Recital 8

(8) It is necessary to ensure the continuity of the critical functions of failing insurance or reinsurance undertakings, or of insurance or reinsurance undertakings that are likely to fail, while minimising the impact of such an undertaking’s failure on the economy or the financial system. It is therefore necessary to lay down a framework to provide authorities with a credible set of tools to intervene sufficiently early and quickly in insurance or reinsurance undertakings that are failing or likely to fail. Such framework should ensure that shareholders bear losses first and that creditors bear losses after shareholders, provided that no creditor incurs greater losses than they would have incurred if the insurance or reinsurance undertaking had been wound up under normal insolvency proceedings in accordance with the principle that no creditor should be worse off than under normal insolvency proceedings (the ‘no creditor worse off’ principle). In order to ensure that the treatment that affected shareholders, policy holders, beneficiaries, claimants and other creditors would have received if the undertaking under resolution had entered into normal insolvency proceedings is accurately reflected, all the relevant occurrences that would be triggered either by or before the opening of normal insolvency proceedings as well as all the relevant occurrences related to the opening of such proceedings, including those linked to the protection of injured parties under Directive 2009/103/EC of the European Parliament and of the Council (4) in respect of damage resulting from accidents in the case of the insolvency of an insurance undertaking, should be taken into account.

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Source: EUR-Lex (Cellar) · retrieved 2026-10-14 · Text as adopted (Official Journal); later amendments are not incorporated in this text.