Article 5

Decision on the application

1.   The supervisory authority shall only approve the application for the use of an internal model if it is satisfied that the systems of the insurance or reinsurance undertaking for identifying, measuring, monitoring, managing and reporting risk are adequate, and in particular if it is satisfied that the internal model fulfils the requirements set out in Articles 101, 112 and 120 to 125 of Directive 2009/138/EC and also Article 113 of that Directive in the case of a partial internal model.

2.   In addition, the supervisory authority shall only approve the application for the use of an internal model if it is satisfied that the policy for changing the model fulfils the requirements set out in Article 115 of Directive 2009/138/EC. When the supervisory authority has reached a decision on an application, it shall, without delay, notify its decision in writing to the insurance or reinsurance undertaking. That decision shall include:

(a)	where the supervisory authority approves the application, the starting date from which the model shall be used to calculate the Solvency Capital Requirement;

(b)	where the supervisory authority approves the application, any terms and conditions related to the approval decision together with the reasons for those terms and conditions;

(c)	where the supervisory authority rejects the application, the reasons on which the decision is based;

(d)	where the supervisory authority has requested a transitional plan in accordance with Article 113 of Directive 2009/138/EC, a decision about the approval of the transitional plan referred to in Article 6.

3.   Supervisory authorities shall not disclose that an insurance or reinsurance undertaking has applied to use an internal model to calculate the Solvency Capital Requirement, and that an application was rejected or withdrawn.