(1) When calculating, in accordance with Regulation 237, the group solvency of an insurance undertaking or reinsurance undertaking which is a participating undertaking in a third-country insurance undertaking or third-country reinsurance undertaking, the latter shall, solely for the purposes of that calculation, be treated as a related insurance undertaking or reinsurance undertaking.

(2) However, if the law of the third country in which that undertaking has its head office -

(a) requires the undertaking to be licensed, registered or otherwise authorised, and

(b) imposes on it a solvency regime at least equivalent to that laid down in Regulations 82 to 143,

the Bank, where it is group supervisor, shall permit the calculation referred to in paragraph (1) to take into account, as regards that undertaking, the Solvency Capital Requirement and the own funds eligible to satisfy that requirement as prescribed by that law unless, in the opinion of the Bank, there is a significant change to the law of that third country and it would not be in the interests of policyholders to do so.