ITALY Law and Practice Contributed by: Giovanna Aucone and Debora Gobbo, FIVERS Studio Legale e Tributario
The application for authorisation must be prepared in accordance with ISVAP Regulation No 10/2008. Key requirements include a comprehensive three-year pro- gramme of operations (including financial forecasts and organisational structure of the branch) and a capi- tal endowment at least equal to the statutory minimum provided for the classes of business to be pursued (ranging from EUR1.5 million to EUR7.5 million) and to be deposited as collateral with the Cassa Depositi e Prestiti or the Bank of Italy. In addition, the application must be accompanied by a set of statements issued by the competent super- visory authority of the insurer’s home state, confirm- ing (i) compliance with applicable capital adequacy requirements, (ii) the adequacy of the undertaking’s or group’s administrative and accounting structures, and (iii) the undertaking’s commitment to maintain specific accounts and to keep all documents relating to the business conducted in Italy at the Italian branch. The application must also include a certificate from the home-state supervisory authority specifying the insur- ance classes for which the undertaking is authorised in its home jurisdiction and the activities or risks that are actually carried out, together with a declaration confirming the supervisory authority’s prior consent to the establishment of a branch in Italy. Authorisation is granted if the legal requirements are met and it may be refused if the insurer’s home juris- diction does not ensure reciprocity or equivalent treat- ment for Italian insurers seeking to establish branches there. The authorisation process is generally completed within 90 days, subject to interruptions or requests for additional information by IVASS. Post-Brexit, UK insurers no longer benefit from EU passporting rights. As a result, UK undertakings wish- ing to conduct insurance business in Italy must fol- low the same regime applicable to other third-country insurers, including the establishment and authorisa- tion of an Italian branch. 3.2 Fronting Under the current Italian and EU regulatory frame- work, there is no explicit prohibition preventing an
insurance undertaking from assigning the entirety of the risks it underwrites to a reinsurer (so-called front- ing), nor is there a specific statutory regime governing such arrangements. That said, fronting may fall within the definition of “risk-mitigation technique” under Solvency II and the Code of Private Insurance, which expressly define them as “techniques enabling an insurance or reinsur- ance undertaking to transfer a part or the whole of its risks to a third party”. Fronting may therefore fall within the scope of recognised risk-mitigation techniques, to the extent that it entails a (potentially total) transfer of the underwritten risks to a third party. It is worth noting that the use of risk-mitigation tech- niques – and therefore the use of fronting – direct- ly impacts the calculation of the Solvency Capital Requirement (SCR), since it is calibrated to capture all quantifiable risks to which the undertaking is exposed. Therefore, where risk-mitigation techniques are used, the SCR must adequately reflect any risks arising from their use (including the counterparty default risk asso- ciated with the reinsurance arrangement). In light of this prudential impact, the appropriateness of front- ing structures should be assessed on a case-by-case basis and in close co-ordination with the supervisory authority, taking into consideration any risk arising from its use. 4. Transaction Activity 4.1 M&A Activities Relating to Insurance Companies From a regulatory perspective, the execution of any extraordinary transaction involving an insurance undertaking – including acquisition of qualified share- holdings and a merger/demerger – is subject to prior authorisation by IVASS. Acquisition of Qualified Shareholdings Any person, whether natural or a legal entity, who intends (i) to acquire, directly or indirectly, the control or a qualifying holding in an insurance undertaking – ie, a holding representing 10% or more of the capital or voting rights, or otherwise allowing the exercise of significant influence over the management of the
255 CHAMBERS.COM
Powered by FlippingBook