(1) An authorised reinsurance undertaking established in the State that is underwriting credit insurance risks shall establish and maintain an equalisation reserve to offset any technical deficit or above-average claims ratio arising during a financial year of the undertaking in relation to those risks.
(2) The undertaking shall calculate its equalisation reserve in accordance with whichever of the methods set out in point D of the Annex to the Non-life Insurance Business Directive as is chosen by the undertaking, with the authorisation of the Bank.
(3) The undertaking's equalisation reserve is to be disregarded for the purpose of calculating its required solvency margin, up to the amount calculated in accordance with the chosen method.
(4) Paragraph (1) does not apply to an authorised reinsurance undertaking for which the premiums or contributions receivable in respect of its credit insurance business are less than whichever is the smaller of the following amounts:
(a) 4 per cent of t
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