text: Regulation (EU) No 1094/2010

text: of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Insurance and Occupational Pension Authority), amending Decision No

text: and repealing

text: Commission Decision 2009/79/EC

text: (OJ L 331, 15.12.2010, p. 48). Directive

text: 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), (OJ L 335, 17.12.2009, p. 1).

text: Page 2/5

text: Page 3/5

text: Page 4/5

text: Page 5/5

title: Guidelines on exclusions from scope of group supervision.pdf

text: This is only test GUIDELINES

text: GUIDELINES

text: on exclusion of undertakings from the scope of group supervision

text: EIOPA-BoS-25/525 Adopted on 26 November 2025

text: GUIDELINES ON EXCLUSION OF UNDERTAKINGS FROM THE SCOPE OF GROUP SUPERVISION

text: INTRODUCTION

text: 1. In accordance with

text: Article 16 of Regulation (EU) No 1094/2010

text: (EIOPA Regulation) and

text: Article 214(3) of Directive 2009/138/EC

text: (Solvency II Directive) , EIOPA issues these Guidelines to further specify the exceptional circumstances where the exclusion of one or more undertakings from the scope of group supervision in accordance with

text: Article 214(2)

text: would result in a case that would not trigger the application of group supervision under

text: Article 213(2)

text: , points (a), (b), and (c) of the Solvency II Directive and the cases where it may be justified to exclude the ultimate parent undertaking, including insurance holding companies, from the scope of group supervision.

text: 2. These Guidelines are addressed to supervisory authorities as defined in the Solvency II Directive.

text: 3. If not defined in these Guidelines, the terms have the meaning defined in the legal acts referred to in the introduction.

text: 4. The Guidelines apply from 30 January 2027.

text: GUIDELINE 1 – CIRCUMSTANCES UNDER WHICH UNDERTAKINGS SHOULD NOT BE ELIGIBLE FOR EXCLUSION BASED ON ARTICLE 214(2) WHERE EXCLUSION WOULD LEAD TO NON- APPLICATION OF GROUP SUPERVISION

text: 5. The group supervisor should not exclude an undertaking from the scope of group supervision where it leads to non-application of group supervision under

text: Article 213(2)

text: , points (a) to (c) of the Solvency II Directive in any of the following circumstances: (a) there are material intra-group transactions, including the provision of ancillary services, between the undertaking or its related undertakings and any insurance or reinsurance undertakings in the group; (b) the undertaking coordinates financial or investment decisions or exercises significant influence over the operations or processes of any other insurance or reinsurance undertakings in the group; (c) the application of Articles

text: or

text: a of the Solvency II Directive to the undertaking would allow a better understanding of the risks that could possibly affect the other insurance or reinsurance undertakings in the group instead of non-application of group supervision.

text: GUIDELINE 2 – ADDITIONAL CIRCUMSTANCES TO EXCLUDE UNDERTAKINGS BASED ON ARTICLE 214(2)(A) WHERE EXCLUSION WOULD LEAD TO NON-APPLICATION OF GROUP SUPERVISION

text: 6. The group supervisor should consider the exclusion of one or more undertakings from the scope of group supervision based on legal impediments to information exchange between authorities in accordance with

text: Article 214(2)

text: (a) of the Solvency II Directive, leading to non-application of group supervision under

text: Article 213(2)

text: , points (a) to (c) of the Solvency II Directive, only where the following conditions apply: (a) the undertaking is located in a third country with no equivalence decision under Articles 227 and 260 of the Solvency II Directive; (b) the third country supervisory authority of the undertaking is not a party to the IAIS Multilateral Memorandum of Understanding; (c) based on available information the size of the undertaking in terms of total assets, and of technical provisions, where applicable, taken individually and collectively, is small in comparison with that of other undertakings of the group and the group as a whole; (d) all risks that might be posed by the undertaking and its related undertakings, based on the available information, are adequately identified and managed at the level of the individual insurance and reinsurance undertakings of the group, in particular they are reflected in the own risk and solvency assessment and in the solvency position of those insurance and reinsurance undertakings.

text: 7. Where the conditions listed above apply, the group supervisor should consider the possibility of signing a memorandum of understanding with the third country supervisory authority of the nonequivalent jurisdiction instead of applying

text: Article 214(2)

text: (a) of the Solvency II Directive.

text: GUIDELINE 3 – ADDITIONAL CIRCUMSTANCES TO EXCLUDE UNDERTAKINGS BASED ON ARTICLE 214(2) POINT (B) OR (C) WHERE EXCLUSION WOULD LEAD TO NON-APPLICATION OF GROUP SUPERVISION

text: 8. The group supervisor should consider the exclusion of one or more undertakings from the scope of group supervision in accordance with

text: Article 214(2)

text: , points (b) or (c) of the Solvency II Directive, leading to non-application of group supervision under

text: Article 213(2)

text: , points (a) to (c) of the Solvency II Directive, only where the following conditions apply: (a) the undertaking fulfils the conditions set out in Guideline 2, points (c) and (d); (b) where the undertaking is a parent undertaking, the risks that the parent undertaking is exposed to stem almost exclusively from the risks of the insurance or reinsurance undertakings that are part of the group.

text: GUIDELINE 4 – APPLICATION OF GROUP SUPERVISION AT THE LEVEL OF AN INTERMEDIATE PARTICIPATING UNDERTAKING WHEN EXCLUDING THE ULTIMATE PARENT UNDERTAKING

text: 9. The group supervisor should consider the exclusion of the ultimate parent undertaking from the scope of group supervision in accordance with Article 214(2) of the Solvency II Directive and apply group supervision at the level of an intermediate participating undertaking, only where the following conditions apply: (a) the ultimate parent undertaking is not in any of the circumstances set out in Guideline 1, with the exception that dividend payments to the ultimate parent undertaking should not be regarded as material intra-group transactions for the purposes of Guideline 1, point (a); (b) all the relevant group risks arising from all other undertakings, which could possibly affect the insurance or reinsurance undertakings, and all the interconnections and intra-group transactions with all other undertakings, which could possibly affect the insurance or reinsurance undertakings, are properly captured at the level of the intermediate participating undertaking; (c) the group supervisor has sufficient information on the intra-group transactions between the ultimate parent undertaking or its related undertakings and the other undertakings in the group, that could possibly affect the insurance or reinsurance undertakings.

text: GUIDELINE 5 – REASSESSMENT OF EXCLUSIONS

text: 10. When reassessing the decision to exclude one or more undertakings from the scope of group supervision as required under Article 214(3) of the Solvency II Directive, the group supervisor should confirm whether all the conditions justifying the exclusion are still applicable.

text: 11. For the purpose of reassessing exclusions, the group supervisor should monitor regularly the intragroup transactions between the individual insurance and reinsurance undertakings and the excluded undertakings and their related undertakings through existing or additional reporting.

text: COMPLIANCE AND REPORTING RULES

text: 12. This document contains Guidelines issued under Article 16 of the EIOPA Regulation. In accordance with Article 16(3) of the EIOPA Regulation, competent authorities and financial institutions are required to make every effort to comply with guidelines and recommendations.

text: 13. Competent authorities that comply or intend to comply with these Guidelines should incorporate them into their regulatory or supervisory framework in an appropriate manner.

text: 14. Competent authorities are to confirm to EIOPA whether they comply or intend to comply with these Guidelines, with reasons for non-compliance, within two months after the issuance of the translated versions.

text: 15. In the absence of a response by this deadline, competent authorities will be considered as noncompliant to the reporting and reported as such.

text: FINAL PROVISION ON REVIEWS

text: 16. These Guidelines will be subject to a review by EIOPA.


text: Regulation (EU) No 1094/2010

text: of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority), amending Decision No

text: and repealing

text: Commission Decision 2009/79/EC

text: (OJ L 331, 15.12.2010, p. 48). 2 Directive

text: 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) (OJ L 335, 17.12.2009, p. 1).

text: Page 2/16

text: Page 3/16

text: Page 4/16

text: Page 5/16

text: Page 6/16

text: Page 7/16

text: Page 8/16

text: Page 9/16

text: Page 10/16

text: Page 11/16

text: Page 12/16

text: Page 13/16

text: Page 14/16

text: Page 15/16

text: Page 16/16

publisher: Europeiska försäkrings- och tjänstepensionsmyndigheten

sprak: en

title: Guidelines on supervisory review process

serie: riktlinjer

text: This is only test GUIDELINES

type: rubrik

text: GUIDELINES

text: on supervisory review process

text: EIOPA-BoS-25/660 Adopted on 27 January 2026

text: Please note that the authoritative source of information is the English version. If there is any conflict between the translated versions and the English version, the latter takes precedence.

type: stycke

text: GUIDELINES ON SUPERVISORY REVIEW PROCESS

text: INTRODUCTION

text: 1. In accordance with

text: Article 16 of Regulation (EU) No 1094/2010

text: , EIOPA issues Guidelines on supervisory review process.

text: 2. These guidelines relate to

text: Article 36 of Directive 2009/138/EC

text: (Solvency II Directive) . Further relevant provisions concern in particular Articles 27, 29, 34, 71, 213(2), 248, 249, 250 and 255 of the Solvency II Directive.

text: 3. These Guidelines aim at identifying the manner in which a risk-based, prospective and proportionate approach to supervision may be achieved within the supervisory review process.

