Establishment, Keeping and Custody of the Register of Guarantee Assets

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To all undertakings authorised to conduct primary insurance business for which the legal provisions for small insurance undertakings (sections 212 to 217 of the German Insurance Supervision Act ( Versicherungsaufsichtsgesetz – VAG ) apply, as well as German Pensionskassen and Pensionsfonds.

14.10.2020

Introduction

It is of utmost importance that the claims from insurance business or Pensionsfonds business of insured persons, policyholders, (third-party) beneficiaries and injured third parties that have a direct right of action against the insurance undertaking or the Pensionsfonds are protected in insolvency proceedings. In order to guarantee this, these claims are granted absolute precedence over any other claim with respect to assets representing the technical or Pensionsfonds provisions. These assets constitute the guarantee assets (section 125 (2) of the VAG ). The register of guarantee assets (hereinafter referred to as the "register of assets") forms the basis for guaranteeing the claims of beneficiaries of insurance contracts (Pensionsfonds contracts) in the event of the insolvency of the insurance undertaking or the Pensionsfonds (sections 315 and 126 of the VAG ). In the interest of the beneficiaries, it is therefore of the utmost importance that the register is maintained properly, in full compliance with the relevant legal provisions.

The previous supervisory announcements must continue to be observed provided they do not contradict this circular.

Circular 12/2005 (
VA
) will be repealed on 1 January 2018 in order to give the addressees of this circular adequate opportunity to implement the IT measures necessary for a segmentation of the register of assets according to the investment classes set out in

the Regulation on the Investment of Guarantee Assets of Pensionskassen, Funeral Expenses Funds and Small Insurance Undertakings (Anlage des Sicherungsvermögens von Pensionskassen, Sterbekassen und kleinen Versicherungsunternehmen – AnlV ) or "Chapter 4 Investments" of the Regulation on the Supervision of Pensionsfonds (Pensionsfonds-Aufsichtsverordnung (PFAV),

This circular will enter into force on 1 January 2018.

It is planned for the register of assets to be submitted to BaFin electronically.

A public consultation has taken place prior to publication of this circular.

In order to ensure proper supervision and the equal treatment of undertakings, the following principles and guidelines must be observed for the establishment, keeping, custody and submission of the register of assets:

1 General information on the establishment and keeping of the register of assets pursuant to section 126 (1) and (2) of the VAG

1.1 The concept of a register of assets

1.1.1 The register of assets as a register of the additions and withdrawals during the financial year with a carry forward of the balance in one single total amount

The register of assets within the meaning of section 126 of the VAG refers to the register of additions and withdrawals of assets held as guarantee assets compiled on an ongoing basis on the forms intended for this purpose. The balance at the end of the previous financial year is carried forward at the beginning of the new financial year in one single total amount as a "carry forward from the previous year (accepted value)". Any repayment lists for claims secured by mortgages are also included in the register of assets (see no. 4.1.2).

1.1.2 The register of assets as a register of the assets held as guarantee assets at the beginning of the financial year and of the additions and withdrawals during the financial year

If, instead of the "carry forward from the previous year (accepted value)", the assets held as guarantee assets at the beginning of the financial year are entered into the register of assets, an inventory of assets is thus compiled (see no. 6 "Changeover to the new forms as of 1 January 2018" and no. 7 "Inventory of assets every five years"). This inventory of assets, together with the additions and withdrawals during the financial year, constitutes the register of assets within the meaning of section 126 of the VAG .

1.1.3 The register of assets as the computerised storage of data on the assets held as guarantee assets and on additions and withdrawals during the financial year

The undertakings should keep the register of assets with the aid of a computerised system. In the case of particularly small portfolios, BaFin can permit the undertakings to keep the register manually. The data medium on which the data on the assets held as guarantee assets and the additions and withdrawals during the financial year are stored constitutes the register of assets within the meaning of section 126 of the VAG . The saved data must be backed up, in particular in order to avert the danger of unauthorised or erroneous changes, deletions or mixing of data as well as changes, deletions or mix-up of data caused by technical failures.

If the saved data are printed out, this printout also constitutes the register of assets within the meaning of the law. The possibility of printing the register of assets in full or in part must be guaranteed at all times.

The printed register of assets must contain the data in an unencrypted, readily readable, structured and clear format in accordance with the relevant forms (see no. 1.1.1). Only those data which serve the undertaking's internal purposes are not to be printed.

