What is Decree No. 434 / 2009 Coll.?

Decree No. 434 / 2009 Coll., implementing certain provisions of the Insurance Act — Decree implementing certain provisions of the Insurance Act.

When it became Decree No. 434 / 2009 Coll. effectiveness?

Decree No. 434 / 2009 Coll. became effective 01.01.2010.

Is Decree No. 434 / 2009 Coll. still valid?

Yes, Decree No. 434 / 2009 Coll. is still valid and effective.

How many times was it Decree No. 434 / 2009 Coll. amended?

Decree No. 434 / 2009 Coll. has 4 time versions of the text.

Decree No. 434 / 2009 Coll. - Decree implementing certain provisions o...

434

DECLARATION

of 24 November 2009

implementing certain provisions of the Insurance Act

Pursuant to § 136 (1) (a) to (c), (f) to (h), (j) to (m), (o), (p), (t), (u), (w) and (x) of Act No. 277 / 2009 Coll., on Insurance, (hereinafter referred to as "the Insurance Act '):

ČÁST PRVNÍ

SUBJECT MATTER OF THE ADJUSTMENT

§ 1

This decree implements the relevant regulations of the European Community1), and provides for

(a) requirements for the control and control system;

(b) the form and content of the documents attached to the application for an operating permit

1. insurance activities by domestic insurance company,

2. insurance activities by an insurance undertaking from a third State;

3. reinsurance activities by the domestic reinsurance undertaking;

4. reinsurance activities by a third-State reinsurance undertaking;

(c) the form and content of the documents attached to the application for approval to acquire or increase qualifying holdings in the domestic insurance undertaking and in the domestic reinsurance undertaking;

(d) the extent of the information and documents which the interested party is obliged to submit to the Czech National Bank in the application for registration in this list and the extent of the information entered in the list of AIFMs;

(e) the scope of the information and documents which the applicant is obliged to submit to the Czech National Bank in the application for entry in that list and the scope of the data entered in the list of liquidators;

(f) the extent of the information and documents demonstrating compliance with the operational assumptions for the management of the transferred insurance line or part of it and for the management of the transferred hedge line or part of it;

(g) the content and particulars of the documents submitted for the request for consent to the conversion;

(h) methods to calculate the level of the equalisation reserve and its drawing conditions;

(i) the procedure determining the maximum amount of the technical interest rate;

(j) the limits for each item of the investment composition and the conditions under which those items may be included in the investment composition;

(k) a list of the items from which the available and requested solvency margins are calculated and the method of calculation of the available and required solvency margins, including items that can only be included or deducted in the calculation if the conditions laid down in this Decree are met;

(l) the form, content of the communication of the proportional distribution of the capital and the particulars of the request for amendment of the proportional distribution of the capital,

(m) a list of the items that can be included in the guarantee fund;

(n) method of calculating the adjusted solvency margin;

(o) the form and formalities of the report of the actuarial responsible,

(p) the scope, manner and timing of the publication of data.

ČÁST DRUHÁ

REQUIREMENTS FOR THE MANAGEMENT AND CONTROL SYSTEM

§ 2

(1) A local insurance undertaking or a domestic reinsurance undertaking shall ensure that the management and control system is set up to cover all activities of the domestic insurance undertaking or domestic reinsurance undertaking. A system of internal principles and procedures to prevent the legalisation of proceeds from crime and terrorist financing is also part of the management and control system.

(2) A local insurance undertaking or a domestic reinsurance undertaking which also complies with the requirements of the management and control system at group level, for the purpose of overseeing the activities of the domestic insurance or reinsurance undertaking in the group, shall set up a management and control system to take into account the activities of all persons in the group. This provision shall apply mutatis mutandis in relation to associates.

§ 3

The national insurance or reinsurance undertaking shall establish, maintain and apply a management and control system with regard to:

(a) the size, method of management, the number of employees, the nature, scale and complexity of the activities they carry out or intend to carry out; and

(b) the development of the environment in which the insurance or reinsurance business operates, including developments in the field of corporate governance.

§ 4

Further requirements for the management and control system are set out in Annex 1 to this Decree.