text: 4. The supervisory review process refers to all activities conducted by the supervisory authority in order to comply with its obligations under Article 36 of the Solvency II Directive. The supervisory review process includes the evaluation of strategies, processes and reporting procedures for insurance and reinsurance undertakings.

text: 5. Therefore, the objective of these Guidelines is to attain consistent outcomes through the convergence of supervisory processes and practices within the supervisory review process, whilst ensuring sufficient flexibility for supervisory authorities to be able to appropriately adapt their actions on a case-by-case basis, taken into account the specificities of the insurance and reinsurance undertakings and groups involved, their own markets and other supervisory priorities.

text: 6. These Guidelines are summarised in the diagram presented in the explanatory text of Guideline 1 and in the document “SRP Guidelines Diagram” published together with these Guidelines.

text: 7. For the supervisory review process of insurance groups where there is a college of supervisors in place, these Guidelines have taken into consideration the Guidelines on operational functioning of colleges and the college’s specific coordination arrangements and any other processes or plans agreed by the college of supervisors.

text: 8. These Guidelines are not intended to restrict the group supervisor and the college of supervisors from additional communications or information sharing arrangements that are consistent with the Solvency II Directive, including the proportionate and risk-based approach of the supervisory review process in line with Article 29 of the Solvency II Directive.

text: 9. Supervisory authorities that are part of a college will have ongoing responsibilities to communicate and involve the college in the supervisory review process, particularly when taking supervisory measures, or when insurance and reinsurance undertakings or groups enter into financial difficulties. Where appropriate, examples with cross references to various requirements and Guidelines are provided in the explanatory text. Please note that the authoritative source of information is the English version. If there is any conflict between the translated versions and the English version, the latter takes precedence.

text: 10. These Guidelines apply to the supervisory review process performed by supervisory authorities regarding all insurance and reinsurance undertakings, both individual undertakings and insurance and reinsurance groups subject to group supervision under Article 213 of the Solvency II Directive(insurance groups). Regarding the application of the Guidelines to the supervisory review process of insurance groups the following needs to be considered: • Guidelines 10, 16, 18, 21, 35, 37 and 40 are group-specific and are only applicable to the group supervisor, with the exception of Guidelines 37 and 40 which can apply to both group supervisor and individual supervisory authority; • Guidelines 15 and 17 apply only to supervisory authorities of individual insurance and reinsurance undertakings and do not apply to supervisory authorities in their role as group supervisor. The group supervisor should comply with the relevant group-specific Guidelines 16 and 18; • Guidelines 5, 6, 7, 11, 13, 19, 21, 23, 25, 28, 29, 32, 37, 39 and 40 also include provisions that apply only if the insurance group has a college that is established under Article 248 of the Solvency II Directive. These provisions may apply to both the group supervisor and the supervisory authorities of individual insurance and reinsurance undertakings within the college, with the exception of Guideline 21, which only applies to the group supervisor.

text: 11. Where there is group supervision established at national level pursuant to Article 216 of the Solvency II Directive, these Guidelines apply mutatis mutandis both to group supervision carried out at national level under Article 216 of the Solvency II Directive and group supervision carried out under Article 213 of the Solvency II Directive.

text: 12. These Guidelines are addressed to the supervisory authorities under the Solvency II Directive.

text: 13. The Guidelines apply from 30 January 2027 and repeal and replace the Guidelines on Supervisory Review Process (EIOPA-BoS-14-179).

text: 14. For the purpose of these Guidelines the following definitions apply: • When applying these Guidelines to group supervisors: o the term “supervisory authority” refers to the supervisory authority responsible for group supervision pursuant to Article 247(1) of the Solvency II Directive; • When applying these Guidelines to group supervisors, the term “insurance and reinsurance undertakings” refers to “insurance groups” (excluding guidelines 12, 19, 33, 36 and 38, which refer to both groups and the undertakings within the group); • “Group supervisor” refers to the supervisory authority that fulfils the criteria set out in Article 247(1) of the Solvency II Directive; • “College” refers to the college of supervisors as defined in

text: Article 212(1)

text: (e) of the Solvency II Directive; • “Members” and “participants” refer to members and participants as defined in the Guidelines on operational functioning of colleges; • “On-site inspection” refers to an organised assessment or formal evaluation exercise, performed at the location of the supervised undertaking, or the service providers to whom the supervised undertaking has outsourced functions, which leads to the issuing of a document communicated to the undertaking. Please note that the authoritative source of information is the English version. If there is any conflict between the translated versions and the English version, the latter takes precedence.

text: 15. If not defined in these Guidelines the terms have the meaning defined in the legal acts referred to in the introduction.

text: SECTION I - OVERALL SUPERVISORY REVIEW PROCESS (SRP) Guideline 1 – Conducting the supervisory review process

text: 16. The supervisory authority should, in carrying out the supervisory review process and whilst recognising the need for flexibility and supervisory judgement, ensure it comprises three subprocesses as set out in these Guidelines: the risk assessment framework, the detailed review and the supervisory measures.

text: Guideline 2 – Consistency of the supervisory review process

text: 17. The supervisory authority should ensure that the supervisory review process is applied in a consistent manner over time, across insurance and reinsurance undertakings and within the supervisory authority.

text: Guideline 3 – Proportionality in the supervisory review process

text: 18. The supervisory authority should ensure that the principle of proportionality is observed throughout all the stages of the supervisory review process.

text: Guideline 4 – Supervisory judgement in the supervisory review process

text: 19. The supervisory authority should ensure that supervisors use their supervisory judgement at each stage of the supervisory review process. The supervisory authority should ensure that the supervisory review process is kept flexible enough to allow appropriate supervisory judgement to be used.

text: Guideline 5 – On-going communication with insurance and reinsurance undertakings

text: 20. The supervisory authority should ensure that there is an appropriate level of communication between the personnel of the supervisory authority and the insurance and reinsurance undertaking throughout the entire supervisory review process in order to facilitate effective supervision.

text: 21. If there is a college, the communication with the supervised undertakings should be coordinated as described in Guideline 15 of the Guidelines on operational functioning of colleges.

text: Guideline 6 – On-going communication with and involvement of other supervisors

text: 22. The supervisory authority should undertake an appropriate level of communication and involvement with other relevant supervisory authorities throughout the entire supervisory review process.

text: 23. Communication with third-country supervisory authorities should be in line with any relevant memoranda of understanding in place.

text: 24. If there is a college, communication should follow the relevant requirements and guidelines.

text: Guideline 7 – Inclusion of market-wide risks in the supervisory review process

text: 25. The supervisory authority should take into account market wide analyses throughout the supervisory review process.

text: 26. If there is a college the supervisory authority should take into account the outcome of any relevant market-wide analysis that has been shared within the college. Please note that the authoritative source of information is the English version. If there is any conflict between the translated versions and the English version, the latter takes precedence.

text: Guideline 8 – Documentation

text: 27. The supervisory authority should ensure that information supporting the conclusions from the supervisory review process is documented and easily accessible within the supervisory authority whilst also observing appropriate confidentiality standards in relation to this information.

text: Guideline 9 – Governance over and regular review of the supervisory review process

text: 28. The supervisory authority should have an adequate governance mechanism in place to properly monitor the conduct of the supervisory review process.

text: 29. The supervisory authority should regularly review their method of implementation of the supervisory review process to ensure its on-going appropriateness.

text: Guideline 10 – The scope and focus of the insurance group supervisory review process

text: 30. The group supervisor should apply the supervisory review process consistently with the scope and cases of application of group supervision described in Title III, Chapter I of the Solvency II Directive, taking into account the type of the ultimate parent undertaking of the insurance group, the geographical location of its head office (EEA or a third country), the equivalence status of the third country, if any, and any financial conglomerate aspects.

text: 31. The group supervisor should consider in the supervisory review process all relevant entities within the insurance group including regulated and non- regulated as well as EEA and non-EEA entities.

text: 32. The group supervisor should focus on the group-specific issues, including: a) intra-group transactions, complexity and interconnectedness of the insurance group; b) the group risk profile including any diversification effects, risk concentrations and risk transfer across the insurance group; c) any other risks from a group-wide perspective, including those that arise at group level, such as risks from non-insurance entities; d) aspects of the group governance and group strategy including any conflict or any potential conflict of interests; e) aspects of the group-wide risk management, including any centralised risk management functions; and f) the group’s management of its group capital, including transferability and allocation within the insurance group.

text: SECTION II - INPUT TO THE SUPERVISORY REVIEW PROCESS Guideline 11 – Input to the supervisory review process

text: 33. Throughout the supervisory review process the supervisory authority should, where appropriate, consider relevant information arising from different sources, including from: a) the insurance and reinsurance undertaking or the insurance group: quantitative reporting templates, regular supervisory report, solvency and financial condition report, ORSA report, other undertaking or group information or any other information requested from the insurance and reinsurance undertaking or insurance group by the supervisory authority; b) the supervisory authority or the group supervisor itself: historical information, early warning indicators, risk indicators, previous findings on insurance and reinsurance undertakings or groups, thematic reviews or stress tests results; Please note that the authoritative source of information is the English version. If there is any conflict between the translated versions and the English version, the latter takes precedence. c) the college: individual outcomes of the risk assessment framework, individual supervisory plans shared within the college, college work plan, any relevant analysis or reviews or supervisory measures shared within the college; d) other competent authorities; e) other external parties: market or sector information, information from consumer or industry bodies or associations, technical research papers or press or media information.

