Definition of “prudential regulation in the Union” in Article 142(1)(4)(b)

Can insurance and re-insurance undertakings located in the EU be considered as non-prudentially regulated and therefore as non-eligible to the definition of large financial sector entity?

It is understood that for a counterparty to be considered as a large financial sector entity, such entity would have to fulfill three criteria: (i) meet the definition of financial sector entities as defined in article 4(1)(27); (ii) (ii) have total assets equal to or greater than 70 billion Euros; and (iii) (iii) be, or one of their subsidiaries be, subject to prudential regulation in the Union or to the laws of a third country which applies prudential supervisory and regulatory requirements at least equivalent to those applied in the Union. We understand that an insurance or re-insurance undertaking is a financial sector entity according to Article 4(1)(27) and may have total assets of 70 billion Euros or more. So the question is really whether one considers they are subject to EU "prudential regulation" or to a regulation outside the EU that is deemed equivalent. Commission Implementing Decision 2014/908, as amended by the Commission Implementing Decision 2016/2358/EU, specifies that the equivalence assessment (to identify third countries that are deemed equivalent for the purpose of article 142(1)(4)(b)) is limited to the supervisory and regulatory arrangements applicable to third country undertakings with a main business comparable to that of a credit institution or investment firm. It is therefore clear that third country insurance and re-insurance undertakings cannot qualify for the definition of large financial sector entities as defined in article 142(1)(4). But we also understand that the term “prudential regulation in the Union” in article 142(1)(4) refers only to supervisory and regulatory arrangements applicable to institutions and therefore does not refer to Solvency II. In this context, an insurance or re-insurance undertaking in the EU that is not subject to CRR or an equivalent prudential regulation applicable to institutions (although it is subject to Solvency II regulation), cannot be considered as prudentially regulated for the purpose of Article 142(1)(4)(b) and therefore would not meet the definition of large financial sector entity of Article 142(1)(4).