9.12.2005 Official Journal of the European Union L 3231 (Acts whose publication is obligatory) DIRECTIVE 2005/68/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 16 November 2005 on reinsurance and amending Council Directives 73/239/EEC, 92/49/EEC as well as Directives 98/78/EC and 2002/83/EC (Text with EEA relevance) THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty establishing the European Community, and in particular Articles 47(2) and 55 thereof, Having regard to the proposal from the Commission, Having regard to the opinion of the European Economic and Social Committee (%), After consulting the Committee of the Regions, Acting in accordance with the procedure laid down in Article 251 of the Treaty (3, Whereas: 1 Council Directive 73/239/EEC of 24 July 1973 on the coordination of laws, regulations and administrative provisions relating to the taking-up and pursuit of the business of direct insurance other than life assurance (?), Council Directive 92/49/EEC of 18 June 1992 on the coordination of laws, regulations and administrative provisions relating to direct insurance other than life assurance (*) and Directive 2002/83/EC of the European Parliament and of the Council of 5 November 2002 concerning life assurance (°) have laid down the provi- sions relating to the taking-up and pursuit of direct insurance in the Community. O] C 120, 20.5.2005, p. 1. Opinion of the European Parliament of 7 June 2005 (not yet published in the Official Journal) and Decision of the Council of 17 October 2005. O] L 228, 16.8.1973, p. 3. Directive as last amended by Directive 2005/1/EC of the European Parliament and of the Council (O] L 79, 24.3.2005, p. 9). O] L 228, 11.8.1992, p. 1. Directive as last amended by Directive 2005/1/EC. O] L 345, 19.12.2002, p. 1. Directive as last amended by Directive 2005/1/EC. ) Those Directives provide for the legal framework for insurance undertakings to conduct insurance business in the internal market, from the point of view both of the right of establishment and of the freedom to provide services, in order to make it easier for insurance undertakings with head offices in the Community to cover commitments situated within the Community and to make it possible for policy holders to have recourse not only to insurers established in their own country, but also to insurers which have their head office in the Community and are established in other Member States. The regime laid down by those Directives applies to direct insurance undertakings in respect of their entire business carried on, both direct insurance activities as well as reinsurance activities by way of acceptances; however reinsurance activities conducted by specialised reinsurance undertakings are neither subject to that regime nor any other regime provided for by Community law. Reinsurance is a major financial activity as it allows direct insurance undertakings, by facilitating a wider distribu- tion of risks at worldwide level, to have a higher underwriting capacity to engage in insurance business and provide insurance cover and also to reduce their capital costs; furthermore, reinsurance plays a funda- mental role in financial stability, since it is an essential element in ensuring the financial soundness and the stability of direct insurance markets as well as the financial system as a whole, because it involves major financial intermediaries and institutional investors. Council Directive 64/225[EEC of 25 February 1964 on the abolition of restrictions on freedom of establishment and freedom to provide services in respect of reinsurance and retrocession (°) has removed the restrictions on the right of establishment and the freedom to provide services related to the nationality or residence of the provider of reinsurance. It has not however removed restrictions caused by divergences between national provisions as regards prudential regulation of reinsur- ance. This situation has resulted in significant differences 0] 56, 4.41964, p. 878.