administrator — a person or body appointed by the competent authorities for the purpose of administering reorganisation measures (e)

branch — an agency or a branch of an insurance or reinsurance undertaking which is located in the territory of a Member State other than the home Member State (11)

branch — a permanent presence in the territory of a Member State of an undertaking referred to in paragraph 1, which receives authorisation in that Member State and which pursues insurance business 3.

branch — a permanent presence of an insurance undertaking in the territory of a Member State other than the home Member State which pursues insurance activities (b)

captive insurance undertaking — an insurance undertaking, owned either by a financial undertaking other than an insurance or reinsurance undertaking or a group of insurance or reinsurance undertakings within the meaning of Article 212(1)(c) or by a non-financial undertaking, the purpose of which is to provide insurance cover exclusively for the risks of the undertaking or undertakings to which it belongs or of an undertaking or undertakings of the group of which it is a member (2)

captive reinsurance undertaking — a reinsurance undertaking, owned either by a financial undertaking other than an insurance or reinsurance undertaking or a group of insurance or reinsurance undertakings within the meaning of Article 212(1)(c) or by a non-financial undertaking, the purpose of which is to provide reinsurance cover exclusively for the risks of the undertaking or undertakings to which it belongs or of an undertaking or undertakings of the group of which it is a member (5)

close links — a situation in which two or more natural or legal persons are linked by control or participation, or a situation in which two or more natural or legal persons are permanently linked to one and the same person by a control relationship (17)

college of supervisors — a permanent but flexible structure for cooperation and coordination among the supervisory authorities of the Member States concerned (e)

competent authorities — the administrative or judicial authorities of the Member States which are competent for the purposes of the reorganisation measures or the winding-up proceedings (a)

competent authorities — the competent authorities of the home Member State (c)

concentration risk — all risk exposures with a loss potential which is large enough to threaten the solvency or the financial position of insurance and reinsurance undertakings (35)

control — the relationship between a parent undertaking and a subsidiary undertaking, as set out in Article 1 of Directive 83/349/EEC, or a similar relationship between any natural or legal person and an undertaking (18)

credit risk — the risk of loss or of adverse change in the financial situation, resulting from fluctuations in the credit standing of issuers of securities, counterparties and any debtors to which insurance and reinsurance undertakings are exposed, in the form of counterparty default risk, or spread risk, or market risk concentrations (32)

diversification effects — the reduction in the risk exposure of insurance and reinsurance undertakings and groups related to the diversification of their business, resulting from the fact that the adverse outcome from one risk can be offset by a more favourable outcome from another risk, where those risks are not fully correlated (37)

financial undertaking — any of the following entities: a credit institution, a financial institution or an ancillary banking services undertaking within the meaning of Article 4(1), (5) and (21) of Directive 2006/48/EC respectively; an insurance undertaking, or a reinsurance undertaking or an insurance holding company within the meaning of Article 212(1)(f); an investment firm or a financial institution within the meaning of Article 4(1)(1) of Directive 2004/39/EC; or a mixed financial holding company within the meaning of Article 2(15) of Directive 2002/87/EC (25)

group — a group of undertakings that: consists of a participating undertaking, its subsidiaries and the entities in which the participating undertaking or its subsidiaries hold a participation, as well as undertakings linked to each other by a relationship as set out in Article 12(1) of Directive 83/349/EEC; or is based on the establishment, contractually or otherwise, of strong and sustainable financial relationships among those undertakings, and that may include mutual or mutual-type associations, provided that: one of those undertakings effectively exercises, through centralised coordination, a dominant influence over the decisions, including financial decisions, of the other undertakings that are part of the group; and, the establishment and dissolution of such relationships for the purposes of this Title are subject to prior approval by the group supervisor, where the undertaking exercising the centralised coordination shall be considered as the parent undertaking, and the other undertakings shall be considered as subsidiaries (c)

group supervisor — the supervisory authority responsible for group supervision, determined in accordance with Article 247 (d)

home Member State — any of the following: for non-life insurance, the Member State in which the head office of the insurance undertaking covering the risk is situated; for life insurance, the Member State in which the head office of the insurance undertaking covering the commitment is situated; or for reinsurance, the Member State in which the head office of the reinsurance undertaking is situated (8)

home Member State — the Member State in which the branch was granted authorisation in accordance with Articles 145 to 149 (a)

host Member State — the Member State, other than the home Member State, in which an insurance or a reinsurance undertaking has a branch or provides services; for life and non-life insurance, the Member State of the provisions of services means, respectively, the Member State of the commitment or the Member State in which the risk is situated, where that commitment or risk is covered by an insurance undertaking or a branch situated in another Member State (9)