text: SECTION III - RISK ASSESSMENT FRAMEWORK Guideline 12 – Risk assessment framework structure and use

text: 34. The supervisory authority should use a risk assessment framework to identify and assess current and future risks that insurance and reinsurance undertakings face or may face including the insurance and reinsurance undertaking’s capacity to identify, measure, monitor, manage and report on those risks.

text: 35. The supervisory authority should use this approach for the purposes of: a) conducting the effective supervision of insurance and reinsurance undertakings; b) prioritising supervisory activities; c) setting the frequency of the regular supervisory reporting; d) determining the scope, depth and frequency of off-site analysis and on-site inspections or any other matters needed for the supervision of insurance and reinsurance undertakings.

text: Guideline 13 – Scope of the risk assessment framework

text: 36. The supervisory authority should apply a risk-based and forward- looking approach to supervision that is established in the following stages: a) assessment of information; b) determination of insurance and reinsurance undertaking impact classification; c) determination of insurance and reinsurance undertaking risk classification; d) determination of outcome of risk assessment framework; e) creation of supervisory plan and determination of intensity of supervision. f) in the case of insurance groups, if there is a college established under Article 248(2) of the Solvency II Directive, the contribution of aspects of the supervisory plan to the college work plan, where appropriate.

text: Guideline 14 – Assessment of information

text: 37. The supervisory authority should perform at least a high-level assessment of the information when regular reporting is received and consider the need to reappraise the components of the risk assessment framework.

text: Guideline 15 – Determination of undertaking impact classification

text: 38. The supervisory authority should include in the risk assessment framework an assessment of the potential impact of all insurance and reinsurance undertakings. This assessment should reflect the potential impact that the failure of a particular undertaking would have on its policyholders and beneficiaries, on the market or the objective of the supervisory authority.

text: 39. The supervisory authority should assign an impact classification to each undertaking and elaborate on the outcome. It should be conducted on a scale with 4 categories, from ‘Impact class 1’ the Please note that the authoritative source of information is the English version. If there is any conflict between the translated versions and the English version, the latter takes precedence. lowest impact on policyholders and beneficiaries and on the market to ‘Impact class 4’ the highest impact on policyholders and beneficiaries and on the market.

text: 40. The impact should in principle be assessed at least on an annual basis through quantitative indicators and where applicable qualitative factors. The supervisory authority may carry out an impact classification on an ad-hoc basis in cases where an extraordinary event occurs.

text: Guideline 16 – Determination of impact classification for insurance groups

text: 41. The group supervisor should include in the group risk assessment framework an impact classification for all insurance groups.

text: 42. The impact classification at insurance group level should reflect the potential impact of the failure of the insurance group, through its entities, on the group’s policyholders and beneficiaries, on the markets where the insurance group is active or the objective of the supervisory authority.

text: 43. The group supervisor should, when assigning an impact classification, take into account the complexity and inter-connectedness of the insurance group.

text: 44. The group supervisor should assign an impact classification to each insurance group on a scale with 4 categories, from ‘Impact class 1’ the lowest impact of the insurance group on policyholders and beneficiaries and on the market to ‘Impact class 4’ the highest impact of the insurance group on policyholders and beneficiaries and on the market.

text: 45. The impact should in principle be assessed at least on an annual basis through quantitative indicators and where applicable qualitative factors. The supervisory authority may carry out an impact classification on an ad-hoc basis in cases where an extraordinary event occurs.

text: Guideline 17 – Determination of undertaking risk classification

text: 46. The supervisory authority should identify and assess the current and future risks that insurance and reinsurance undertakings face or may face, including the ability of the undertaking to manage and control those risks and to withstand possible events or future changes in economic conditions, and their potential adverse effect on the solvency and financial position, the viability of the undertaking and its ability to meet its obligations to policyholders and beneficiaries if the risks materialise.

text: 47. The supervisory authority should carry out this risk identification and assessment for all insurance and reinsurance undertakings taking into account quantitative and qualitative criteria and measures relevant to each undertaking.

text: 48. The supervisory authority should assign insurance and reinsurance undertakings a risk classification on a scale with 4 categories: from ‘Risk class 1’ that corresponds to being best able to withstand the risks materialising, to ‘Risk class 4’ that corresponds to being least able to withstand the risks materialising.

text: 49. Undertakings’ risks should in principle be assessed at least on an annual basis. The supervisory authority may carry out risk classification on an ad-hoc basis in cases where and extraordinary event occurs. However, on the basis of the results of the impact assessment, the supervisory authority should be able to modulate the frequency and depth of the risk assessment for proportionality purposes. Please note that the authoritative source of information is the English version. If there is any conflict between the translated versions and the English version, the latter takes precedence.

text: Guideline 18 – Determination of undertaking risk classification for insurance groups

text: 50. The group supervisor should identify and assess the current and future group level risks that could affect the insurance group, including the ability of the insurance group to withstand possible events or future changes in economic conditions and their potential adverse effect on the solvency and financial position, the viability of the insurance group and the group’s individual insurance and reinsurance undertakings’ abilities to meet their obligations to policyholders and beneficiaries if the risks materialise.

text: 51. The group supervisor should, when assessing the risks of the insurance group, consider the groupspecific issues outlined in Guideline 10.

text: 52. The group supervisor should carry out this risk identification and assessment for all insurance groups taking into account quantitative and qualitative criteria and measures relevant to the insurance group.

text: 53. The group supervisor may carry out risk classification on an ad-hoc basis in cases where an extraordinary event occurs.

text: 54. The group supervisor should assign a risk classification to each insurance group on a scale with 4 categories: from ‘Risk class 1’ that corresponds to being best able to withstand the risks materialising, to ‘Risk class 4’ that corresponds to being least able to withstand the risks materialising.

text: 55. Group risks should in principle be assessed at least on an annual basis. However, on the basis of the results of the impact assessment, the group supervisory authority should be able to modulate the frequency and depth of the risk assessment for proportionality purposes.

text: Guideline 19 – Determination of outcome of the risk assessment framework

text: 56. The supervisory authority should ensure that the risk assessment framework outcome for all insurance and reinsurance undertakings and groups includes an impact classification and a risk classification, whether combined or not, and that they are used together with other relevant supervisory information for the purpose of setting the supervisory plan.

text: 57. If there is a college, when exchanging the outcomes of the risk assessment framework (group and individual) the group supervisor and the other supervisory authorities should be able to explain the rationale of the outcome so to enable the college to form a shared view of the risks of the insurance group.

text: Guideline 20 – Business model analysis

text: 58. As part of the supervisory review process, the supervisory authority should perform a structured business model analysis for insurance and reinsurance undertakings, in line with the nature, scale and complexity of the risks inherent in their business.

text: 59. The business model analysis should result in a view on how the insurance and reinsurance undertaking generates value from its business. It should provide insights into the insurance and reinsurance undertaking’s strategy, its main risks as well as on the business viability, sustainability and vulnerabilities of the business model. The supervisory authority should use the outcome of the business model analysis to support the assessment of other elements of the supervisory review process. Please note that the authoritative source of information is the English version. If there is any conflict between the translated versions and the English version, the latter takes precedence.

text: 60. The process adopted by the supervisory authority to carry out the business model analysis can differ in terms of being an integrated or separate approach (i.e. integrated into risk assessment framework in itself) but the objectives and outcomes remain the same.

text: Guideline 21 – Scope of business model analysis

text: 61. The business model analysis can be performed at the group and/or individual level depending on the supervisory authority’s expert judgement. The analysis should be forward-looking.

text: 62. The business model analysis should be performed at least every three years and after major changes in the business or risk profile of the insurance and reinsurance undertaking and group e.g. large mergers and acquisitions to adequately reflect relevant emerging trends.

text: 63. The level of detail of the analysis should be commensurate with the nature, scale and complexity of the risks the insurance and reinsurance undertaking and group faces or could face assessed in combination with the impact it could have on policyholders.

text: Guideline 22 – Structured approach

text: 64. When performing a business model analysis following an integrated or separate approach, the supervisory authority should make use of a structured approach. The aim of the structured approach is to minimize the risk of overlooking important information and excluding this from the business model analysis, and to optimize consistency which in turn enables the comparison over time and between peers.

text: 65. This structured approach should at least comprise: a) a structured identification of risks; b) an analysis of the business environment; c) a qualitative and quantitative analysis of the current business model; d) an analysis of the business plans and; e) an analysis of the business viability, sustainability and vulnerability.

text: Guideline 23 – Creation of supervisory plan and determination of intensity of supervision

text: 66. The supervisory authority should define minimum engagement levels and conduct at least every three years the supervisory review process for all insurance and reinsurance undertakings under its scope of supervision, having regard to their size, complexity, and intrinsic riskiness.

text: 67. The supervisory authority should utilise the outcome of the risk assessment framework together with the details of the risks identified, the various priorities and constraints of the supervisory authority and other relevant supervisory information to develop the supervisory plan.

text: 68. The supervisory plan should set out the frequency and intensity of supervisory activities for each insurance and reinsurance undertaking. The supervisory plan should be commensurate to the nature, scale and complexity of the insurance and reinsurance undertaking.

