[As of 1 January 2019 this text has been deleted]

1. Insurance and reinsurance undertakings investing in securitisation shall meet the requirements laid down in paragraphs 2 to 7.

2. Insurance and reinsurance undertakings shall conduct adequate due diligence prior to making the investment, which shall include an assessment of the commitment of the originator, sponsor or original lender to maintain a material net economic interest securitisation of no less than 5 % on an on-going basis and of the factors that could undermine that commitment to maintain that interest as disclosed in accordance with point (f) of paragraph 3.

3. Before investing in securitisation, and thereafter as appropriate, insurance and reinsurance undertakings shall ensure that the originator, the sponsor or the original lender has all of the following features:

(a) the originator, sponsor or original lender grants credit based on sound and well-defined criteria and clearly establishes the process for approving, amending, renewing and refinancing loans to be securitised as well as loans which it will not securitise;

(b) the originator, sponsor or original lender has in place effective systems to manage the ongoing administration and monitoring of their credit risk-bearing portfolios and exposures, including for identifying and managing problematic credits and for making adequate value adjustments and provisions;

(c) the originator, sponsor or original lender adequately diversifies each credit portfolio based on its target market and overall credit strategy;