1.2
Subsections for particular investment types of the guarantee assets

Forms
VV
1, 3, 6, 7b, 8, 9b, 10, 13 and
VV-FLV provide for the creation of subsections. As a rule, investments of a particular investment type of the guarantee assets are to be listed in each subsection. The subsection in question must be ticked in each case.

1.3
Ongoing maintenance of the register of assets

Pursuant to section 126 (1) sentence 1 of the
VAG
, the register of assets must be maintained on an ongoing basis.

1.3.1
Immediate entry of additions and withdrawals

Additions and withdrawals must be entered without delay and in chronological order in the register of assets; all relevant columns must be completed. Basically, the date the entry is actually made must be indicated as the date of the entry. Only in the case of withdrawals immediately before the end of the financial year and immediately before the reference dates for the interim reports on the estimated target volume of guarantee assets including its coverage must the date of the actual reduction in the volume of guarantee assets be used as the date of entry.

1.3.1.1
Additions

In the case of additions, immediate entry is required because pursuant to section 126 (1) sentence 2 of the VAG only the investments that are entered are considered part of the guarantee assets, and pursuant to section 315 of the VAG only the investments that are entered are available for the purposes of preferential satisfaction of the beneficiaries. The assets intended for allocation to the guarantee assets must therefore be entered without delay in the register of assets, i.e. as soon as the insurance undertaking (the Pensionsfonds) has acquired ownership of the relevant assets or, in the case of claims, the creditor's right.

For example, when purchasing bearer bonds the insurance undertaking (the Pensionsfonds) usually acquires ownership of same upon posting these to its own securities account. The insurance undertaking (the Pensionsfonds) must therefore enter such bearer bonds in the register of assets immediately upon becoming aware of them being posted to the securities account. The point in time at which the outflow of funds occurs for the insurance undertaking (Pensionsfonds) is not considered.

Any documents relating to the asset but not yet ceded to the undertaking ( e.g. loan documentation) do not prevent entry of the asset in the register of assets, unless the ceding of the documents is required in order to transfer ownership or the creditor's right.

The guarantee assets trustee reviews the eligibility of each individual investment asset immediately upon allocation to the guarantee assets, and in any event within 10 bank working days.

1.3.1.2
Withdrawals

Withdrawals, whether relating to the full value of the asset or only a part thereof, must be entered without delay in the register of assets because they reduce the actual volume of the guarantee assets even if not entered in the register, and a divergence between the actual volume of guarantee assets and the register must be prevented in order to ensure that any inadequacy in the cover can always be identified in the register of assets. Assets held as guarantee assets that are no longer part of the assets of the insurance undertaking (Pensionsfonds) in an economic sense must be entered as withdrawals. Still outstanding notifications or land register (Grundbuch) entries, for instance, are not an obstacle to entering the withdrawal in the register of assets once the asset is removed in full or in part from the guarantee assets (for the treatment of repayments in the case of claims secured by mortgages, see no. 4.1.2). For example, in the case of withdrawal of claims through repayment, the point in time at which the funds are received is the relevant time of removal from the register of assets, unless the insurance undertaking (the Pensionsfonds) decides that the receipt of payment was unjustified and takes measures aimed at reimbursement. Temporary removal of documents from the guarantee assets safe or guarantee assets securities account (see no. 3.4) does not constitute a withdrawal.

1.3.2
Identification numbers of assets held as guarantee assets

Every asset entered in the register of assets must be allocated an identification number, which remains unchanged for the entire time this asset is part of the guarantee assets. The number must be unique and may not be reassigned even after the asset ceases to be part of the guarantee assets.

The identification number must be the same number under which the individual asset held as a guarantee asset is also kept in the insurance undertaking's other documentation. This is in order to be able to find at all times the corresponding documentation of the insurance undertaking (Pensionsfonds) using the identification number and, conversely, to be able to find the entry in the register of assets using the other documentation of the insurance undertaking (Pensionsfonds). This number must also be assigned to any documents concerning assets held as guarantee assets that are stored in the undertaking's safe.

The numbering method is left up to the insurance undertakings (Pensionsfonds).

1.3.3
Carry forward from the previous year in one single total amount

At the beginning of each financial year, the total accepted value determined in the register of assets for the previous year must be entered in the respective forms (subsections) of the register of assets for the financial year as a "carry forward from the previous year (accepted value)".

1.3.4
Immutability of the entries

1.3.4.1 An entry may not be altered in such a way that the original content can no longer be determined (see section 239 (3) of the German Commercial Code (Handelsgesetzbuch –
HGB
).