§ 5

An insurance undertaking from a third State or a reinsurance undertaking from a third State shall set up a management and control system in accordance with Sections 2 to 4 accordingly to the extent that it operates insurance or reinsurance activities in the Czech Republic.

ČÁST TŘETÍ

FORM AND CONTENTS OF DOCUMENTS ADMITTED TO THE APPLICATION FOR AUTHORIZATION TO OPERATE INSURANCE ACTIVITIES OR INSURANCE ACTIVITIES

§ 6

(1) The lists of persons referred to in Articles 15 (2) (f) and (g), 34 (2) (f), 37 (2) (f) and 47 (4) (f) of the Insurance Act shall be submitted in the form of a description of the structure and graphic presentation of the structure where persons with a qualifying holding and persons closely connected are represented.

(2) For persons referred to in Articles 15 (2) (f) and (g), 34 (2) (f), 37 (2) (f) and 47 (4) (f) of the Insurance Act, the application for authorisation to pursue an insurance or reinsurance activity shall include:

(a) in the case of a legal person, the trading firm or the name, registered office, identification number, if any, and subject matter of the business; where the legal person is a regulated entity, the name and address of its supervisory authority shall also be indicated;

(b) in the case of a natural person, the name and surname, maiden name, address of residence, date and place of birth (State, district, municipality), sex and citizenship; the business name, place of business, identification number, if assigned, and subject of business shall also be indicated for the business register or other records.

ČÁST ČTVRTÁ

FORM AND CONTENTS OF THE DOCUMENTS ADMITTED TO THE APPLICATION FOR CONFORMITY WITH THE CONSIDERATION OR EXTENSION OF THE QUALIFIED PARTICIPATION IN THE TOWN INSURANCE OR IN THE TOWN INSURANCE

§ 7

(1) For persons under Articles 24 (3) (b) and (c) and 42 (3) (b) and (c) of the Insurance Act, the application for approval to acquire or increase qualifying holdings in a domestic insurance undertaking or in a domestic reinsurance undertaking shall include:

(a) in the case of a legal person, the trading firm or the name, registered office, identification number, if any, and subject matter of the business; where the legal person is a regulated entity, the name and address of its supervisory authority shall also be indicated;

(b) in the case of a natural person, the name and surname, maiden name, address of residence, date and place of birth (State, district, municipality), sex and citizenship; the business name, place of business, identification number, if assigned, and subject of business shall also be indicated for the business register or other records.

(2) The application shall be accompanied by a graphical representation of the qualifying holdings in the domestic insurance undertaking or in the domestic reinsurance undertaking in the state before the change in the participation and the condition to be taken into account after the change in the participation.

ČÁST PÁTÁ

RECORDING TO THE LIST OF ENFORCEMENT MANAGERS AND LIST OF SUPPLIERS

§ 8

(1) The application for entry in the list of forced administrators or in the list of liquidators shall be submitted with details of the applicant's name and, where applicable, names and surnames, maiden name, address of residence, address of service, date and place of birth (State, district, municipality), sex and citizenship and evidence of the applicant's education and practice, to the extent of Section 11 of the Insurance Act.

(2) In the list of forced managers and in the list of liquidators kept by the Czech National Bank, the name and, where applicable, the names and surnames, the address of residence, the date on which the decision was taken to enter the person in the list of forced managers or the list of liquidators.

ČÁST ŠESTÁ

TRANSFER OF THE INSURANCE KMENS OR OF THE PARTS AND TRANSFER OF THE INSURANCE CONTRACTS OR OF THE PARTS

§ 9

(1) Compliance with the operating assumptions for the management of the transferred premium strain or part thereof pursuant to § 104 (4) (a) of the Insurance Act in the case of a proposal for a transfer procedure or part thereof or an application for approval of the transfer of the premium strain or part thereof shall be demonstrated.

(a) a description of the information system taken over by insurance undertakings;

(b) the organisation of the undertaking taking over the insurance undertaking, indicating the powers and responsibilities of its competent departments;

(c) an indication of the control mechanisms in the individual processes taken over by insurance undertakings;

(d) by staffing the performance of the activities resulting from the contracts taken over.

(2) Paragraph 1 shall apply mutatis mutandis in the case of the transfer of the tribe of reinsurance contracts or part thereof under Paragraph 107 (4) (a) of the Insurance Act.

