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Home > Prudential Regulation Authority > Maintenance of the ‘transitional measure on technical provisions’ under Solvency II - CP47/16
 

Maintenance of the ‘transitional measure on technical provisions’ under Solvency II - CP47/16

15 December 2016

​Overview

This consultation paper (CP) sets out the Prudential Regulation Authority’s (PRA) proposed updates to Supervisory Statement (SS) 6/16 ‘Recalculation of the ‘transitional measure on technical provisions’ under Solvency II’. The purpose of the proposal is to clarify the PRA’s expectations for maintaining the calculation of the Transitional Measure on Technical Provisions (‘TMTP’) both at outset and over the transitional period.
This CP is relevant to life insurance and reinsurance companies using or intending to use TMTP.

Summary of proposals

This CP sets out the PRA’s expectations as to how the Solvency I comparator used for the calculation of the TMTP should continue to be maintained over time. The PRA is proposing that changes in best estimate assumptions used to calculate Solvency II technical provisions should, where applicable, be reflected consistently in the Solvency I Pillar 1 and Pillar 2 bases.

The PRA is also making proposals in respect of the:

  • need for firms to analyse the material components and drivers of the TMTP benefit in order to facilitate better risk management, and
  • role of firms’ Audit Committees in ensuring that the TMTP claimed continues to meet the conditions for approval.

The proposals set out are not solely related to the recalculation of the transitional relief, and hence the title of the SS6/16 has been amended to reflect this.

Responses

This consultation closes on Wednesday 15 March 2017. The PRA invites feedback on the proposals set out in this consultation. Please address any comments or enquiries to CP47_16@bankofengland.co.uk.
 
Consultation paper 
 
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