By virtue of

– section 217 sentence 1 no. 6 in conjunction with sentences 3 and 4, also in conjunction with section 219 (1) of the Insurance Supervision Act (Versicherungsaufsichtsgesetz VAG) of 1 April 2015 (Federal Law Gazette I p. 434), in consultation with the Federal Ministry of Justice and Consumer Protection, and
– section 235 (1) sentence 1 no. 10 in conjunction with subsection (2) sentence 2 of the Insurance Supervision Act of 1 April 2015 (Federal Law Gazette I p. 434),

the Federal Ministry of Finance issues the following Regulation:

Section 1 Scope, Investment Principles and Investment Management

(1) This Regulation applies to the investment of guarantee assets of

(a) Pensionskassen within the meaning of section 232 of the Insurance Supervision Act,
(b) funeral expenses funds within the meaning of section 218 of the Insurance Supervision Act, and
(c) small insurance undertakings within the meaning of section 211 of the Insurance Supervision Act.

(2) The insurance undertakings mentioned under subsection (1) no. 1 must comply with the general investment principles set out in section 124 (1) of the Insurance Supervision Act when investing guarantee assets. The insurance undertakings mentioned under subsection (1) nos. 2 and 3 must comply with the general investment principles under section 215 (1) of the Insurance Supervision Act when investing guarantee assets.

(3) The insurance undertakings mentioned under subsection (1) must ensure that they comply with the general investment principles applicable to them and with the following specific provisions of this Regulation by means of qualified investment management, appropriate internal capital investment principles and control procedures, a strategic and tactical investment policy and other organisational measures. These include, in particular, the monitoring of all risks associated with the asset and liability side of the balance sheet and the relation of both sides to each other and the testing of the resilience of the investment portfolio to specific capital market scenarios and investment conditions.

(4) The insurance undertakings mentioned under subsection (1) must ensure that they are able at any given time to respond adequately to changes in economic and legal circumstances, in particular developments in the financial and real estate markets, catastrophic events involving major losses or other irregular market circumstances. When investing guarantee assets in a state that is not a member state of the European Economic Area (EEA) or a full member state of the Organisation for Economic Co-operation and Development (OECD), any legal risks associated with the investment must be examined comprehensively and with particular care.

(5) Precise stipulations relating to the provisions of this Regulation and the disclosure and reporting obligations of the insurance undertakings mentioned under subsection (1) are set out by the Supervisory Authority.

Section 2 Forms of Investment

(1) The guarantee assets may be invested in

1. debts secured by a charge over land or land rights located in a member state of the EEA or in a full member state of the OECD, if the land charge meets the requirements of sections 14 and 16 (1) to (3) of the Pfandbrief Act (Pfandbriefgesetz PfandBG), and in the case of heritable building rights additionally meets the requirements of section 13 (2) of the Pfandbrief Act or if the land charge complies with the relevant regulations of that other state;

2. debts

(a) sufficiently secured through cash payments or for which deposits or securities in accordance with section 200 (1) to (3) of the Investment Code (Kapitalanlagegesetzbuch – KAGB) or equivalent regulations of another member state of the EEA or a full member state of the OECD have been pledged or transferred as collateral (securities loans),
(b) for which bonds or debt securities as referred to in nos. 6 or 7 below have been pledged or transferred as collateral, or
(c) composed of liquid receivables of the primary insurer from a reinsurer, less any liabilities arising out of premium receivables of reinsurers on primary insurers;

