GFSC Guidance Note Solvency 2: Applying EIOPA Set 2, System of Governance and ORSA Guidelines

Version: 1 Publication Date: 22 December 2025 www.gfsc.gi GFSC Guidance Note Solvency 2: Applying EIOPA Set 2, System of Governance and ORSA Guidelines

Gibraltar Financial Services Commission Guidance Note on Solvency 2: Applying EIOPA Set 2, System of 2 Governance and ORSA Guidelines Table of Contents

1. Introduction..................................................................................................................................... 3
2. Compliance with the Guidelines...................................................................................................... 3
3. Recognition and valuation of assets and liabilities other than technical provisions ...................... 3
4. Reporting and public disclosure ...................................................................................................... 4
5. Single solvency and financial condition report (SFCR) .................................................................... 4

Gibraltar Financial Services Commission Guidance Note on Solvency 2: Applying EIOPA Set 2, System of 3 Governance and ORSA Guidelines

1. Introduction 1.1. This Guidance Note is addressed to all insurance and reinsurance undertakings, as defined in Financial Services (Insurance Companies) Regulations 20201 (the ‘Insurance Companies Regulations’). Insurance undertakings and reinsurance undertakings are collectively referred to as ‘insurers’ or ‘firms’ within this Guidance Note, which sets out the Gibraltar Financial Services Commission’s (’GFSC’s’) expectations of firms and its general approach to the following European Insurance and Occupational Pensions Authority’s (‘EIOPA’s’) Guidelines (as at the end of the transition period)2 : • Set 2 of the Solvency II Guidelines (‘the Guidelines’), published as final reports on 6 July 2015 and in all European Union official languages on 14 September 2015; and • the System of Governance and the Own Risk and Solvency Assessment (‘ORSA’), published as final reports on 3 February 2015 and in all European Union official languages on 14 September 2015. 1.2. Firms should also refer to the GFSC’s Policy Statement on the interpretation of EU Guidelines and Recommendations.3

1.3. Any reference to any provision of direct EU legislation is a reference to it as it forms part of retained EU law. 2. Compliance with the Guidelines 2.1. The GFSC expects firms to comply with all of the Set 2, System of Governance and ORSA Guidelines (as at the end of the transition period) that apply to them, in a proportionate manner. 2.2. This supervisory statement also provides further commentary on certain Guidelines where the GFSC considers that this is useful for firms. Those Guidelines on which further commentary is provided are: • recognition and valuation of assets and liabilities other than technical provisions; • methods for determining the market shares for reporting; • reporting for financial stability purposes; • reporting and public disclosure; and • ORSA. 3. Recognition and valuation of assets and liabilities other than technical provisions 3.1. The GFSC expects firms to comply with each of the Guidelines in all cases unless they intend to take advantage of the derogation in article 9(4) of the Financial Services (Solvency 2)(Technical Standards) Regulations 20254 (the ‘Solvency 2 Technical Standards’). 1 Financial Services (Insurance Companies) Regulations 2020 – Regulation 3 2 Gibraltar’s membership of the EU came to an end on Friday 31 January 2020. Gibraltar entered into a transition period lasting until midnight on Thursday 31 December 2020, which marked the end of the transition period, during which EU law continued to apply to the Gibraltar. 3 GFSC Policy Statement on the interpretation of EU Guidelines and Recommendations 4 Financial Services (Solvency 2)(Technical Standards) Regulations 2025

Gibraltar Financial Services Commission Guidance Note on Solvency 2: Applying EIOPA Set 2, System of 4 Governance and ORSA Guidelines 3.2. This derogation lays down criteria which, if met, allow a firm to recognise and value an asset or liability based on the valuation method it uses in preparing its annual or consolidated financial statements. 3.3. Where firms intend to take advantage of the derogation in article 9(4) of the Solvency 2 Technical Standards, they should still apply Guidelines 1, 2, 4, 5 and 8 to 11. They should also refer to the GFSC’s Guidance Note on Financial Reporting Standards for Insurers,5 in which the GFSC sets out its conclusions as to which financial reporting standards (‘FRS’) are within the possible scope of the derogation. 4. Reporting and public disclosure 4.1. In accordance with the requirement under regulation 64(7) of the Insurance Companies Regulations, composite firms are required to prepare a statement on the basis of the accounts referred to in regulation 64(6) of the Insurance Companies Regulations identifying the eligible own funds covering the notional minimum capital requirements (‘MCRs’) of the life and non– life parts of the business. Section II on Regular Supervisory Reporting (Guidelines 16-29) (as at the end of the transition period) also gives guidance on reporting issues. In order to fulfil all these requirements, as the template Own Funds (IR.23.01.01) does not provide space for composite firms to report eligible own funds separately for life and non-life business, the GFSC expects composite firms to submit such statements, on an annual basis, within Section E (Capital Management) of the Solvency and Financial Condition Report, as described in article 51A of the Financial Services (Insurance Supervisory Reporting)(Technical Standards) Regulations 20256 . 5. Single solvency and financial condition report (SFCR) 5.1. The GFSC expects firms to assess risks on a forward-looking basis, covering business plan and strategy timelines, and reflect the specific risk profile and governance mechanisms of each entity or group. 5.2. Firms should ensure that they capture own capital needs and reflect business risk profiles over both the short-term and the long-term. 5.3. As part of its supervisory process, the GFSC will review ORSA reports on a risk-based and proportionate basis. 5 GFSC Guidance Note on Financial Reporting Standards for Insurers 6 Financial Services (Insurance Supervisory Reporting)(Technical Standards) Regulations 2025

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