i,j — that the sum of the different terms should cover all possible combinations of i and j. In the calculation, SCR_(i) and SCR_(j) are replaced by the following: SCR _(non-life) denotes the non-life underwriting risk module, SCR _(life) denotes the life underwriting risk module, SCR _(health) denotes the health underwriting risk module, SCR _(market) denotes the market risk module, SCR _(default) denotes the counterparty default risk module, The factor Corr _(i,j) denotes the item set out in row i and in column j of the following correlation matrix: j i Market Default Life Health Non-life Market 1 0,25 0,25 0,25 0,25 Default 0,25 1 0,25 0,25 0,5 Life 0,25 0,25 1 0,25 0 Health 0,25 0,25 0,25 1 0 Non-life 0,25 0,5 0 0 1 The non-life underwriting risk module set out in Article 105(2) shall be equal to the following: SCR_(non-life) = Σ_(i,j)Corr_(i,j) × SCR_(i) × SCR_(j) where SCR_(i) denotes the sub-module i and SCR_(j) denotes the sub-module j, and where ANNEX IV

insurance claim — an amount which is owed by an insurance undertaking to insured persons, policy holders, beneficiaries or to any injured party having direct right of action against the insurance undertaking and which arises from an insurance contract or from any operation provided for in Article 2(3)(b) and (c) in direct insurance business, including an amount set aside for those persons, when some elements of the debt are not yet known (g)

insurance holding company — a parent undertaking which is not a mixed financial holding company within the meaning of Directive 2002/87/EC and the main business of which is to acquire and hold participations in subsidiary undertakings, where those subsidiary undertakings are exclusively or mainly insurance or reinsurance undertakings, or third-country insurance or reinsurance undertakings, at least one of such subsidiary undertakings being an insurance or reinsurance undertaking (f)

insurance undertaking — a direct life or non-life insurance undertaking which has received authorisation in accordance with Article 14 (1)

intra-group transaction — any transaction by which an insurance or reinsurance undertaking relies, either directly or indirectly, on other undertakings within the same group or on any natural or legal person linked to the undertakings within that group by close links, for the fulfilment of an obligation, whether or not contractual, and whether or not for payment (19)

large risks — risks classified under classes 4, 5, 6, 7, 11 and 12 in Part A of Annex I; risks classified under classes 14 and 15 in Part A of Annex I, where the policy holder is engaged professionally in an industrial or commercial activity or in one of the liberal professions and the risks relate to such activity; risks classified under classes 3, 8, 9, 10, 13 and 16 in Part A of Annex I in so far as the policy holder exceeds the limits of at least two of the following criteria: a balance-sheet total of EUR 6,2 million; a net turnover, within the meaning of Fourth Council Directive 78/660/EEC of 25 July 1978 based on Article 54(3)(g) of the Treaty on the annual accounts of certain types of companies OJ L 222, 14.8.1978, p. 11. , of EUR 12,8 million; an average number of 250 employees during the financial year. If the policy holder belongs to a group of undertakings for which consolidated accounts within the meaning of Directive 83/349/EEC are drawn up, the criteria set out in point (c) of the first subparagraph shall be applied on the basis of the consolidated accounts. Member States may add to the category referred to in point (c) of the first subparagraph the risks insured by professional… (27)

lawyer — any person entitled to pursue his professional activities under one of the denominations laid down in Council Directive 77/249/EEC of 22 March 1977 to facilitate the effective exercise by lawyers of freedom to provide services OJ L 78, 26.3.1977, p. 17. 2.

liquidator — a person or body appointed by the competent authorities or by the governing bodies of an insurance undertaking for the purpose of administering winding-up proceedings (f)

liquidity risk — the risk that insurance and reinsurance undertakings are unable to realise investments and other assets in order to settle their financial obligations when they fall due (34)

market risk — the risk of loss or of adverse change in the financial situation resulting, directly or indirectly, from fluctuations in the level and in the volatility of market prices of assets, liabilities and financial instruments (31)

Member State in which the risk is situated — any of the following: the Member State in which the property is situated, where the insurance relates either to buildings or to buildings and their contents, in so far as the contents are covered by the same insurance policy; the Member State of registration, where the insurance relates to vehicles of any type; the Member State where the policy holder took out the policy in the case of policies of a duration of four months or less covering travel or holiday risks, whatever the class concerned; in all cases not explicitly covered by points (a), (b) or (c), the Member State in which either of the following is situated: the habitual residence of the policy holder; or if the policy holder is a legal person, that policy holder’s establishment to which the contract relates (13)