ČÁST SEDMÁ

CONTENTS AND SIGNIFICATIONS OF THE DOCUMENTS ADMITTED TO THE APPLICATION FOR CONFORMITY WITH THE TRANSFER OF TOURISM INSURANCE OR TOURAL INSURANCE

§ 10

(1) An application for approval to convert a domestic insurance undertaking or a domestic reinsurance undertaking shall be accompanied by:

(a) information on the insurance or reinsurance undertaking involved in the conversion, to the minimum extent provided for in Article 7 (1), including a graphic representation similar to that provided for in Article 7 (2);

(b) a list of the members of the authorities of the insurance or reinsurance undertaking involved in the conversion;

(c) information on the amount and repayment of the applicant's capital, the number, amount and subject matter of the individual contributions to which the capital was subscribed, the number, nominal value, form and form of the shares of the insurance or reinsurance undertaking involved in the conversion;

(d) the composition of the funds to be subject to the required amendments;

(e) the expected evolution of the solvency of the insurance or reinsurance undertaking involved in the conversion within the first 3 years following the implementation of the required changes;

(f) an affidavit by the applicant stating that the information given in the application and its annexes are true, up to date and complete.

(2) The application referred to in paragraph 1 shall be accompanied by:

(a) the conversion project;

(b) a report by the statutory authority of each participating insurance or reinsurance undertaking on the conversion or a joint report by those authorities on the transformation and an expert report on the conversion;

(c) the expert's opinion on the valuation of the assets;

(d) detailed information on the transformation of a domestic insurance undertaking or a domestic reinsurance undertaking containing in particular the applicant's intention, changes in the business plan, timetable, description of the effects on the business of insurance or reinsurance activities, description of the integration of organisational units and individual employees into the new organisational structure and description of the transfer of responsibilities;

(e) the interim accounts of each participating insurance or reinsurance undertaking and the audit report on its verification;

(f) the final accounts of each participating insurance or reinsurance undertaking, the opening balance sheet of the receiving insurance or reinsurance undertaking and the audit report on the final accounts and the opening balance;

(g) a description of the groups of persons between whom close links arise as a result of the conversion and the legal successors of the persons involved in the conversion;

(h) an overview of changes in the facts pursuant to Section 15 or 37 of the Insurance Act with regard to the proposed conversion.

(3) The documents referred to in paragraph 2 shall be annexed where their preparation requires another legislature2), not applicable to the information referred to in paragraph 2 (d), (g) and (h).

ČÁST OSMÁ

BALANCE SHEET

§ 11

(1) The methods for calculating the buffer are set out in Annex 2 to this Decree.

(2) The equalisation reserve is drawn on an ongoing basis in accordance with the chosen method of calculation in accordance with Annex 2 to this Decree.

ČÁST DEVÁTÁ

TECHNICAL INTEREST RATE

§ 12

(1) The maximum amount of the technical interest rate is set at a maximum of 60% of the weighted arithmetic average of the average yields of sovereign bonds (3) in Czech crowns with a maturity of at least 5 years issued during the last 36 calendar months immediately preceding the month when the maximum amount of the technical interest rate is published. If such bonds have not been issued at this time, the maximum amount of the technical interest rate shall be set at a maximum of 60% of the weighted arithmetic average of the average yields of all government bonds in Czech crowns issued during the last 36 calendar months immediately preceding the month when the maximum amount of the technical interest rate is published.

(2) Paragraph 1 shall not apply to insurance contracts with one-off premiums with an insurance term of up to 8 years, unless otherwise specified, or to insurance contracts where the investment risk is entirely borne by the policyholder.

