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Home > Prudential Regulation Authority > Authorisation and supervision of insurance special purpose vehicles – CP42/16
 

Authorisation and supervision of insurance special purpose vehicles – CP42/16

23 November 2016

Background

As part of the March 2015 Budget, HM Treasury signalled an intention to work with the London insurance market to design a new framework which would attract Insurance Linked Securities (ILS) business to the United Kingdom. The regulators also committed to work with HM Treasury to examine what steps might be taken, within the constraints of the Solvency II regime, to address any obstacles within the regulatory framework for ILS business.

Subsequently, in March 2016, HM Treasury released a consultation document in which it sought views on the regulatory, tax and corporate structure framework for ILS business in the United Kingdom. As part of that consultation, comment was also invited on the authorisation and supervision of ISPVs. HM Treasury released a second consultation document on Wednesday 23 November 2016 setting out further details of its proposed approach (see External links).

This joint CP sets out more detail on the regulators’ proposed authorisation and supervision regime for insurance special purpose vehicles (ISPVs) in the United Kingdom and should be read alongside HM Treasury’s consultation document.

Summary of proposals

This CP sets out the regulators’ approach and expectations in relation to the authorisation and supervision of ISPVs. It introduces a draft PRA supervisory statement (Appendix 1), a draft FCA statement (Appendix 2), proposed amendments to the PRA Rulebook (Appendix 3), a draft application form in relation to the authorisation and supervision of ISPVs (Appendix 4), and a draft notification form for firms to use when they propose to add new cells to a multi-arrangement ISPV (MISPV) (Appendix 5). The joint consultation reflects the views of each regulator insofar as is applicable to each regulator’s objectives.

It is relevant to all parties who wish to apply to the PRA for, or have obtained authorisation as, an ISPV. It is also relevant to parties who wish to apply to the FCA for registration of a Protected Cell Company (PCC), and to insurers seeking to use UK ISPVs as risk mitigation in accordance with Solvency II.

Responses and next steps

This consultation closes on Thursday 23 February 2017. The regulators invite feedback on the proposals set out in this consultation. Please address any comments or enquiries to both regulators - the PRA by email to CP42_16@bankofengland.co.uk, and the FCA by writing to the address on page 2 of the CP or by emailing cp16-34@fca.org.uk.

Consultation paper

Authorisation and supervision of insurance special purpose vehicles – CP42/16

 

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