1.3.4.2 Entries (additions or withdrawals) with retroactive effect – such as entries made after the close of a financial year with retroactive effect on the balance of the concluded financial year – are not permitted. The only exceptions to this are valuation adjustments which have to be undertaken after the close of a financial year and which are related to the annual financial statements (depreciation) of the accepted values of land, write-ups or write-downs on securities as a result of rising or falling prices; see
no.
2.3 for more information on this, see also
no.
1.3.1.2 for withdrawals).

1.4 Small mutual associations within the meaning of section 210 of the
VAG

Small mutual associations within the meaning of section 210 of the VAG , which only have to actuarially determine their respective target volume of guarantee assets precisely at intervals of several years (see also no. 4.5.1), should enter in the register of assets all assets invested under the principles for guarantee assets pursuant to the AnlV , and not only up to the putative target volume of guarantee assets. This does not apply to assets that are invested in liquid assets in order to meet current expenses. This is because the target volume of guarantee assets could easily be underestimated by these undertakings over the period of several years in which this target volume is not actuarially determined. This could lead to corresponding inadequate cover in the guarantee assets (see also no. 4.5.2).

1.5
One register of assets for each basket of guarantee assets and for each separate account within the guarantee assets

1.5.1
One register of assets for each basket of guarantee assets

A basket of guarantee assets is to be created for life insurance pursuant to section 125 (1) sentence 1 of the VAG and a basket of guarantee assets is to be created for health insurance within the meaning of section 146 of the VAG .

In accordance with section 88 (3) sentence 2, section 125 (2) and section 126 (1) and (2) of the VAG , property-casualty insurers have to create a basket of guarantee assets for pension benefits paid on liability insurance contracts pursuant to section 162 of the VAG . A separate basket of guarantee assets must be created for the pension benefits paid on the accident insurance types set out in section 162 of the VAG . In addition, one basket of guarantee assets is to be created for the life insurance component of accident insurance with premium refund pursuant to section 161 (1) of the VAG and a separate basket of guarantee assets is to be created for all other insurance lines and all benefits other than pension benefits in the insurance lines liability, accident and accident insurance with premium refund. The respective baskets of guarantee assets must be established without any consideration of the size of the premium reserve.

Pursuant to section 239 (1) sentence 1 of the
VAG
, Pensionsfonds have to establish guarantee assets with due consideration of the respective pension plans. Various baskets of guarantee assets must hence be created if the Pensionsfonds contract or pension plan explicitly provides for this. From a supervisory perspective, several baskets of guarantee assets are required if different investment strategies are followed by individual pension plans or within a pension plan or if different investment strategy options are available to employees or employers within the pension plans. Furthermore, separate baskets of guarantee assets are necessary for investments for the account and at the risk of Pensionsfonds and for the account and at the risk of employers and employees.

The portfolios within the individual baskets of guarantee assets must be entered in a special register of assets, which means that separate files must be created. Inadequate cover in one basket of guarantee assets cannot be compensated for through excess cover in another. The same applies to separate accounts within the guarantee assets.

1.5.2
One register of assets for each separate account within the guarantee assets

Where separate accounts within the guarantee assets must be established by law, or with the approval of BaFin pursuant to section 125 (6) of the VAG , the provisions for the guarantee assets and the claims to these apply, with the necessary modifications, for each separate account. A separate register of assets must therefore be kept for each of these accounts, which means that separate files must be kept. The establishment of a separate account within the guarantee assets is required, for example:

1.5.2.1 in order to capture the segregated investment portfolios of unit-linked life insurance (see section 125 (5) of the
VAG
). Insurance undertakings must enter these portfolios in form VV-FLV attached as annex 14 to this circular (see the explanations provided there);

1.5.2.2 in the case of insurance contracts for which obligations are to be met in the currency of a non-
EEA member state. For each of these currencies, a separate account must be established within the guarantee assets and the assets within this account must be entered in a separate register of assets in that currency. At the end of each form (subsection), the relevant carrying amount must be stated in euros. This amount must be entered in a separate form VV-Z (see notes on form VV-Z attached to this circular as Annex 15).

1.5.3 If assets are denominated in currencies other than the euro, they must be accounted for separately for each currency in the forms
VV
1-13 intended for the relevant investment class. At the end of each form or each subsection, after the single total amount which must be established in each case, the relevant carrying amount must be stated in euros and transferred to form VV-Z (Annex 15).

