The French insurance regulator Autorité de Contrôle Prudentiel et de Résolution (ACPR) has released a guide for captive insurance companies in the country.
The ACPR aims to provide potential captive owners with critical information on the application process, requirements, expected timelines, and best practices for gaining regulatory approval.
The move is fuelled by the rising interest in reinsurance captive in France as part of risk management strategy for businesses, with 17 entities approved to date.
Under French insurance regulations, a captive is defined as a reinsurance company owned by a non-insurance entity that provides reinsurance exclusively for the risks of the parent company or affiliated entities.
The ACPR’s guidelines recommend a thorough internal evaluation by prospective captive owners to assess the benefits, costs, and responsibilities of setting up and managing a captive.
Before submitting an application, companies must arrange an initial meeting with the ACPR to present their project and demonstrate a clear understanding of regulatory expectations.
Once the application is submitted, the ACPR typically provides an approval decision within six months, although additional meetings with the captive’s proposed leadership team may be required.
The ACPR’s evaluation criteria include the applicant's motivations, governance structure, risk coverage plans, business strategy, and risk management framework.
As France’s captives operate under Solvency II regulations, the ACPR also requires assurances from the captive’s parent company regarding financial support in case of solvency issues.
To aid companies in the application process, the guide outlines the primary regulatory and prudential principles that captives, whether newly established or relocating from the European Economic Area, must follow to secure approval.
