1 May 2020

DNB requests new powers to scrutinise reorganisations of insurers

The Dutch Central Bank (DNB) has requested a change in legislation to oblige insurance companies that have their seat in the Netherlands to obtain a declaration of no objection from the DNB before carrying out a financial or corporate reorganisation. The Minister of Finance has reacted positively to the request, confirming that a proposal is being prepared to enhance DNB's powers of supervision in this area and that a consultation will be held in due course.
The request was made in DNB's annual letter to the Ministry of Finance, which traditionally sets out those developments in the financial sector that call for amendments to existing law and regulations. In the letter, DNB explained that introducing this declaration of no objection requirement to insurers would allow the prudential regulator additional scope to intervene in proposed reorganisations. The new powers would, in DNB's view, in particular be necessary where a reorganisation poses a risk to insurance policy holders. Under existing law, insurance companies only have to request prior approval from DNB for reducing equity capital in certain circumstances and if they transfer portfolios. Banks, in comparison, are already subject to a more extensive list of circumstances in which they must seek a declaration of no objection from DNB. They must do so, not only before carrying out a financial or corporate reorganisation, but also before (i) acquiring certain qualifying holdings in specified financial and non-financial enterprises, (ii) completing partial or full takeovers of assets and/or liabilities, and (iii) effecting certain mergers.