For the Conduct of a Review of the Pension Funds’ Assets and of the Insurers’ and Reinsurers’ Balance Sheets, Including on an Insurance Group Level
 
The Financial Supervision Commission (FSC) extends an invitation for participation of independent external reviewers (IER) for the balance sheet review of the insurers and reinsurers, including on an insurance group level as to December 31, 2016 and for a review of the pension funds’ assets as to December 31, 2016, in connection with the reporting of the results from the review of the assets of pension funds as to June 30, 2016, taking into account the changes that have occurred after this date and considering the impact of all the subsequent events. The balance sheet reviews of insurers and reinsurers, including on an insurance group level and the review of the assets of the pension funds as to December 31, 2016 will be conducted pursuant to Art. 18. para 2 of the FSCA.
The FSC shall approve a list of independent external reviewers to conduct the reviews on the basis of the below-mentioned criteria. The deadline for submission of applications for admission to the list of independent external reviewers is February 21, 2017. The independent external reviewers who have participated in the completed balance sheet reviews of insurers and reinsurers and of the assets of the pension funds and who were not excluded from the list of the approved independent external reviewers can participate in the present procedure only on the basis of a notification for interest on their behalf to the FSC, without being obliged to submit documents. On February 22, 2017 the FSC will announce a final list of the independent external reviewers, who comply with the requirements for participation in the reviews.
All insurance, reinsurance and pension insurance companies shall choose an independent external reviewer from the list of the approved independent external reviewers.
 
1. Methodology

The balance sheet reviews of insurers and reinsurers, including on an insurance group level, as well as the review of the assets of pension funds as to December 31, 2016 shall be conducted as execution of contractual procedures under ISRS 4400 in compliance with methodologies, adopted by the FSC and entirely based on the methodologies adopted by the FSC for the purposes of the reviews as to June 30, 2016. For the purposes of the reviews, the independent external reviewers shall use as a basis the results from the conducted review as to June 30, 2016 of the relevant supervised entity, and considering the results from the consistency checks, reported in the summary and final report. The independent external reviewers should take into account the changes, which have occurred within the period of June 30, 2016 – December 31, 2016.
For the insurers with right to access to the single market of the European Union, the review shall cover the templates for quantity reporting under Solvency 2, and for the insurers without right to access to the single market of the European Union, the annual references under Ordinance № 30 dated July 19, 2006 on the requirements to accounting, the form and content of financial statements, references, reports and attachments of insurers and reinsurers.      
The balance sheet review of insurers and reinsurers, including on an insurance group level is considered by the FSC as compliance with the requirements for authentication of annual references under Art. 126, para 1, item 2 of the IC in the cases where the authentication is conducted by an independent external reviewer who is also an auditor according the Independent Financial Audit Act.
The independent external reviewer can be also an auditor of the reviewed entity for the purposes of the authentication of its annual financial statement. 
 
2. Deadlines for the completion of the reviews

For pension funds, the results of the reviews shall be submitted to the FSC by the independent external reviewer not later than March 31, 2017.
For insurers and reinsurers on an individual level the results from the reviews shall be submitted to the FSC by the independent external reviewer not later than May 22, 2017.
For insurers on a group level the results of the reviews shall be submitted to the FSC by the independent external reviewer not later than July 3, 2017.
 
3. Selection process of independent external reviewers
 
Every insurer and reinsurer, including on an insurance group level, as well as all pension insurance companies shall notify the FSC in writing of their choice of at least one independent external reviewer not later than March 2, 2017. All the notification letters containing the choice of an independent external reviewer shall be submitted to the FSC together with the evidence for compliance with the specific requirements referred to in item 4.2.
In case an insurer, respectively a reinsurer or a pension insurance company does not notify the FSC of its choice, accompanied by the required documents, or the teams do not comply with the requirements under item 4.2, the FSC will appoint an independent external reviewer of its choice to the relevant entity.
The inspection of the participating companies (insurance groups, falling within the scope of the review) shall be settled in an agreement of the insurance company, which is part of an insurance group. For the purposes of the independent external reviewer selection, the written notification to the FSC in regard to the appointing of an independent external reviewer to conduct the review on an insurance group level shall be realized by an insurance company, which is part of the insurance group.
The choice of the supervised entity is not binding for the FSC.
The Financial Supervision Commission will appoint an independent external reviewer to an insurer and to a reinsurer including on an insurance group level or to a pension fund not later than March 10, 2017.
 
