What changed between the draft committee report and the plenary report

Removed:Article 5 – paragraph 1 – introductory part: 1. Member States shall ensure that insurance and reinsurance undertakings that are not part of a group subject to pre-emptive recovery planning pursuant to Article 7 and that meet the criteria laid down in paragraphs 2 or 3, draw up and keep updated a pre-emptive recovery plan. Such pre-emptive recovery plan shall contain measures to be taken by the undertaking concerned to restore its financial position where that position has significantly deteriorated. A significant deterioration in the financial position is considered to have occurred if the eligible funds fail to cover the Solvency Capital Requirement as laid down in Title I, Chapter VI, Section 4, of Directive 2009/138/EC [Solvency II].

Added:(7) There is currently no harmonisation of the procedures at European Union level for resolving insurance or reinsurance undertakings in a coordinated manner. Instead, considerable substantive and procedural differences between national laws, regulations and administrative provisions that govern the failure of insurance and reinsurance undertakings are observed across Member States. In addition, corporate insolvency procedures may not always be appropriate for insurance or reinsurance undertakings, as those procedures may not always ensure an adequate continuation of the critical functions for policy holders, beneficiaries and injured parties, the real economy or the financial stability as a whole.

Removed:Article 5 – paragraph 2 – subparagraph 1: deleted

Added:(8) It is necessary to ensure the continuity of the critical functions of failing insurance or reinsurance undertakings, or of insurance or reinsurance undertakings that are likely to fail, while minimising the impact of such an undertaking’s failure on the economy and financial system. It is therefore necessary to lay down a framework to provide authorities with a credible set of tools to intervene sufficiently early and quickly in insurance or reinsurance undertakings that are failing or likely to fail. Such framework should ensure that shareholders bear losses first and that creditors bear losses after shareholders, provided that no creditor incurs greater losses than they would have incurred if the insurance or reinsurance undertaking had been wound up under normal insolvency proceedings in accordance with the no creditor worse off principle.

Removed:An arbitrary market coverage criterion of 80% does not correspond to the idea of a risk-based approach.

Added:(9) In accordance with the aim pursued in Directive 2009/138/EC the framework to be laid down should enable authorities to ensure the continuity of insurance protection for policy holders, beneficiaries and injured parties, transfer viable activities and portfolios of the insurance or reinsurance undertaking where appropriate, and apportion losses in a manner that is fair and predictable. Those objectives should help avoid unnecessary losses or social hardship falling on policy holders, beneficiaries and injured parties, mitigate negative impacts on the real economy, minimise negative effects on financial markets and minimise the costs for taxpayers. Resolution authorities should have a certain degree of flexibility to balance those objectives as appropriate to the specificities of the situation, in particular focusing on policy holder protection.

Removed:Article 5 – paragraph 2 – subparagraph 2: deleted

Added:(10) The review of Directive 2009/138/EC, and in particular the introduction of more risk-sensitive capital requirements, strengthened supervision, enhanced liquidity monitoring and better tools for macro-prudential policies, should further reduce the likelihood of failures of insurance or reinsurance undertakings and enhance the resilience of those undertakings to economic stress, whether caused by systemic disturbances or by events specific to the individual undertaking. Nevertheless, despite a sound and robust prudential framework, situations of financial distress cannot be completely excluded. Member States should therefore be prepared and have adequate recovery and resolution tools in place to handle situations involving both systemic crises and failures of individual undertakings. Such tools should include mechanisms that enable authorities to deal effectively with undertakings that are failing or likely to fail. The use of such tools and the exercise of such powers should take into account the circumstances in which the failure occurs.

Removed:An arbitrary market coverage criterion of 80% does not correspond to the idea of a risk-based approach.

