1. Member States shall inform the Commission of any general difficulties encountered by their reinsurance undertakings in establishing themselves and operating in a third country or carrying on activities in a third country.

Reinsurance is a major financial activity as it allows direct insurance undertakings, by facilitating a wider distribution of risks at worldwide level, to have a higher underwriting capacity to engage in insurance business and provide insurance cover and also to reduce their capital costs; furthermore, reinsurance plays a fundamental role in financial stability, since it is an essential element in ensuring the financial soundness and the stability of direct insurance markets as well as the financial system as a whole, because it involves major financial intermediaries and institutional investors.

In order to implement such 'home country control' while ensuring adequate Europe-wide protection of the interests of reinsurance customers who are in general direct insurers and therefore of insurance policy holders, the proposed Directive would also set out essential provisions for the supervision of reinsurance, which all Member States would need to apply.

Whereas in the Member States insurance undertakings of different legal forms are in competition with each other; whereas undertakings engaged in the business of direct insurance customarily engage in the business of reinsurance as well and are therefore in competition with specialist reinsurance undertakings; whereas it is therefore appropriate not to confine coordination to the legal forms covered by Directive 78/660/EEC, but to choose a scope that corresponds to that of Council Directive 73/239/EEC of 24 July 1973 on the coordination of laws, regulations and administrative provisions relating to the taking up and pursuit of the business of direct insurance other than life assurance ...[+++] (7), as last amended by Directive 90/618/EEC (8), and to that of Council Directive 79/267/EEC of 5 March 1979 on the coordination of laws, regulations and administrative provisions relating to the taking up and pursuit of the business of direct life assurance (1), as last amended by Directive 90/619/EEC (2), but which also includes certain undertakings that are excluded from the scope of those Directives and companies and firms which are reinsurance undertakings;

The Commission has approved two acquisitions to be made by Employers Reinsurance Corporation (USA), a member of the General Electric group and a leading supplier of reinsurance.

Merger RegulationThe Commission has approved the acquisition of the German reinsurance company Kölnische Rückversicherungs-Gesellschaft AG (KR) by the American insurance and reinsurance company General Re Corporation (GR).