Audit Report Regulation issued by the Federal Ministry of Finance

The new German Regulation on Auditors’ Reports (Prüfungsberichteverordnung) issued by the Federal Ministry of Finance (Bundesministerium der Finanzen) entered into force on 1 August 2017.¹ The amended version replaces the 1998 Regulation which was effective until 31 March 2016. For BaFin, audit reports are a crucial source of information on the business position of the undertakings under supervision. The Regulation on Auditors’ Reports sets out in detail the Supervisory Authority's requirements for the contents of audit reports as well as for the type and scope of the reporting.

Insurance Reporting Regulation

On 31 July 2017, a new German Insurance Reporting Regulation (Verordnung über die Berichterstattung von Versicherungsunternehmen gegenüber der Bundesanstalt für Finanzdienstleistungsaufsicht) issued by the Federal Ministry of Finance was published in the Federal Law Gazette.² It replaces the version which was effective until 31 March 2016. The new Regulation was applicable for the first time to financial years beginning after 31 December 2015. Quarterly reporting for financial years that began prior to 1 January 2017, however, was still subject to the provisions of the version of the Regulation in force until 31 March 2016.

The Insurance Reporting Regulation sets out the reporting obligations of insurance undertakings to the Supervisory Authority on the basis of accounting information. BaFin continues to require this information about the business activities of the undertakings supervised, including from undertakings subject to the requirements of the Solvency II Directive and the related reporting obligations.

The scope of the reporting has changed in some respects compared with the previous legislation. The existing national reporting obligations have been reviewed and amended in the light of the introduction of the Solvency II reporting framework. The aim was to avoid duplicating the submission of information and to take account of the revised priorities for supervisory activities in the wake of the introduction of Solvency II. Some of the existing reporting obligations have ceased to apply as a result or will do so following a transitional period. At the same time, some reporting requirements for life insurance undertakings had to be expanded to reflect legislative changes (German Life Insurance Reform Act (Lebensversicherungsreformgesetz) in supervisory reporting in the meantime.

First Regulation amending the RfB Regulation

As a result of the transposition of the Solvency II Directive into German law, references to the amended version of the Insurance Supervision Act and other revised regulations had to be changed in the Federal Ministry of Finance's Regulation on the Collective Portion of the Provision for Bonuses (RfB Regulation). The First Regulation amending the RfB Regulation was issued for this purpose and became effective on 1 August 2017.³ This did not result in any substantive changes to the RfB Regulation.

Second Regulation amending regulations pursuant to the Insurance Supervision Act

The German Regulation on Audits by Independent Experts (Sachverständigenprüfverordnung), the German Remuneration Regulation for the Insurance Industry (Versicherungs-Vergütungsverordnung), the German Health Insurance Supervision Regulation (Krankenversicherungsaufsichtsverordnung), the German Capital Resources Regulation (Kapitalausstattungs-Verordnung), the German Minimum Allocation Regulation (Mindestzuführungsverordnung) and the German Regulation on the Supervision of Pensionsfonds (Pensionsfonds-Aufsichtsverordnung) issued by the Federal Ministry of Finance also had to be amended. The Second Regulation amending regulations pursuant to the Insurance Supervision Act was issued for this purpose and became effective on 1 August 2017.⁴

Most of the amendments consisted of updating references. However, the Regulation on the Supervision of Pensionsfonds was expanded in the newly formulated chapter 7 to include rules on the implementation of defined contribution commitments with a minimum payment pursuant to section 236 (2a) of the Insurance Supervision Act. If the parties to the collective wages agreement consent, this provision for the first time also allows Pensionsfonds to use a structure for the payout phase for defined contribution commitments with a minimum payment that is not insurance-based.

The Regulation on the Supervision of Pensionsfonds, with reference to the authorisation to issue regulations in section 236 (2b) of the Insurance Supervision Act, now governs the initial amount, minimum amount and adjustment of lifetime payments to the beneficiaries, as well as the form, content and evidence of the employer's commitment to make the minimum payment. Amendments were also made to the Pensionsfonds' reporting obligations to BaFin in Statements 801 and 830. Pensionsfonds must now provide a more detailed analysis of certain data in relation to the different types of business in which they engage.

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