Article 3

Supporting evidence regarding the amount or method

The application submitted by the insurance or reinsurance undertaking shall seek approval of a specified monetary amount for an ancillary own-fund item or a method to determine the amount of an ancillary own-fund item.

Where the insurance or reinsurance undertaking seeks approval of a specified monetary amount, the application shall include an explanation of the calculation of the amount, based on prudent and realistic assumptions in accordance with Article 90(2) of Directive 2009/138/EC.

Where the insurance or reinsurance undertaking seeks approval of a calculation method, it shall provide the following information:

(a)	an explanation of the method and how it reflects the loss-absorbency of the ancillary own-fund item;

(b)	a description of any assumptions upon which the method relies and how these assumptions are prudent and realistic;

(c)	the item's expected initial amount that has been calculated in accordance with the method and a justification of that amount;

(d)	an explanation of the validation processes the insurance or reinsurance undertaking will implement to ensure that the results of the method continue to reflect the loss-absorbing capacity of the item on an ongoing basis.