In connection with the application of Art. 73, Art. 75, Art. 76, para. 1, Art. 77, para. 1 and Art. 156, para. 1 of Ordinance No. 44 of 20.10.2011 on the requirements for the activity of collective investment schemes, management companies, national investment funds and alternative investment fund managers, in connection with Art. 64, para. 2 and Art. 92, para. 1 and 2 of the Collective Investment Schemes and Other Undertakings for Collective Investments Act, updated templates of reports to the financial statements of management companies and collective investment schemes have been approved, as well as a table for presenting summary information on the declared issue values and redemption prices of units of collective investment schemes, together with instructions to it.

The current templates of reports and table are published in the section “Administrative documents”, subsection “Forms and templates”, „Investment activity“.

Pursuant to Art. 86, para. 11 of Ordinance No. 53 of 23.12.2016 on the requirements for reporting, valuation of assets and liabilities and the formation of technical reserves of insurers, reinsurers and the Guarantee Fund, the Financial Supervision Commission published the maximum amount of technical interest for calculating premiums and reserves for the period from 1 January 2022 to 31 March 2022. Data on the maximum amount of technical interest can be found in the section “Insurance Activity”, “Statistics”, “Life Insurance”.

The package of reports, statements and appendices in connection with the submission to the Financial Supervision Commission of the periodic reports of the insurance brokers as of 31.12.2021, on the grounds of Art. 311, para. 3, item 2, in connection with para. 4 of the Insurance Code has been updated.

In connection with the above, the completion of the above reports and statements, and their submission through the electronic portal of the FSC, must begin after downloading the mandatory updated format (version 31.12.2021), published on the FSC website at:

www.fsc.bg, section “Administrative documents”, subsection “Forms and templates”, “Insurance market“.

IMPORTANT:

Attachments must meet the following conditions:

• The main file containing the reference package according to Appendices 2.1-2.8 and 3.1-3.4 with basic information must be in .xls format (Microsoft Excel 2003);
• The content of the main file with basic information must be filled in according to the templates approved by the Financial Supervision Commission, observing all rules for data validity (these rules are not part of this instruction and can be downloaded from the Financial Supervision Commission website) ;
• The name of the main file with basic information must be formatted according to the rules set by the Financial Supervision Commission;
• For Appendix No. 2.4, Appendix No. 2.8, Appendix No. 3.2 and Appendix No. 3.4 of the main file with basic information contained in the reference package, the Note section should indicate the country in which the insurer / reinsurer has its registered office and the territory on which the risk under the concluded insurance / reinsurance contract is located
• Appendix No. 1 shall be filled in according to the attached template contained in the reference package, the information must be in .xls format;
• The Insurance Code stipulates an obligation for insurance brokers to submit information on the ongoing professional training and development of the persons under Art. 303, para. 2 and 3 and Art. 304, para. 1 of the IC within the year. The reports shall be submitted to the Commission annually by January 31 of the following year. For this purpose, Appendix No. 3 in .xls format should be filled in, according to the attached template contained in the reference package;
• Files must be signed with a universal electronic signature in p7m or p7s format (PKCS # 7), and encryption should NOT be used when signing;
• The signature on the files must belong to the same employee who logged in the system.

The presented reports and statements of insurers and reinsurers in non-life insurance and life insurance, according to Ordinance No. 53 of 23.12.2016 and presented quarterly quantitative templates, according to Regulation (EU) 2015/2450 under Art. 304, paragraph 1, letter „d“ of Regulation (EU) 2015/35 at the end of the third quarter of 2021 are summarized and published on the FSC website – www.fsc.bg, section “Insurance Activity“, “Statistics” – 2021.

As a continuation of the consistent policy pursued by the Financial Supervision Commission with regard to innovation through the new Financial Innovation Monitoring Strategy for the period 2021-2024, the FSC has started an active partnership with the Bulgarian Fintech Association (BFA) and representatives of business organizations with expressed interest in stimulating the development of financial innovations in the non-banking sector.

At a special meeting initiated by the Commission, the main lines of action were outlined and concrete steps were set out to support the development of innovative solutions in the non-banking financial sector in Bulgaria:

 Development of financial literacy of consumers of financial services and investors through the participation of experts from the Commission in master’s programs and training innovation camps with students.