4. Requirements for independent external reviewers
4.1. Eligibility criteria and evidence to be submitted to the FSC
In order to be included in the list, Independent external reviewers must comply with the following requirements:
4.1.1. The firm must have minimum 5 years international experience in at least three EU member states in the field of:
– for the pension funds sector – in evaluating and/or auditing pension companies/funds and/or assets management companies and/or banks and/or insurance/reinsurance undertakings with sizable assets[1]  and/or international experience in carrying out Asset Quality Reviews (AQR) in the banking sector or Balance Sheet Reviews (BSR) in the financial sector, commissioned by governments, EU or national authorities or central banks;
– for the insurance sector – evaluating[2]  assets and liabilities of sizable insurance undertakings and/or auditing sizable insurance undertakings and/or international experience in carrying out Asset Quality Reviews (AQR) in the banking sector or Balance Sheet Reviews (BSR) in the financial sector, commissioned by governments, EU or national authorities or central banks;
4.1.2. The firm’s team must not consist of members that have violated the Social Insurance Code, the Insurance Code, the Law on the Independent Financial Audit or the Law on Accounting during the last 5 years.
 
4.1.3. The firm should demonstrate that it has at least one team with theoretical knowledge and practical experience according to 4.2.1.
 
The selection will be based on the evaluation of compliance with the eligibility criteria. In order to certify compliance with the set criteria in point 4.1, the following evidences shall be provided by the applicants:
– A detailed written description, signed by the legal representatives of the firm, for the experience of the IER, in compliance with the requirements in point 4.1.1, together with a declaration signed by the legal representatives of the firm for the correctness of the information.
– A declaration, signed by the legal representatives of the firm for compliance with the requirements in point 4.1.2.
– CVs, signed by the respective person and by at least one legal representative of the firm, presenting details on the qualification and experience of the team complying with the requirements of 4.1.3, together with a declaration signed by the legal representatives of the IER for compliance with the requirements of 4.1.3.
 
All documents under point 4.1. shall be submitted to FSC in original hard copy.
 
4.2. Appointment of independent external reviewers for each particular (re)insurer, including on insurance group level and each particular pension fund
 
Requirements
 
4.2.1. For the review of each particular (re)insurer, including on insurance group level and the pension funds, managed by a pension insurance company, the IER shall provide separate team, while being free to use the same team or specific members of that team for different entities under review, provided that the workload for the team members is not unreasonably high.
 
The team required for each participating (re)insurer, including on insurance group level and the pension funds, managed by a pension insurance company will be composed of:
 
–           as minimum 1 manager (partner/director/principal) with expertise in the review of assets and liabilities of the undertakings in 4.1.1. with at least 5 years of professional experience as a professional, registered auditor in the review of assets and liabilities of the undertakings in 4.1.1., who has the ultimate responsibility for the review;
–           1 highly qualified actuary expert with at least 5 years of professional experience as an actuary (for (re)insurer and insurance groups);
–           1 expert / analyst who is a holder of the right to use the Chartered Financial Analyst designation or other internationally recognized professional qualification in the area of finance and at least 3 years of professional experience and
–           3 experts with at least 3 years’ practical experience in auditing or evaluation of the undertakings in point 4.1.1.
 
In the course of the review the independent external reviewer will use at least 1 independent valuer (either employee of the Independent external reviewer or separately hired) with the necessary competences according to the Independent Valuers Act.
 
It is not an obstacle the IER to be the auditor of the reviewed undertaking.
 
Evidences
 
–           The independent external reviewer shall provide the FSC with CV's of the partner or other person(s) in the firm who is responsible for the review and for signing the report together with the CVs of all team members. CVs shall include accurate information and appropriate details on the type of reviews carried out by the staff indicating capability and capacity to undertake the review as well as details on relevant specific experience. Each CV should be signed by the respective person and by at least one legal representative of the firm. A declaration shall be submitted by the legal representative of the IER for compliance with the requirements.
–           Written consent by the legal representative of the IER to perform review of the supervised entity in compliance with this invitation.
 
All documents under point 4.2. shall be submitted to FSC in original hard copy.