(3) The technical interest rate on one-off insurance premiums with an insurance term of no more than 8 years must be determined prudently on the basis of the expected annual yield to maturity of the underlying bond and deposit portfolio, while not exceeding 90% of the annual return to maturity of the underlying bond at the date of the determination of the technical interest rate under this paragraph. The period to maturity of the relevant underlying bond portfolio shall be longer or equal to the period for which the insurance contract is concluded and the value of the underlying bond and deposit portfolio shall be at least equal to the value of the liabilities arising from those insurance contracts. The relevant underlying portfolio of bonds and deposits must be recorded separately in the investment, and bonds and deposits in that portfolio must be denominated in the same currency as liabilities arising from insurance contracts concluded. The insurance undertaking shall periodically verify the technical interest rate established under this paragraph but at least twice a year. The insurance undertaking shall change the amount of the technical interest rate if the difference between the applicable amount of the technical interest rate referred to in this paragraph and 90% of the annual yield to the maturity of the bonds in the underlying portfolio is at least 0,5percentage point. Where an insurance undertaking does not determine the technical interest rate referred to in this paragraph, the technical interest rate shall also be limited to such insurance by the maximum technical interest rate fixed in accordance with paragraph 1.

(4) The maximum amount of the technical interest rate determined in accordance with paragraph 1 will be changed by the Czech National Bank if the absolute value of the difference of 60% of the weighted arithmetic average of the average government bond yields referred to in paragraph 1 and the applicable maximum amount of the technical interest rate determined in accordance with paragraph 1 is at least 0,5percentage point. The change in the maximum technical interest rate according to the first sentence may be made earlier, taking into account developments in the financial market situation.

ČÁST DESÁTÁ

LIMITS OF THE LEVEL OF FINANCIAL LOCATION

§ 13

(1) The limits for each item of the investment composition and the conditions under which those items may be included in the investment composition are laid down for:

(a) bonds, including treasury bills, issued by a Member State of the European Union or by a State forming the European Economic Area (hereinafter referred to as "Member State") or its central bank and loans to a Member State or its central bank, up to 100% of the total technical provisions;

(b) quoted bonds, including treasury bills, issued by banks and similar institutions of the Member States, up to a maximum of 50% of the total technical provisions; for unquoted bonds issued by these issuers, no more than 10% of the total technical provisions;

(c) quoted bonds issued by trading companies not exceeding 20% of the total technical provisions; for bonds guaranteed by a Member State, the limit may be increased to 40%;

(d) quoted municipal bonds up to a maximum of 20% of the total technical provisions; for municipal bonds guaranteed by a Member State, the limit may be increased to 40%;

(e) loans, loans and other claims other than those referred to in (a), (j) or (l) not exceeding 10% of the total technical provisions; such loans, loans or other claims must be secured by securities secured or guaranteed by a Member State or its central bank, bank, insurance or reinsurance undertaking;

(f) notes up to 10% of the total technical provisions; the note must be secured by an exchange handle4) where the foreign exchange hostage is a bank or similar credit institution;

(g) real estate on the territory of the Member States not exceeding 20% of the total technical provisions, with a maximum of 10% of the total technical provisions in one parcel or building or several of the lots or buildings which together form a whole; the property must be insured in case of damage or destruction with another insurance undertaking;

(h) mortgage bonds not exceeding 50% of the total technical provisions;

(i) quoted shares not exceeding 10% of total technical provisions; This item also includes quoted bonds subject to subordination,

(j) deposits, including deposits confirmed by a deposit certificate, a deposit note or other similar document, for banks authorised to operate on the territory of Member States as a bank, loans, loans and other claims on such banks, up to a maximum of 50% of the total technical provisions; deposits, including deposits confirmed by a deposit certificate, a deposit note or other similar document, for one bank and loans, loans and other claims on that bank shall not exceed 20% of the total technical provisions; This item does not cover bank accounts from which the operating costs or payments of claims are covered,

(k) objects and works of artistic cultural value valued by at least two experts not exceeding 5% of the total technical provisions; such articles must be insured in case of damage, destruction, loss or theft with another insurance undertaking;

(l) bonds issued by the European Investment Bank, the European Central Bank, the European Bank for Reconstruction and Development or the International Bank for Reconstruction and Development and loans granted to such persons up to 100% of the total technical provisions;

(m) securities issued by standard funds or comparable foreign investment funds, up to 20% of total technical provisions;

(n) securities issued by investment funds or foreign investment funds whose home Member State is a Member State and which are not referred to in (m), not more than 5% of the total technical provisions, the securities issued by one issuer may not exceed 3% of the total technical provisions;

