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Home > Prudential Regulation Authority > 2015 news archive
 

2015 news archive

Solvency II news  |  Solvency II materials  |  2015 news archive  |  2014 news archive  |  2013 news archive

December 2015
On 18 December 2015, the PRA set out the basis of preparation on which it will accept look through reporting for Collective Investment Undertakings under template S.06.03. See the 'Detailed technical information' page for further information.
 
 
On 11 December 2015, the PRA made firms aware that the European Commission adopted three Solvency II Implementing Technical Standards on 2 December 2015 that will all apply from 1 January 2016. These are: i) the Solvency II supervisory reporting; ii) public disclosure; and iii) transparency and accountability. These are available on the European Commission’s website, and will be published in the Official Journal in due course.
 
 
On 5 December 2015, the PRA published a list of firms for which a full or partial internal model has been approved under the Solvency II Directive – see below. The decision on each application has been provided to the relevant firm, on an individual basis, and the approvals will be published on the Financial Services Register from 1 January 2016 (including details of the legal entities for which model approval has been granted).

The PRA has cooperated with colleges of supervisors and reached joint decisions where applicable. Communication of joint decisions rests with the group supervisor, therefore decisions for firms where the PRA is not the group supervisor are not included here. The PRA notes that other national supervisory authorities have already communicated some of these decisions.
 
 
On 1 December 2015, the Financial Conduct Authority sent an email to UK insurance firms in scope of the Solvency II Directive to remind them of the 8 February 2016 deadline for submitting the Form K grandfathering notification forms. All Solvency II affected firms must make their submission using Connect. Links to Connect, the guidance note, mapping table and final policy for the Senior Insurance Managers Regime are available on the dedicated ‘Strengthening Accountability’ webpage.
 

November 2015

On 27 November 2015, the PRA published Supervisory Statement (SS) 44/15 ‘Solvency II: third-country insurance and pure reinsurance branches’ which supersedes SS10/15 ‘Solvency II: third-country branches’ published in March 2015.
 
On 20 November 2015, the PRA published consultation paper (CP) 43/15 Solvency II: external audit of the public disclosure requirement. The CP sets out the PRA’s proposals for a policy to require the external audit of elements of Pillar 3 disclosure under Solvency II, and seeks feedback on the proposal, the draft rules and draft supervisory statement. 
 
 
On 7 November 2015, the PRA announced it has concluded its decision-making process in respect of current applications for matching adjustment approval under Solvency II. The decision on each application has been provided to the relevant firm, on an individual basis. The approvals will be published on the Financial Services Register on 1 January 2016.

On 6 November 2015, the PRA published an update letter from the PRA's Insurance Directors for all Solvency II-affected firms.
 
 
On 3 November, Sam Woods, Executive Director of Insurance, delivered a speech entitled 'Solvency II: Approaching the try line' at the Association of British Insurers biennial conference in London. The speech considers what regulated insurers and the PRA need to do ahead of 1 January 2016.
 
 

October 2015

On 30 October 2015, the PRA published two supervisory statements for all UK firms within the scope of Solvency II, and where applicable, to third-country branches:

 
 
On 27 October 2015, the PRA published materials from a seminar held on 22 October 2015 for relevant category 3, category 4 and category 5 firms. The seminar gave an overview of Solvency II Pillar 3 submissions for smaller insurers due to submit in 2016 for the first time. Slides and a recording of the seminar are available on the ‘Regulatory reporting’ page below. Firms are reminded of the meeting notes available from the PRA’s Solvency II regulatory reporting industry working group and testing sub-group on the ‘Industry working group’ page below. In addition an updated version of the BEEDS portal user guide is also now available on the 'BEEDS portal' page below, in Key Resources.


Regulatory reporting

 

On 15 October 2015, following the recommendations of the Fair and Effective Markets Review (FEMR), HM Treasury issued a consultation on the extension of the accountability regime, as well as changes to some areas relevant for banks, building societies, credit unions and PRA-designated firms as they prepare for implementation on 7 March 2016 - see the Senior Managers and Certification Regime: extension to all FSMA authorised persons. Readers may also find it useful to refer to the Bank of England and Financial Services Bill.

 
The new Senior Managers and Senior Insurance Managers regimes will be implemented on 7 March 2016 and firms should continue to make preparations to meet the deadlines, including 8 February 2016 for the submission of grandfathering notifications and relevant notifications. Firms should continue to refer to the dedicated Strengthening Accountability webpage.
 

September 2015

On 24 September 2015, the PRA published a letter from Sam Woods, Executive Director of Insurance Supervision, providing firms with information on Solvency II-related approvals for day 1 of the regime; applications to use the matching adjustment; applications to use an internal model; capital add-ons; and feedback on the preparatory phase data submissions received in July 2015.