1.6
Statement of investments defined in section 2 (2) of the AnlV , if applicable in conjunction with section 3 (2) no.
4 of the
AnlV
(section 17 (2) of the PFAV)

These investments must be accounted for in form VV 8, subsection 8 of the register of assets. If, however, a form for a particular class of investment is already provided for under to this circular, the assets concerned must be entered in this form ( e.g. claims secured by mortgage liens in form VV 2, notes receivable in form VV 3).

Investments under section 2 (2) of the
AnlV
(section 17 (2) of the PFAV) must be identified in the forms by entering the words "opening clause" (Öffnungsklausel) in the comments column. In the event of an exemption being granted under section 3 (2) no. 4 of the AnlV or section 2 (3) of the AnlV (section 17 (3) of the PFAV), then the word "exemption" (Ausnahmegenehmigung) must be entered in the comments column. In form VV-Z (Annex 15), the investments under section 2 (2) of the AnlV , if applicable in conjunction with section 3 (2) no. 4 of the AnlV (section 17 (2) of the PFAV), must be reported for each form (subsection) as well as under "single total amount for forms VV 1 to VV 13" (in each case with "of which investments pursuant to section 2 (2) of the AnlV (section 17 (2) of the PFAV)).

1.7
Form of the printout to be submitted to
BaFin

Pursuant to section 126 (2) sentence 1 of the
VAG
, at the end of each financial year a printout of the entries made during that year, including a printout of any repayment lists (see no.
4.1.2), must be submitted to
BaFin
. In order to avoid the loss of individual sheets, the printout should be stapled or bound together. A copy or photocopy of the original printout can also be submitted.

If an inventory of assets must be prepared (see nos.
6.4 and 7), a printout of this must also be submitted. The control register of temporary removals (
no.
3.4) is not part of the register of assets and therefore does not have to be submitted.

1.8 Deadline for submission of the printout

The printout of the register of assets must be submitted within three months of the close of the financial year. Attestations not yet available during this three-month period are to be submitted subsequently without delay. When making a request for an extension of the deadline, the reasons for said request must be stated and the request made on time so that BaFin can make a decision before the deadline passes. An extension of the deadline can only be expected in those cases where compelling reasons beyond the organisational powers of the management board render it impossible to meet the submission deadline.

2 Assets to be entered in the register of assets

2.1 Only qualified assets

Only assets which qualify under the
AnlV
, under the PFAV or by way of supervisory approval may be entered in the register of assets.

2.2 Rights to use

The guarantee assets also include rights to use (interest, tenancy and lease payments, dividends) granted by the assets held as guarantee assets. These do not have to be entered in the register of assets (section 126 (1) sentence 3 of the VAG ). They can be accounted for, however, in the summary of assets held as guarantee assets (see form VV-Z , note no. 1.2).

2.3
Accepted value of the assets held as guarantee assets

The accepted value is the value at which an asset held as a guarantee asset is credited to the target volume of guarantee assets. The accepted value is usually the book value although, in the case of land, under certain circumstances the lower market value or the value set by BaFin is used instead (see section 125 (3) of the VAG and the notes to form VV 1).

In cases where the accepted value is the book value, any change in said book value brought about by an addition or a withdrawal is to be recorded without delay in the register of assets by entering a corresponding increase or decrease in the accepted value of this asset held as a guarantee asset (see no. 1.3.1).

In the case of securities, write-ups and write-downs as a result of price fluctuations (section 341b (2) of the HGB ) are to be considered in one single total amount at the end of the financial year when calculating the total accepted value of the assets held as guarantee assets of each form or of each subsection. In the case of land, the same applies to its depreciation (depreciation for wear and tear; see also the notes on completing the forms).

For the segregated investment portfolios of unit-linked life insurance (section 125 (5) of the VAG ), their fair value, with due consideration of the prudent person principle (section 341d of the HGB ), is the applicable accepted value.

For Pensionsfonds, where the investment is undertaken for the account and at the risk of employers and employees, the fair value, with due consideration of the prudent person principle (section 341 (4) sentence 2 of the HGB in conjunction with section 341d of the HGB ), is the applicable accepted value for all investment classes.

3 Management and custody of the guarantee assets (section 125 (4) of the VAG )

3.1
Place of management and custody of the guarantee assets

The register of assets for the financial year, i.e. all forms belonging to said register, must be kept separately from other registers and in one piece within the territory of the member states and EEA countries in order to avoid fragmentation. It must also be stored safely so that access by unauthorised parties is not possible.

