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Home > Prudential Regulation Authority > Maintenance of the ‘transitional measure on technical provisions’ under Solvency II – SS6/16 UPDATE
 

Maintenance of the ‘transitional measure on technical provisions’ under Solvency II – SS6/16 UPDATE

28 April 2017

​Update 28 April 2017: This Supervisory Statement (SS) was updated following the publication of Policy Statement (PS) 11/17 ‘Maintenance of the ‘transitional measure on technical provisions’ under Solvency II’. See Annex for full details.

The Solvency II Directive allows for a recalculation of the transitional measure on technical provisions (TMTP) every 24 months, or more frequently where the risk profile of the firm has materially changed. These Directive provisions have been transposed by HM Treasury’s Solvency 2 Regulations 2015 (2015/575) (see Regulation 54). The purpose of this supervisory statement is to provide clarity with respect to the PRA’s expectations as to how the TMTP should be maintained over the transitional period and the process for recalculations of the TMTP. It should be read alongside Regulation 54 of the Solvency 2 Regulations 2015, the Transitional Measures Part of the PRA Rulebook and the Supervisory Statement 17/15 ‘Solvency II: transitional measures on risk-free interest rates and technical provisions’.

This statement is of interest to all UK insurance firms within the scope of Solvency II and to the Society of Lloyd’s. It is particularly relevant to firms that have been granted approval to use the TMTP, or those that have been considering applying to use this transitional measure.

In particular, this statement sets out the PRA’s expectations and proposed process for:

  • how the calculation of the amount of the TMTP should be maintained over the transitional period;
  • requesting that a firm carry out a recalculation of the transitional measure; and
  • assessing a firm’s application for a recalculation on the basis of a material change in risk profile.

This statement expands on the PRA’s general approach as set out in its insurance approach document.

Supervisory statement

Maintenance of the ‘transitional measure on technical provisions’ under Solvency II – SS6/16

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