1546

We have a technical query we were hoping you could assist with.  We are in the process of considering whether to acquire 100% of the shares of an unlisted non-insurance undertaking, which will then be held as a subsidiary of the Company.  We would like to clarify the treatment of this investment in our Solvency II balance sheet.We understand that according to Article 13 of Commission Delegated Regulation EU 2015/35 paragraph 1(b), we should use the adjusted equity method, given that the entity is unlisted and therefore the default valuation method is not applicable.  According to paragraph 3 of Article 13, we should value our holding based on our share of the subsidiary’s net assets.  Our question is, how to recognise the initial cost element of the investment.  For example:Initial cost to purchase                                                = EUR 500.000Assets acquired at purchase date                             = EUR 250.000Net assets at next reporting date as per SII          = 500K What would be show in our SII balance sheet?  Should the valuation be:Initial cost                                                                         500.000Plus share of post acquisition movement of net assets   250.000Valuation of investment as per SII                                            750.000