New Guidance Published For (Re)insurance Undertakings On Intra-Group Transactions

Published date03 February 2023
Subject MatterInsurance, Compliance, Insurance Laws and Products, Reinsurance
Law FirmWilliam Fry
AuthorMr John Larkin, Eoin Caulfield, Ian Murray and Mike Frazer

On 30 January 2023, the Central Bank of Ireland (Central Bank) published its "Guidance for (Re)Insurance Undertakings on Intragroup Transactions & Exposures" (Guidance). The Central Bank's stated aim in publishing this guidance is to be "more transparent about its expectations with regard to IGTs of (re)insurance undertakings supervised by the Central Bank and in doing so, to promote a level playing field" (IGTs are defined in the Guidance as "intragroup financial transactions and exposures"). The Central Bank also states: "The Guidance does not introduce any new requirements on (re)insurers in relation to IGTs. Rather, the Central Bank wishes to clarify its expectations on what compliance with the existing Solvency II requirements might look like for (re)insurers."

The publication of the Guidance follows the issuance of a consultation paper on the same topic in July 2022, designated CP150 by the Central Bank. A feedback statement was also published containing the Central Bank's responses to points raised in the five submissions received under the consultation process.

Structure of the Guidance

The Guidance is broadly split into four sections, the first setting out the expectations of the Central Bank on governance and risk management of IGTs in general. The remaining sections address the most significant intragroup exposures observed by the Central Bank:

  • intragroup assets (notably loans from Irish-authorised (re)insurers to other companies within the same group);
  • intragroup reinsurance; and
  • cash pooling/treasury function arrangements.

Key Contents

The Central Bank expectations are set out in the first section as follows:

  • The Central Bank expects (re)insurers to extend the same level of oversight to an intragroup counterparty exposure as they would to an external counterparty.
  • Where (re)insurers enter IGTs, the ensuing risks are appropriately detailed in their risk register, and the risk appetite statement includes detailed metrics.
  • (Re)insurers can evidence that the board has appropriately considered its ongoing compliance with the pre-defined appetite for IGTs and that any KRIs set out in its risk appetite statement have been appropriately embedded in the (re)insurer's risk management framework generally.
  • All deliberations by the board are fully documented, with the minutes of meetings providing sufficient detail evidencing appropriate board attention, the substance of discussions and their outcome. Material IGTs should be regularly reviewed for...

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