Added:(11) Some Member States have already introduced pre-emptive recovery planning requirements, and mechanisms to resolve failing insurance or reinsurance undertakings. However, the absence of common conditions, powers and processes for the recovery and resolution of insurance or reinsurance undertakings across the Union is likely to constitute barriers to the smooth operation of the internal market and hinder cooperation between national authorities when dealing with distressed or failing cross-border groups of undertakings. That is particularly true where different approaches mean that national authorities do not have the same level of control or the same ability to resolve insurance or reinsurance undertakings. Those differences in recovery and resolution regimes may affect the level playing field and potentially create competitive distortions between undertakings. Those barriers should be eliminated and rules should be adopted to ensure that the internal market is not undermined. To that end, rules governing the pre-emptive recovery and resolution of insurance or reinsurance undertakings should be made subject to common minimum harmonisation rules. In order to ensure consistency with existing Union legislation in the area of insurance services, the pre-emptive recovery and resolution regime should apply to insurance or reinsurance undertakings that are subject to the prudential requirements laid down in Directive 2009/138/EC.

Removed:Article 5 – paragraph 3 – subparagraph 1: Low-risk profile undertakings shall not be subject to pre-emptive recovery planning requirements.

Added:(12) The failure of an entity affiliated to a group can rapidly impact the solvency and the operations of the whole group. It is therefore necessary to have in place group pre-emptive recovery and resolution planning requirements. In addition, authorities should possess effective means of action with respect to those entities to impose remedial actions that take into account the financial soundness of all group entities, address impediments to resolvability in a group context and produce a consistent resolution scheme for the group as a whole, in particular in a cross-border context. The pre-emptive recovery and resolution planning and resolvability requirements and the resolution regime should therefore also apply to parent undertakings, holding companies and other group entities, including branches of insurance and reinsurance undertakings that are established outside the Union.

Removed:Article 5 – paragraph 5: 5. Supervisory authorities shall ensure that insurance and reinsurance undertakings update their pre-emptive recovery plans at least every two years and after a change to the legal or organisational structure of the undertaking concerned, or to its business or its financial situation, which could have a material effect on, or necessitates a material change to, the pre-emptive recovery plan.

Added:(13) It is necessary to ensure the suitability and effectiveness of the recovery and resolution framework while avoiding unnecessary administrative burdens and costs on undertakings and authorities. The implementation of such recovery and resolution framework should therefore be proportionate to the nature, scale and complexity of the undertaking concerned, and of its activities and services. In addition, the differences between pre-emptive recovery on the one hand and resolution on the other should be taken into account. Regarding the scope of the recovery ▐planning requirements, authorities should determine, on the basis of a harmonised set of risk-based criteria, which undertakings are subject to fully-fledged planning requirements. Apart from scenarios in which an insurance or reinsurance undertaking causes a specific risk, low risk profile undertakings should not be subject to pre-emptive recovery planning on an individual basis.

Removed:Article 5 – paragraph 7 – point c: (c) a framework of indicators referred to in paragraph 9;

Added:(14) For the same reason, authorities should, where appropriate, apply different or reduced pre-emptive recovery and resolution planning and information requirements on an undertaking-specific basis, and at a lower frequency of updates. Authorities should, when applying such simplified obligations, take into account the nature, size, complexity and substitutability of an undertaking’s business, its shareholding structure and legal form, its risk profile, its degree of interconnectedness to other regulated undertakings or to the financial system in general. Authorities should also take into account whether the failure and subsequent winding up of the insurance or reinsurance undertaking under normal insolvency proceedings would be likely to have a significant negative effect on policy holders, financial markets, other undertakings, or the wider economy. Authorities should report to EIOPA on the application of such simplified obligations on an annual basis.

Removed:Editorial correction: reference in Commission proposal is incorrect.

Added:(15) For an orderly resolution process, and to avoid conflicts of interest, Member States should designate public administrative authorities or authorities entrusted with public administrative powers to perform the functions and tasks in relation to the recovery and resolution framework. Member States should ensure that adequate resources are allocated to those resolution authorities. Where a Member State designates a resolution authority that has other functions, adequate structural arrangements should be put in place to separate those functions from the functions related to resolution and to ensure operational independence. Such separation should not prevent the resolution function from having access to any information it requires for the exercise of its duties under the recovery and resolution framework, or for cooperation between different authorities involved in the application of the recovery and resolution framework.

