(1) Subject to sub article (2) of this Article, Annex II and Article 16 (2) of these Regulations shall apply to an undertaking to which this Article applies.
(2) In calculating a solvency margin for the purposes of this Article, account shall be taken only of the premiums or contributions and claims pertaining to the business effected by the insurance undertaking in the State or in another Member State, as appropriate.
(3) The assets representing the solvency margin shall be retained in the State up to the amount of the guarantee fund required by Part B of Annex II to these Regulations and any excess shall be retained either in the State or in another Member State.