text: Guideline 24 – Interaction between the group supervisory plan and the college work plan

text: 69. If there is a college, the group supervisor should include the relevant aspects of the group supervisory plan in the college work plan (as set out in Guideline 12 of the Guidelines on operational functioning of colleges) for discussion and action within the college.

text: 70. Relating to the group supervisory review process, the college work plan should include: a) a description of the main risks being focused on as a result of the outcome of the group risk assessment framework; Please note that the authoritative source of information is the English version. If there is any conflict between the translated versions and the English version, the latter takes precedence. b) descriptions and rationale of the activities to be carried out within the college on the basis of the group supervisory plan; c) the identification of the relevant entities within the insurance group and their supervisory authorities that the group supervisor is likely to seek input from.

text: Guideline 25 – Governance of the supervisory plan

text: 71. The supervisory authority should ensure that the appropriateness of the supervisory plan is subject to suitable oversight and internal governance within the supervisory authority.

text: Guideline 26 – Notification of the frequency of regular supervisory report

text: 72. The supervisory authority should notify insurance and reinsurance undertakings of the frequency of the regular supervisory report required, be it annually, every two or three years as well as any subsequent change to that, as soon as possible and no later than three months in advance of the insurance and reinsurance undertakings’ financial year end.

text: 73. The decision on frequency should, at least, take the outcome of the risk assessment framework, other supervisory information and the exercise of supervisory judgement into consideration.

text: 74. If there is a college, the supervisory authorities should communicate changes to the regular supervisory report frequency to the group supervisor before notifying the insurance and reinsurance undertakings if appropriate.

text: Guideline 27 – Update of the risk assessment framework

text: 75. The supervisory authority should, throughout the supervisory review process, consider if it is necessary to update the outcome of the risk assessment framework.

text: SECTION IV - DETAILED REVIEW Guideline 28 – Detailed review activities

text: 76. The supervisory authority should carry out detailed review activities, whether off-site analysis or on-site inspections, based on the supervisory plan, taking into account all relevant information and focusing on the areas of risk as identified in the risk assessment framework.

text: 77. If there is a college the supervisory authorities should also refer to the college work plan when carrying out the detailed review activities with regard to any participation of other supervisory authorities in line with the Guidelines on operational functioning of colleges.

text: Guideline 29 – Request for additional information during the detailed review

text: 78. The supervisory authority should, where appropriate, evaluate the need for additional information from the insurance and reinsurance undertaking, including various types of data, analyses or tasks to be performed by the insurance and reinsurance undertaking. The timeframe allowed by the supervisory authority for the provision of additional information should be appropriate in order for the insurance and reinsurance undertaking to be able to answer the request.

text: Guideline 30 – Detailed review conclusions

text: 79. The supervisory authority should ensure that the main findings and conclusions of the detailed review are recorded and internally accessible for supervisory purposes. Please note that the authoritative source of information is the English version. If there is any conflict between the translated versions and the English version, the latter takes precedence.

text: Guideline 31 – Detailed off-site analyses

text: 80. The supervisory authority should, as defined in the supervisory plan and taking into account the college work plan, if there is a college, use off-site analyses to carry out further activities beyond the high level assessment of information performed in the risk assessment framework, focusing on the specified risk areas.

text: Guideline 32 – On-site inspections

text: 81. The supervisory authority should carry out regular on-site inspections if defined in the supervisory plan and take into account the college work plan, if there is a college, or other ad-hoc on-site inspections as appropriate.

text: Guideline 33 – Governance of on-site inspections

text: 82. The supervisory authority should have adequate governance mechanisms in place which allow them to properly monitor the on-site inspections.

text: Guideline 34 – Process to follow for on-site inspections

text: 83. The supervisory authority should consider, for the on-site inspections, the following phases: preparation, field work and written conclusions.

text: Guideline 35 – Written conclusions of on-site inspections

text: 84. The supervisory authority should communicate the conclusions of the on-site inspections in writing to the insurance and reinsurance undertaking and should allow the insurance and reinsurance undertaking to respond to the conclusions within a reasonable timeframe as set by the supervisory authority. The supervisory authority should communicate these conclusions to those persons who effectively run the insurance and reinsurance undertaking and are considered appropriate in that context.

text: 85. If there are other supervisory authorities involved in the on-site inspections, the supervisors should discuss the conclusions that will be communicated to the relevant insurance and reinsurance undertakings that are part of the insurance group before communicating them.

text: Guideline 36 – Joint on-site inspections

text: 86. Joint on-site inspections are inspections carried out by a joint on-site inspections team composed by two or more supervisory authorities and EIOPA, where relevant, in the context of supervision of cross-border activities and group supervision.

text: 87. Joint on-site inspections may be initiated based on the request of the supervisory authority of the home or the host Member State, or EIOPA. In case of supervision of cross-border activities, the joint on-site inspections can be initiated upon decision of the supervisory authority of the home Member State, or of the host Member State, where applicable. In case of group supervision, the joint on-site inspections can be initiated upon decision of the group supervisor. The request to or the decision not to initiate a joint on-site inspection need to be duly justified.

text: 88. Guidelines 29, 30, 31 and 32 apply to joint on-site inspections.

text: 89. Guidelines 32a, 32b and 32c apply mutatis mutandis to joint on-site inspections in the context of group supervision.

text: Guideline 37 – Principles governing joint on-site inspections

text: 90. The joint on-site inspections team should be able to: Please note that the authoritative source of information is the English version. If there is any conflict between the translated versions and the English version, the latter takes precedence. a) access the premises of the supervised insurance and reinsurance undertakings, and/or the premises of any service providers to whom the supervised entity has outsourced functions, covered by the scope of the inspection, b) conduct all necessary investigations by accessing to the relevant information, documents and data (including those stored in the IT systems), c) obtain oral or written explanations from the supervised entity.

text: 91. The joint on-site inspections team is subject to the requirements of professional secrecy pursuant to all relevant provisions in Union legislation with regard to the facts, actions and non-public information that they become aware of during the inspection. These requirements apply even after their duties have ceased.

text: 92. The joint on-site inspections team should act with independence and objectivity. The joint on-site inspections team should observe and comply with the relevant laws and regulations.

text: Guideline 38 – Procedural aspects for joint on-site inspections

text: 93. The supervisory authorities concerned should reach joint conclusions in writing. The joint conclusions may include findings, as well as the most appropriate supervisory actions recommended by the supervisory authorities concerned.

text: 94. The supervisory authority of the home Member State should draft a report taking into account those joint conclusions and adopt the appropriate supervisory measures. In case the supervisory authority of the home Member State does not take into account all or part of the joint conclusions, it should inform all other participating members of the joint on-site inspections team and state the reasons.

text: 95. The supervisory authority of the home Member State should inform the other participating supervisory authorities and EIOPA, about the outcome of the consultation with the supervised entity in relation to the report (right-to-be-heard) and about any additional collected evidence, if any.

text: 96. The joint conclusions by the supervisory authorities concerned may be used by the other participating supervisory authorities to take supervisory measures within their mandate.

text: 97. In case the joint conclusions are relevant to multiple jurisdictions, the supervisory measures should be taken in a coordinated manner if feasible.

text: SECTION V - SUPERVISORY MEASURES Guideline 39 – Identification of matters leading to the supervisory measures

text: 98. The supervisory authority should, based on the conclusions of the detailed review, identify any weaknesses and actual or potential deficiencies or non-compliances with requirements that could lead them to imposing supervisory measures.

text: Guideline 40 – Early intervention measures in case of a risk of non-compliance with the Solvency Capital Requirement

text: 99. The supervisory authority should assess whether a situation of a risk of non-compliance (so called ”near non-compliance” or ”near-breach”) with the Solvency Capital Requirement (SCR) occurs and, as a consequence, assess the need for early intervention measures aiming at avoiding the breach from occurring. In certain circumstances it might be necessary for the supervisory Please note that the authoritative source of information is the English version. If there is any conflict between the translated versions and the English version, the latter takes precedence. authority to extend the scope of early intervention measures to consider also the Minimum Capital Requirement (MCR) or specific key supervisory indicators, like local GAAP equity.

text: 100. The supervisory authority should apply early intervention measures at an initial stage in order to avoid the deterioration of the financial position of the insurance and reinsurance undertakings or groups.

text: 101. The supervisory authority should assess, identify and apply early intervention measures based on a combination of qualitative and quantitative key risk indicators.

text: 102. Early intervention measures applied by the supervisory authority should be proportionate to the nature of the issues identified and be based on a forward-looking and risk-based approach.

text: Guideline 41 – Assessment of the significance of weaknesses, deficiencies or noncompliances

text: 103. The supervisory authority should, in order to decide upon measures, assess the significance of the weaknesses and the actual or potential deficiencies or non-compliances identified in the detailed review.

text: Guideline 42 – Identification and assessment of the significance of weaknesses, deficiencies or non-compliances at group level

text: 104. The group supervisor identifies and assesses any weaknesses and actual or potential deficiencies or non-compliance from a group-wide perspective, taking into account the specificities of the insurance group structure and business and the interconnectedness of the insurance and reinsurance group.

