive], the starting point for the extrapolation of risk-free interest rates for the euro, shall be at a maturity of 20 years.’;

Removed:(37a) in Article 77b, paragraph 1, point (i) is replaced by the following:

Removed:(i) the insurance or reinsurance obligations of an insurance or reinsurance contract, and where a group contract is considered a single contract, are not split into different parts when composing the portfolio of insurance or reinsurance obligations for the purpose of this paragraph.’;

Removed:(38) Article 77d is amended as follows:

Removed:(a) paragraph 1 is replaced by the following:

Removed:‘1. An insurance and reinsurance undertaking may apply a volatility adjustment to the relevant risk-free interest rate term structure to calculate the best estimate referred to in Article 77(2) subject to prior approval by the supervisory authorities where all of the following conditions are met:

Removed:(a) the volatility adjustment for a given currency is applied in the calculation of the best estimate of all insurance and reinsurance obligations of the undertaking denominated in that currency where the relevant risk-free interest rate term structure used to calculate the best estimate for those obligations does not include a matching adjustment as referred to in Article 77b;

Removed:(b) the undertaking demonstrates to the satisfaction of the supervisory authority that it has adequate processes in place to calculate the volatility adjustment pursuant to paragraphs 3 and 4 of this Article.’;

Removed:(b) the following paragraphs 1a, 1b and 1c are inserted:

Removed:‘1a. Notwithstanding paragraph 1 of this Article, insurance and reinsurance undertakings who applied a volatility adjustment to the relevant risk-free interest rate term structure to calculate the best estimate referred to in Article 77(2) before [OP please insert date = one year before application date] may, without prior approval by the supervisory authority, continue applying a volatility adjustment provided that they comply with paragraph 1, points (a) and (b), of this Article as of [OP please insert date = application date].

Removed:1b. Member States shall ensure that supervisory authorities have the power to require an insurance and reinsurance undertaking to stop applying a volatility adjustment to the relevant risk-free interest rate term structure to calculate the best estimate referred to in Article 77(2) where the undertaking no longer meets the conditions set out in paragraph 1 of this Article. When an undertaking restores compliance with paragraph 1, points (a) and (b), of this Article, it may request prior approval to the supervisory authorities to apply a volatility adjustment to the relevant risk-free interest rate term structure to calculate the best estimate pursuant to paragraph 1 of this Article.

Removed:1c. Insurance and reinsurance undertakings may, subject to prior approval by the supervisory authority, apply an undertaking-specific adjustment to the risk-corrected spread of the currency referred to in paragraph 3, under the conditions that:

Removed:(i) the risk-corrected spread exceeded, during the four quarterly reporting periods prior to the reporting date, the risk-corrected spread calculated on the basis of the undertaking’s portfolio of investments in debt instruments; and

Removed:(ii) the information that is inherent to the relevant assets of the undertaking and that is reported by the undertaking in line with Article 35(1) to (4) is of sufficient quality to allow a robust and reliable calculation of this adjustment.

Removed:That adjustment shall correspond to the lowest between 125 % and the ratio of the risk-corrected spread calculated based on the undertaking’s portfolio of investments in debt instruments and the risk-corrected spread calculated on the basis of the reference portfolio for the relevant currency. The risk-corrected spread based on the undertaking’s portfolio of investments in debt instruments shall be calculated in the same manner as the risk-corrected spread based on the reference portfolio for the relevant currency, but using undertaking-specific data on the weights and the average duration of the relevant sub-classes within the undertaking’s portfolio of investments in debt instruments for the relevant currency.