Member State of the commitment — the Member State in which either of the following is situated: the habitual residence of the policy holder; if the policy holder is a legal person, that policy holder’s establishment, to which the contract relates (14)

mixed-activity insurance holding company — a parent undertaking, other than an insurance undertaking, a third-country insurance undertaking, a reinsurance undertaking, a third-country reinsurance undertaking, an insurance holding company or a mixed financial holding company within the meaning of Directive 2002/87/EC, which includes at least one insurance or reinsurance undertaking among its subsidiary undertakings (g)

national bureau — borrowed from another act; this instrument states no meaning of its own (23)

national guarantee fund — the body referred to in Article 1(4) of Directive 84/5/EEC (24)

operational risk — the risk of loss arising from inadequate or failed internal processes, personnel or systems, or from external events (33)

outsourcing — an arrangement of any form between an insurance or reinsurance undertaking and a service provider, whether a supervised entity or not, by which that service provider performs a process, a service or an activity, whether directly or by sub-outsourcing, which would otherwise be performed by the insurance or reinsurance undertaking itself (28)

parent undertaking — borrowed from another act; this instrument states no meaning of its own (15)

participating undertaking — an undertaking which is either a parent undertaking or other undertaking which holds a participation, or an undertaking linked with another undertaking by a relationship as set out in Article 12(1) of Directive 83/349/EEC (a)

participation — the ownership, direct or by way of control, of 20 % or more of the voting rights or capital of an undertaking (20)

probability distribution forecast — a mathematical function that assigns to an exhaustive set of mutually exclusive future events a probability of realisation (38)

qualifying holding — a direct or indirect holding in an undertaking which represents 10 % or more of the capital or of the voting rights or which makes it possible to exercise a significant influence over the management of that undertaking (21)

regulated market — either of the following: in the case of a market situated in a Member State, a regulated market as defined in Article 4(1)(14) of Directive 2004/39/EC; or in the case of a market situated in a third country, a financial market which fulfils the following conditions: it is recognised by the home Member State of the insurance undertaking and fulfils requirements comparable to those laid down in Directive 2004/39/EC; and the financial instruments dealt in on that market are of a quality comparable to that of the instruments dealt in on the regulated market or markets of the home Member State (22)

reinsurance — either of the following: the activity consisting in accepting risks ceded by an insurance undertaking or third-country insurance undertaking, or by another reinsurance undertaking or third-country reinsurance undertaking; or in the case of the association of underwriters known as Lloyd’s, the activity consisting in accepting risks, ceded by any member of Lloyd’s, by an insurance or reinsurance undertaking other than the association of underwriters known as Lloyd’s (7)

reinsurance undertaking — an undertaking which has received authorisation in accordance with Article 14 to pursue reinsurance activities (4)

related undertaking — either a subsidiary undertaking or other undertaking in which a participation is held, or an undertaking linked with another undertaking by a relationship as set out in Article 12(1) of Directive 83/349/EEC (b)

reorganisation measures — measures involving any intervention by the competent authorities which are intended to preserve or restore the financial situation of an insurance undertaking and which affect pre-existing rights of parties other than the insurance undertaking itself, including but not limited to measures involving the possibility of a suspension of payments, suspension of enforcement measures or reduction of claims (c)

risk measure — a mathematical function which assigns a monetary amount to a given probability distribution forecast and increases monotonically with the level of risk exposure underlying that probability distribution forecast (39)

risk-mitigation techniques — all techniques which enable insurance and reinsurance undertakings to transfer part or all of their risks to another party (36)

special purpose vehicle — any undertaking, whether incorporated or not, other than an existing insurance or reinsurance undertaking, which assumes risks from insurance or reinsurance undertakings and which fully funds its exposure to such risks through the proceeds of a debt issuance or any other financing mechanism where the repayment rights of the providers of such debt or financing mechanism are subordinated to the reinsurance obligations of such an undertaking (26)

subsidiary undertaking — any subsidiary undertaking within the meaning of Article 1 of Directive 83/349/EEC, including subsidiaries thereof (16)

supervisory authorities — the supervisory authorities of the home Member State (b)

supervisory authority — the national authority or the national authorities empowered by law or regulation to supervise insurance or reinsurance undertakings (10)

third-country insurance undertaking — an undertaking which would require authorisation as an insurance undertaking in accordance with Article 14 if its head office were situated in the Community (3)

third-country reinsurance undertaking — an undertaking which would require authorisation as a reinsurance undertaking in accordance with Article 14 if its head office were situated in the Community (6)

underwriting risk — the risk of loss or of adverse change in the value of insurance liabilities, due to inadequate pricing and provisioning assumptions (30)

winding-up proceedings — collective proceedings involving the realisation of the assets of an insurance undertaking and the distribution of the proceeds among the creditors, shareholders or members as appropriate, which necessarily involve any intervention by the competent authorities, including where the collective proceedings are terminated by a composition or other analogous measure, whether or not they are founded on insolvency or are voluntary or compulsory (d)