It must be ensured that the register is kept centrally by a restricted group of individuals. To make the work easier, the data entered by several employees can be stored temporarily in a "subsidiary file", for example. However, at least once every working day the data must be released and the relevant entries made in the register of assets.

The registers of assets of previous years must be kept in safe custody. If the saved data are printed and then kept in safe custody, the printout must be bound. If instead it is data media that are kept in safe custody, this must be done in compliance with the principles of proper data backup (see no. 1.1.3).

Pursuant to section 125 (4) sentence 1 of the
VAG
, the guarantee assets must essentially be kept in safe custody within the territory of the member states and EEA countries.
BaFin can authorise exemptions from this rule (section 125 (4) sentence 3 of the VAG ).

3.2
Notification on the manner of custody

Notification on the manner in which the guarantee assets are kept in custody must be provided pursuant to section 125 (4) sentence 2 of the VAG . The provision of information on this is specified in form VV-Z under no.
2.3. This information has to relate not only to the additions of the concluded financial year but rather to the entire guarantee assets.

3.3
Separation from all other assets

Pursuant to section 125 (4) sentence 1 of the
VAG
, the guarantee assets must be kept separate from all other assets.

3.3.1 Custody in the undertaking's own safe

The undertaking must ensure that the documents are kept safely in extra secure rooms.
If documents on the assets held as guarantee assets are kept together with documents on other assets in the same safe of the insurance undertaking, the former must be sealed separately within the safe.

3.3.2
Custody of documents by credit institutions; term and fixed deposits, savings deposits and current account balances; declarations by the credit institutions

3.3.2.1
Custody in a bank safe (safe deposit box)

If an insurance undertaking (Pensionsfonds) stores the documents associated with the guarantee assets in a rented safe (safe deposit box, strong box) of a credit institution, the statements on separate custody made in no.
3.3.1 apply with the necessary modifications. Where applicable, the management board of the insurance undertaking (Pensionsfonds) must confirm in form
VV-Z that the credit institution has submitted a pledging waiver declaration in accordance with Annex 16 b) (see form VV-Z , note no.
2.3.5).

3.3.2.2
Individual safe custody (Streifbandverwahrung), collective custody

If the documents are kept in individual safe custody by a credit institution, a separate guarantee assets securities account must be set up there for these documents and identified as such. The credit institution submits a pledging waiver declaration in accordance with Annex 16 a), the existence of which must be confirmed, where applicable, by the management board of the insurance undertaking (Pensionsfonds) (see form VV-Z , note no. 2.3.5).

If securities from the guarantee assets securities account of a central depository for securities are moved to collective custody by the custodian bank, a pledging waiver declaration from the custodian bank in accordance with Annex 16 a) is also required. In addition, it must be noted in the custody ledger that the share in the collective securities holdings is part of the guarantee assets of the insurance undertaking (Pensionsfonds).

3.3.2.3
Term and fixed deposits, savings deposits and current account balances at credit institutions within the meaning of section 2 (1) no.
18 of the
AnlV
(section 17 (1) no.
18 of the PFAV)

These investments must be posted by the credit institution to a separate guarantee assets account (Sicherungsvermögen-Konto), which must be identified as such. The credit institution submits a pledging waiver declaration in accordance with Annex 16 a). The management board of the insurance undertaking (the Pensionsfonds) must confirm, where applicable, that this declaration has been submitted (see form VV-Z , note no. 2.3.5).

3.3.3 Custody of documents belonging to the guarantee assets that are kept at other custody location
s

If documents belonging to the guarantee assets are kept in custody at another location, e.g. at another insurance undertaking (Pensionsfonds) within the scope of outsourcing or at a life insurance undertaking within investments of the Pensionsfonds pursuant to section 17 (1) no. 5 of the PFAV, this undertaking or Pensionsfonds must submit the pledging waiver declaration pursuant to Annex 16 b). The submission of a pledging waiver declaration is not required for securities accounts held at Bundesrepublik Deutschland Finanzagentur GmbH .

3.3.4
Custody of guarantee assets abroad

If the guarantee assets named in sections 3.3.2 and 3.3.3 are kept in custody at a credit institution or some other custody location abroad, the insurance undertaking (Pensionsfonds) must obtain a pledging waiver declaration (in accordance with Annex 16) or similar declaration from that institution or location. Comparability with the pledging waiver declaration must be verified by way of a legal opinion in German.