3. loans

(a) to the Federal Republic of Germany, its Länder, municipalities and associations of municipalities,
(b) to another member state of the EEA or a full member state of the OECD,
(c) to regional governments and local authorities of another member state of the EEA or a full member state of the OECD,
(d) to an international organisation of which the Federal Republic of Germany is a full member,
(e) whose interest payment and repayment have been fully guaranteed by one of the bodies mentioned under (a), (b) or (d) above, by an eligible credit institution within the meaning of 18 (b) below, by a public-law credit institution within the meaning of 18 (c) below or by a multilateral development bank within the meaning of 18 (d) below, or loans which have been insured against default by an insurance undertaking within the meaning of Article 14 of Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) (OJ L 335 of 17 December 2009, p. 1), last amended by Directive 2014/51/EU (OJ L 153 of 22 May 2014, p. 1), or
(f) to liquidation institutions (Abwicklungsanstalten) within the meaning of section 8a (1) of the Financial-Market Stabilisation Fund Act (Finanzmarktstabilisierungsfondsgesetz – FMStFG) to the extent that a body specified under (a), (b) or (d) above has assumed an obligation to compensate losses within the meaning of section 8a (4) sentence 1 no. 1 sentence 1 and no. 1a of the Financial-Market Stabilisation Fund Act;

4. loans

(a) to undertakings domiciled in a member state of the EEA or in a full member state of the OECD, excluding credit institutions, if on the basis of the past and expected future development of the net assets and results of operations of the undertaking the contractual interest payment and repayment appear to be guaranteed and if the loans are adequately secured

(b) to undertakings within the meaning of no. 14 (a) in which the insurance undertaking is a shareholder (shareholder loans), if the loans comply with the requirements of section 240 (1) and (2) no. 1 of the KAGB;
(c) to other undertakings domiciled in a member state of the EEA or in a full member state of the OECD, excluding credit institutions, if these loans are sufficiently secured by a property lien or under the law of obligations;

5. advance payments or loans granted by the insurance undertaking on its own insurance policies up to an amount equal to the surrender value (policy loans);

6. mortgage bonds (Pfandbriefe), municipal bonds and other debt securities of credit institutions domiciled in a member state of the EEA or in a full member state of the OECD, if the credit institutions are subject to special public supervision on the basis of legal provisions to protect the holders of such debt securities and the funds raised by issuing the debt securities are invested in accordance with the law in assets which provide adequate cover for the resulting liabilities during the entire term of the debt securities, and which in the event of default of the issuer are intended to be applied with priority to repayments falling due and to the payment of interest (special cover pool existing by virtue of law);

7. debt securities

(a) which are admitted to trading on a stock exchange or admitted to another organised market or included in such market (organised market),
(b) whose inclusion in an organised market is to be applied for in accordance with the terms and conditions of the issue, provided that the inclusion of such debt securities occurs within one year of their issue or
(c) which are admitted to trading on a stock exchange in a state outside the EEA or admitted to another organised market in such state or included in such market;

8. other debt securities;

9. receivables due from subordinated liabilities or from participation rights of undertakings that are

(a) domiciled in a member state of the EEA or in a full member state of the OECD or
(b) admitted to trading on a stock exchange or admitted to another organised market or included in such market, or admitted to trading on a stock exchange in a state outside the EEA or admitted to another organised market in such state or included in such market;

10. asset-backed securities (structured financial instruments secured by receivables) and credit linked notes (financial instruments linked to credit risks) and other investments as referred to in section 2 (1) whose income or repayment is linked to credit risks or which are used to transfer third-party credit risks

(a) of undertakings domiciled in a member state of the EEA or in a full member state of the OECD or
(b) admitted to trading on a stock exchange or admitted to another organised market or included in such market, or admitted to trading on a stock exchange in a state outside the EEA or admitted to another organised market in such state or included in such market;

11. debts which are entered in the debt register of the Federal Republic of Germany or one of its Länder or in any similar list of another member state of the EEA or a full member state of the OECD, or whose entry in the debt register occurs within one year of their issue, as well as liquidity instruments within the meaning of section 42 (1) of the Bundesbank Act (Gesetz über die Deutsche Bundesbank BBankG);

12. fully paid-up shares which are admitted to trading on a stock exchange or admitted to another organised market or included in such market, or admitted to trading on a stock exchange in a state outside the EEA or admitted to another organised market in such state or included in such market;

13. participating interests in the form of

(a) other fully paid-up shares, shares in a limited liability company (GmbH), interests in a limited partnership (KG) or silent partnership contributions, each of which as defined in the German Commercial Code (Handelsgesetzbuch – HGB), provided that the undertaking has a business model in place, bears entrepreneurial risks and