(o) unquoted shares, debt securities and other securities similar to shares and debt securities which do not fall under any other item in the investment composition shall not exceed 5% of the total technical provisions, the securities issued by one issuer shall not exceed 3% of the total technical provisions; This item also includes bonds other than those referred to in point (i), deposits, loans, loans or other claims whose repayment is subject to subordination,

(r) claims on policy holders and insurance intermediaries arising from insurance, provided that from the date on which they are due, the period of less than 1 month has expired, up to 3% of the total technical provisions;

(s) refunds of taxes on which a payment order has been issued under the Tax and Charge5 Act), not more than 5% of the total technical provisions;

t) claims on the guarantee fund of the Czech Insurance Office 6) up to 5% of the total technical provisions,

(u) foreign securities (7) traded on a regulated market8) of the Member States of the Organisation for Economic Co-operation and Development not falling under any other item in the investment composition shall not exceed 10% of the total technical provisions;

(v) loans to insured persons who have entered into a life insurance contract, up to a maximum of 5% of the total technical provisions; the limit of one loan represents the maximum amount of the redemption at the date of granting the loan and the interest on the loan is fixed at least at the amount of the technical interest rate guaranteed by the insurance contract,

(w) hedge derivatives that meet the requirements for hedge derivatives laid down by international accounting standards referred to in Article 2, the directly applicable EC Code governing the application of international accounting standards (9);

(x) claims on reinsurance undertakings and persons under Section 50 of the Insurance Act, including the reinsurers' share of technical provisions, after deduction of all obligations to the Reinsurer, up to a maximum of 50% of the total technical provisions.

(2) The investments referred to in points (b), (c), (d) and (e) of paragraph 1, with the exception of loans granted to national or regional or local authorities or to international organisations of which one or more Member States is a member, and in accordance with points (f), (h), (i), (m), (u) and (w), 5% of the total technical provisions are limited to one issuer of a security, one debtor or one counterparty. This limit may be increased to 10% of the total technical provisions, provided that the domestic insurance or reinsurance undertaking does not invest more than 40% of the total technical provisions in investment according to the first sentence for persons for whom it invests more than 5% of the total technical provisions.

(3) The investment referred to in paragraph 1 (b), (c), (e), (f), (h), (i), (j), (m), (n), (o), (r), (u), (v), (w) and (x), relating to two or more persons belonging to the same business group, is limited to 15% of the total technical provisions (hereinafter referred to as "group limit"). Where the first deposit, loan, loan or other claim on the banks referred to in paragraph 1 (a) is part of the investment according to the sentence. (j) or a claim for reinsurance undertakings established in a Member State, the limit per group shall be increased by the volume of such investment items up to 20% of the total technical provisions.

§ 14

(1) Total technical provisions means:

(a) the sum of the technical provisions relating to all life insurance sectors listed in Part A of Annex 1 to the Insurance Act, with the exception of technical provisions made up of those insurance contracts for which the claims comply with the provisions of Section 67 of the Insurance Act;

(b) the sum of technical provisions relating to all non-life insurance sectors listed in Part B of Annex 1 to the Insurance Act; or

(c) total technical provisions for reinsurance business.

(2) In the case of a domestic insurance undertaking which, pursuant to Section 17 (1) of the Insurance Act, simultaneously operates insurance under the life and non-life insurance sectors, the total amount of technical provisions is calculated separately for the life insurance sector and for the non-life insurance sector.

(3) In the case of a domestic insurance undertaking operating a reinsurance business, if at least one of the values referred to in Section 18 (4) (a) of the Insurance Act is exceeded, the total amount of technical provisions shall be calculated separately for the insurance business and for the reinsurance business.

(4) The limits of the investment composition apply separately to the technical provisions of the life insurance sector, to the technical provisions of the non-life insurance sector and to the reinsurance activity.

(5) Individual investment items are included in the investment in the valuation in which they are included in the accounts of the domestic insurance or reinsurance undertaking. The purchases and sales of securities shall be taken into account in the investment from the time of settlement, irrespective of the accounting method used.

§ 15

The insurance undertaking from a third State or a reinsurance undertaking from a third State shall be governed by Sections 13 and 14 mutatis mutandis, to the extent that it operates insurance or reinsurance activities in the Czech Republic.