3.3.5
Several baskets of guarantee assets; separate accounts within the guarantee assets

If an undertaking has several baskets of guarantee assets (see no.
1.5.1), these are to be kept separately from one another. The same applies where an undertaking must establish several separate accounts within its guarantee assets (see no. 1.5.2) for the assets that belong to each of these accounts.

3.4
Temporary removals; register

A separate register must be kept if mortgage deeds or land charge certificates or other documents relating to an asset held as a guarantee asset are temporarily removed from the guarantee assets safe or the guarantee assets securities account. This register should show the identification number of the individual asset held as a guarantee asset (see no. 1.3.2), its name, the time of and reason for the temporary removal as well as the time the document was returned to its habitual place of custody. The document in question must be returned without delay after the purpose of its removal has been fulfilled.

4 Information on individual forms

Structured products must be assigned to the forms according to the legal nature of the cash instrument. Hedge fund-linked investments must be identified in the comments column by the letters "HF".

4.1 Form
VV
2 – Claims for which a mortgage lien has been created

4.1.1
Entering the claims

Claims for which a mortgage lien has been created (section 2 (1) no.
1 of the
AnlV
; section 17 (1) no.
1 of the PFAV) or whose interest payment and repayment have been fully guaranteed (section 2 (1) no.
3 (e) of the
AnlV
; section 17 (1) no.
3 (e) of the PFAV) by a suitable credit institution within the meaning of section2 (1) no.
18 (b) of the
AnlV
(section 17 (1) no.
18 (b) of the PFAV) or a public-law credit institution within the meaning of section 2 (1) no.
18 (c) of the
AnlV
(section 17 (1) no.
18 (c) of the PFAV) or which have been allocated to the "opening clause" (section 2 (2) of the AnlV ; section 17 (2) of the PFAV) can be summarised for the purpose of simplicity in one loan agreement. When entering a partial amount in the register of assets, this must be clearly identified as such.

Each claim must be entered in form
VV
2 under its own identification number.

A mortgage lien is sufficient to secure several claims, provided all claims are part of the guarantee assets.

4.1.2
Repayment lists

In the case of claims which are secured by mortgages and must be paid back in partial amounts, the register of assets pursuant to section 126 (1) sentence 5 of the VAG must be adjusted subject to more precise definition by BaFin . For the purpose of simplicity and in order to maintain an overview of the register of assets, repayments, including the most recent repayment instalment, are not to be listed in form VV 2 but rather in a repayment list as an annex to and component of the register of assets at the close of the financial year (see no. 1.1.1). This must be done in line with the following example, where several payments made during the year are added together to make one and the same claim:

Identification no. of the claim in the register of assets Total amount repaid per claim during the financial year

EUR
Residual claim at the end of the financial year

EUR
0201
0203
0206
0208
700
3,300
60
8,000
10,300
94,700
0
267,000
Single total amount of all repayments made in the financial year 12,060

Repayments on loans may only be entered in the repayment list if the repayment is effected in partial amounts pursuant to section 126 (1) sentence 5 of the VAG . If the debtor repays all still outstanding amounts in one single total amount, an entry in the repayment list is not permitted unless the repaid remainder of the loan balance is below a de minimis threshold of EUR 25,000.

4.1.3
Monthly adjustment of the accepted value of the total portfolio of claims secured by mortgages

All repayments made must be withdrawn monthly in one single total amount from the register of assets. The total for these monthly withdrawals made during the year must match the total for all repayments according to the repayment list (see no. 4.1.2). If annuities are paid in instalments and if the capital share of the individual instalment can only be determined with disproportionate effort, the monthly repayments can be carefully estimated and withdrawn monthly in one single total amount from the register of assets. If the total of these monthly estimated amounts does not reach the total for all accurately calculated repayments according to the repayment list, the difference must be withdrawn at the close of the financial year. If the total of the estimated amounts exceeds the total for repayments according to the repayment list, the difference must be added at the close of the financial year.

4.2 Form

VV
11 – Current account balances

For each current account balance at credit institutions (form 11), only the respective individual balance must be entered every month.

This is without prejudice to:

the obligation of the guarantee assets trustee to examine the suitability of each individual asset added to the guarantee assets without delay – but at the latest within 10 banking days – and the requirement that the trustee approves every disposal of assets held as guarantee assets (section 129 (1) of the VAG ).