On 22 September 2015, the PRA invited firms that are due to submit Solvency II information for the first time in 2016 to a regulatory reporting seminar that will be held on 22 October 2015. Further details are available via the link below. Firms should also be aware that a third regulatory reporting question and answer document has been made available on the ‘Detailed technical information’ page. In addition those working on the technical aspects of the Solvency II data submissions in the preparatory phase should be aware that a second version of the Bank of England’s Solvency II XBRL filing manual is now available on the ‘Taxonomy’ page.

On 18 September 2015, the PRA published the materials from the smaller insurers briefing for category 5 insurers for Solvency II-affected firms, non-Directive firms and firms considering or pursuing an exit strategy.  Materials from the event are available on the small insurers seminar page.

On 16 September 2015, the PRA published an update letter from the PRA's Insurance Directors for all Solvency II-affected firms.
 
 

August 2015

On 28 August 2015, the PRA published two consultation papers and a supervisory statement for all UK firms within the scope of Solvency II:
 
  • CP30/15: Solvency II: applying EIOPA Set 2, System of Governance and ORSA Guidelines seeks feedback on a draft supervisory statement that sets out the PRA’s expectations of firms and its general approach to EIOPA’s Set 2 Solvency II Guidelines, the System of Governance and Own Risk and Solvency Assessment (ORSA) Guidelines.
  • CP31/15: Solvency II: third-country insurance and pure reinsurance branches consults on revisions to Supervisory Statement 10/15 ‘Solvency II: third-country branches’ concerning the PRA’s approach to third-country insurance and pure reinsurance branches under the Solvency II Directive.
  • SS38/15: Solvency II: consistency of UK generally accepted accounting principles with the Solvency II Directive sets out the PRA’s expectations of firms which are considering applying the derogation within Article 9 (4) of the Commission Delegated Regulation (EU) 2015/35 (‘the Solvency II Regulation’). This derogation permits a firm to value some assets and liabilities using local generally accepted accounting principles (GAAP) if they fulfil some very specific criteria listed in that Article.
 
On 17 August 2015, the PRA published two supervisory statements (SS) following consultation in CP20/15.
 
  • SS36/15 – Solvency II: life insurance product reporting codes sets the list of codes which the PRA expects firms to use when reporting information on life business or annuities stemming from non-life business at product level.
  • SS37/15 – Solvency II: internal model reporting codes and components sets out how the PRA expects internal model and partial internal firms to derive the ‘unique number of component’ for each component of the internal model.
Firms should review both supervisory statements in addition to CP25/15, published on 10 August 2015 (see below).  

On 14 August 2015, the PRA provided clarification for intra-group reinsurance of matching adjustment business.
 
 
On 13 August 2015, the PRA published policy that sets out how it will hold senior managers in insurance companies to account. The new Senior Insurance Managers Regime replaces the current Approved Persons Regime. Relevant individuals currently approved under the APR can grandfather into equivalent functions in the SIMR provided a grandfathering notification is received by 8 February 2016. The publications and further information and materials for implementation are available on the dedicated ‘Strengthening Accountability’ webpage.
 
On 10 August 2015, the PRA published a consultation paper on a draft supervisory statement ‘Solvency II: reporting and public disclosure - options provided to supervisory authorities’. The PRA sets out its expectations of firms where it has an option to specify a different approach to that published in the Implementing Technical Standards for the Solvency II reporting templates and Solvency II public disclosure templates. The consultation closes on Monday 21 September 2015.

As a reminder, on 20 March 2015, the PRA made information available to firms regarding applications for approvals or waivers for Solvency II. As part of this the PRA stated that firms could apply for an exemption to quarterly reporting; firms wishing to apply are reminded to do so by 1 September 2015. Further information on the quarterly reporting exemption is available below and includes links to a waiver application form.

 

July 2015

On 31 July 2015, EIOPA published the final taxonomy v2.0.0 for Solvency II implementation in 2016. Firms should implement this taxonomy in their reporting systems and should note that there will be a hotfix to this version at the end of September 2015. Further details are available via the link below.


On 30 July 2015, the PRA provided an update on deferred tax.


On 24 July 2015, the PRA provided an update on matching adjustment applications.


On 23 July 2015, the PRA published the following:

  • A supervisory statement (SS) expanding on the general approach set out in the PRA's approach to insurance supervision. SS30/15 outlines the PRA's expectations of firms in relation to the treatment of sovereign debt in internal models.
 
  • An amendment to supervisory statement SS22/15 - Solvency II: applying EIOPA's set 1 guidelines to PRA-authorised firms. The amendment is to clarify that the statement, where relevant, applies to Lloyd's, including Lloyd's managing agents, rather than just the Society of Lloyd's.

On 14 July 2015, the PRA published an update letter from the PRA's Insurance Directors for all Solvency II-affected firms.
 