 Participation of regulator representatives in local and international webinars of BFA.

 Regular meetings with fintech companies to provide feedback on the assessment of potential risks to both the market and consumers, as well as potential actions and measures to minimize the risks and maximize the benefits of growing interest in innovative financial products and / or technologies, while in compliance with regulatory requirements.

 Promoting and encouraging the use of the already operational Innovation Hub, which provides quick and easy access to information for start-ups and on issues and cases of a regulatory and legal nature.

 Research and preparation for the introduction of a regulatory Sandbox for the non-banking financial sector which will allow FinTech companies to test their products in a real and secure environment, and the supervisor to monitor this process to optimally adapt regulations to digital finance.

 Joint discussion and adaptation of the new regulatory framework for crowdfunding, which is considered as an established form of alternative financing for start-ups and SMEs. This task will be related to the supervision of a digital platform designed to connect or facilitate the connection of potential investors or lenders with companies seeking financing.

In pursuance of the Financial Innovation Monitoring Strategy for the period 2021-2024, the Financial Supervision Commission, at the invitation of the Bulgarian National Bank, took part in an organized online event by the National Bank of Lithuania on „Regulatory sandbox“. The meeting focused on sharing good practices in building innovative financial products. In order to minimize the risks and build well-functioning services in a real business environment, through the much-needed reliable and secure support from the relevant national supervisory authority.

The FSC continues to build on what has been achieved so far in terms of creating an innovation-friendly business environment, with an emphasis on the need for collaboration between regulators and business to create a developed fintech ecosystem.

The event program for 2022 builds on the achievements of the Financial Supervision Commission so far in support of fintech solutions and their entry into everyday life.

The Financial Supervision Commission initiates proceedings for the issuance of a general administrative act – Decision for determining the amount of minimum percentages, according to Art. 91, para. 3, item 2 of Ordinance No. 53 of 23.12.2016 on the requirements for reporting, valuation of assets and liabilities and the formation of technical reserves of insurers, reinsurers and the Guarantee Fund (Ordinance No. 53), as well as the period for their application. The draft act can be found on the FSC website in the section “Public consultations” (available in BG version).

Manner of submitting and explaining an approved report on commercial real estate owned by special purpose vehicles securitizing real estate on a quarterly and annual basis on an individual basis according to a template determined by the Deputy Chairperson of the FSC, head of the Investment Supervision Department.

In connection with an approved report on commercial real estate (CRE) owned by special purpose vehicles (SPVs) securitizing real estate, on a quarterly and annual basis on an individual basis in connection with the implementation of Recommendations C and D of the Recommendation of the European Systemic Risk Board of 21 March 2019 (ESRB / 2019/3) according to the template determined by the Deputy Chairperson of the FSC, Head of the Investment Supervision Department, to the financial statements and public notifications of SPVs it is necessary to take into account the following:

The information in column No. 1 of the report on CRE owned by the SPV is filled in by explicitly individualizing the respective property owned by the SPV (indicating location, type – land, building, etc.), and “owned by CRE 1, CRE2, etc. n.” is described for the purpose of sequentially listing the relevant CREs. Information on the CRE owned by the specialized company should be provided on a quarterly and annual basis, taking into account the requirement to report the type and location of the property by balances and flows specifying direct and indirect ownership of the CRE according to Form B “Indicators for financial system exposures”, respectively“ Exposure indicators” to Annex III “Indicative models for indicators for the commercial real estate sector “of the Recommendation. According to item 5 “Assessment of the exposures of the financial system to commercial real estate” of Annex V “Guidelines on definitions and indicators” of the Recommendation, investments may cover both direct ownership of CREs by SPVs, e.g. by virtue of the right of ownership over the CRE, as well as the indirect ownership of the CRE in the line of property which the SPV owns from the capital of a specialized company established or acquired by it, when these CREs are owned by this specialized company. The column “Book value of those received during the period in BGN thousand” indicates the value of the acquisition of CRE which was acquired after the beginning of the period.

It is necessary to indicate all CREs even if they do not generate rental income, respectively construction has not started, given the requirement for subsequent evaluation of CRE according to Art. 23 of the Law on Special Purpose Vehicles and Securitization Companies, respectively whether there is a change in the value of the property.