(b) units and shares in closed-ended alternative investment funds (AIF) within the meaning of section 1 (3) of the KAGB,

14. real estate in the form of

(a) developed land, land in the process of development or soon to be developed and located in a member state of the EEA or in a full member state of the OECD, land rights located in that state and participating interests in an undertaking the sole object of which is the acquisition, development and management of land or land rights located in such state; the insurance undertaking must verify on the basis of the opinion of a sworn expert or in a similar way whether the purchase price is appropriate; notwithstanding the provisions of section 125 (3) sentence 4 of the Insurance Supervision Act, any existing land charges are to be deducted from such investments;
(b) shares in REITs or in a similar incorporated company domiciled in a member state of the EEA or in a full member state of the OECD which meet the requirements of the REIT Act (REIT-Gesetz REITG) or equivalent provisions of that other state;
(c) units and shares in domestic special AIFs within the meaning of section 1 (6) of the KAGB or shares and units in domestic closed-ended retail AIFs within the meaning of section 1 (3) in conjunction with subsection (6) sentence 2 of the KAGB,

15. units and investment shares in domestic open-ended retail collective investment undertakings within the meaning of section 1 (2) of the KAGB (UCITS) as well as units and shares in similar EU collective investment undertakings within the meaning of section 1 (8) of the KAGB as long as these assets are managed by a UCITS management company domiciled in a member state of the EEA;

16. units and investment shares in domestic open-ended special AIFs within the meaning of section 1 (6) sentence 1 of the KAGB,

(a) which fulfil the conditions of section 284 of the KAGB and are not covered by no. 14 (c) and
(b) which are managed by an asset management company authoised pursuant to section 20 (1) of the KAGB or by a management company domiciled in a member state of the EEA, which, for the purposes of investor protection, is subject to public supervision and is authorised in a manner similar to the authorisation in accordance with section 20 (1) of the KAGB, as well as shares and units in EU investment funds within the meaning of section 1 (8) of the KAGB in the form of open-ended special AIFs which fulfil the requirements of (a) in a similar manner and are managed by a company within the meaning of (b);

17. units and shares in domestic investment funds within the meaning of section 1 (1) of the KAGB,

(a) which are not retail investment funds in the form of real estate funds within the meaning of sections 230 to 260 of the KAGB,
(b) which are not covered by no. 13 (b), no. 14 (c), no. 15 or no. 16 and
(c) which are managed by an asset management company authorised in accordance with to section 20 (1) of the KAGB or by a management company domiciled in a member state of the EEA, which, for the purposes of investor protection, is subject to public supervision and is authorised in a manner similar to the authorisation in accordance with section 20 (1) of the KAGB, as well as shares and units in EU investment funds within the meaning of section 1 (8) of the KAGB that fulfil the requirements of (a) in a similar manner and are not covered by the investment forms described in (b) and are managed by a company within the meaning of (c), and

18. deposits with

(a) the European Central Bank or the central bank of a member state of the EEA or a full member state of the OECD,
(b) a credit institution domiciled in a member state of the EEA which is subject to the requirements of Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC (OJ L 176 of 27 June 2013, p. 338), last amended by Directive 2014/59/EU (OJ L 173 of 12 June 2014, p. 190), if the credit institution gives the insurance undertaking written confirmation of its compliance with the regulations on equity capital and liquidity of credit institutions applicable at its domicile (eligible credit institution),
(c) public-law credit institutions exempted from the application of Directive 2013/36/EU under Article 2(5) thereof,
(d) multilateral development banks which have been assigned a zero per cent risk weight in accordance with Article 117(2) of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 646/2012 (OJ L 176 of 27 June 2013, p. 1), last amended by Commission Delegated Regulation (EU) 2015/62 (OJ L 11 of 17 January 2015, p. 37).

Credit balances on current accounts must also be deemed investments.

