Annexes I and II to Directive 98/78/EC shall be replaced by the following:
'ANNEX I CALCULATION OF THE ADJUSTED SOLVENCY OF INSURANCE UNDERTAKINGS AND REINSURANCE UNDERTAKINGS
1. CHOICE OF CALCULATION METHOD AND GENERAL PRINCIPLES
A. Member States shall provide that the calculation of the adjusted solvency of insurance undertakings and reinsurance undertakings referred to in Article 2(1) shall be carried out according to one of the methods described in point 3. A Member State may, however, provide for the competent authorities to authorise or impose the application of a method set out in point 3 other than that chosen by the Member State.
B. Proportionality
The calculation of the adjusted solvency of an insurance undertaking or a reinsurance undertaking shall take account of the proportional share held by the participating undertaking in its related undertakings.
'Proportional share' means either, where method 1 or method 2 described in point 3 is used, the proportion of the subsc