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For the Conduct of a Review of the Pension Funds’ Assets and of the Insurers’ and Reinsurers’ Balance Sheets, Including on an Insurance Group Level
 
The Financial Supervision Commission (FSC) extends an invitation for participation of independent external reviewers (IER) for the balance sheet review of the insurers and reinsurers, including on an insurance group level as to December 31, 2016 and for a review of the pension funds’ assets as to December 31, 2016, in connection with the reporting of the results from the review of the assets of pension funds as to June 30, 2016, taking into account the changes that have occurred after this date and considering the impact of all the subsequent events. The balance sheet reviews of insurers and reinsurers, including on an insurance group level and the review of the assets of the pension funds as to December 31, 2016 will be conducted pursuant to Art. 18. para 2 of the FSCA.
The FSC shall approve a list of independent external reviewers to conduct the reviews on the basis of the below-mentioned criteria. The deadline for submission of applications for admission to the list of independent external reviewers is February 21, 2017. The independent external reviewers who have participated in the completed balance sheet reviews of insurers and reinsurers and of the assets of the pension funds and who were not excluded from the list of the approved independent external reviewers can participate in the present procedure only on the basis of a notification for interest on their behalf to the FSC, without being obliged to submit documents. On February 22, 2017 the FSC will announce a final list of the independent external reviewers, who comply with the requirements for participation in the reviews.
All insurance, reinsurance and pension insurance companies shall choose an independent external reviewer from the list of the approved independent external reviewers.
 
1. Methodology

The balance sheet reviews of insurers and reinsurers, including on an insurance group level, as well as the review of the assets of pension funds as to December 31, 2016 shall be conducted as execution of contractual procedures under ISRS 4400 in compliance with methodologies, adopted by the FSC and entirely based on the methodologies adopted by the FSC for the purposes of the reviews as to June 30, 2016. For the purposes of the reviews, the independent external reviewers shall use as a basis the results from the conducted review as to June 30, 2016 of the relevant supervised entity, and considering the results from the consistency checks, reported in the summary and final report. The independent external reviewers should take into account the changes, which have occurred within the period of June 30, 2016 – December 31, 2016.
For the insurers with right to access to the single market of the European Union, the review shall cover the templates for quantity reporting under Solvency 2, and for the insurers without right to access to the single market of the European Union, the annual references under Ordinance № 30 dated July 19, 2006 on the requirements to accounting, the form and content of financial statements, references, reports and attachments of insurers and reinsurers.      
The balance sheet review of insurers and reinsurers, including on an insurance group level is considered by the FSC as compliance with the requirements for authentication of annual references under Art. 126, para 1, item 2 of the IC in the cases where the authentication is conducted by an independent external reviewer who is also an auditor according the Independent Financial Audit Act.
The independent external reviewer can be also an auditor of the reviewed entity for the purposes of the authentication of its annual financial statement. 
 
2. Deadlines for the completion of the reviews

For pension funds, the results of the reviews shall be submitted to the FSC by the independent external reviewer not later than March 31, 2017.
For insurers and reinsurers on an individual level the results from the reviews shall be submitted to the FSC by the independent external reviewer not later than May 22, 2017.
For insurers on a group level the results of the reviews shall be submitted to the FSC by the independent external reviewer not later than July 3, 2017.
 
3. Selection process of independent external reviewers
 
Every insurer and reinsurer, including on an insurance group level, as well as all pension insurance companies shall notify the FSC in writing of their choice of at least one independent external reviewer not later than March 2, 2017. All the notification letters containing the choice of an independent external reviewer shall be submitted to the FSC together with the evidence for compliance with the specific requirements referred to in item 4.2.
In case an insurer, respectively a reinsurer or a pension insurance company does not notify the FSC of its choice, accompanied by the required documents, or the teams do not comply with the requirements under item 4.2, the FSC will appoint an independent external reviewer of its choice to the relevant entity.
The inspection of the participating companies (insurance groups, falling within the scope of the review) shall be settled in an agreement of the insurance company, which is part of an insurance group. For the purposes of the independent external reviewer selection, the written notification to the FSC in regard to the appointing of an independent external reviewer to conduct the review on an insurance group level shall be realized by an insurance company, which is part of the insurance group.
The choice of the supervised entity is not binding for the FSC.
The Financial Supervision Commission will appoint an independent external reviewer to an insurer and to a reinsurer including on an insurance group level or to a pension fund not later than March 10, 2017.
 
