Simultaneous applicability of non-deduction exemptions under Articles 48 and 49 CRR regarding equity exposures on insurance holdings where an institution has a significant investment

For an institution that has received permission to apply Article 49(1) CRR, has a significant investment below or equal to the threshold indicated in Article 48(1) and 48(2) (exempted from being deducted from Common Equity Tier 1 according to Article 49(1), are the amounts of holdings in insurance undertakings, to be risk-weighted at 250% according to Article 48(4) and the amounts of such holdings that are above this threshold risk-weighted in line with Article 49(4)?

Article 48 CRR allows institutions to not deduct from their own funds the portion of holdings in financial sector entities where they have a significant investment and that are below or equal to the threshold indicated in Article 48(1) and 48(2), and instructs institutions to risk weight the amounts of the holdings below the threshold at 250%, as indicated in Article 48(4). Article 49 states that, for institutions having received the appropriate permit from competent authorities, holdings of own funds instruments of a financial sector entity in which the parent institution, parent financial holding company or parent mixed financial holding company or institution has a significant investment and where conditions in points (a) to (e) are met, may not be deducted as well, but risk weighted according to the Standardized or IRB approaches as indicated in Article 49(1) CRR. Article 471 derogates to Article 49 and states that non-deducted holdings in (re)insurance undertakings pursuant to Article 49 shall be risk-weighted at 370%. Given that there is no mention of Article 48 in Article 49 and vice-versa, and that the two articles are not mutually exclusive, it is our understanding that holdings of an insurance undertaking, re-insurance undertaking or insurance holding company entity where an institution has a significant investment, can be risk weighted at 250% (according to Article 48(4)) for the amount below or equal to the threshold of Article 48(1) and 48(2), and risk-weighted in accordance with Chapter 2 or 3 of Title II of Part Three (according to Article 49(4), provided they have received the permit from the competent authorities) or at 370% (according to Article 471(2)) for the amount above the threshold.