This supervisory statement is addressed to UK Solvency II firms and to Lloyd’s. It sets out the Prudential Regulation Authority’s (PRA’s) expectations of firms applying for permission to apply a volatility adjustment (VA). In particular, the statement clarifies:
- the items that should be included in an application to use the VA;
- how the PRA will use the content of applications to assess whether the statutory conditions for approval to use the VA have been satisfied; and
- how the VA approval process will work.