I. Conditions for carrying out business without the need for authorisation

If the undertaking-specific criteria set out in the Agreement are met, no authorisation or branch under section 67 (1) sentence 1 of the Insurance Supervision Act (Versicherungsaufsichtsgesetz – VAG) is required to carry out reinsurance business in Germany. The relevant requirements can be found in Article 3(4) of the Agreement. These relate on the one hand to certain financial conditions. On the other, reinsurers from the USA are required to submit certain declarations to the insurance supervisory authority responsible for the ceding insurer and to meet further conditions applying to their business activities. A distinction is made here between initial and subsequent submissions.

1. Initial submission

The following documents must be submitted to BaFin for the initial submission:

1.1. a declaration by the assuming reinsurer that it will provide prompt written notice and explanations to BaFin if:

a. it falls below the minimum capital and surplus or own funds, as applicable, specified in Article 3(4)(a) of the Agreement, or the capital ratio specified in Article 3(4)(b) of the Agreement; or

b. any regulatory action is taken against it for serious noncompliance with applicable law (Article 3(4)(c) of the Agreement).

1.2. a written confirmation by the assuming reinsurer regarding its consent to the jurisdiction of the courts of the territory in which the ceding insurer has its head office or is domiciled (Article 3(4)(d) of the Agreement).

1.3. a written declaration that the assuming reinsurer will pay all final judgments, wherever enforcement is sought, obtained by a ceding insurer, that have been declared enforceable in the territory where the judgment was obtained (Article 3(4)(f) of the Agreement).

1.4. submission of the following documents and information:

a. annual audited financial statements in accordance with the applicable law of the territory of the head office of the assuming reinsurer, including the external audit report, with respect to the preceding two years (Article 3(4)(h)(i) of the Agreement).
Note: if the undertaking is not subject to a requirement to prepare its own audit annual financial statements and if it is included in annual financial statements that cover several undertakings, this must be stated explicitly.

b. solvency and financial condition reports or actuarial opinions, if filed with the assuming reinsurer’s supervisor, with respect to the preceding two years (Article 3(4)(h)(ii) of the Agreement);

c. a list of all disputed and overdue reinsurance claims outstanding for 90 days or more, regarding reinsurance contracts from ceding insurers from Germany (Article 3(4)(h)(iii) of the Agreement);
Note: if this information is not evident from the documents submitted, reference must be made to the precise location of the information. If there are no such reinsurance claims, an express statement to this effect must be made.

d. information regarding the assuming reinsurer’s assumed reinsurance by ceding undertaking, ceded reinsurance by the assuming reinsurer, and reinsurance recoverable on paid and unpaid losses by the assuming reinsurer, to allow for the evaluation of the criteria defined in Article 3(4)(i) of the Agreement (Article 3(4)(h)(i) of the Agreement).

Note: The undertaking is at liberty to submit the annual statement, or extracts from it, prepared under national law in the home country. Reference must be made to the precise source of the information.
To determine whether payments are prompt as required by Article 3(4)(i) of the Agreement, the following information must always be submitted in summary form:

• the amount of reinsurance recoverables due from the assuming reinsurer from the USA and
• the amount of reinsurance recoverables due from the assuming reinsurer in the USA that are overdue and in dispute (see Article 3(4)(i)(i) of the Agreement);
• the number of ceding insurers and reinsurers of the assuming reinsurer from the USA and
• the number of ceding insurers and reinsurers of the assuming reinsurer from the USA that have overdue reinsurance recoverables on paid losses of 90 days or more that are not in dispute and that exceed USD 100,000 for each ceding insurer (see Article 3(4)(i)(ii)of the Agreement);
• the aggregate amount of reinsurance recoverables due from the reinsurer from the USA that are not in dispute but are overdue by 90 days or more (see Article 3(4)(i)(iii) of the Agreement)).
  

1.5. written confirmation by the assuming reinsurer that it is not presently participating in any solvent scheme of arrangement that involves European Union ceding insurers, and a declaration that it will notify the ceding insurer and BaFin and provide 100 per cent collateral to the ceding insurer consistent with the terms of the scheme should the reinsurer enter into such an arrangement (Article 3(4)(j) of the Agreement).

1.6. confirmation by the competent authority that the reinsurer complies with the risk-based capital ratio within the meaning of Article 3(4)(b) (Article 3(4)(l) of the Agreement).
Note: Evidence of compliance with the capital requirements as defined in Article 3(4)(a) of the Agreement must be provided. Where compliance with the capital requirements is not already evident from the confirmation by the competent authority, compliance with the capital requirements as defined in Article 3(4)(a) of the Agreement must be evidenced by other means. Where attached documents are referred to, reference must be made to the precise location of the information.