 
 
EIOPA published the second set of draft Implementing Technical Standards (ITS) and Guidelines for Solvency II. This second set of ITS has been submitted to the European Commission for scrutiny and endorsement. It is expected that both the ITS and Guidelines will be applied from 1 January 2016.
 
 
On 7 July 2015, the PRA published policy that completes the framework for individual accountability in the banking sector. The material in PS16/15, SS28/15 and the Statement of Policy addresses the Senior Managers Regime and only relates to the banking industry. Policy on the Senior Insurance Managers Regime with equivalent material is scheduled for release in due course, and will be made available in the usual way.
 

June 2015

On 15 June 2015, the PRA published the following:
 
  • A supervisory statement setting out its expectations of life and non-life firms and providing further clarity on the information to be reported by firms using an internal model to calculate the solvency capital requirement (SCR);
 
  • A supervisory statement setting out its expectations of how non-life firms should identify and manage all risks to which their business could be exposed over the long and short term;
 
  • A letter from Sam Woods, Executive Director of Insurance Supervision, providing firms with feedback on the PRA’s review of firms’ own risk and solvency assessments (ORSAs) submitted in 2014 and 2015 [during the preparatory phase]; and
 
  • Information regarding Legal Entity Identifiers on its ‘Detailed technical information’ page.
 
On 12 June 2015, the PRA published feedback on step 1 of its review of Solvency II balance sheets. This follows two related publications dated October 2014 and February 2015, which can be found on the ‘Other Pillar 1 aspects’ page.
 


On 8 June 2015, the Bank of England published a pre-release article of the Quarterly Bulletin 2015 Q2 titled ‘The prudential regulation of insurers under Solvency II’. A news release and short video discussing some of the topics covered in the article is also available. 


 
On 5 June 2015, the PRA provided clarification for firms on volatility adjustment in the modelling of market and credit risk stresses. More information can be found on the Solvency II internal model page. 
 
 
On 1 June 2015, the PRA published the following:
 
  • A consultation paper that includes two draft supervisory statements. The first is on internal model reporting codes and components, and sets out how the PRA expects internal model and partial internal firms to derive the ‘unique number of component’ for each component of the internal model. The second, on life product codes, sets the list of codes which the PRA expects firms to use when reporting information on life business or annuities stemming from non-life business at product level.
 
  • A supervisory statement setting out its expectations of firms applying for permission to apply a volatility adjustment (VA).


SS23/15: Solvency II: supervisory approval for the volatility adjustment

 
  • A letter from Sam Woods, Executive Director of Insurance Supervision, on the matching adjustment. This letter provides further clarification around three specific areas of feedback given in Paul Fisher’s letter of 28 March 2015; i) management of collateral arrangements; ii) collateral received against stock-lending activity and iii) the treatment of reinsurance in the MA calculation. It also provides additional points of feedback on issues that have emerged following the pre-application phase. It should be read alongside earlier industry feedback letters available in Key Resources on the Solvency II approvals page.

 

May 2015

On 29 May 2015, the PRA updated its instructions on the use of the Solvency II taxonomy in the preparatory phase. The Bank of England also published a Solvency II XBRL filing manual available on the 'Taxonomy' page in Key Resources via the link below.


On 22 May 2015, the PRA published an update letter from the PRA's Insurance Directors for all Solvency II-affected firms.


On 21 May 2015, the PRA began onboarding firms in scope to submit regulatory returns in 2015, to the "Bank of England Electronic Data Submission" (BEEDS) portal. This portal will be used to submit the regulatory returns expected during the preparatory phase and Solvency II. More information along with key materials can be found on the BEEDS portal page via the link below.
 
 

April 2015

On 22 April 2015, the PRA published a supervisory statement that sets out its expectation of firms in relation to EIOPA’s Solvency II Set 1 Guidelines which were published on 2 February 2015.  The statement follows consultation paper CP5/15, Solvency II: applying EIOPA’s Set 1 Guidelines to PRA-authorised firms, issued on 19 February 2015. 
 
 
On 10 April 2015, the PRA published a consultation paper that seeks feedback on a draft supervisory statement (SS). This SS sets out the PRA’s expectation of firms which are considering applying the derogation within Article 9 of the Solvency II Regulation (EU) 2015/35.  This derogation permits firms to value some assets and liabilities using local generally accepted accounting principles (GAAP) if certain criteria are fulfilled.

On 10 April 2015, the PRA released a briefing session on the role of non-executive directors in an internal model firm in Solvency II. A recording of the event and the delegate pack are available on the following links.
 
 

March 2015

On 31 March 2015, the PRA published a consultation paper that contained a draft supervisory statement (SS) setting out the PRA’s position on treatment of sovereign debt in internal models. The consultation paper expands on the PRA’s general approach as set out in its insurance approach document and reminds firms of a particular basis risk that arises when sovereign bonds are used to back Solvency II liabilities.