Removed:Article 5 – paragraph 8: 8. Member States shall require that insurance and reinsurance undertakings as referred to in paragraph 1 assess the credibility and feasibility of pre-emptive recovery plans, in particular the framework of indicators referred to in paragraph 9 and the remedial actions, against a range of scenarios of severe macroeconomic and financial stress relevant to the insurance or reinsurance undertaking’s specific conditions, including system-wide events, idiosyncratic stress events likely to materially affect their asset and liability profile, and combinations of such stress events.

Added:(16) In light of the consequences that the failure of an insurance or reinsurance undertaking may have on policy holders, the financial system and the economy of a Member State, and in light of the possible need to use public funds to deal with such failure, the Ministries of Finance or other relevant ministries in the Member States should be closely involved, at an early stage, in the process of crisis management and resolution.

Removed:Editorial correction: reference in Commission proposal is incorrect.

Added:(17) It is necessary to deal in an efficient manner with deteriorating financial positions of insurance and reinsurance undertakings, or breaches of regulatory requirements by those undertakings, and to prevent the escalation of problems. Supervisory authorities should therefore have the power to impose preventive measures. Such preventive powers should, however, be consistent with the ladder of intervention and the supervisory powers already provided for in Directive 2009/138/EC for similar circumstances, including supervisory powers provided for in the Supervisory Review Process laid down in Article 36 of Directive 2009/138/EC. Such preventive powers should neither lead to a new pre-defined intervention trigger ahead of the Solvency Capital Requirement, laid down in Title I, Chapter VI, Section 4 of that Directive. Supervisory authorities should assess each situation individually and decide upon the need for preventive measures based on the circumstances, the situation of the undertaking and their supervisory judgment.

Removed:Article 5 – paragraph 11: deleted

Added:(18) It is essential that groups, or where applicable, individual undertakings, prepare and regularly update pre-emptive recovery plans that set out actions to be taken by those groups or undertakings to restore their financial position following a significant deterioration of that position that could pose a risk to their viability. Insurance and reinsurance undertakings should therefore identify a set of quantitative and qualitative indicators that would trigger the activation of remedial actions envisaged in such pre-emptive recovery plans. Such indicators should help insurance and reinsurance undertakings to take remedial actions in the best interest of their policy holders and should not lay down new regulatory prudential requirements. Pre-emptive recovery plans covering all material legal entities within the group should be detailed and should be based on realistic assumptions that are applicable in a range of robust and severe scenarios. Those pre-emptive recovery plans should be an integral part of an undertaking’s system of governance. Existing tools may serve as an input when preparing such pre-emptive recovery plans, including the own risk and solvency assessment, contingency plans or liquidity risk management plans. The requirement to prepare a pre-emptive recovery plan should, however, be applied proportionately and should be without prejudice to the development and submission of a realistic recovery plan as required by Article 138(2) of Directive 2009/138/EC. Where relevant, the elements of the pre-emptive recovery plan could inform or serve as a basis to develop the recovery plan required by Article 138(2) of Directive 2009/138/EC.

Removed:Article 5 – paragraph 12 – introductory part: 12. EIOPA shall develop draft regulatory technical standards further specifying, without prejudice to Article 4, the information that an insurance or reinsurance undertaking as referred to in paragraph 1 of this Article is to include in the pre-emptive recovery plan, including the remedial actions referred to in paragraph 7, first subparagraph, point (e), of this Article and their implementation. EIOPA shall also develop draft regulatory technical standards to specify further the minimum list of qualitative and quantitative indicators referred to in paragraph 7, first subparagraph, point (c), of this Article and, in cooperation with the European Systemic Risk Board (ESRB), the range of scenarios referred to in paragraph 8 of this Article.

