Update 20 November 2015
The PRA updated this supervisory statement to reflect the changes to the PRA Rulebook that will occur when the new Solvency II and non-Directive firm (NDF) regimes come into force on 1 January 2016. The statement is not addressed to firms within the scope of Solvency II who will need to value their assets in accordance with the Valuation Part of the PRA Rulebook and must have the necessary governance and internal controls in place to control their valuation risks. This update supplements the PRA’s expectations set out in the original statement, published on 22 August 2014.
Published on 22 August 2014
This supervisory statement sets out the Prudential Regulation Authority’s (PRA) expectations of firms in relation to existing rules on the valuation of financial assets. It applies to all PRA authorised insurers (firms) and may also be relevant to insurance holding companies and other entities in the same group, together with their advisors. The statement is equally relevant to life and general insurers, whether they are mutuals or proprietary companies.
The statement seeks to reduce the risk to the PRA’s objectives caused by intended or unintended misstatement of values and hence misstatement of capital resources, by clarifying the PRA’s existing expectations.
This statement does not represent a change of policy. Future clarifications or expectations on the topic of valuation risk may be added to the statement.