EIOPA · 2345
Disclosure Templates
- Regulation
- (EU) No 2009/138 - Solvency II Directive (Insurance and Reinsurance)
- Article
- Article 35 of SII Directive
- Topic
- Disclosure Templates
- Submitted
- 2021-10-14
- Answered
- 2023-01-13
Question
Our question is regarding the classification of a Bond that is a Floating Rate Note (FRN) with variable interest rate, that has been issued by a corporation as defined in the CIC table. Our understanding is that such FRNs are not falling with the categories 21-28 and therefore, they are to be classified with the code 29 - "other corporate bonds, not classified under the above categories. Is our assumption correct?
Background
We are supporting the industry with the classification of financial instruments according to the CIC table and it looks that there are in the industry different views of how to classify a FRN
Answer
There is no automatism that such an asset, with the information provided, should be classified as CIC 29. FRNs can also be for example CIC 21, in case the reporting undertaking assess it as having "simple characteristics", or classified as CIC 25 . In general, when classifying an asset using the CIC table, undertakings shall take into consideration the most representative risk to which the asset is exposed to.
Please see further details about when a bond should be classified as CIC 2 or as CIC 5 in Q&A 2245.
This Q&A is published by European Insurance and Occupational Pensions Authority and is non-binding. It does not constitute legal advice. Updated weekly from official ESA sources.
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