(2) In accordance with section 3 (2) no. 4, the guarantee assets may also be invested in investments which are not referred to in subsection (1) above, do not meet the requirements under subsection (1) or exceed the limits stipulated in section 3 (2) nos. 1 to 3 and subsections (3) to (5) (opening clause).

(3) The supervisory authority may permit the insurance undertaking to invest in assets which are not referred to in the preceding subsections or do not meet the requirements of the preceding subsections and to exceed the limits stipulated in section 3 (2) nos. 1 to 3 and subsections (3) to (5) as well as section 4 (1) to (4), provided that the interests of the insured are not thereby impaired.

(4) The following direct and indirect investments are prohibited:

1. direct and indirect investments in consumer credits, working capital loans, movable goods or claims on movable goods and in intangibles,
2. direct and indirect investments in participating interests in group companies of the insurance undertaking within the meaning of section 18 of the Stock Corporation Act (Aktiengesetz – AktG), with the exception of undertakings in which the insurance undertaking is invested only passively, without exerting any influence on their operating business or taking part in the development of ongoing projects, and
3. direct and indirect investments in companies to which the insurance undertaking or its group companies within the meaning of section 18 of the Stock Corporation Act have outsourced their business operations in whole or in part (section 7 no. 2 of the Insurance Supervision Act) or which on behalf of the insurance undertaking or its group companies within the meaning of section 18 of the Stock Corporation Act carry out activities directly connected with insurance business, if the business volume of such companies is essentially determined by the object of the outsourcing or the provision of services.

Section 3 Mix

(1) Direct and indirect investments as referred to in section 2 (1) no. 2 (a) and no. 8, as well as investments in debtors domiciled in a state outside the EEA, for which it is not assured that they are covered by the prerogative of section 315 of the Insurance Supervision Act, are to be limited to a prudent level.

(2) Investments in the individual forms of investment are restricted as follows:

1. direct and indirect investments as referred to in section 2 (1) no. 10 may not exceed 7.5 per cent of the guarantee assets;
2. direct and indirect investments as referred to in section 2 (1) no. 17, assets held under section 2 (1) no. 16 which cannot be attributed to any items on the list of investments of section 2 (1), as well as other direct and indirect investments as referred to in section 2 (1) above whose income or repayment is linked to hedge fund or commodity risks may not exceed 7.5 per cent of the guarantee assets;
3. direct and indirect investments as referred to in section 2 (1) no. 4 (c) may not exceed 5 per cent of the guarantee assets;
4. investments made under the opening clause under section 2 (2) are restricted to 5 per cent of the guarantee assets; if the interests of the policyholders are sufficiently safeguarded, this investment limit may be raised, subject to the approval of the supervisory authority, to 10 per cent of the guarantee assets; this is without prejudice to the limit of 1 per cent of the guarantee assets stipulated in section 4 (4).

(3) The share of direct and indirect investments as referred to in section 2 (1) nos. 9, 12 and 13 and the investments subject to the percentages stipulated in subsection (2) nos. 2 and 3 above taken together may not exceed 35 per cent of the guarantee assets. Investments as referred to in section 2 (1) no. 2 (a) are also to be counted towards this percentage to the extent that the securities loans involve investments as referred to in section 2 (1) no. 12. Within the percentage stipulated in sentence 1 of this subsection, the share of the assets as referred to in section 2 (1) no. 9 (a) and no. 13 that are not admitted to trading on a stock exchange and not admitted to another organised market or included in such market, and not admitted to trading on a stock exchange in a state outside the EEA or admitted to another organised market in such state or included in such market, may not exceed 15 per cent of the guarantee assets.

(4) In the case of investments in units and shares in investment funds as referred to in section 2 (1) nos. 15 and 16 which involve more than the simple potential market risk due to their use of derivatives in accordance with section 197 (2) of the KAGB or equivalent regulations of another member state of the EEA, the increased potential market risk must be counted towards the percentage stipulated in subsection (3) sentence 1. In the event that the increased potential market risk cannot be calculated in a timely manner, the maximum admissible amount must be taken as the value.

