CBI Finalises Guidance On Intra-Group Transactions And Exposures

Published date06 February 2023
Subject MatterFinance and Banking, Insurance, Financial Services, Insurance Laws and Products, Reinsurance
Law FirmArthur Cox
AuthorStephen D'Ardis

The Central Bank of Ireland has published the feedback statement and finalised guidance on CP150, the guidance for (re)insurance undertakings on intra-group transactions and exposures (IGTs).

Key messages from the feedback statement are:

  • The guidance generally applies to material IGTs, rather than all IGTs.
  • The guidance is not intended to amount to further requirements on (re)insurers re IGTs, over and above Solvency II.
  • Aim of the guidance is to ensure that (re)insurers treat IGTs the same as similar transactions with third parties - IGTs should not be subject to a lower standard of care, risk management and oversight than equivalent arrangements with non-group entities.
  • Boards and management of Irish (re)insurers should not just follow group expectations or policy without full and appropriate consideration of their duties to the undertaking.
  • All respondents to CP150 commented that the guidance should be consistent with the Insurance Recovery and Resolution Directive (IRRD). The CBI responded that it expected existing domestic legislation (regarding recovery plan requirements for insurers) to be updated as necessary in line with the IRRD once implemented.
  • The CBI doesn't intend to prescribe audits of every IGT but material IGTs should be auditable topics.
  • A respondent commented that the prudent person principle (PPP) should be applied proportionately in relation to intragroup assets. However, the CBI said that, as Solvency II requires conflicts of interest which arise in this context to be resolved in the best interests of policyholders and beneficiaries, proportionality is not viewed as particularly relevant here.
  • On the application of the PPP to reinsurance assets, the CBI stated that in its view, it is a question of how reinsurance assets should be considered in the context of PPP as opposed to whether...

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