Caa Luxembourg Deposit Agreement

In accordance with Article 55 of CAA Regulation No 15/03 of 7 December 2015 on insurance and reinsurance undertakings as amended (CAA Regulation 15/03), the deposit of concordant assets with credit institutions established outside the EEA is only permitted upon reasoned request from the insurance undertaking concerned. In addition, Circular 16/9 provides that such filing may take place only in the country of the seat of the non-EEA depositary. On 2 April 2020, the Commissariat aux Assurances du Luxembourg (CAA) published an information note highlighting the impact of Brexit on the application of Circular CAA 16/09 (Circular 16/9) on the deposit of transferable securities and liquidity used as assets to cover the technical provisions of direct insurance undertakings and pension funds subject to CAA supervision (the information note). Concordant deposits of assets in the United Kingdom or its dependent areas do not require changes to existing deposit agreements. The security triangle, resulting from the Law on the insurance sector, is a favourable mechanism, centred on the policyholder, the separation of assets and strict control of them by signing a tripartite deposit agreement between the Insurance Commission (`the CAA`), the life insurance company and the depositary bank representing the three sides of the triangle, allows you to do that. As the United Kingdom and its dependent territories will become a third country from 1 January 2021, the deposit of assets to cover the technical provisions of credit institutions established in those areas must comply with the laws, regulations and administrative provisions applicable to deposits outside the European Economic Area (EEA). As deposits in the United Kingdom or its dependent territories have not been subject to special prior authorization from the CAA, the CAA is not informed of the existence of a reason that can be recognized as legitimate for the deposit. However, the CAA reminds insurance companies that Circular 16/9 considers that the choice of a depositary outside the EEA is an essential condition for the conclusion of contracts whose matching assets are deposited as a legitimate reason in life insurance. If this condition is met, certain measures must be taken vis-à-vis the client and only assets that are part of a fund or specialized fund can be deposited in the third country, according to CAA.

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