French Insurance Code
In forceI.-The Minimum Capital Requirement shall be calculated in accordance with the following principles:
a) It shall be calculated in a clear and simple manner, and in such a way that the calculation can be verified ;
b) It corresponds to an amount of eligible basic own funds below which policyholders and reinsured undertakings would be exposed to an unacceptable level of risk if the insurance or reinsurance undertaking were authorised to continue its business;
c) The linear function, referred to in II, used to calculate it is calibrated according to the value-at-risk of the basic own funds of the insurance or reinsurance undertaking concerned, with a confidence level of 85% over a one-year horizon;
d) It has an absolute floor threshold, the amount of which is set by order of the Minister responsible for the economy in accordance with Directive 2009/138/EC 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; this threshold differs according to the types of undertaking listed below:
i) A threshold for non-life insurance undertakings, including captive insurance undertakings, except where all or some of the risks mentioned in one of the classes listed in 10 to 15 of Article R. 321-1 are covered, in which case it may not be lower than the threshold referred to in point ii;
ii) A threshold for life insurance undertakings, including captive insurance undertakings;
iii) A threshold for reinsurance undertakings, except in the case of captive reinsurance undertakings, for which a specific threshold is determined;
iv) A threshold for insurance undertakings covering both the risks mentioned in 1° and 2° of Article L. 310-1, corresponding to the sum of the amounts set out in points i and ii.
II - Subject to the provisions of III, the Minimum Capital Requirement is calculated as a linear function of a set or subset of the following variables: the undertaking's prudential technical provisions referred to in Article L. 351-2, premiums written, capital at risk, deferred tax and administrative expenses. The variables used are measured net of reinsurance.
III - Without prejudice to d of I, the minimum capital requirement is between 25% and 45% of the undertaking's Solvency Capital Requirement, calculated in accordance with sub-section 2 of section 1 of this chapter and including any additional capital imposed in accordance with Article L. 352-3.
The Autorité de contrôle prudentiel et de résolution may require, until 31 December 2017 at the latest, that an insurance or reinsurance undertaking apply the percentages provided for in the first paragraph exclusively to the undertaking's Solvency Capital Requirement calculated in accordance with Subsection 2 of Section 1 of this Chapter.
IV - Insurance and reinsurance undertakings shall calculate their Minimum Capital Requirement at least once every quarter and shall submit the results of this calculation to the Autorité de contrôle prudentiel et de résolution, in accordance with the procedures set out in Article L. 355-1.
V.-The detailed rules for the application of this Article are set out in Articles 248 to 253 of Commission Delegated Regulation (EU) No 2015/35 of 10 October 2014.