2. Subsequent submissions

Under the Agreement, the supervisory agency can periodically require the reinsurer from the USA to submit documents. BaFin expects the following documents to be submitted each year:

a. annual audited financial statements in accordance with the applicable law of the territory of the head office of the assuming reinsurer, including the external audit report (Article 3(4)(h)(i) of the Agreement).

b. a list of all disputed and overdue reinsurance claims outstanding for 90 days or more, regarding reinsurance contracts from ceding insurers from Germany (Article 3(4)(h)(iii) of the Agreement);

c. information regarding the assuming reinsurer’s assumed reinsurance by ceding company, ceded reinsurance by the assuming reinsurer, and reinsurance recoverable on paid and unpaid losses by the assuming reinsurer, to allow for the evaluation of the criteria set forth in Article 3(4)(i) of the Agreement (Article 3(4)(h)(i) of the Agreement).

d. confirmation by the competent authority that the reinsurer complies with the risk-based capital ratio within the meaning of Article 3(4)(b) of the Agreement (Article 3(4)(l) of the Agreement).
The notes contained in paragraph 1.4 above must be observed in this respect. BaFin presumes that the documents will be submitted directly after the audit of the annual financial statements within the meaning of Article 3(4)(h)(i) of the Agreement.

3. Other conditions

The reinsurer must additionally observe the following conditions:

3.1 the assuming reinsurer must meet certain capital requirements (“capital and surplus” of at least EUR 226 million (Article 3(4)(a) of the Agreement) as well as certain local risk-based capital requirements (at least 300% “Authorized Control Level” (Article 3(4)(b) of the Agreement)).

3.2. the assuming reinsurer agrees in each reinsurance contract subject to the Agreement that it will provide collateral for 100 per cent of the assuming reinsurer’s liabilities attributable to reinsurance ceded pursuant to this agreement if the assuming reinsurer resists enforcement of a final judgment that is enforceable under the law of the territory in which it was obtained or a properly enforceable arbitration award, whether obtained by the ceding insurer or by its resolution estate, if applicable (Article 3(4)(g) of the Agreement).

3.3. the assuming reinsurer maintains a practice of prompt payment of claims under reinsurance contracts; the lack of prompt payment will be evidenced if any of the criteria specified in Article 3(4)(i)(i–iii) of the Agreement is met (Article 3(4)(i) of the Agreement).

3.4 if subject to a legal process of resolution, receivership or winding-up proceedings as applicable, the ceding insurer, or its representative, may seek and, if determined appropriate by the court in which the resolution, receivership or winding-up proceedings is pending, may obtain an order requiring that the assuming reinsurer post collateral for all outstanding ceded liabilities (Article 3(4)(k) of the Agreement).

3.5. In addition, the assuming reinsurer is subject to requirements to provide information to BaFin in the cases referred to in Article 3(4)(c) and to BaFin and the ceding insurer in the cases referred to Article 3(4)(j) of the Agreement.

3.6. BaFin presumes that the declaration by the assuming reinsurer under Article 3(4)(f) of the Agreement that it will pay all final judgments obtained by a ceding insurer, wherever enforcement is sought, that have been declared enforceable in the territory where the judgment was obtained, will also be communicated to the German ceding insurer or will be embedded in reinsurance contracts.

II. Submission process

1. Formal requirements

Original versions of all declarations by the assuming reinsurer referred to above must be submitted to BaFin in writing and signed by the governing body authorised to represent the assuming reinsurer. Scans are not sufficient in this respect.
The documentation can be filed in English. If no translation into German of the submitted documents is filed, an original version of a declaration, signed by the governing body authorised to represent the assuming reinsurer, must be submitted in which the reinsurer undertakes to submit a translation of the documents to BaFin on request.

2. Submission method

Submissions and questions can be sent by email to reinsurance@bafin.de. For the submissions, it should be noted that the declarations referred to above that must be notified to BaFin must be submitted as original documents, and not merely as scans. The other documents can be submitted electronically.

3. Contact data and communication

It is recommended to provide details of contacts at the undertaking to which questions about the submissions can be sent as well as details of contacts at the competent authority. BaFin will respond in writing to submissions. This can be sent in advance by fax on request if the undertaking has notified a fax number.

III. Information to be provided to market participants

A summary of reinsurers from the USA that have submitted the necessary documents and information by 30 June of each year will be made available in a table published on BaFin’s website. The table will only contain reinsurers that have expressly given their consent to be included in the table. Where market participants send questions to BaFin about individual reinsurers from the USA, BaFin will only provide information about the submissions if the reinsurer from the USA has consented to the communication of information about the status of the submissions.