 
On Saturday, 28 March 2015, the PRA published a letter from Paul Fisher, Executive Director of Insurance Supervision, on the matching adjustment. Following the PRA’s review of firms’ matching adjustment pre-application submissions, the letter provides general feedback to the industry and should be particularly helpful to firms wishing to make a formal application from 1 April 2015. It should be read alongside earlier industry feedback letters published on 15 October 2014, 20 February 2015 and 9 March 2015.
 
 
 
On 25 March 2015, the PRA and Association of British Insurers (ABI) published a webcast ahead of Solvency II coming into force on 1 January 2016. The webcast features Paul Fisher, Executive Director at the PRA, discussing the Solvency II framework with Huw Evans, the ABI’s Director General.
 
 
On 20 March 2015, the PRA published the following:
 
  • Policy statement 2/15 Solvency II: A new regime for insurers which sets out the rules and accompanying supervisory statements required for the PRA’s implementation of the Solvency II Directive.
 
  • Information regarding the approvals and waivers firms should use to make a formal application under the Solvency II Directive from 1 April 2015, ahead of the PRA rules that transpose the Solvency II Directive requirements coming into effect on 1 January 2016. This includes additional information to support firms applying for approval to use the transitional measure on technical provisions.
 
 
 
  • Consultation paper CP11/15 Solvency II: supervisory approval for the volatility adjustment

On 13 March 2015, the PRA published an update letter from the PRA's Insurance Directors for all Solvency II-affected firms.

 PRA Solvency II: Insurance Directors' update letter, 13 March 2015

On 9 March 2015, the PRA published a letter from Paul Fisher, Executive Director of Insurance Supervision. The letter: clarifies how internal models allow for matching adjustment portfolios; provides information on the quantitative framework that the PRA will use as part of its review of internal model applications; and gives initial feedback from the matching adjustment pre-application process.

 Solvency II: internal model and matching adjustment update, 9 March 2015
 

February 2015

On 27 February 2015, the PRA issued data collection exercises to both life and general insurers. This followed the information in the Insurance Directors’ letter of 12 February 2015. A summary of the data requests, including response dates, is available below.
 
 Summary of PRA Solvency II data collection exercises, 27 February 2015

On 20 February 2015, the PRA published an amendment to supervisory statement SS2/14 -Solvency II: recognition of deferred tax. This is relevant to all insurance firms within the scope of the Solvency II Directive.

Solvency II: recognition of deferred tax – SS2/14 UPDATE

Also on 20 February 2015, the PRA published a letter from Paul Fisher, Executive Director of Insurance Supervision. The letter clarifies the PRA’s expectations of firms planning to re-structure their equity release mortgage  portfolios in order to meet the matching adjustment eligibility criteria.

 Letter from Paul Fisher - Solvency II: equity release mortgages

On 19 February 2015, the PRA published a consultation paper that sets out the PRA’s expectations of firms in relation to EIOPA’s Set 1 Solvency II Guidelines which were published on 2 February 2015.


CP5/15 - Solvency II: applying EIOPA’s Set 1 Guidelines to PRA-authorised firms

On 12 February 2015, the PRA published an update letter from the PRA's Insurance Directors for all Solvency II-affected firms.

PRA Solvency II: Insurance Directors' update letter, 12 February 2015

On 10 February 2015, the PRA published further clarification on its approach to the review of the Solvency II balance sheet, technical provisions and own funds. This followed a publication on the same topics on 16 October 2014. Both updates are available on the page dedicated to ‘Other Pillar 1’ aspects of Solvency II.

PRA Solvency II: Further clarification on balance sheet, technical provisions and own funds review, February 2015

Other Pillar 1 aspects
 

January 2015

On 30 January 2015, the PRA published information on its internal model page to assist firms in their preparations to submit a formal internal model application from 1 April 2015. This included links to the EIOPA's Common Application Package for Internal Models (CAP), which includes instructions firms should follow when submitting a formal internal model application.

Internal model

On 23 January 2015, the PRA published a consultation paper that sets out draft rules on transitional measures for risk-free interest rates and for technical provisions, necessary to implement the Solvency II Directive. CP3/15 also includes two draft supervisory statements: the first on the PRA’s expectations regarding the calculation and application process for these transitional measures; and the second on the internal model treatment of participations.

CP3/15 - Solvency II: transitional measures and the treatment of participations

On 16 January 2015, the PRA re-published Solvency II reporting schedules for firms with non-December year ends to correct a number of inaccuracies, primarily related to submission dates in 2017 and 2018. The updated schedules are available on the regulatory reporting page.

Regulatory reporting
 
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