Instruction No. 2014-I-07 relative to the acceptance procedure for experts in the context of the valuation of the realizable value of real estate and shares or units of non-listed real estate or landholding companies

Prudential Control and Resolution Authority

The Prudential Control and Resolution Authority,

Having regard to the Monetary and Financial Code, particularly Articles L. 612-1 and L. 612-2;

Having regard to the Social Security Code, particularly Article R. 931-10-42;

Having regard to the Mutual Code, particularly Article R. 212-54;

Having regard to the Insurance Code, particularly Article R. 332-20-1;

Having regard to the opinion of the Prudential Affairs Consultative Committee dated June 19, 2014;

Decides:

Article 1 – This instruction applies to insurance undertakings subject to the control of the Prudential Control and Resolution Authority (ACPR) for the valuation of the realizable values of real estate and shares or units of real estate or landholding companies not listed on the stock exchange of a member state of the OECD, under the conditions provided for in Articles R. 931-10-42-d of the Social Security Code, R. 212-54-d of the Mutual Code, and R. 332-20-1-d of the Insurance Code.

Article 2 – The insurance undertakings referred to above must, for the closing of annual accounts, have carried out the five-year expert appraisal or the update of values between two appraisals, of the real estate assets¹ referred to in Article 1 located in France or abroad. The five-year expert appraisal concerns properties appraised five years prior or those entered into the organization's assets and which have not yet been subject to a five-year expert appraisal. The update of the realizable value, also called intermediate update, is carried out between two appraisal deadlines.

Article 3 – The real estate valuation expert is the person responsible for the valuation of the value of the real estate. The expert in the valuation of the accounting value of the real estate or landholding company, also called the central expert, is the person responsible for the valuation of the value of the shares or units of the company concerned.

¹ Also referred to as "properties".

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Instruction No. 2014-I-07 relative to the acceptance procedure for experts in the context of the valuation of the realizable value of real estate and shares or units of non-listed real estate or landholding companies

Prudential Control and Resolution Authority 2

Article 4 – The experts² referred to in Article 3, proposed for acceptance by the ACPR, possess the technical skills and sufficient resources for the valuation of the properties for which they will be commissioned. Experts must be independent both with regard to the insurance undertaking wishing to commission them and with regard to the properties to be appraised. Experts adhere to professional standards and apply current ethical principles. Experts cannot carry out two consecutive appraisals of the same property.

Article 5 – Insurance undertakings propose to the ACPR for acceptance the real estate valuation experts and the central experts prior to the engagement of the expert's mission. Acceptance is valid only for the five-year expert mission presented, followed by the intermediate updates linked to it.

The central expert is responsible for verifying the realization of the valuations of the underlying assets by experts under conditions equivalent to those required in this instruction.

In the case of real estate or landholding companies whose shares or units are held by several insurance undertakings, the insurance undertaking that holds the majority³ of these shares is generally the lead entity proposing the central expert for acceptance by the ACPR.

Article 6 – Undertakings have full latitude in the choice of experts meeting the requirements set out in Article 4. When an insurance undertaking envisages submitting to the ACPR the designation of one or more experts, it transmits to the General Secretariat of the ACPR, for each proposed expert, an acceptance request.

Article 7 – The acceptance request file includes a declarative statement and the list of real estate assets (Form 1), accompanied, depending on the mission, by the following forms duly completed by each proposed signing expert, whether in the capacity of a natural person or on behalf of an expert firm:

– Form 2, presentation of the real estate or land valuation expert; – and/or Form 3, presentation of the central expert in the valuation of real estate or landholding companies; – Form 4, commitment of the real estate or land valuation expert; – and/or Form 5, commitment of the central expert in the valuation of real estate or landholding companies.

Article 8 – When during a five-year cycle of expertise and intermediate updates, a change of expert is envisaged, the insurance undertaking transmits an acceptance request for a new expert to the General Secretariat of the ACPR.

Article 9 – The expert acceptance requests provided for in Articles 6, 7, and 8 must reach the General Secretariat of the ACPR during the relevant accounting year. These requests must be transmitted at the latest two months before the engagement of the expert's mission. This engagement must take place within a reasonable and sufficient timeframe allowing the expert to produce the valuation of the property's value as of the inventory date.

Article 10 – The acceptance of the expert by the ACPR is deemed granted within a period of two months upon receipt of the complete file comprising the declarative statement, Form 1, and Forms 2 or 3, 4 or 5 depending on the missions.

² The functions of real estate expert and central expert can be cumulated provided that the expert meets the two categories of competence and has completed the corresponding files.
³ The one who holds the most shares.

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Instruction No. 2014-I-07 relative to the acceptance procedure for experts in the context of the valuation of the realizable value of real estate and shares or units of non-listed real estate or landholding companies

Prudential Control and Resolution Authority 3

Article 11 – Valuations carried out by an expert who has not been accepted under the conditions of this instruction are deemed to be non-compliant with the provisions of Articles R. 931-10-42-d of the Social Security Code, R. 212-54-d of the Mutual Code, and R. 332-20-1-d of the Insurance Code.

Article 12 – When an insurance undertaking becomes aware of an element likely to modify the conditions of the expert's exercise, it informs the General Secretariat of the ACPR by letter as soon as possible.

Article 13 – The declarative statement provided for in Article 7 must be signed by the manager of the insurance undertaking, notably within the meaning of Articles L. 321-10 of the Insurance Code, L. 211-8 of the Mutual Code, and L. 931-5 of the Social Security Code.

Article 14 – The files for expert acceptance requests as well as the sales table presented in Annex II are sent to the following address:

General Secretariat of the Prudential Control and Resolution Authority DAAR – 66-2789 61, rue Taitbout 75436 Paris Cedex 09

Article 15 – The information note of June 8, 2006 of the Insurance and Mutuals Control Authority, regarding the procedures for the acceptance of real estate experts for the annual inventory, is repealed.

Article 16 – This instruction enters into force on the date of its publication.

– Annex I: Declarative statement and forms

• Form 1: List of real estate assets
• Form 2: Presentation of the real estate or land valuation expert
• Form 3: Presentation of the central expert in the valuation of real estate or landholding companies
• Form 4: Commitment of the real estate or land valuation expert
• Form 5: Commitment of the central expert in the valuation of real estate or landholding companies

– Annex II: Sales table

– Annex III: Current regulations: Article R. 931-10-42 of the Social Security Code; Article R. 212-54 of the Mutual Code; Article R. 332-20-1 of the Insurance Code

Paris, July 10, 2014

The President of the
Prudential Control and Resolution Authority,
[Robert OPHÈLE]