Cap. 403 Art. 16Non-Compliance with the Solvency Capital Requirement.

(1) An authorised insurance or reinsurance undertaking which fails to comply with article 15 shall immediately inform the competent authority as soon as it observes that the Solvency

Capital Requirement is no longer complied with, or where there is a risk of non-compliance in the following three months.

(2) Within two months from the observation of non-compliance with the Solvency Capital Requirement, the authorised insurance or reinsurance undertaking shall submit a realistic recovery plan in accordance with Insurance Rules issued under article 18A for approval by the competent authority.

(3) The competent authority shall require the undertaking concerned to take the necessary measures to achieve, within six months from the observation of non-compliance with the Solvency Capital Requirement, the re-establishment of the level of eligible own funds covering the Solvency Capital Requirement or the reduction of the risk profile of the undertaking to ensure compliance with the Solvency Capital Requirement.

(4) The competent authority may, if appropriate, extend that period by three months.

(5) The competent authority may issue Insurance Rules to determine the circumstances within which the period set out in sub-article (4) may be extended and the requirements to be complied with by the authorised insurance and reinsurance undertakings in such circumstances.

(6) In exceptional circumstances, where the competent authority is of the opinion that the financial situation of the authorised insurance or reinsurance undertaking concerned will deteriorate further, it may also restrict or prohibit the free disposal of the assets of that undertaking.

(7) Where the competent authority decides to restrict or prohibit the free disposal of the assets of that undertaking, it shall inform the European regulatory authorities of the host Member States or the overseas regulatory authorities of any measures it has taken. The competent authority may request those authorities concerned to take the same measures, and shall designate the assets to be covered by such measures.