European Union: The European Commission Grants Equivalence To Seven Non-EU Countries Under The Solvency II Directive

Last Updated: 11 August 2015

Edited by David W. Alberts, Lawrence R. Hamilton and Colin Scagell

Keywords: The European Commission, Equivalence, Solvency II Directive,

On June 5, 2015 the European Commission released an announcement that detailed its Solvency II equivalence decisions. The decisions deemed that the insurance rules implemented by Switzerland achieve the same outcome as those used in the EU in all three areas subject to an equivalence assessment and that the rules in the US, Australia, Bermuda, Brazil, Canada and Mexico are expected to do so in relation to one area only. These decisions are now subject to review by the European Parliament and the Council. This scrutiny process could take up to six months, and the decisions will only enter into force if the process is completed successfully.

There are three areas of Solvency II where there is a requirement for equivalence evaluation, namely solvency calculation (Article 227 of Solvency II), group supervision (Article 260) and reinsurance (Article 172). Solvency calculation is of relevance to EU (re)insurers with participations or subsidiaries ("activities") outside the EU. If an EU (re)insurer is active in a third country that is deemed equivalent, it can carry out its EU prudential reporting for a subsidiary in that third country under the rules of the third country, instead of Solvency II rules, if deduction and aggregation is allowed as the method of consolidation of group accounts. On the other hand, group supervision is of relevance to (re)insurers from third countries with activities in the EU. If the third country's rules are deemed equivalent in this area, they are exempted from some aspects of group supervision in the EU.

Reinsurance is of relevance to (re)insurers from third countries who enter into a reinsurance arrangement with a (re)insurer in the EU. If the third country's rules are deemed equivalent, they must be treated by EU supervisors in the same way as they treat EU reinsurers. Thus, if a solvency regime of a third country is deemed equivalent in this regard, its reinsurers cannot be subject to a requirement to post collateral in the EU.

The Commission has found the Swiss insurance regulatory regime to be fully equivalent to Solvency II in all three of these areas and, thus, full equivalence is granted for an unlimited period. The Commission has found the US, Australia, Bermuda, Brazil, Canada and Mexico to be provisionally equivalent in relation to the solvency calculation only. These six countries do not currently meet all the criteria for full equivalence in this area, but there is an expectation that an equivalent solvency regime will be adopted by these third countries within the foreseeable future. Notably, there is no finding of equivalence in relation to group supervision or reinsurance.

A determination of provisional equivalence is valid for a period of ten years. At the end of that period, the European Commission should carry out an analysis of the developments in the third country's regime, resulting in either a determination of full equivalence, a renewed determination of provisional equivalence or non-renewal of provisional equivalence. There is no difference in effect between provisional and full equivalence.

The consequences of not being granted equivalence (provisional or full) is significant. For example, if a non-EU country is not granted equivalence in all areas of Solvency II, it is possible that an EU country may unilaterally impose additional regulatory requirements on entities and contracts of that non-EU country. Of the three regulatory areas that are assessed for Solvency II equivalence – solvency calculation for EU groups, group supervision and reinsurance – solvency calculation and reinsurance are of particular relevance for a subsidiaries of EU-based groups. Group supervision and reinsurance are of relevance for non-EU (re)insurers.

With respect to reinsurance, absent equivalence treatment an EU country's regulator could impose additional requirements, such as the imposition of collateral requirements, on contracts of reinsurance which originate outside the EU. With respect to solvency calculation, Solvency II requires EU (re)insurers to calculate consolidated group solvency across their global insurance business. Where the EU (re)insurer has a subsidiary based in a non-EU jurisdiction, absent equivalence treatment of the non-EU jurisdiction the EU regulator could require that the EU insurer impose on the non-EU subsidiary the use of Solvency II formula for European reporting purposes. Finally, in respect of group supervision, where a non-EU (re)insurer has a subsidiary in the EU, absent equivalence, the whole group will be subject to the Solvency II group supervision requirements.

The US insurance industry, through the ACLI, RAA and other trade associations has been pushing the federal government to negotiate a covered agreement with the EU to prevent the above referenced potentially adverse, competitively disadvantageous outcomes from a lack of equivalence decision by the EU. Those negotiations continue to be mired in political positioning within the federal government (at Treasury and the US Trade Representative), with the US state regulators and with the EU regulators and time is running short. Solvency II is scheduled to take effect on January 1, 2016 and, at present, it appears unclear if the US will be granted equivalence in respect of group supervision and reinsurance.

Originally published 7 August 2015

Visit us at

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2015. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.