text: 105. The group supervisor should consider whether the findings on weaknesses and actual or potential deficiencies or non-compliance from a group-wide perspective relate to the insurance group as a whole or to some specific insurance and reinsurance undertakings.

text: Guideline 43 – Different measures for varying situations

text: 106. The supervisory authority should take measures appropriate to the level of significance of the weaknesses and the actual or potential deficiencies or non-compliances, faced by the insurance and reinsurance undertakings.

text: Guideline 44 – Ladder of intervention

text: 107. The notion of proportionality and appropriateness of the supervisory measures provided in the Solvency II Directive should be implemented through a gradual supervisory response. In that frame, such measures should be applied according to an appropriate ladder or escalation of interventions (ladder of intervention).

text: Guideline 45 – Decision upon measures at group or individual level

text: 108. The supervisory authorities responsible for the supervision of the relevant insurance and reinsurance undertakings or the group supervisor, in case of measures related to the insurance group as a whole, should take the necessary measures against the relevant insurance and reinsurance undertaking based on their analysis of the findings on the weaknesses, deficiencies or non-compliances. Please note that the authoritative source of information is the English version. If there is any conflict between the translated versions and the English version, the latter takes precedence.

text: 109. Where measures are taken both at group and individual levels, the group supervisor and the supervisory authorities should coordinate measures, where appropriate, to enhance their effectiveness.

text: Guideline 46 – Governance over exercise of measures

text: 110. The supervisory authority should have a suitable governance process on the exercise of supervisory measures to ensure that they are used in a consistent, proportionate and objective manner and that they are properly documented.

text: Guideline 47 – Notification of measures

text: 111. The supervisory authority should notify the undertaking in writing and on a timely manner about the specific measures that the insurance and reinsurance undertaking should implement. This notification should, where appropriate, include a specification of the appropriate timeframe in which the insurance and reinsurance undertaking is to implement the actions necessary to comply with the measures.

text: 112. If there is a college and where more than one supervisory authority takes measures, the supervisory authorities should consider coordinating their communication strategy.

text: Guideline 48 – Communication in the college

text: 113. If there is a college, the supervisory authority should, where appropriate, communicate to the group supervisor the supervisory measures taken.

text: Guideline 49 – Monitoring implementation by insurance and reinsurance undertakings

text: 114. The supervisory authority should monitor whether the measures are properly implemented by the insurance and reinsurance undertakings.

text: Guideline 50 – Review of supervisory measures

text: 115. The supervisory authority should review the measures and update the supervisory plan in response to the degree of effectiveness of the supervisory measures as implemented by the insurance and reinsurance undertaking.

text: SECTION VI – RECOVERY AND RESOLUTION Guideline 51 – Pre-emptive recovery planning

text: 116. In the supervisory review process, the supervisory authority should use the information contained in pre-emptive recovery plans prepared pursuant to

text: Directive (EU) 2025/1

text: 117. In addition, the supervisory authority should assess the consistency of pre-emptive recovery plans with the insurance and reinsurance undertaking or group’s system of governance, including decision-making process and the risk management process.

text: SECTION VII – CONDUCT OF BUSINESS Guideline 52 – Supervision of conduct of business

text: 118. The supervisory authority should take into consideration how conduct risks are managed within insurance and reinsurance undertakings or groups regardless of its consumer protection mandate, without prejudice to the application of the proportionality principle. Please note that the authoritative source of information is the English version. If there is any conflict between the translated versions and the English version, the latter takes precedence.

text: 119. In case the supervisory authority does not have a consumer protection mandate, it should cooperate with the supervisory authority in this matter in order to achieve the goal of consumer protection.

text: SECTION VIII – EMERGING RISKS Guideline 53 – Governance in addressing emerging risks in the supervisory review process

text: 120. The supervisory authority should have a regular process in place, where at least once a year major legal and regulatory developments, as well as changes to the risk landscape are analysed and assessed for their impact on the implemented supervisory review process. In addition to the regular process, the supervisory authority may also establish an ad hoc process to respond to specific developments or changes to the regulatory landscape as they occur.

text: 121. The results of such a process should be translated into necessary adjustments to the established supervisory review process.

text: 122. Such changes should be implemented as quickly as possible. If an immediate implementation is not possible, an adjustment plan should be drawn up to ensure proper compliance.

text: Guideline 54 – Supervision of ICT risks

text: 123. The supervisory authority should integrate the assessment of ICT-related risks (as part of the overall operational risk of the insurance and reinsurance undertaking) within its supervisory review processes. The assessment should be in line with the requirements stemming from the Digital Operational Resilience Act.

text: 124. The assessment of these operational risks (e.g. business interruption) should involve verifying whether the insurance and reinsurance undertakings are integrating such risks in their system of governance, in particular risk management.

text: 125. The assessment should be risk-based and proportionate to the nature, scale and complexity of the insurance and reinsurance undertaking.

text: Guideline 55 – Climate change and other sustainability risks

text: 126. The supervisory authority should integrate the assessment of climate change risks, including the climate change scenario analysis’ in accordance with

text: Article 45

text: a of the Solvency II Directive, and other sustainability risks within their supervisory review processes.

text: 127. That should involve an assessment of an actual and potential impact of sustainability risks and verifying whether and how insurance and reinsurance undertakings are integrating such risks within their business models and strategies, and the system of governance, particularly focusing on risk management and actuarial functions, the assessment of the overall solvency needs within the ORSA, the remuneration policies, and the investment strategies, also in their implementation of the prudent person principle.

text: 128. In case of climate change risks, supervisory authorities should assess both the potential impact of the physical risks and transition risks. With respect to risk management, the supervisory authority should also verify whether insurance and reinsurance undertakings make reasonable efforts to assess their sustainability risks over different time horizons, i.e. whether the insurance and reinsurance undertaking is able to forecast its climate and sustainability risks over the short, medium and long-term. Please note that the authoritative source of information is the English version. If there is any conflict between the translated versions and the English version, the latter takes precedence.

text: Guideline 56 – Use of supervisory technology in the supervisory review process

text: 129. The supervisory authority should establish an ongoing quality control process regarding the supervisory review process implemented, and consider where technological developments could promote data-driven supervisory processes. The supervisory authority should implement, where possible and considered necessary, experimental technological approaches, testing those emerging technologies that could improve the efficiency and responsiveness of the supervisory review processes.

text: COMPLIANCE AND REPORTING RULES

text: 130. This document contains Guidelines issued under Article 16 of the

text: Regulation (EU) No 1094/2010

text: . In accordance with Article 16(3) of that Regulation, competent authorities and financial institutions are required to make every effort to comply with guidelines and recommendations.

text: 131. Competent authorities that comply or intend to comply with these Guidelines should incorporate them into their regulatory or supervisory framework in an appropriate manner.

text: 132. Competent authorities are to confirm to EIOPA whether they comply or intend to comply with these Guidelines, with reasons for non-compliance, within two months after the issuance of the translated versions.

text: 133. In the absence of a response by this deadline, competent authorities will be considered as noncompliant to the reporting and reported as such.

text: FINAL PROVISION ON REVIEWS

text: 134. These Guidelines will be subject to a review by EIOPA.


text: Regulation (EU) No 1094/2010

text: ,of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority), amending Decision No

text: and repealing

text: Commission Decision 2009/79/EC

text: (EIOPA Regulation) (OJ L 331, 15.12.2010, p. 48–83). Directive

text: 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) (OJ L 335, 17.12.2009, p. 1-155). 3 Commission Delegated

text: Regulation (EU) 2015/35 of 10 October 2014

text: supplementing Directive

text: (OJ L 12, 17.01.2015, p. 1-797). 4

text: Regulation (EU) No 236/2012

text: of the European Parliament and of the Council of 14 March 2012 on short selling and certain aspects of credit default swaps (OJ L 86, 24.03.2012, p. 1-24).

text: Page 2/7

text: Page 3/7

text: Page 4/7

text: Page 5/7

text: Page 6/7

text: Page 7/7

text: EIOPA-BoS-25/664 Adopted on 27 January 2026 GUIDELINES ON THE TREATMENT OF MARKET AND COUNTERPARTY RISK EXPOSURES IN THE STANDARD FORMULA INTRODUCTION

text: 1. In accordance with

text: Article 16 of Regulation (EU) No 1094/2010

text: (EIOPA Regulation) , EIOPA issues revised Guidelines on the treatment of market and counterparty risk exposures in the standard formula.

text: 2. The Guidelines relate to Articles

text: and

text: of Directive 2009/138/EU (Solvency II) as well as to

text: Articles 164

text: to 202 of Commission Delegated

text: Regulation (EU) 2015/35

text: 3. These Guidelines are addressed to the supervisory authorities under Solvency II.

text: 4. These Guidelines aim at facilitating convergence of practices across Member States and supporting undertakings in applying the market and counterparty default risk modules of the standard formula.

text: 5. For the purpose of these Guidelines, the following definition has been developed: - ‘short equity position’ means a short position relating to equity resulting from a short sale within the meaning of paragraph 1(b) of

text: Article 2 of Regulation (EU) No 236/2012

text: 6. If not defined in these Guidelines, the terms have the meaning defined in the legal acts referred to in the introduction.

text: 7. The Guidelines repeal and replace the Guidelines on the treatment of market and counterparty risk exposures in the standard formula (EIOPA-BoS-14-174).