The report on the CREs held by a SPV should be disclosed together with the financial statements and notifications of the companies in the respective order.

Diana Yordanova, Deputy Chairperson of the FSC, Head of the Social Insurance Supervision Department, issued a decision approving the technical interest rate and biometric mortality tables to be applied in the calculation of pension reserves as of 31.12.2021 by the pension insurance companies who manage a supplementary voluntary pension insurance fund.

Decision No. 918 – ПОД of 20.12.2021 can be found in the section “Administrative documents”, and the annexes to it – in the section “Administrative documents”, “Forms and templates”, “Social Insurance activity”, 2021 (available only in BG version).

For the period from 01.11.2021 to 30.11.2021 the FSC received notifications from the competent authorities of Member States regarding the intention of 80 (eighty) insurers and insurance intermediaries based in other EU Member States to operate (entry or termination of the notification) on the territory of the Republic of Bulgaria under the terms of the freedom to provide services, including notifications for extension of the scope of the performed activity or provision of information for the change of addresses, representatives and other circumstances.

Notifications have been received from the national competent authorities of the EU Member States regarding the intention of 5 (five) insurance companies based in their territory to operate on the territory of the Republic of Bulgaria under the terms of freedom to provide services; only 4 (four) companies are registered so far, because 1 (one) of the notifications is expected to provide additional information. As of the end of November 2021, the number of insurance companies based in other EU and EEA Member States which intend to operate in Bulgaria under the principle of freedom to provide services, increased to 418 (six hundred and eighteen).

For the period from 01.11.2021 to 30.11.2021 the FSC received notifications from the competent supervisory authorities of EU Member States regarding the intention of 17 (seventeen) insurance intermediaries based in EU Member States to carry out insurance intermediation activities on the territory of the Republic of Bulgaria under the terms of the freedom to provide services.

Notifications from competent authorities of the EU Member States regarding the intention to suspend the activity of insurance intermediation on the territory of the Republic of Bulgaria under the terms of freedom to provide services for the period 01.11.2021 – 30.11.2021 have been received for 46 (forty-six) insurance intermediaries. As a result, as of 30.11.2021, the number of insurance intermediaries based in EU Member States that have stated their intention to carry out cross-border insurance intermediation activities in Bulgaria decreased to 2,189 (two thousand one hundred and eighty-nine), while in October they were 2218.

For the period 01.11.2021 – 30.11.2021 the FSC has not sent notifications to the national competent authorities of the EU Member States regarding the intention or withdrawal of the intention of the insurance companies based in the territory of the Republic of Bulgaria to carry out cross-border activity.

As of the end of November 2021, the total number of local insurance companies which have stated their intention to carry out insurance activities on the territory of other Member States of the EU and the EEA under the terms of freedom to provide services remains 17 (seventeen).

During the period the FSC has sent 1 (one) notification to the competent authorities of EU Member State regarding the intention of an insurance broker based in the Republic of Bulgaria to carry out cross-border insurance intermediation in their territory under the terms of the freedom to provide services.

The total number of insurance intermediaries based in the Republic of Bulgaria which declared their intention to carry out insurance intermediation activities in the territory of EU Member States under the terms of freedom to provide services or the right of establishment, increased to 54 (fifty four) intermediaries.

The updated lists of notifications are available on the FSC website in the section “Supervised entities” – “Notifications”.

The European Securities and Markets Authority (ESMA) has published its annual Public Statement setting out European common enforcement priorities for the 2021 Annual Financial Statements of issuers whose securities are admitted to trading on a regulated market.

* A Bulgarian translation of ESMA’s Guidelines on Alternative Performance Measures (APMs) can be found on the FSC website: www.fsc.bg, section Legislation / Guidelines and recommendations of the European Supervisory Authorities / ESMA.

Issuers and their auditors should take into account the main issues addressed in ESMA’s public statement when preparing and auditing the annual financial statements (AFSs) of issuers and public companies for 2021.

ESMA and national competent regulators will ensure compliance with the specific requirements set out above in the presentation of financial statements by public companies and issuers. Appropriate measures will be taken in case of significant discrepancies.

The statement is published on ESMA’s website and can be accessed here.

A translation into Bulgarian of the text of the public statement can be found on the FSC website www.fsc.bg, section European Affairs / EU News / Notices.