(5) The proportion of direct and indirect investments in loans as referred to in section 2 (1) no. 4 (b), real estate as referred to in section 2 (1) no. 14 (a), (b) and (c) and real estate held through investment funds as referred to in section 2 (1) no. 16 and fulfilling the requirements of section 2 (1) no. 14 (c) may not exceed 25 per cent of the guarantee assets.

(6) The supervisory authority may reduce the proportion of direct and indirect investments as referred to in section 2 (1) no. 2 (a), nos. 9, 12 and 13 and investments subject to the percentages stipulated in subsection (2) nos. 2 and 3 to 10 per cent of the guarantee assets if this is necessary to safeguard the interests of the insured. The supervisory authority is empowered to do likewise in the case set out in section 135 (1) first alternative of the Insurance Supervision Act.

Section 4 Diversification

(1) Subject to the provisions of subsection (2) below, all investments in one and the same debtor may not exceed 5 per cent of the guarantee assets. The investments in the ten largest debtors in an open-ended investment fund as referred to in section 2 (1) nos. 15 to 17 must be counted towards this percentage and the percentages stipulated in subsections (2), (3) and (4) below. If a debtor has assumed warranty in relation to the insurance undertaking for liabilities of a third party, the liability from such warranty must also be taken into account in calculating the percentage set out in sentence 1. Investments in units or shares in an open-ended investment fund as referred to in section 2 (1) nos. 15, 16 and 17 are not to be deemed investments in one and the same debtor if the investment fund itself is sufficiently diversified.

(2) In derogation from subsection (1), a percentage of 30 per cent of the guarantee assets applies to investments in one and the same debtor as described in section 2 (1) no. 3 (a), (b) or (d). In derogation from subsection (1), a percentage of 15 per cent of the guarantee assets applies to the following investments:

1. investments in debt securities put into circulation by one and the same credit institution domiciled in a member state of the EEA or in a full member state of the OECD, if these debt securities are secured through a special cover pool in accordance with the law,
2. investments with one and the same eligible credit institution as referred to in section 2 (1) no. 18 (b) if and to the extent that the investments are in fact secured by a comprehensive bank guarantee of the credit institution or a deposit guarantee system; the exclusion in the articles of association of an entitlement to payment under the deposit guarantee scheme does not rule out the existence of such guarantee,
3. investments with one and the same public-law credit institution as referred to in section 2 (1) no. 18 (c) and
4. investments with one and the same multilateral development bank as referred to in section 2 (1) no. 18 (d).

(3) For the purpose of calculating the percentages as referred to in subsections (1), (2) and (4), investments in the debtor and its group companies within the meaning of section 18 of the Stock Corporation Act are to be aggregated. In derogation from subsection (1) sentence 1, a reduced diversification percentage of 3 per cent of the guarantee assets applies to investments in group companies, with the exception of liabilities arising from reinsurance relationships within the meaning of section 2 (1) no. 2 (b).

(4) In derogation from subsection (1), investments as referred to in section 2 (1) nos. 9, 12 and 13 in one and the same undertaking and units and shares in a closed-ended investment fund as referred to in section 2 (1) no. 17 may, in the aggregate, not exceed 1 per cent of the guarantee assets. In the case of shares in an undertaking whose sole object is the holding of the investments set out in sentence 1 above in other undertakings, sentence 1 applies to the indirect investments of the insurance undertaking in those other undertakings.

(5) Up to 10 per cent of the guarantee assets may be invested in a single item of land or a land right or in participating interests in an undertaking whose sole object is the acquisition, development and management of land or land rights located in a member state of the EEA or in a full member state of the OECD, or invested in units or shares in an investment fund as referred to in section 2 (1) no. 14 (c). The same limit applies to several legally independent items of land taken together if they form an economic unit.

(6) Investments by Pensionskassen in a sponsoring company within the meaning of section 7 (1) sentence 2 no. 2 of the Occupational Pensions Act (Betriebsrentengesetz – BetrAVG) and its group companies may not exceed 5 per cent of total assets. In the event that a Pensionskasse is sponsored by more than two companies, investments in these companies must be limited to no more than 15 per cent of total assets; sentence 1 remains unaffected.