text: GUIDELINE 1 – IMPACT OF OPTIONS ON THE DURATION OF BONDS AND LOANS

text: 8. When determining the duration of bonds and loans, insurance and reinsurance undertakings (collectively “undertakings”) should take into account options granted to the issuers of the bonds and loans which might decrease or increase their maturity. The determination of the duration of such bonds and loans should be based on prudent assumptions that reflect stressed conditions.

text: GUIDELINE 2 – INTEREST RATE RISK SUB-MODULE

text: 9. Undertakings should include all interest rate sensitive assets and liabilities in the calculation of the capital requirement for the interest rate risk sub-module.

text: 10. The technical provision should be recalculated under the scenarios using the risk free interest rate term structure after the shock, which is determined by stressing the basic risk free interest rate term structure and adding back matching adjustment, volatility adjustment or transitional measure on the risk free rate under

text: Article 308

text: (c) of the Solvency II Directive, if applicable.

text: 11. The assets value should be recalculated under the scenarios by stressing only the basic risk free interest rate term structure and any spreads over the basic risk free interest rate term structure should remain unchanged. This may involve using a mark to model valuation for determining the value of the assets under the stresses.

text: 12. Insurance and reinsurance undertakings should ensure that the values of assets before the stresses obtained by using a mark-to-model valuation are consistent with the quoted market prices of relevant assets in active markets.

text: GUIDELINE 3 – INVESTMENTS WITH EQUITY AND DEBT INSTRUMENT CHARACTERISTICS

text: 13. Where assets exhibit debt and equity instrument characteristics, undertakings should take into account both of these characteristics when determining which standard formula risk modules and sub-modules should apply.

text: 14. When determining which standard formula risk modules and sub-modules apply, undertakings should consider the economic substance of the asset.

text: 15. Where the asset can be considered as the composite of discrete components, undertakings should where appropriate apply the relevant stresses to each of these components separately.

text: 16. Where it is not possible to consider the asset as the composite of discrete components, undertakings should base the determination of which of the standard formula risk modules and sub-modules apply on whether the debt or equity characteristics predominate in an economic sense.

text: GUIDELINE 4 – FINANCIAL RISK-MITIGATING INSTRUMENTS AND SHORT EQUITY POSITIONS

text: 17. Any risk mitigating effect of financial risk-mitigating instruments, including short equity positions, can only be considered if they comply with

text: Articles 208

text: to 215 of Commission Delegated Regulation 2015/35. Otherwise, they should only be considered under those stressed scenarios where they contribute to a decrease in value of own funds.

text: GUIDELINE 5 – COMMITMENTS WHICH MAY CREATE PAYMENT OBLIGATIONS

text: 18. For legally binding commitments where no nominal value is explicitly mentioned in the commitment arrangement, undertakings should determine the corresponding loss-given-default, as referred to in Article 192(5) of Commission Delegated Regulation 2015/35, on the basis of an estimated nominal value.

text: 19. The estimated nominal value is the maximum amount that is expected to be paid in case of a credit event of the counterparty.

text: GUIDELINE 6 – TREATMENT OF LEVERAGED FUNDS

text: 20. Where undertakings calculate the market risk module and apply the look-through approach for a leveraged investment fund, they should consider the leverage of the fund under the relevant market risk sub-modules. The change in value of the investment fund should be the net change after applying the market risk sub-module stress to the gross assets and reducing the resulting value by the value of the outstanding borrowing.

text: 21. For a highly leveraged investment fund, the outcome of the calculation of the relevant sub-modules might be a reduction of the value of the investment fund exceeding 100 percent. In this case, the reduction of the value should be assumed to be 100 percent.

text: COMPLIANCE AND REPORTING RULES

text: 22. This document contains guidelines issued under Article 16 of the EIOPA Regulation. In accordance with Article 16(3) of the EIOPA Regulation, competent authorities and financial institutions are required to make every effort to comply with guidelines and recommendations.

text: 23. Competent authorities that comply or intend to comply with these Guidelines should incorporate them into their regulatory or supervisory framework in an appropriate manner.

text: 24. Competent authorities are to confirm to EIOPA whether they comply or intend to comply with these Guidelines, with reasons for non-compliance, within two months after the issuance of the translated versions.

text: 25. In the absence of a response by this deadline, competent authorities will be considered as noncompliant to the reporting and reported as such.

text: FINAL PROVISION ON REVIEW

text: 26. These Guidelines will be subject to a review by EIOPA.

text: Annex – Examples for the treatment of leveraged funds EXAMPLE 1

text: Suppose an insurance company (hereinafter “IC”) which invests 40 million euros of equity in a leveraged investment vehicle (hereinafter "LF"). In doing so, IC holds 20% of the equity of LF. LF invests exclusively in private equity, up to 350 million euros. The application of the 49% shock on private equity leads to a 49% decrease in the value of the private equity investments as there are no risk mitigating instruments in place. The SCR calculation for the equity risk along with the total balance sheet approach is illustrated below.

text: Before the type 2 equity shock

text: Insurance company or IC Assets Liabilities Equity in LF 40 Own Funds 100 Other Assets 960 Liabilities 900 Total 1000 Total 1000

text: IC holds 20% of equity of LF = 20%*200 = 40

text: Leveraged fund or LF Assets Liabilities Private Equity 350 Equity 200 Debt 150 Total 350 Total 350

text: The application of the private equity shock gives rise to a capital requirement of 34.3 million (350*49%*20%) euros for the IC. In relative terms, this results in a risk weighting of 34.3/40 = 85.75%, i.e., 1.75 times the relative weighting applicable to the risk on private equity (1.75*49% = 85.75%). This factor of 1.75 is the result obtained by dividing the value of the private equity investments of the LF by the value of the equity of the LF (350/200 = 1.75). It represents the leverage ratio calculated as the total assets to equity of the LF.

text: After the type 2 equity shock

text: Insurance company Assets Liabilities Equity in LF (= 40-34.3) 5.7 Own Funds (= 965.7-900) 65.7 Other Assets 960 Liabilities 900 Total 965.7 Total 965.7

text: IC holds 20% of equity of LF = 20%*28.5 = 5,7

text: LF (leveraged fund) Assets Liabilities Private Equity (= 350*(1-49%)) 178.5 Equity (= 178.5-150) 28.5 Debt 150 Total 178.5 Total 178.5

text: In comparison to the correct SCR calculation above, an approach where solely the net asset value (NAV) of the LF is stressed, would result in a capital requirement of 19.6 million (200*49%*20%). By neglecting the leverage in the fund, the equity risk would substantially be underestimated.

text: EXAMPLE 2

text: Suppose an insurance company (hereinafter “IC”) which invests 30 million euros of equity in a leveraged investment vehicle (hereinafter "LF"). In doing so, IC holds 20% of the equity of LF. LF invests exclusively in private equity, up to 350 million euros. The LF is now mainly debt-financed with debt of 200 and equity of 150. Other assets have now the value of 970 in the insurance company’s balance sheet.

text: Before the type 2 equity shock

text: Insurance company or IC Assets Liabilities Equity in LF 30 Own Funds 100 Other Assets 970 Liabilities 900 Total 1000 Total 1000

text: IC holds 20% of equity of LF = 20%*150 = 30

text: Leveraged fund or LF Assets Liabilities Private Equity 350 Equity 150 Debt 200 Total 350 Total 350

text: An immediate application of the private equity shock results in a capital requirement of 34.3 million (350*49%*20%) euros for the IC, which exceeds the amount of its investment in LF. Accordingly, the capital requirement needs to be capped by the IC’s investment in the LF. Therefore, the capital requirement is 30 (min(34.3,30)=30). This implies that for this highly leveraged investment fund the entire equity in the LF is lost under the type 2 equity scenario and the relative risk weight is 100%.

text: After the type 2 equity shock

text: Insurance company Assets Liabilities Equity in LF (=30-min (34.3,30)) 0 Own Funds (=970-900) 70 Other Assets 970 Liabilities 900 Total 970 Total 970

text: IC holds 20% of equity of LF = 20%*max (0,-21.5) = 0

text: LF (leveraged fund)

text: Assets Liabilities Private Equity (= 350*(1-49%)) 178.5 Equity (=178.5-200) -21.5 Debt 200 Total 178.5 Total 178.5

type: vagledning

utgivare: eiopa


text: FINAL REPORT ON THE GUIDELINES TO SPECIFY FURTHER THE CRITERIA FOR THE IDENTIFICATION OF CRITICAL FUNCTIONS

text: Regulation (EU) No 1094/2010

text: of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority), amending Decision No

text: and repealing

text: Commission Decision 2009/79/EC

text: (OJ L 331, 15.12.2010, p. 48–83). 2

text: Directive (EU) 2025/1

text: of the European Parliament and of the Council of 27 November 2024 establishing a framework for the recovery and resolution of insurance and reinsurance undertakings and amending Directives

text: and

text: (EU) 2017/1132

text: and Regulations

text: (EU) No 1094/2010

text: (EU) No 648/2012

text: (EU) No 806/2014

text: and

text: (EU) 2017/1129

text: (OJ L, 2025/1, 8.1.2025, p. 1). 3 Bolder, Simpler, Faster: EIOPA’s views for better regulation and supervision

text: Directive

text: 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 (Solevncy II) (OJ L 335, 17.12.2009, p.1).

