The Prudential Regulation Authority (PRA) has published its consultation, CP6/13, on the PRA’s approach when reviewing Companies Act 2006 schemes of arrangement proposed by PRA authorised general insurers. It is intended that the material in this consultation paper will be adopted by the PRA as a Supervisory Statement.
The material expands on the PRA’s general approach as set out in its Approach Document, and is designed to help ensure the PRA meets its statutory objectives in its supervision of insurers.
It explains some factors which the PRA will take into account when judging whether, in promoting a scheme, an insurer is acting in a manner consistent with the PRA’s statutory objectives of safety and soundness and policyholder protection. Specifically, the PRA seeks to ensure that insurers are able (with a high degree of likelihood) to meet claims from policyholders as they fall due, and that where firms wish to exit the market they do so in a way which takes proper account of the need to provide an acceptable degree of continuity of cover for policyholders.
The PRA’s starting point is that solvent schemes are unlikely to be compatible with the PRA’s policyholder protection objective.
This consultation closed on 26 October 2013.
The Supervisory Statement relating to this Consultation Paper was issued on 25 April 2014.