Section 1: Solvency Capital Requirement

Articles in this section · 4

L352-1L352-2L352-3L352-4-1

Article L352-3

French Insurance CodeIn force
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Updated 8 Nov 2023

I.-The Autorité de contrôle prudentiel et de résolution may, by reasoned decision, impose an additional capital requirement on insurance and reinsurance undertakings in any of the following exceptional circumstances, where it concludes from its supervisory process that :

1° The risk profile of the undertaking deviates significantly from the assumptions underlying the calculation of the Solvency Capital Requirement using the standard formula referred to in Article L. 352-1 and the requirement to use an internal model under Article L. 352-2 is inappropriate or has proved ineffective, or until such time as a partial or full internal model is developed;

2° The risk profile of the undertaking deviates significantly from the assumptions underlying the calculation of the Solvency Capital Requirement using a full internal model or a partial internal model referred to in Article L. 352-1, because certain quantifiable risks are insufficiently taken into account and the model has not been adapted within a period of time enabling it to better reflect the risk profile;

3° The company's system of governance deviates significantly from the standards set out in Chapter IV of this Title, and the company is therefore not in a position to identify, measure, control, manage and report adequately the risks to which it is or could be exposed, and the application of other measures is not likely to remedy the shortcomings quickly and sufficiently;

4° The risk profile of an insurance or reinsurance undertaking applying the equalisation adjustment or the volatility correction referred to in Article L. 351-2, or the transitional measures referred to in Articles L. 351-4 and L. 351-5, deviates significantly from the assumptions underlying these adjustments, corrections and transitional measures.

The Solvency Capital Requirement, increased by the additional capital requirement imposed, replaces the inadequate Solvency Capital Requirement.

II - Decisions taken by the Autorité de contrôle prudentiel et de résolution pursuant to I shall be subject to the adversarial procedure provided for inArticle L. 612-35 of the Monetary and Financial Code.

Mariela Petrova

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Mariela Petrova

Mariela Petrova

Avocate au Barreau de Paris

Toque #C2396

15+ Years In Corporate Practice

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