text: EIOPA-BoS-25-714 11 February 2026

text: INTRODUCTION

text: 1. In accordance with

text: Article 16 of Regulation (EU) No 1094/2010

text: (EIOPA Regulation) and with Article 9(9) of IRRD , EIOPA issues these Guidelines to specify further the criteria for the identification of critical functions.

text: 2. Pursuant to Article 2(25) of the IRRD critical functions mean, “activities, services or operations performed by an insurance or reinsurance undertaking for third parties that cannot be substituted within a reasonable time or at a reasonable cost and where the inability of the insurance or reinsurance undertaking to perform the activities, services or operations would be likely to have a significant impact on the financial system or the real economy in one or more Member States including, in particular, the impact resulting from effects on the social welfare of a large number of policy holders, beneficiaries or injured parties or from a systemic disruption or a loss of general confidence in the provision of insurance services”.

text: 3. The Guidelines were developed in line with EIOPA’s views for better regulation and supervision , thereby enhancing supervisory convergence through simpler, more efficient frameworks.

text: 4. The disruption of a critical function can have a severely negative impact on policyholders, beneficiaries and injured parties, the real economy or financial stability as a whole. The identification of critical functions is therefore a key element in the process of resolution planning and in the decision whether taking a resolution action is in the public interest.

text: 5. During the development of these Guidelines EIOPA has considered the work of international bodies on critical functions such as the International Association of Insurance Supervisors (IAIS) and the Financial Stability Board (FSB). In particular, the Guidelines consider the 2016 FSB Guidance “Developing Effective Resolution Strategies and Plans for Systemically Important Insurers” and the 2023 FSB practices paper for the “Identification of Critical Functions of Insurers” as a basis.

text: 6. The structure of these Guidelines builds on the several elements included in the definition of critical functions as provided for in Article 2(25) of the IRRD. This includes a section on general elements and specific sections covering the assessment of the likely significant impact on the real economy or the financial system and the analysis of the substitution at a reasonable cost and within a reasonable time. In these sections the Guidelines also cover some firm-specific factors which are relevant for the impact assessment or substitutability analysis.

text: 7. The Guidelines also cover potentially critical functions that are not directly related to insurance, such as investments in and lending to the real economy and acting as a counterparty in derivative transactions, but the main emphasis is on the insurance functions.

text: 8. For the purpose of identifying critical functions, the resolution authority may engage in a dialogue with the insurance supervisory authority, in accordance with Article 12 of the IRRD to collect additional information on specificities of the insurance market in the given Member State.

text: 10. These Guidelines apply from 30 January 2027.

text: 11. If not defined in these Guidelines, the terms have the meaning defined in the legal acts referred to in the introduction.

text: Type of potential critical functions

text: GUIDELINE 1 – SCOPE OF POTENTIAL CRITICAL FUNCTIONS

text: 12. When assessing whether the insurance or reinsurance undertaking provides critical functions, the resolution authority should consider all functions provided to third parties, including the following categories of functions: (a) insurance or reinsurance functions, including underwriting new (re)insurance business, providing coverage for already underwritten risks and settling claims due under existing insurance contracts; specific coverages falling in the scope of these key insurance or reinsurance functions are: i. insurance and/or reinsurance coverage as a precondition for economic activities, ii. insurance and/or reinsurance coverage as a precondition for individuals to go about their daily lives, iii. insurance and/or reinsurance payments that are vital to individuals’ financial security. (b) non-insurance functions, including investment in and lending to the real economy, acting as a counterparty in derivatives, repo and securities lending markets and pooling of risks, as an economic function. (c) insurance or reinsurance related functions, including claims management, actuarial services, pension fund management, asset management and other administrative functions.

text: General requirements for the identification of critical functions

text: GUIDELINE 2 – GEOGRAPHICAL LEVEL

text: 13. The resolution authority should make an assessment for each Member State in which the insurance or reinsurance undertaking provides a function that may be likely to have a significant impact on the financial system or the real economy in that Member State.

text: 14. For the purpose of this assessment, the resolution authority should assess the impact of the inability of the insurance or reinsurance undertaking to perform activities, services or operations on the financial system or the real economy and their substitutability for the Member State as a whole.

text: 15. Notwithstanding the previous paragraph 13, the resolution authority may decide to assess the impact and substitutability also at a regional level based on factors such as the importance or characteristics of the region for the Member State, the severity of the disruption at regional level, the potential contagion and differences between the Member State level and the regional level.

text: GUIDELINE 3 - CONSIDERATION OF AN INSURANCE GUARANTEE SCHEME, MEASURES UNDER NORMAL INSOLVENCY PROCEEDINGS, AND USE OF PUBLIC FUNDS IN THE IDENTIFICATION OF CRITICAL FUNCTIONS

text: 16. When assessing whether activities, services or operations performed by an insurance or reinsurance undertaking meet the conditions set out in Article 2(25) of the IRRD, the resolution authority should exclude the following elements: (a) measures under normal insolvency proceedings if they reduce the impact of the inability to perform the function on the financial system or the real economy or facilitate substitution at a reasonable cost and within a reasonable time. (b) the use of an insurance guarantee scheme which is applicable to that insurance or reinsurance undertaking if the conditions for normal insolvency proceedings are met. (c) the use of public funds.

text: 17. The measures listed under (a) - (c) above should not be considered given that the analysis of the effect of these measures are not part of the critical functions identification process. They relate to the resolvability assessment or the public interest test.

text: Specific guidelines for the assessment of the likelihood of a significant impact on the financial system or the real economy

text: GUIDELINE 4 - INABILITY TO PROVIDE THE FUNCTION

text: 18. When assessing whether the inability of the insurance or reinsurance undertaking to provide a function that consists of certain activities, services or operations results in a significant impact, the resolution authority should use the assumption that these activities and operations cease completely and that the services are no longer provided. This means: (a) for the function of underwriting new insurance business for certain risks that, inter alia, no new business is written for these risks. (b) for the function of providing coverage for certain risks which have already been underwritten that, inter alia, cover for these risks is no longer provided. (c) for the function of making payments to certain policyholders, beneficiaries or claimants that, inter alia, no payments are made to these policyholders, beneficiaries or claimants. (d) for the function of investing in or providing funding to certain entities in the real economy that, inter alia, no new investments and loans into these entities are made and that existing investments including loans into these entities are immediately sold or called in. (e) for the function of acting as counterparty in certain derivatives, repo or securities lending transactions that, inter alia, the insurance or reinsurance undertaking does not enter into new transactions and that existing transactions are immediately terminated.

text: 19. Alternatively, the resolution authority may assume a partial cease of the activities or operations of a certain function or the partial provision of the services of a certain function, which means that they are still performed or provided but no longer to a comparable extent, under comparable conditions and with comparable quality. Such approach can be taken only if the resolution authority can ensure, based on objective criteria and reasonable assumptions, that this results in a more accurate assessment of the impact.

text: GUIDELINE 5 - TRANSMISSION CHANNELS

text: 20. When assessing the potential significant impact of the inability to provide a function on the real economy or the financial system, the resolution authority should consider at least the following transmission channels and/or their impact: (a) direct impact on third parties to which the function is provided. Depending on the specific function this includes, inter alia, a reduction in the level of activities, including the purchase of goods and services, and in the ability to meet obligations. (b) contagion from third parties to which the function is provided to other parties in the financial system or the real economy.

text: 21. The resolution authority should consider whether it is necessary for the assessment referred to in the previous paragraph to consider any of the following elements: (a) the potential impact on the financial system, including on financial markets, financial market infrastructures, banks, insurance and reinsurance undertakings, IORPs or hedge funds, public services. (b) the potential impact on the real economy, including on the level of activity, output, employment, consumption, prices, incomes or profits in non-financial sectors of the economy. (c) further contagion including from the financial system to the real economy and vice versa.

text: GUIDELINE 6 - FACTORS TO CONSIDER FOR THE ASSESSMENT WHETHER A SIGNIFICANT IMPACT ON THE REAL ECONOMY OR THE FINANCIAL SYSTEM IS LIKELY

text: 22. When assessing the significant impact of the inability to provide a function on the real economy or the financial system, the resolution authority should consider, inter alia, the following factors: (a) the characteristics of the function, including, where relevant, the risk(s) covered, the type of products, services or activities and in the case of insurance whether a mandatory coverage or coverage with specific legal requirements provided. (b) the type of third parties to which the function is provided, such as individuals, small and mediums sized enterprises , large corporations, financial industry, state owned companies and public institutions, and the nature of their reliance on the continuing provision of the function. (c) the number of third parties to which the function is provided, the total volume and number of activities, services and operations and the respective market share of the insurance or reinsurance undertaking. (d) the geographical level at which the function is provided. The assessment may be carried out at national level, or, where justified, at regional level, for example, where there is a high concentration of policyholders/risks in a given area or where a legally mandated coverage predominantly applies within a specific region. The assessment may also be performed at European level, if and as necessary. (e) the impact of the disruption of the function on the third parties to which it is provided, including to what extent and how long they can continue their activities without the function or whether they can easily adjust their activities without a negative impact in terms of income or the assets’ value. (f) the potential for contagion to other related parties, such as competitors, intermediaries, suppliers or creditors and the speed of such contagion, including the interdependencies between the third parties to which the function is provided and other parties, the potential for contagion following a change in societal sentiment and the relevance of the other parties to the financial system or the real economy. (g) Without prejudice to 16 (b), the potential for contagion to other insurance or reinsurance undertakings following a significant use of an insurance guarantee scheme that could trigger a substantial degree of ex-post funding putting a financial strain on those other insurance or reinsurance undertakings.