Added:(19) It is necessary to ensure an adequate degree of preparedness for crisis situations. Ultimate parent undertakings or individual insurance or reinsurance undertakings should therefore be required to submit their pre-emptive recovery plans to supervisory authorities for a complete assessment, including the assessment of whether those plans are comprehensive and could feasibly restore an undertaking or group’s viability in a timely manner, even in periods of severe financial stress. Where an undertaking presents a pre-emptive recovery plan that is not adequate, supervisory authorities should be empowered to require that undertaking to take measures necessary to redress the material deficiencies of the plan.

Removed:The list of qualitative and quantitative indicators should be established via an RTS, not via guidelines.

Added:(20) Resolution planning is an essential component of an effective resolution process. Resolution authorities should therefore have all the information necessary to identify critical functions and ensure their continuation. Insurance and reinsurance undertakings have privileged knowledge of their own functioning and any problems arising from it, and resolution authorities should therefore draw up resolution plans on the basis of, inter alia, the information provided by the undertakings concerned. ▐

Removed:Article 9 – paragraph 2 – subparagraph 1: deleted

Added:(21) Low risk profile undertakings should, due to their low risk profile, not be obliged to draw up separate pre-emptive recovery plans, nor should they be subject to resolution planning on an individual basis, except where such an undertaking represents a particular risk at national or regional level.

Removed:Arbitrary market coverage criteria do not correspond to the notion of a risk-based approach.

Added:(22) In order to anticipate the possible interaction of remedial and resolution measures and to enhance the crisis preparedness and the resolvability of groups, any group treatment for pre-emptive recovery and resolution planning should apply to all group entities subject to group supervision. The pre-emptive recovery and resolution plans should take into account the financial, technical and business structure of the group concerned and its degree of internal interconnectedness.

Removed:Article 9 – paragraph 2 – subparagraph 2: Low-risk profile undertakings shall not be subject to resolution planning requirements.

Added:(23) Group pre-emptive recovery and resolution plans should be prepared for the group as a whole and should identify measures in relation to both an ultimate parent undertaking and individual subsidiaries that are part of that group. The extent to which subsidiaries are considered in the group pre-emptive recovery and resolution plans should, however, be proportionate to their relevance to the group and to policy holders, the real economy and the financial system in the Member States where those subsidiaries operate. The resolution authorities of the Member States where a group has subsidiaries should be involved in the drawing up of any resolution plans. The authorities concerned, acting within the supervisory or resolution colleges, should make every effort to reach a joint decision on the assessment and adoption of those plans. However, adequate crisis preparedness should not be affected by an absence of a joint decision within the supervisory or resolution colleges. In such cases, each supervisory authority responsible for a subsidiary should have the possibility to require a pre-emptive recovery plan for the subsidiaries under its jurisdiction and make its own assessment of the pre-emptive recovery plan. For the same reasons, each resolution authority responsible for a subsidiary should, for the subsidiaries under its jurisdiction, draw up ▐a resolution plan. The drawing up of individual pre-emptive recovery and resolution plans for undertakings that are a part of a group should remain exceptional, duly justified and apply the same standards that are applied to comparable undertakings in the Member State concerned. Where individual pre-emptive recovery and resolution plans for undertakings that are a part of a group are prepared, the authorities concerned should aim to achieve, to the extent possible, consistency with pre-emptive recovery and resolution plans for the rest of the group.

Removed:Article 9 – paragraph 4 – subparagraph 1: Resolution plans shall not assume any extraordinary public financial support or the use of any financing arrangements.

Added:(23a) There is a risk that financial conglomerates are simultaneously within the scope of this Directive and Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms (BRRD). This might lead to two separate pre-emptive recovery plans and two separate resolution plans. To avoid excessive burden, financial conglomerates should be permitted to draw up one single pre-emptive recovery plan for the whole group. Likewise, it should be sufficient to require the resolution authority to draw up one single resolution plan for the whole group. If a competent supervisory authority comes to the conclusion that a particular business field within a specific financial conglomerate is not sufficiently covered, it should be able to request the group to draw up a dedicated recovery plan for the entity which is active in that particular business field.

