1. Member States shall ensure that resolution authorities may apply the write-down or conversion tool to meet the resolution objectives for any of the following purposes:
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(a)
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to recapitalise an entity as referred to in Article 1(1), points (a) to (e), that meets the conditions for resolution referred to in Article 19(1) and Article 20(3) to the extent sufficient to apply the solvent run-off tool and to maintain its authorisation under Directive 2009/138/EC;
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(b)
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to convert to equity or reduce the principal amount of claims, including insurance claims, or debt instruments that are transferred:
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(i)
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to a bridge undertaking; or
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(ii)
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under the asset and liability separation tool or the sale-of-business tool.
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When applying the write-down or conversion tool to insurance claims, resolution authorities may also restructure the terms of the related insurance contracts to achieve the resolution objectives more effectively. When doing so, resolution authorities shall take into account the impact on the collective interest of policy holders.