Solvency II: the quality of capital instruments

First published on 20 March 2015

This supervisory statement is of interest to all UK Solvency II firms, the Society of Lloyd’s and firms that are part of a Solvency II group that will determine and classify capital instruments under the Solvency II own funds regime. This statement should be read alongside all relevant European legislation and relevant parts of the Prudential Regulation Authority Rulebook.

SS3/15 covers the following topics:

• prohibition on redemption of instruments within five years of the date of issue;
• liability management and capital reduction;
• principal loss-absorbency mechanism for Tier 1 instruments subject to limitation (‘restricted Tier 1’); and
• additional considerations for instruments intended to contribute to group own funds.

Current version

Published on 16 March 2020. Effective from 16 March 2020.

• Supervisory Statement 3/15 - March 2020 (pdf)

 - following PS7/20 ‘Solvency II: Adjusting for the reduction of loss absorbency where own fund instruments are taxed on conversion’.