4.3 Form
VV
7b – Insurance contracts with life insurance undertakings

Regarding insurance contracts with life insurance undertakings within the meaning of section 1 (2) sentence 1 of the Pension Contracts Certification Act (Altersvorsorgeverträge-Zertifizierungsgesetz – AltZertG ) (section 17 (1) no. 5 of the PFAV), the following procedure must be followed:

The Pensionsfonds should regularly obtain confirmation from the life insurance undertaking for the payments it has made and received and the number of new contracts concluded. This may be indicated in the form of a single total amount. The trustee should reconcile this confirmation with the entries made in the register of assets. In case of deviations, the trustee should notify the Pensionsfonds without delay.

If it merely uses one identification number for each life insurance undertaking in the register of assets, the Pensionsfonds should, in order to identify deviations, provide an up-to-date overview on a regular basis – containing the following details, at a minimum:

name of the beneficiary; policy number of the corresponding life insurance contract; contributions and pay-outs under this contract; and the value of the final balance.

The individual life insurance contracts must be reported in the inventory of assets that is to be compiled on a regular basis, stating the name and registered office of the life insurance undertaking as well as the policy number.

Form
VV
8 – Bearer bonds; catch-all form

This form can also be used to account for those guarantee assets investments which are not recorded in the other forms of the register of assets.

4.5 Form
VV-Z
– Summary of the results

The results (accepted values) of the entries made over the course of the financial year and accounted for in the individual forms must be compiled in form VV-Z at the end of the financial year. Rights to use (see no. 2.2) can also be accounted for here. Details can be found in the "Notes on completing the form".

4.5.1
Actuarial certification

An actuarial certification must be attached to form VV-Z in which the accuracy of the calculation of the target volume of guarantee assets is confirmed separately for each basket of guarantee assets (see 1.5.1) and each separate account within the guarantee assets (see 1.5.2) as well as broken down into the different parts of the target volume of guarantee assets.

Property-casualty insurers also have to submit an actuarial certification of the pension benefits paid on liability and accident insurance as well as on the life insurance component of accident insurance with premium refund. For all other insurance lines and benefits other than those paid in the form of annuities in the aforementioned classes, the calculation of the target volume of guarantee assets must be attached to form VV-Z as a memo item.

The actuarial certification must be signed by the appointed actuary.
In the case of life insurance undertakings with their head office in a non- EEA member state as well as undertakings within the meaning of section 65 of the VAG , the respective certification is limited to the domestic portfolio. If an undertaking does not have this certification at its disposal within the period set for submission of the printout of the register of assets, the printout can be submitted without the certification. However, the certification must be submitted subsequently without delay (see no. 1.8).

4.5.2
Actuarial balance sheet at intervals of several years

Undertakings which only draw up an actuarial balance sheet at intervals of several years (see no.
1.4) must attach the actuarial certification on the accuracy of the calculation of the target volume of guarantee assets only to the register of assets for the respective accounting year. At the end of each intervening financial year, they must indicate in form VV-Z the amount of the most recent actuarially calculated target volume of guarantee assets and the point in time which the calculation relates to.

4.5.3
Attestations of the management board/authorised agent and, if applicable, of the trustee

In form
VV-Z
, the management board or (in the case of insurance undertakings with their registered seat in a non- EEA member state) the authorised agent and, if applicable, the trustee must make the attestations specified there (see form VV-Z

nos.
2 and 3).

4.6 Forms
VV
2, 3, 5 and 6 – Changes to premiums and discounts

With regard to section 341c of the
HGB
– restriction of nominal value accounting – notes receivable and loans as well as mortgage loans must be disclosed at historical cost (including premiums and discounts). In the period before maturity, these premiums and discounts are gradually written down or written up at least yearly.

In the line "total premium/discount amount" in forms VV 2, 3, 5 and 6, the net changes to premiums and discounts must be disclosed in one single total amount. In the column "Premium/discount" in form VV-Z , the net values of the individual registers of assets must likewise be entered.

5 Separate portfolio in a non-
EEA member state pursuant to section 124 (3) of the VAG

The assets which serve to cover the target volume of guarantee assets of a separate portfolio within the meaning of section 124 (3) of the VAG are not to be entered in the register of assets. Instead, the statement of the target volume of guarantee assets and of the actual volume of guarantee assets of the separate portfolio in a non- EEA member state must be submitted separately to BaFin at the close of a financial year, if possible together with the printout of the register of assets in the form of the following documentation:

5.1
Target volume of guarantee assets

Actuarial certification of the target volume of guarantee assets for the separate foreign business portfolio calculated – separately for each currency – in accordance with section 125 (2) of the VAG at the close of the financial year, itemised according to its individual parts, with the target amount converted into euros and the exchange rate indicated.