Removed:Article 9 – paragraph 8 – introductory part: 8. EIOPA shall develop draft regulatory technical standards further specifying, without prejudice to Article 4, the contents of the resolution plan and the criteria for the identification of critical functions.

Added:(24) In order to keep all authorities concerned fully and permanently informed, supervisory authorities should transmit any pre-emptive recovery plans and any changes thereto to the resolution authorities concerned and resolution authorities should transmit any resolution plans and any changes thereto to the supervisory authorities concerned.

Removed:Article 9 – paragraph 9: deleted

Added:(25) Based on an assessment of the resolvability of insurance or reinsurance undertakings, resolution authorities should have the power to require, either directly or indirectly through the supervisory authority, that insurance or reinsurance undertakings change their structure and organisation. Resolution authorities should also be able to take necessary but proportionate measures to reduce or remove any material impediments to the application of resolution tools and to ensure the resolvability of the entities concerned. Resolution authorities should assess the resolvability of insurance or reinsurance undertakings at the level of those undertakings where it is expected that, in accordance with the group resolution plan, resolution actions would be taken. The resolution authorities’ ability to request changes to the structure and organisation of an insurance or reinsurance undertaking, or to take measures to reduce or remove any material impediments to the application of resolution tools and to ensure the resolvability of the undertakings concerned, should not go beyond what is necessary to simplify the structure and operations of the insurance or reinsurance undertaking concerned in order to improve that undertaking’s resolvability.

Removed:The identification of "critical functions" should be done via an RTS, not via guidelines.

Added:(26) The implementation of actions outlined in a pre-emptive recovery plan or a resolution plan may have effects on staff of insurance or reinsurance undertakings. Those plans should therefore contain procedures for informing and consulting employee representatives throughout the recovery and resolution processes where appropriate. Those procedures should take into account collective agreements, other arrangements provided for by social partners, and national and Union law on the involvement of trade unions and workers’ representatives in company restructuring processes.

Removed:Article 21 – paragraph 1: Member States shall ensure that insurance or reinsurance undertakings that meet the conditions laid down in Article 19(1), points (a) and (b), but not the condition laid down in Article 19(1), point (c), are wound up in an orderly manner in accordance with normal insolvency proceedings which ensure an orderly exit from the market.

Added:(27) Effective recovery and resolution of insurance and reinsurance undertakings or group entities operating across the Union requires cooperation among supervisory authorities and resolution authorities within supervisory and resolution colleges at all stages of the process, from the preparation of pre-emptive recovery and resolution plans to the actual resolution of an undertaking. Where authorities disagree on decisions to be taken with regard to groups and undertakings, the European Supervisory Authority (European Insurance and Occupational Pensions Authority) (‘EIOPA’), established by Regulation (EU) No 1094/2010 of the European Parliament and of the Council should, as a last resort, play a mediation role.

Removed:Article 27 – paragraph 1: 1. Member States shall ensure that supervisory authorities have the power to withdraw the authorisation of the undertaking under resolution to write new insurance or reinsurance contracts and place the undertaking under resolution in a solvent run-off procedure to terminate the activities of that undertaking.

