French Insurance Code
In forceI. - For the operations of each company mentioned in 1° of Article L. 310-1 and of each supplementary occupational pension fund mentioned in Article L. 381-1, in respect of insurance, capitalisation or supplementary occupational pension commitments falling within categories 1 to 7 of Article A. 344-2, the minimum amount of profit sharing to be allocated in respect of a financial year is determined globally on the basis of a profit sharing account.
This account includes the items of expenditure and income relating to categories 1, 2, 3, 4, 5, 6 and 7 of Article A. 344-2 and not covered by an allocation sub-account mentioned in Article L. 142-4 and appearing, in Article 423-28 of Regulation No. 2015-11 of 26 November 2015 of the French Accounting Standards Authority relating to the accounting framework for insurance undertakings, in the breakdown of total income and expenses from operations by category (model A, "Categories 1 to 19"), under the sub-totals "A. - Underwriting balance" and "B. - Net acquisition and management expenses". When the expense arising from the allocation to the provision for liquidity risk is deferred in accordance with Article R. 343-6 of the French Insurance Code, this deferral also applies to the preparation of the profit sharing account. For contracts falling under category 6 of Article A. 344-2 and not covered by an allocation sub-account mentioned in Article L. 142-4, the account also includes the items of expenditure and income relating to ancillary guarantees corresponding to category 21 of the said Article and appearing, in Article 423-28 of Regulation No. 2015-11 of 26 November 2015 of the French Accounting Standards Authority relating to the accounting framework for insurance undertakings, in the breakdown of all operations by category (model B, "Categories 20 to 39") under the sub-totals "A. - Underwriting balance" and "B. - Net acquisition and management expenses", if the balance of these items of expenditure and income is in debit. However, this debit balance is only charged up to the maximum amount of the credit balance of category 6, and the balance not charged may be charged under the same conditions in respect of a subsequent financial year. The profit-sharing account also includes on the expenditure side the insurer's share of technical management profits, which is the higher of 10% of the credit balance of the preceding items and 4.5% of the annual premiums corresponding to operations in categories 3 and 6 of article A. 344-2 and not covered by a subsidiary allocation account mentioned in article L. 142-4.
A portion of the financial income is added to the profit sharing account. This share is equal to 85% of the balance of a financial account containing the items provided for in Article A. 132-13. The profit-sharing account also includes the sums corresponding to the "ceded reinsurance balance", calculated in accordance with the provisions of Article A. 132-15 and, where applicable, the debit balance of the profit-sharing account for the previous financial year.
II - For commitments covered by Article L. 134-1, the profit-sharing account referred to in Article R. 134-4 is drawn up at least quarterly. This account includes as income:
1° The amount of premiums paid, incoming transfers and arbitrated amounts;
2° Net investment income, including any commission retrocessions received in respect of financial management;
3° The difference between accounts 767 and 667 of the chart of accounts set out in Article 322-1 of Regulation No. 2015-11 of 26 November 2015 of the French Accounting Standards Authority relating to the accounting framework for insurance undertakings;
It includes as expenses:
1° The amount of benefits paid and outgoing transferred and arbitrated amounts;
2° Technical reserve expenses, before allocation of profit sharing in respect of the period, with the exception of that mentioned in 11° of Article R. 343-3;
3° The deductions mentioned in Article R. 134-3, with the exception, where applicable, of those applied to the balance of the profit-sharing account in application of e of the same article;
4° Where applicable, the debit balance from the previous period, net of the compensation provided for in the seventh paragraph of Article R. 134-4.
The profit-sharing account also includes the sums corresponding to the ceded reinsurance balance calculated in accordance with Article A. 132-15.
For the application of 5° of Article R. 134-3, deductions from the profit-sharing account balance may not exceed 15% of the said credit balance and deductions from financial management performance may not exceed 10% of the sum, when positive, of net investment income and the difference between accounts 767 and 667 of the chart of accounts set out in Article 322-1 of Regulation No. 2015-11 of 26 November 2015 of the French Accounting Standards Authority relating to the accounting framework for insurance undertakings. However, the sum of these deductions over an accounting period may not exceed 15% of the sum of the balances of the said profit-sharing accounts for that period and 10% of the sum, where positive, of net investment income and the difference between accounts 767 and 667 of the chart of accounts set out in Article 322-1 of Regulation No 2015-11 of 26 November 2015 of the Autorité des normes comptables relating to the accounting framework for insurance undertakings. In the event of a withdrawal in excess of these ceilings, a contribution of assets to the auxiliary allocation accounts in an amount corresponding to the excess withdrawal is made at the end of the financial year. This is accompanied by a revaluation of the provisions mentioned in 9° and 10° of article R. 343-3 for the same amount.
III. - The procedures for allocating and distributing the technical and financial results of the plan among the members of a plan covered by article L. 144-2 but not covered by article L. 134-1 or article L. 441-1 are determined as follows. The provisions of this III do not apply to unit trusts.
a) For each plan, a profit-sharing account is established at least once a year. This account includes the following income
1° The amount of contributions paid in and the amounts transferred to the plan;
2° Net investment income;
3° Any commission rebates referred to in article R. 144-21.
Expenditure includes :
1° Expenses for benefits paid to members and amounts transferred by members to other plans;
2° The cost of technical provisions, including those resulting from actuarial differences in mathematical provisions, before allocation of profit sharing;
3° The charges levied by the insurance undertaking mentioned in article R. 144-25 and, where applicable, the operating expenses of the supervisory committee.
The profit-sharing account also includes the sums corresponding to the ceded reinsurance balance calculated in accordance with Article A. 132-15.
b) The amount of the profit sharing is the credit balance of the profit sharing account defined in a.
If there is a debit balance in this account, this balance is carried forward to the next profit sharing account.
The provisions of the second sentence of article A. 132-16 do not apply to the plan.
c) The revaluation of annuity or capital commitments expressed in euros is determined according to an identical rate for all members, which may however be adjusted to take into account the differences in the technical results of the accounts of members whose individual rights have been liquidated and those whose individual rights are in the process of being constituted.
IV. - For operations in categories 12 and 14 of Article A. 344-2, the minimum amount of profit sharing to be allocated for a financial year is determined on the basis of profit sharing accounts established for each of these categories.
These accounts are set up in accordance with the procedures defined in I, for commitments in categories 12 and 14 which would have been allocated to categories 1 to 7 if they had not been recorded in auxiliary allocation accounts. For this purpose, the financial account defined in article A. 132-13 only includes items relating to categories 12 and 14.