 
4. Requirements for independent external reviewers
4.1. Eligibility criteria and evidence to be submitted to the FSC
In order to be included in the list, Independent external reviewers must comply with the following requirements:
4.1.1. The firm must have minimum 5 years international experience in at least three EU member states in the field of:
– for the pension funds sector – in evaluating and/or auditing pension companies/funds and/or assets management companies and/or banks and/or insurance/reinsurance undertakings with sizable assets[1]  and/or international experience in carrying out Asset Quality Reviews (AQR) in the banking sector or Balance Sheet Reviews (BSR) in the financial sector, commissioned by governments, EU or national authorities or central banks;
– for the insurance sector – evaluating[2]  assets and liabilities of sizable insurance undertakings and/or auditing sizable insurance undertakings and/or international experience in carrying out Asset Quality Reviews (AQR) in the banking sector or Balance Sheet Reviews (BSR) in the financial sector, commissioned by governments, EU or national authorities or central banks;
4.1.2. The firm’s team must not consist of members that have violated the Social Insurance Code, the Insurance Code, the Law on the Independent Financial Audit or the Law on Accounting during the last 5 years.
 
4.1.3. The firm should demonstrate that it has at least one team with theoretical knowledge and practical experience according to 4.2.1.
 
The selection will be based on the evaluation of compliance with the eligibility criteria. In order to certify compliance with the set criteria in point 4.1, the following evidences shall be provided by the applicants:
– A detailed written description, signed by the legal representatives of the firm, for the experience of the IER, in compliance with the requirements in point 4.1.1, together with a declaration signed by the legal representatives of the firm for the correctness of the information.
– A declaration, signed by the legal representatives of the firm for compliance with the requirements in point 4.1.2.
– CVs, signed by the respective person and by at least one legal representative of the firm, presenting details on the qualification and experience of the team complying with the requirements of 4.1.3, together with a declaration signed by the legal representatives of the IER for compliance with the requirements of 4.1.3.
 
All documents under point 4.1. shall be submitted to FSC in original hard copy.
 
4.2. Appointment of independent external reviewers for each particular (re)insurer, including on insurance group level and each particular pension fund
 
Requirements
 
4.2.1. For the review of each particular (re)insurer, including on insurance group level and the pension funds, managed by a pension insurance company, the IER shall provide separate team, while being free to use the same team or specific members of that team for different entities under review, provided that the workload for the team members is not unreasonably high.
 
The team required for each participating (re)insurer, including on insurance group level and the pension funds, managed by a pension insurance company will be composed of:
 
–           as minimum 1 manager (partner/director/principal) with expertise in the review of assets and liabilities of the undertakings in 4.1.1. with at least 5 years of professional experience as a professional, registered auditor in the review of assets and liabilities of the undertakings in 4.1.1., who has the ultimate responsibility for the review;
–           1 highly qualified actuary expert with at least 5 years of professional experience as an actuary (for (re)insurer and insurance groups);
–           1 expert / analyst who is a holder of the right to use the Chartered Financial Analyst designation or other internationally recognized professional qualification in the area of finance and at least 3 years of professional experience and
–           3 experts with at least 3 years’ practical experience in auditing or evaluation of the undertakings in point 4.1.1.
 
In the course of the review the independent external reviewer will use at least 1 independent valuer (either employee of the Independent external reviewer or separately hired) with the necessary competences according to the Independent Valuers Act.
 
It is not an obstacle the IER to be the auditor of the reviewed undertaking.
 
Evidences
 
–           The independent external reviewer shall provide the FSC with CV's of the partner or other person(s) in the firm who is responsible for the review and for signing the report together with the CVs of all team members. CVs shall include accurate information and appropriate details on the type of reviews carried out by the staff indicating capability and capacity to undertake the review as well as details on relevant specific experience. Each CV should be signed by the respective person and by at least one legal representative of the firm. A declaration shall be submitted by the legal representative of the IER for compliance with the requirements.
–           Written consent by the legal representative of the IER to perform review of the supervised entity in compliance with this invitation.
 
All documents under point 4.2. shall be submitted to FSC in original hard copy.

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