Added:(28) During the recovery and preventive phases, shareholders should retain full responsibility and control of the insurance or reinsurance undertaking. They should no longer retain such a responsibility once the undertaking has been put under resolution. The resolution framework should therefore provide for a timely entry into resolution, that is before an insurance or reinsurance undertaking is balance sheet or cash flow insolvent, before all equity has been fully wiped out, or before the insurance or reinsurance undertaking is unable to comply with its payment obligations as they come due. Resolution should be initiated where a supervisory authority, after having consulted a resolution authority, or after having been consulted by a resolution authority, determines that an insurance or reinsurance undertaking is failing or likely to fail and alternative measures would not prevent such a failure within a reasonable timeframe. An insurance or reinsurance undertaking should be considered to be failing or likely to fail in any of the following circumstances: (i) where the undertaking breaches or is likely to be in breach of the Minimum Capital Requirement (‘MCR’) laid down in Title I, Chapter VI, Section 4, of Directive 2009/138/EC and where there is no reasonable prospect of compliance being restored; (ii) where the undertaking no longer fulfils the conditions for authorisation or where the undertaking fails seriously to comply with its legal obligations under the laws and regulations to which it is subject or is likely to seriously fail to comply with its legal obligations under the laws and regulations to which it is subject in the near future in a way that would justify the withdrawal of the authorisation; (iii) where the insurance or reinsurance undertaking is or is likely to be unable to pay its debts or other liabilities in the near future, including payments to policy holders or beneficiaries as they fall due; or (iv) where the insurance or reinsurance undertaking requires extraordinary public financial support.

Removed:Article 33 a (new): Article 33a / Transfer to Existing National Protection Schemes / Instead of applying the provisions of Articles 32 and 33 of this Directive, Member States may, while ensuring the interests of policy holders, provide for a transfer of portfolios to an appropriate national protection scheme, while ensuring continuity of insurance relationships, for undertakings that offer contracts within the meaning of Title II, Chapter II, Section 5, of Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II). Member States may require the establishment, maintenance or modification of an appropriate national protection scheme for that purpose.

Added:(29) The use of resolution tools and powers may disrupt the rights of shareholders and creditors of insurance and reinsurance undertakings. In particular, the power of the resolution authorities to transfer the shares or all or part of the assets of an insurance or reinsurance undertaking to a private purchaser without the consent of shareholders affects the property rights of shareholders. In addition, the power to decide which liabilities to transfer out of a failing undertaking to ensure the continuity of services and to avoid adverse effects on policy holders, beneficiaries and injured parties, the real economy or financial stability as a whole, may affect the equal treatment of creditors. Any resolution tool should therefore be applied only to those insurance or reinsurance undertakings that are failing or likely to fail, and only where it is necessary to pursue the resolution objectives in the general interest. In particular, resolution tools should be applied only where the insurance or reinsurance undertaking cannot be wound up under normal insolvency proceedings without unduly affecting the protection of policy holders, beneficiaries and claimants or destabilising the financial system. In addition, resolution measures should be necessary to ensure the rapid transfer and continuation of critical functions and there should be no reasonable prospect for any alternative private solution, including any increase of capital by the existing shareholders or by any third party sufficient to restore the full viability of the entity without having effect on insurance claims. Any interference with the rights of shareholders and creditors that results from resolution action should be compatible with the Charter of Fundamental Rights of the European Union (the Charter). In particular, where creditors within the same class are treated differently in the context of resolution action, such distinctions should be justified in the public interest and be proportionate to the risks being addressed and should be neither directly nor indirectly discriminatory on the grounds of nationality.

Removed:Allows for an appropriate treatment of health insurance schemes that are used as an alternative to social security and their existing protection schemes.

Added:(30) When applying resolutions tools and exercising resolution powers, resolution authorities should take all appropriate measures to ensure that resolution action is taken in accordance with the principle that insurance claims are affected after shareholders and that other creditors have borne their share of the losses. In addition, resolution authorities should ensure that the costs of the resolution of insurance or reinsurance undertakings are minimised and that creditors of the same class are treated in an equitable manner.

Removed:Article 34 – paragraph 1 – point b – introductory part: (b) to convert to equity or reduce the principal amount of claims, excluding insurance and reinsurance claims, or debt instruments that are transferred:

Added:(31) The write-down or conversion of capital instruments, debt instruments and other eligible liabilities should provide for an internal loss absorption mechanism. That mechanism, combined with transfer tools that aim at maintaining continuity of insurance coverage for the benefit of policy holders, beneficiaries and injured parties, should allow for the achievement of the resolution objectives and should limit to a great extent the impact of a failure of an insurance or reinsurance undertaking on policy holders. There may be extreme cases, however, where the resolution of an insurance or reinsurance undertaking may require the intervention of specific national schemes, in particular an insurance guarantee scheme or a resolution fund, to provide for complementary loss absorbing and restructuring resources or, as a last resort, extraordinary public financing. The necessary safeguards that aim to protect creditors should also reflect the existence of such specific national schemes, which in turn have to comply with the Union State aid framework. The write-down or conversion tool should be applied before the use of any extraordinary public financial support.