text: 23. The resolution authority should consider whether there are any factors specific to the insurance or reinsurance undertaking, not already included in the previous paragraph , that may change the assessment on whether the inability to provide the function is likely to have a significant impact on the real economy or the financial system. Possible factors are, inter alia: (a) significance of the insurance or reinsurance undertaking’s operations, which may be assessed based on its nature, size, market share (in the EU’s internal market, national market or in markets for specific business lines), external and internal interconnectedness, complexity, extent of the cross-border activity and reputational risk (i.e. potential negative impact on the confidence in the whole sector in case of failure); (b) significant differences in the way the insurance or reinsurance undertaking performs the function compared to other insurance or reinsurance undertakings. (c) specifics in terms of interconnections between several functions provided to third parties, especially if they are critical. (d) significant differences in the composition of the third parties to which the insurance or reinsurance undertaking provides the function compared to its competitors.

text: GUIDELINE 7 - IMPACT RESULTING FROM EFFECTS ON THE SOCIAL WELFARE OF A LARGE NUMBER OF POLICY HOLDERS AND FROM THE SYSTEMIC DISRUPTION IN THE PROVISION OF INSURANCE SERVICES

text: 24. When assessing whether there are functions for which the inability of the insurance or reinsurance undertaking to provide them is likely to have a significant impact on the real economy or the financial system resulting from effects on the social welfare of a large number of policy holders, beneficiaries or injured parties, the resolution authority should consider, inter alia, the specific coverages referred to in paragraph 12(a).

text: 25. When assessing whether there are functions for which the inability of the individual insurance or reinsurance undertaking to provide them is likely to have a significant impact on the real economy or the financial system resulting from the systemic disruption of insurance services the resolution authority should consider, inter alia, functions where the inability to provide them creates a risk to the financial stability, in particular resulting from the systemic relevance of the insurance or reinsurance undertaking that provides the function, according to the criteria in paragraph 18(a).

text: 26. Possible indicators for a risk to financial stability as referred to in the previous paragraph are, inter alia, the impact on the third parties to which the function is provided and, for third parties providing financial services, their size, market share, external and internal interconnectedness, complexity, and cross-border activities.

text: GUIDELINE 8 - LOSS OF GENERAL CONFIDENCE IN THE PROVISION OF INSURANCE SERVICES

text: 27. When assessing whether there are functions for which the inability of the insurance or reinsurance undertaking to provide them is likely to have a significant impact on the real economy or the financial system resulting from the loss of general confidence in the provision of insurance services, the resolution authority should consider, inter alia, the following aspects: (a) a loss of confidence may occur for the whole market or for one or more segments. (b) there may be a loss of confidence in the ability of insurance undertakings to meet their existing obligations or in the availability of new insurance coverage. (c) the likelihood that the inability to provide a function results in a loss of confidence may depend, inter alia, on the impact, on the substitutability and on the perception of the situation by third parties to which the function is provided and by other parties.

text: Specific guidelines for the analysis of the substitutability at a reasonable cost and in a reasonable time

text: GUIDELINE 9 - APPROACH TO REASONABLE TIME AND REASONABLE COST

text: 28. The resolution authority should consider whether the condition of substitutability within a reasonable time and at a reasonable cost can be met. This is the case if there are other entities available which are able and willing to replace the function with activities, services or operations: (a) that provide the same or a similar economic function (that is, the same or similar underlying role for the real economy/end-users); and (b) at a certain cost for the third parties and within a certain timeframe, that makes a significant impact on the real economy or the financial system not likely.

text: GUIDELINE 10 - FURTHER ELEMENTS OF THE SUBSTITUTABILITY WITHIN A REASONABLE TIME AND AT A REASONABLE COST

text: 29. When assessing whether a substitution is possible at a reasonable time and at a reasonable cost the resolution authority should, inter alia, consider all of the following: (a) in the case of savings products with no or minimal coverage of biometric risks, non-insurance undertakings, such as investment funds, may provide the same or similar economic function; (b) the same, or a similar, economic function may only be provided by the substitute contracts if the counterparties have at least the same credit quality as the insurance undertaking, where relevant due to a business-to-business relationship. This is normally more relevant for reinsurance as well as functions provided to non-insurance financial institutions; (c) the condition for substitutability is only met if both the timeframe and cost are reasonable, as set out in Guideline 9. Both conditions have to be assessed together; (d) there may be a trade-off between cost and timeframe; (e) provided that any other conditions remain equal, the reasonable time for substitution becomes shorter if: i. the speed with which the inability to perform the function impacts the real economy or the financial system increases; ii. the magnitude of the impact increases; (f) the reasonable cost can be higher than the current costs for the third party associated with the current contract with the insurance or reinsurance undertaking; (g) the substitute contracts do not have to be available to all third parties to which the insurance or reinsurance undertaking provides the function and not all third parties to whom they are available are necessarily required to enter into them.

text: GUIDELINE 11 - FACTORS TO CONSIDER WHEN ASSESSING THE SUBSTITUTABILITY OF A FUNCTION WITHIN A REASONABLE TIME AND AT A REASONABLE COST

text: 30. When assessing whether a function can be substituted within a reasonable time and at a reasonable cost the resolution authority should consider, inter alia, the factors listed below: (a) characteristics of the function including the type of products, services or activities; (b) properties of the market for the function (number, type and size of suppliers (including from other markets) providing the same or an equivalent function; level of market concentration; degree of product standardization; level of competitiveness; geographical level of the market; type of third parties to which the function is provided; timeliness and costs related to moving to a provider of a similar or equivalent function); (c) appetite and ability of other market participants to provide the same or similar function to the third parties, including the volume of the activities, services or operations to be substituted and the number of third parties to which they are provided; market share of the insurance or reinsurance undertaking with respect to the function provided; attractiveness of the business in terms of profitability and technical complexity; overall strategy of other market participants, the overall market environment; presence of barriers to entry in terms of requirements to perform the function (such as HR-related functions) or any absorption issues in terms of the financial and solvency capacity to take over the business or large exposures; (d) obstacles to the provision of activities, services or operations by other entities (regulatory issues, including regarding competition; legal issues; unavailability of reinsurance in case of a transfer of contracts; operational issues, including with regard to IT; (e) any obstacles for the third parties to engage with the activities, services or operations provided by other entities, including any obstacles for policyholders to acquire new policies with the same or similar coverage due to, inter alia, a higher age or a deterioration in health, the availability of coverage (including the coverage capacity of a potential replacing party) or the time required to switch to a new product and any costs associated with such a move; (f) nature of the failure of the insurance or reinsurance undertaking, in particular whether the failure is idiosyncratic or occurring in the context of a system-wide crisis, as this impacts the availability of any replacing entities to provide the function.

text: 31. The resolution authority should consider whether there are any other factors specific to the insurance or reinsurance undertaking, not included in the above list, that may alter the assessment. Possible other factors are, inter alia, those referred to in paragraph 23.

text: Specific guidelines for cross-border activities and groups

text: GUIDELINE 12 - TREATMENT OF SIGNIFICANT CROSS-BORDER ACTIVITIES

text: 32. When assessing whether any significant cross-border activities within the meaning of Chapter VIII of Directive

text: 4 performed by the insurance or reinsurance undertaking include a provision of a critical function in the host Member State, the resolution authority should apply the same criteria as in the identification of a critical function for an insurance or reinsurance undertaking.

text: 33. In case an insurance or reinsurance undertaking engages in significant cross-border activities the resolution authority should liaise with the resolution authority or resolution authorities of the host Member State or Member States to collect information on any specificities in the host Member State that might be relevant for the decision whether the insurance or reinsurance undertaking provides a critical function in the host Member State.

text: GUIDELINE 13 - GROUP ASPECTS IN THE IDENTIFICATION OF CRITICAL FUNCTIONS

text: 34. In the assessment whether an insurance or reinsurance undertaking that is part of a group provides a critical function, the resolution authority should only consider activities, services and operations provided to entities outside the group.

text: 35. In case two or more entities within the group provide the same activity, service or operation which is not deemed as critical at individual entity level, in a certain Member State, the resolution authority should assess the significant impact of this function in that Member State.

text: COMPLIANCE AND REPORTING RULES

text: 36. This document contains Guidelines issued under Article 16 of the EIOPA Regulation. In accordance with Article 16(3) of the EIOPA Regulation, resolution authorities are required to make every effort to comply with guidelines and recommendations.

text: 37. Resolution authorities that comply or intend to comply with these Guidelines should incorporate them into their regulatory or supervisory framework in an appropriate manner.

text: 38. Resolution authorities are to confirm to EIOPA whether they comply or intend to comply with these Guidelines, with reasons for non-compliance, within two months after the issuance of the translated versions.

text: 39. In the absence of a response by this deadline, resolution authorities will be considered as noncompliant to the reporting and reported as such.

text: FINAL PROVISION ON REVIEWS

text: 40. These Guidelines will be subject to a review by EIOPA .