ČÁST JEDENÁCTÁ

SOLVENCY

HLAVA I

CONSIDERATION OF SOLVENCY

§ 16

(1) A local insurance undertaking which simultaneously carries out insurance under the life and non-life insurance sectors shall calculate the available solvency margin separately for life insurance and for non-life insurance. A local insurance undertaking that simultaneously carries out insurance under the life and non-life insurance sectors shall include part of the capital in the calculation of the available solvency margin for life insurance and part of the capital in the calculation of the available solvency margin for non-life insurance in order to comply with the minimum level of capital requirements for the operation of each activity in each calculation. The available solvency margin of the domestic reinsurance undertaking shall be calculated jointly for life and non-life reinsurance. The available solvency margin of a domestic insurance undertaking with a reinsurance activity which exceeds at least one of the values under Paragraph 18 (4) (a) of the Insurance Act shall be calculated separately for the insurance activity as in the case of a domestic insurance undertaking and for the reinsurance activity separately as in the case of a domestic reinsurance undertaking. A local insurance undertaking shall include in the calculation of the available solvency margin for the insurance business and in the calculation of the available solvency margin for the reinsurance business, which shall exceed at least one of the values referred to in Paragraph 18 (4) (a) of the Insurance Act, a part of the share capital shall be included in the calculation of the available solvency margin for the insurance business and a part of the share capital in the calculation of the available solvency margin for the reinsurance business in order to comply with the minimum capital level requirements laid down by the Insurance Act for the operation of each of that business.

(2) The available solvency margin is calculated from these items.

(a) the paid-up capital and, if the national insurance company is not in the legal form of a cooperative, also the issue premium;

(b) other equity, reserves and other profit-making funds;

(c) the retained earnings of past financial years and current periods, minus part of the profits to be paid to shareholders or cooperatives;

(d) other items referred to in paragraph 4;

(e) the value of intangible assets;

(f) own shares if the domestic insurance company is in the legal form of a public limited company;

(g) interests in affiliated or controlled persons who are an insurance undertaking, reinsurance undertaking, insurance holding company, mixed financial holding company, bank, foreign bank, electronic money institution, foreign institution, electronic money (10), savings and credit cooperative, a person who is not a bank or a foreign bank whose principal activity is the acquisition or pursuit of one or more of the activities referred to in § 5d (b) to (l) of the Bank11 Act, a securities dealer or a foreign person providing investment services or items as referred to in paragraph 4 of the first sentence in relation to those persons.

(3) The available solvency margin is calculated as the sum of the items referred to in points (a) to (d) of paragraph 2, minus the items referred to in points (e) to (g) of paragraph 2.

(4) Other items shall mean cumulative preference share capital, subordinated bond liabilities or other liabilities the repayment of which is subject to subordinate condition (3) (hereinafter referred to as "subordinated debt") and securities without specified maturity. These items may be included only up to 50% of the lower value of the required and available solvency margin and up to 25% of the other item may consist of subordinated debt with fixed maturity or cumulative fixed-term preference share capital if, in the event of the bankruptcy or liquidation of an insurance or reinsurance undertaking, there are binding agreements under which subordinated debt or preference shares are classified as claims on all other creditors and may be repaid only after all other debts due at that time have been settled.

(5) Subordinated debt may be included in other items referred to in paragraph 4 if:

(a) the funds have actually been provided;

(b) for debts with a specified maturity, the original maturity shall be at least 5 years. No later than 1 year before the due date, the national insurance or reinsurance undertaking shall submit to the Czech National Bank a plan to maintain the available solvency margin or to achieve the required solvency margin on the due date and the Czech National Bank shall not reject the submitted plan within 1 month of its submission. This does not apply if the extent to which the debt may be included in the available solvency margin has gradually decreased over at least the last 5 years before the due date. The Czech National Bank may allow the early repayment of these debts on condition that the debtor domestic insurance undertaking or domestic reinsurance undertaking so requests and there is no risk of a fall in its available solvency margin below the required level,

(c) the five-year notice period is respected for debts without a specified maturity; This does not apply if such debts are not part of the available solvency margin or if the national insurance or reinsurance undertaking has submitted an early repayment plan to the Czech National Bank at least 6 months before the proposed early repayment date, indicating the available and requested solvency margin before and after the repayment period, unless the Czech National Bank rejects this intention within 1 month of the complete confirmation of the early repayment plan due to the imminent decline in the available solvency margin below the required level,