Section 5 Matching Rules

In accordance with the matching rules in the Annex to this Regulation, the guarantee assets are to be invested in assets denominated in the same currency in which the terms of the insurance contracts are to be met. In this respect,

1. land and land rights are deemed to be denominated in the currency of the state in which they are located,
2. shares and units are deemed to be denominated in the currency in which they are included in an organised market, and
3. shares and units not included in an organised market are deemed to be denominated in the currency of the state in which the issuer of the securities or units is domiciled.

Section 6 Transitional Provisions

(1) Investments made before or on 30 June 2010 and held in guarantee assets since then as a result of section 6 (1) of the Investment Regulation of 20 December 2001 (Federal Law Gazette I, p. 3913) in the version of the Regulation of 3 March 2015 (Federal Law Gazette I, p. 188) may remain part of the guarantee assets until maturity.
(2) Units in retail investment funds in the form of real estate funds within the meaning of sections 230 to 260 of the KAGB which were acquired before 8 April 2011, as well as units in similar foreign investment funds which were acquired before 8 April 2011, may remain part of the guarantee assets and be attributed to the investments as referred to in section 2 (1) no. 14 (c).
(3) Investments made before or on 7 March 2015 and held in guarantee assets since then as a result of section 6 (3) of the Investment Regulation of 20 December 2001 (Federal Law Gazette I p. 3913) in the version of the Regulation of 3 March 2015 (Federal Law Gazette I, p. 188) may remain part of the guarantee assets until maturity and be attributed to the investments under section 2 (1) no. 13 (b).

Section 7 Entry into Force

This Regulation enters into force on the day after its promulgation.

Annex (to Section 5 Sentence 1)

Matching Rules

1. Where the cover provided by an insurance contract is denominated in a particular currency, the insurer's commitments are to be considered to be payable in that currency.

2. Where the cover provided by a contract is not denominated in a particular currency, the insurer's commitments must be considered to be payable in the currency of the country in which the risk is situated. The currency in which the premium is denominated can be used if there are special circumstances that justify this, particularly if it is already likely from the moment the contract is entered into that a claim will be paid in this currency.

3. The currency which the insurer in accordance with experience acquired considers to be the one in which it must most likely provide cover or, in the absence of such experience, the currency of the country in which it is established, may, if there are no special reasons against such a choice, be taken as a basis for the following risks:

a) for contracts covering risks classified under classes 4 to 7 and 11 to 13 (producers' liability only) of Annex 1 to the Insurance Supervision Act,
b) for contracts covering the risks classified under other classes where, in accordance with the nature of the risks, the cover is to be provided in a currency other than the currency which would result from the application of the above rules.

4. Where a claim has been reported to an insurer and is payable in a currency other than the currency resulting from application of the above rules, the insurer's commitments must be considered to be payable in that currency, particularly if it is the currency which has been determined by court judgement or by agreement between the insurer and the insured as the currency in which the compensation is to be paid by the insurer.

5. Where a claim is assessed in a currency which is known to the insurer in advance but which is different from the currency resulting from application of the above rules, the insurer may consider its commitments to be payable in that currency.

6. The guarantee assets need not be invested in assets denominated in the currency in which the insurer's commitments are payable if

a) it is not the currency of a member state of the European Community or another signatory to the EEA Agreement and if it is not suitable for investment, in particular because of transfer restrictions,
b) the guarantee assets to be invested do not exceed 20 per cent, or 30 per cent in the case of Pensionskassen, of the commitments payable in a particular currency, or
c) the application of the rules under nos. 1 to 5 above would result in the undertaking being obliged to hold assets in a certain currency that amount to no more than 7 per cent of the undertaking’s assets existing in other currencies.

7. If under the above rules, the guarantee assets are to be invested in assets denominated in the currency of a member state of the European Community whose currency is not the euro or that of another EEA signatory state, up to 50 per cent of the investment may be made in assets denominated in euro, to the extent that this is in line with the care of a prudent businessman.