Own funds

(1) The determination of own funds includes 1. at stock corporations, the paid-in share capital less the amount of treasury shares; at mutual insurance associations, the paid-in founders' fund; at public-law insurance undertakings, the items corresponding to the paid-in share capital at stock corporations, 2. the capital reserve and the revenue reserves, 3. the retained profit remaining after deduction of the dividend to be distributed, 4. capital paid in against the granting of participation rights, in accordance with subsections (2) and (5), 5. capital paid in on account of incurring subordinated liabilities, in accordance with subsections (3) and (5), 6. capital raised in the form of securities of indefinite term, in accordance with subsections (4) and (5), 7. at life insurance undertakings and at health insurance undertakings that conduct health insurance in the manner of life insurance, the provision for premium refunds, insofar as it may be used to cover losses and insofar as it is not attributable to surplus shares already fixed, and 8. on application and with the consent of the supervisory authority, and subject to compliance with the ceiling under subsection (6), a) half of the unpaid portion of the share capital, the founders' fund, or, at public-law insurance undertakings, the items corresponding to the share capital at stock corporations, where the paid-in portion reaches 25 percent of the share capital, the founders' fund, or the items corresponding to the share capital at stock corporations at public-law insurance undertakings, b) at insurance undertakings that aa) are mutual insurance associations or public-law insurance undertakings operating on the principle of mutuality and bb) conduct neither health nor life insurance, half of the difference between the additional calls permitted in a financial year under the articles of association and the additional calls actually demanded, c) the hidden net reserves resulting from the valuation of the assets, insofar as these reserves are not exceptional in character, and d) at life insurance undertakings, in accordance with the rules issued under section 217, first sentence, the value of the acquisition costs included in the premium, insofar as they have not been taken into account in the premium reserve. Own funds are the sum of the amounts under the first sentence, points 1 to 8, less 1. the loss carried forward, increased by the dividend to be distributed, 2. the intangible assets shown in the balance sheet, in particular any capitalised goodwill under section 246(1), fourth sentence, of the Commercial Code, and 3. the participating interests and claims named in subsection (7).
(2) Capital within the meaning of subsection (1), first sentence, point 4, may be attributed to own funds only where 1. it participates in losses up to its full amount, and the insurance undertaking is obliged to defer interest payments in the event of a loss, 2. it is agreed that, in the event of the opening of insolvency proceedings or the liquidation of the insurance undertaking, it is repaid only after all non-subordinated creditors have been satisfied, 3. it is made available to the insurance undertaking for a period of at least five years, and, under the agreements made, a) it need be repaid early at most in the event of liquidation, and under no circumstances at the creditor's demand, and b) it can be repaid early only with the consent of the supervisory authority, and 4. any amendment of the agreements made presupposes that the supervisory authority has declared it has no objection to the amendment. In the case of agreements with a fixed term, insurance undertakings must submit to the supervisory authority, no later than one year before the end of the term, a plan for approval showing how the level of own funds is to be maintained or increased, by the end of the term, to the then required level. Where the insurance undertaking intends early repayment of the capital under an agreement with or without a fixed term, it must ask the supervisory authority for consent at least six months before the chosen repayment date. An insurance undertaking may not acquire its own participation rights securitised in securities.
(3) Capital within the meaning of subsection (1), first sentence, point 5, may be attributed to own funds only where 1. it is agreed that, in the event of the opening of insolvency proceedings or the liquidation of the insurance undertaking, it is repaid only after all non-subordinated creditors have been satisfied, 2. it is made available to the insurance undertaking for a period of at least five years, and, under the agreements made, a) it need be repaid early at most in the context of liquidation, and under no circumstances at the creditor's demand, and b) it can be repaid early only with the consent of the supervisory authority, 3. set-off of the repayment claim against claims of the insurance undertaking is excluded, and no contractual security is provided for the liabilities by the insurance undertaking or by third parties, and 4. any amendment of the agreements made presupposes that the supervisory authority has declared it has no objection to the amendment. In the case of agreements with a fixed term, insurance undertakings must submit to the supervisory authority, no later than one year before the end of the term, a plan for approval showing how the level of own funds is to be maintained or increased, by the end of the term, to the then required level. Where the insurance undertaking intends early repayment of the capital under an agreement with or without a fixed term, it must ask the supervisory authority for consent at least six months before the chosen repayment date. An insurance undertaking may not acquire its own subordinated liabilities securitised in securities. By way of derogation from the first sentence, point 3, an insurance undertaking may provide subordinated security for subordinated liabilities incurred by a subsidiary of the insurance undertaking established solely for the purpose of raising capital.
(4) Capital within the meaning of subsection (1), first sentence, point 6, may be attributed to own funds only where 1. the claims of all non-subordinated creditors rank ahead of the claims of the holder of the security, 2. it need under no circumstances be repaid at the creditor's demand, 3. it can be repaid only with the consent of the supervisory authority, 4. the issuance agreement permits the insurance undertaking to defer interest payments at any time, and 5. under the terms of issue, unpaid interest, in addition to the capital paid in, participates in a loss, without restricting the insurance undertaking in the continuation of its activity. Where the insurance undertaking intends to repay the capital, it must ask the supervisory authority for consent at least six months before the chosen repayment date.
(5) Capital paid in 1. against the granting of participation rights under subsection (2), 2. on account of incurring subordinated liabilities under subsection (3), or 3. in the form of securities under subsection (4), may be attributed to own funds only within the limits of the second sentence. The attribution is possible insofar as 1. the total amount of this capital, after it is raised, does not exceed 50 percent of own funds and 50 percent of the Solvency Capital Requirement, and 2. the partial amount of the capital for which fixed terms are agreed, and which is attributed to own funds, does not, after it is raised, exceed 25 percent of own funds and 25 percent of the Solvency Capital Requirement.
(6) Funds under subsection (1), first sentence, point 8, letters a and b, may be attributed to own funds only up to a ceiling of 50 percent of the amount resulting as the lower of own funds and the Solvency Capital Requirement.
(7) The deduction items under subsection (1), second sentence, point 3, include: 1. participating interests of the insurance undertaking within the meaning of section 7, point 4, in a) credit institutions within the meaning of section 1(1), second sentence, points 1 to 5 and 7 to 10, of the Banking Act, b) investment firms within the meaning of section 2(1) of the Investment Firms Act, c) financial undertakings within the meaning of section 1(3) of the Banking Act, d) insurance undertakings with their registered office in a member state or contracting state, e) third-country insurance undertakings, f) insurance holding companies, and g) pension funds, and 2. claims arising from participation rights within the meaning of subsection (1), first sentence, point 4, and claims arising from subordinated liabilities within the meaning of subsection (1), first sentence, point 5, against the undertakings named in point 1, letters a to g, in which the insurance undertaking holds a participating interest or with which it is jointly a member of a horizontal group of undertakings. On the insurance undertaking's application, the supervisory authority may permit exceptions in respect of the deduction items under the first sentence, where the insurance undertaking temporarily holds interests in the undertakings named in the first sentence, point 1, letters a to g, in order to provide financial support to the undertaking concerned for the purpose of its restructuring and rescue.
(8) For capital within the meaning of subsection (1), first sentence, points 4 and 5, paid in before 13 January 2019, subsections (2) and (3), in the version in force until 12 January 2019, may continue to be applied. The first sentence applies for the last time in the financial year beginning after 31 December 2027.