(d) neither the subordinated debt contract nor its additions contain provisions under which, in certain circumstances other than the liquidation of a domestic insurance or reinsurance undertaking, the debt becomes due before the agreed due date;

(e) the intention to include subordinated debt in other items, including the terms and conditions of such debt and its amount, has been notified and documented to the Czech National Bank, unless the Czech National Bank, within a period of 1 month from the complete confirmation of the conditions and amount of subordinated debt, rejects that intention, or within 1 month from the full confirmation of the conditions and the amount of subordinated debt, informs the domestic insurance undertaking or the domestic reinsurance undertaking that it reserves the right to reject that intention within a period of no longer than another month, and rejects that intention within that extended period; and

(f) the contract governing the subordinated debt may be amended only if the Czech National Bank has not notified its objection within 1 month of receipt of the amendment.

(6) Securities without a specified maturity may be included in other items referred to in paragraph 4 provided that:

(a) they cannot be repaid on the initiative of the holder or if the national insurance or reinsurance undertaking has submitted an early repayment plan to the Czech National Bank at least 6 months before the proposed early repayment date, indicating the available and required solvency margin before and after the repayment, unless the Czech National Bank rejects the plan within 1 month of the complete confirmation of the early repayment plan due to the imminent decline in the available solvency margin below the required level,

(b) the contract governing the issue of such securities or the terms and conditions of issue shall allow the domestic insurance or reinsurance undertaking to defer payment of interest on the amount due;

(c) the claims of the holder of that security against the domestic insurance undertaking or the domestic reinsurance undertaking shall be fully classified as claims by all non-subordinated creditors;

(d) the documents governing the issue of securities contain provisions on the capacity to absorb debt losses and outstanding interest, the domestic insurance undertaking or domestic reinsurance undertaking being allowed to continue its business;

(e) the national insurance or reinsurance undertaking has received the money from the issue; and

(f) the intention to include securities without a specified maturity to other items, including the terms of issue or prospectus of such securities and their value, in which they are to be included in other items of the available solvency margin, has been notified and documented to the Czech National Bank, unless the Czech National Bank reserves the right to reject the intention within 1 month of the full proof of the terms of issue or the prospectus, within a period of one month of the full period of time, and shall inform the national insurance undertaking or national reinsurance undertaking that it reserves the right to reject the intention within a maximum period of a further month, and shall reject the intention within that extended period.

(7) The item referred to in paragraph 2 (g) shall not be deducted in the calculation of the available solvency margin if those shares of the domestic insurance undertaking or domestic reinsurance undertaking are held temporarily for financial assistance in order to restore or rescue the person and if the intention not to deduct the item referred to in paragraph 2 (g) has been notified and documented to the Czech National Bank, unless the Czech National Bank has rejected the intention within 1 month of notification.

(8) The item referred to in paragraph 2 (g) shall not be deducted in the calculation of the available solvency margin if:

(a) is a person who is a bank, a foreign bank, an electronic money institution, a foreign electronic money institution (10), a savings and credit cooperative, a person who is not a bank or a foreign bank whose principal activity is the acquisition or pursuit of one or more of the activities referred to in § 5d (b) to (l) of the Banking Act (11), a securities dealer or a foreign person providing investment services;

(b) the calculation method for calculating the supplementary capital requirement as laid down in the implementing legislation to the Act governing the supplementary supervision of banks, savings and credit cooperatives, electronic money institutions, insurance companies and securities dealers in financial conglomerate12 is applied mutatis mutandis;

(c) the method referred to in point (b) shall be applied consistently throughout the reporting period.

(9) If a domestic insurance undertaking or a domestic reinsurance undertaking applies the accounting consolidation method provided for in the implementing legislation to the Act governing the supplementary supervision of banks, savings and credit cooperatives, electronic money institutions, insurance companies and securities dealers in financial conglomerates, the Czech National Bank must first demonstrate the existence of an integrated management and control system13) for persons who will be consolidated by this method.

