20 FEBRUARY 2015 – CONTENT ON THIS PAGE HAS BEEN UPDATED
For the update published on 20 February 2015 see:
Supervisory Statement 2/14 Solvency II: recognition of deferred taxThis is relevant to all insurance firms within the scope of the Solvency II Directive.
For information only, the original publication issued on 16 April 2014 is available below.
This supervisory statement is relevant to all insurance firms that will be subject to Solvency II (SII), whether life or general, standard formula or internal model, and sets out the Prudential Regulation Authority’s (PRA) expectations of firms in relation to the recognition of deferred tax in SII.
In particular, the statement:
· highlights areas (in respect of both balance sheet recognition and the solvency capital requirement (SCR) calculation) to which a firm should pay particular attention when considering whether it can recognise a deferred tax asset (DTA) or the tax effects of a 1-in-200 shock; and
· explains what the PRA expects in relation to the credibility of profit projections.
The PRA’s public consultation on this statement closed on 19 March 2014. This statement has been amended to reflect the feedback that was received by the PRA.