Solvency II Art.77b: Art. 77b Apply the matching adjustment only with approval and while every condition holds

What does Art.77b require?

The matching adjustment may be used for a portfolio of life (or annuity) obligations only with prior supervisory approval, where an assigned portfolio of fixed cash flow assets replicating the obligations' cash flows in the same currency is identified, organised and managed separately and ring-fenced, the obligations give rise to no future premiums, carry only longevity, expense, revision and (limited) mortality risk, include no options beyond a restricted surrender option, and are not split. Once used it cannot be abandoned; if conditions cease the supervisor must be told immediately and compliance restored within two months, failing which the adjustment stops for 24 months. It cannot be combined with the volatility adjustment or the interest rate transitional.