Removed:Policyholders should be protected against supervisory decisions to impose a write-down.

Added:(32) Interference with property rights should not be disproportionate. Affected shareholders and creditors of insurance and reinsurance undertakings, including policy holders should therefore not incur greater losses than they would have incurred if the insurance or reinsurance undertaking had been wound up at the time that the resolution decision was taken. In the event of a partial transfer of assets and liabilities of an insurance or reinsurance undertaking under resolution to a private purchaser or to a bridge undertaking, the residual part of the undertaking under resolution should be wound up under normal insolvency proceedings. Shareholders and creditors who are left in the winding up proceedings of an insurance or reinsurance undertaking should be entitled to receive in payment of, or compensation for, their claims in the winding up proceedings not less than what they would have recovered if the whole insurance or reinsurance undertaking had been wound up under normal insolvency proceedings.

Removed:Article 40 – paragraph 1 – point f: (f) the power to restructure claims, excluding insurance and reinsurance claims, or reduce, including to reduce to zero, the principal amount of or outstanding amount due in respect of debt instruments and eligible liabilities, excluding insurance and reinsurance claims, of an undertaking under resolution;

Added:(33) To protect the rights of shareholders and creditors, it is necessary to lay down clear obligations concerning the valuation of the assets and liabilities of the undertaking under resolution and concerning the valuation of the treatment that shareholders and creditors would have received if the undertaking had been wound up under normal insolvency proceedings. It is therefore necessary to lay down that, before any resolution action is taken, a fair and realistic valuation of the assets and liabilities of the insurance or reinsurance undertaking is carried out. Such a valuation should be subject to a right of appeal. However, due to the nature of resolution action and its close link with the valuation, such appeal should only be possible where it is simultaneously directed against the resolution decision. In addition, it is necessary to lay down that, after resolution tools have been applied, a comparison is made between the treatment that shareholders and creditors have actually received and the treatment they would have received under normal insolvency proceedings. That ex-post comparison should be challengeable apart from the resolution decision. Shareholders and creditors that have received less than the amount that they would have received under normal insolvency proceedings should be entitled to the payment of the difference.

Removed:Consistent amendment with the rapporteur's proposed amendment to Article 34 (1)(b) to exclude insurance and reinsurance claims from the write-down or conversion tool.

Added:(34) It is important that losses are recognised upon failure of the insurance or reinsurance undertaking. The valuation of assets and liabilities of failing insurance or reinsurance undertakings should be based on fair, prudent and realistic assumptions at the moment that the resolution tools are applied. The value of liabilities should, however, not be affected in the valuation by the insurance or reinsurance undertaking’s financial state. It should be possible, in exceptional cases of urgency, that resolution authorities make a rapid valuation of the assets or the liabilities of a failing insurance or reinsurance undertaking. That valuation should be provisional and should apply until an independent valuation is carried out. EIOPA should establish a framework of principles to be used in conducting such valuations and should allow for different specific methodologies to be applied by resolution authorities and independent valuers, as appropriate.

Removed:Article 41 – paragraph 1 – point g: (g) transfer any reinsurance rights covering transferred insurance claims without the consent of the reinsurance undertaking where the resolution authority transfers assets and liabilities related to those reinsurance rights of the undertaking under resolution in whole or in part to another entity.

Added:(35) When taking resolution actions, resolution authorities should take into account and follow the measures provided for in the resolution plans unless resolution authorities assess, taking into account circumstances of the case, that resolution objectives will be achieved more effectively by taking actions that are not provided for in the resolution plans.