5.2
Actual volume of guarantee assets

Statement by the management board on the assets used to cover the target volume of guarantee assets (separate statement for each currency) as well as the confirmation of the management board that, pursuant to section 124 (3) of the VAG and to the extent that the law applicable in the EU or EEA member state does not provide otherwise, the assets are invested in accordance with the AnlV and section 125 (5) of the VAG and are clearly identified as assets held as guarantee assets of the insurance undertaking.

In the statement to be submitted to
BaFin
, the assets must be listed together with the accepted values and, where applicable, the nominal values of each investment class at the close of the financial year. This must be done separately for each currency and broken down by investment class. Individual asset statements are not necessary. The single total amount of the assets to be counted towards the target volume of guarantee assets must be converted into euros.

6 Changeover to the new forms as of 1 January 2018

The following points must be observed when changing over to the new forms as of 1 January 2018:

6.1
Ongoing maintenance of the register of assets 2018

The forms must be converted at the latest by 1 January 2018 and used from that date onwards. The changeover must not result in any delay in the entry of the additions and withdrawals for the financial year 2017 (see no. 1.3.1).

6.2
Submission of the printout of the register of assets in 2018

In 2018, a printout (see no.
1.7) of the register of additions and withdrawals for the financial year 2017 (see no.
6.1), including any repayment lists (see no.
4.1.2), must be submitted to
BaFin on the basis of the old forms within the time limit mentioned in no.
1.8.

6.3
Submission of the printout of the register of assets for 2018

In 2019, a printout (see no.
1.7) of the register of additions and withdrawals for the financial year 2018 (see no.
6.1), including any repayment lists (see no.
4.1.2), must be submitted to
BaFin on the basis of the new forms within the time limit mentioned in no.
1.8.

6.4
Inventory of assets as of 1 January 2021

As of 1 January 2021, all assets existing on 31 December 2020 must be entered individually in the new forms. In particular, the following points must be observed:

The printout of the inventory of assets must be submitted within three months of the close of the financial year 2020. Attestations or confirmations not yet available during this period must be submitted subsequently without delay.

When making a request for an extension of the deadline, the reasons for said request must be stated and the request made on time so that BaFin can make a decision before the deadline passes. An extension of the deadline can only be expected in those cases where compelling reasons beyond the organisational powers of the management board render it impossible to meet the submission deadline.

6.4.1
Completeness of the column entries

Essentially, all columns must be completed for each asset held as a guarantee asset. The only information that may be omitted is the date of the entry (column 2) and the reference number of any authorisations in the comments column.

The principle of completeness of the column entries also applies to forms VV 1 and VV 2, which provide for the submission of land register data. Here, however, the land register data can be used which the insurance undertaking (the Pensionsfonds) provided upon initial entry of the individual asset held as a guarantee asset in the register of assets.

6.4.2
Currentness of the entries

All assets held as guarantee assets must be entered at their accepted value (see no.
2.3) and, if applicable, their nominal value as of 31 December 2020. The accepted value and, if applicable, the nominal value must be entered in the "Addition" columns. In the inventory of assets, changes to the identification features which have resulted since the initial entry of the individual asset held as a guarantee asset in the register of assets must also be considered. These include changes relating to the debtor, the issuer, the company name, the address, changeover to ISIN identifiers, etc. (see no.
6.4.1 second paragraph on the question of the currentness of the land register data requested in forms
VV
1 and
VV
2).

7 Inventory of assets every five years

After a few years, a complete overview of the assets actually held as guarantee assets can only be obtained with disproportionate effort. This lack of overview arises in particular as a result of the restriction of the annual registers of assets to the additions and withdrawals of the financial year (see no. 1.3.1) as well as the summary details on write-ups and write-downs owing to rising or falling prices and on depreciation for wear and tear (see no. 2.3), and as a result of repayment lists (see no. 4.1.2).

It is therefore urgently required that, at intervals of five years, instead of the "carry forward from the previous year (accepted value)" every insurance undertaking (Pensionsfonds) compile an inventory of assets at the beginning of the new financial year in accordance with the instructions contained in no.
6.4 above.

8 Repeal of Circular 12/2005 (
VA
)

Circular 12/2005 (
VA
) is cancelled with effect from 1 January 2018. From that date onwards, all announcements made by BaFin thenceforth on establishing and keeping the register of assets are rendered redundant insofar as they contradict this circular.

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