Tied assets

(1) The management board of a direct insurance undertaking must, already during the course of the financial year, allocate to the tied assets, and invest in accordance with the applicable provisions, amounts corresponding to the expected growth of the minimum amount under subsection (2). Where direct insurance undertakings invest assets in
1. loan receivables,
2. debt securities and participation certificates,
3. registered debt claims,
4. shares,
5. participating interests,
6. land and rights equivalent to land,
7. units within the meaning of section 215(2), first sentence, point 6, or
8. current balances and deposits with credit institutions, these assets must be allocated to the tied assets up to the amount of the total of the balance sheet values named in subsection (2). The assets named in the second sentence must, taken as a whole, correspond at least to the level of the overall portfolio in terms of security, liquidity, profitability, and quality.
(2) The amount of the tied assets must correspond at least to the sum of the balance sheet values of the following:
1. unearned premiums,
2. the premium reserve,
3. the provision for
a) claims and surrenders not yet settled,
b) non-profit-related premium refunds, and
c) unused premiums from suspended insurance contracts,
4. the portions of the provision for profit-related premium refunds that relate to surplus shares already fixed but not yet allocated,
5. liabilities to policyholders arising from insurance business written directly, and
6. amounts received as premium that an insurance undertaking must refund where an insurance contract or a transaction named in section 1(2) has not come into effect or has been rescinded. Balance sheet values within the meaning of the first sentence are the gross amounts for insurance business written directly, before deduction of the shares for business ceded in reinsurance.
(3) Unencumbered land and rights equivalent to land are recognised for the tied assets at their balance sheet value. Where the balance sheet value is higher than the market value, the market value is recognised. The supervisory authority may permit an appropriate increase in the recognised value where and insofar as an expert opinion demonstrates that the market value exceeds the balance sheet value by at least 100 percent. For encumbered land and rights equivalent to land, the supervisory authority determines the value on a case-by-case basis.
(4) The tied assets must be managed separately from all other assets and kept in the territory of the member states or contracting states. The manner of safekeeping must be notified to the supervisory authority. The supervisory authority may approve the safekeeping of the assets of the tied assets in another location.
(5) A separate section of the tied assets (investment fund) must be established for each type of investment, insofar as life insurance contracts provide for insurance benefits that
1. are invested in units of an open-ended investment undertaking within the meaning of section 1(4) of the Capital Investment Code,
2. provide for units issued by an investment company,
3. provide for assets within the meaning of section 2(4) of the Investment Act, in the version in force until 21 July 2013, other than cash, or
4. are directly linked to an equity index or other reference values.
(6) With the approval of the supervisory authority, separate sections of the tied assets may be established. What is prescribed for the tied assets and claims to them then applies correspondingly to each separate section.
(7) For a pan-European Personal Pension Product under Regulation (EU) 2019/1238 of the European Parliament and of the Council of 20 June 2019 on a pan-European Personal Pension Product (PEPP) (OJ L 198, 25.7.2019, p. 1), a separate section of the tied assets must be established for contracts in the accumulation phase, insofar as the investment risk is borne by the insurance undertaking. Insofar as the investment risk for contracts in the accumulation phase is not borne by the insurance undertaking, subsection (5) applies, with the proviso that separate investment funds must be established for a pan-European Personal Pension Product.