(10) The item referred to in paragraph 2 (g) shall not be deducted in the calculation of the available solvency margin if:

(a) a domestic insurance undertaking or a domestic reinsurance undertaking is subject to group supervision under § 87 to 92 of the Insurance Act or additional supervision under the Act governing the supplementary supervision of banks, savings and credit cooperatives, electronic money institutions, insurance companies and securities dealers in financial conglomerate14); and

(b) the supervision referred to in (a) shall include the person referred to in paragraph 2 (g).

(11) The available solvency margin calculated in accordance with paragraph 3 may be added at the most

(a) half of the capital outstanding if the part paid up has already reached 25% of the capital but up to a maximum of 50% of the lower value of the required and available solvency margins;

(b) the difference between the unzillmetered or partially zillmetered reserve and the zillmetered initial cost rate contained in the premium in the case of non-zillmetering or partial zillmetering of life insurance provisions is lower than the initial cost rate contained in the premium but up to a maximum of 3,5% of the non-negative risk capital for contracts for which zillmetering is possible, further reduced by the amount of non-amortised purchase costs of insurance contracts contained in assets;

if the intention, including the calculation documents, has been notified and documented to the Czech National Bank, unless the Czech National Bank rejects the intention within 1 month of the complete supporting evidence.

(12) The calculation of the available solvency margin during the accounting year shall be treated mutatis mutandis in accordance with paragraphs 1 to 11.

HLAVA II

SOLVENCY REQUIREMENTS

§ 17

(1) In the case of mixed-activity insurance undertakings, the required solvency margin shall be calculated separately for life insurance and for non-life insurance. The required solvency margin of the domestic reinsurance undertaking carrying out the life reinsurance business and the required solvency margin of the domestic reinsurance undertaking carrying out the non-life reinsurance business shall be calculated mutatis mutandis as the required solvency margin for non-life insurance business. Where a domestic reinsurance undertaking operates a reinsurance business for life and non-life reinsurance, its required solvency margin shall be calculated as the sum of the required solvency margin for life and the required solvency margin for non-life reinsurance. The required solvency margin of a domestic insurance undertaking with a reinsurance activity exceeding at least one of the values under Paragraph 18 (4) (a) of the Insurance Act shall be calculated separately for the insurance activity as in the case of a domestic insurance undertaking and for the reinsurance activity separately as in the case of a domestic reinsurance undertaking. The required solvency margin of a domestic insurance undertaking with a reinsurance activity which does not exceed one of the values under Paragraph 18 (4) (a) of the Insurance Act shall be calculated together as an insurance and reinsurance business, and for the purposes of this calculation the premiums received shall be considered as premiums received.

(2) In non-life insurance, the required solvency margin shall be equal to the higher of the two results calculated in accordance with the procedures set out in Part I of Annex 3 to this Decree.

(3) Where the required solvency margin calculated in accordance with paragraph 2 is lower than the required solvency margin for the previous year, the required solvency margin shall be equal to the minimum required solvency margin for the previous year multiplied by the ratio of the amount of technical provisions for claims at the end of the last financial year and the amount of technical provisions for claims at the beginning of the last financial year. This ratio shall not exceed 1. In such calculations, the technical provisions shall be net of reinsurance.

(4) Where the required solvency margin calculated in accordance with paragraph 3 is lower than the required solvency margin calculated in accordance with paragraph 2, the required solvency margin shall be equal to the required solvency margin calculated in accordance with paragraph 2.

(5) In life insurance, the required solvency margin shall be equal to the sum of the results for each group of life insurance sectors calculated using the procedures set out in Part II of Annex 3 to this Decree.

(6) The required solvency margin during the accounting year shall be compiled from the data in force on the last day of the preceding financial year.

§ 18

The items referred to in § 16 (2) (a) to (d) may be included in the guarantee fund after deduction of the items referred to in § 16 (2) (e) to (g).

Citation	Decree No. 434 / 2009 Coll., implementing certain provisions of the Insurance Act
Regulation Type	Order
Author	-
Collection	Code of Laws

Date of Promulgation	10.12.2009
Effective from	01.01.2010
Effective until	-
Status	Valid

Decree No. 434 / 2009 Coll.

Decree implementing certain provisions of the Insurance Act

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