In this consultation paper (CP), the Prudential Regulation Authority (PRA) sets out its proposed approach to the determination of the availability of group own funds and its expectations on firms in presenting relevant analysis to the PRA. The PRA sets out amendments to Supervisory Statement (SS) 9/15 ‘Solvency II: group supervision’ to reflect the proposed approach in the Appendix.
This consultation is relevant to all insurance firms within the scope of the Solvency II Directive and to the Society of Lloyd’s.
In 2016, the PRA published CP38/16 ‘Solvency II: group supervision’ which consulted on number of updates to its supervisory approach for group supervision including the choice of calculation method available to insurance groups; entities excluded from the scope of group supervision; single own risk and solvency assessment reports (ORSAs); single group solvency and condition reports (SFCRs); responsibilities of the relevant insurance group undertaking; and group supervision in the absence of third-country equivalence. These proposed policy changes were subsequently reflected in the updated SS9/15 ‘Solvency II: group supervision.
Further to these amendments, proposals in this CP would better align the PRA policy and supervisory expectations with the point of view put forward by the European Insurance and Occupational Pensions Authority (EIOPA) regarding group own funds availability, through its answer to a question posed in late 2017.
The PRA proposals are informed by some of the feedback PRA received to CP38/16 as well as by supervisory practice on assessments PRA has considered since Solvency II came into force.
Responses and next steps
This consultation closed on Monday 12 November 2018. The PRA invites feedback on the proposals set out in this consultation. Please address any comments or enquiries to CP15_18@bankofengland.co.uk.
The proposals in this CP have been designed in the context of the current UK and EU regulatory framework. The PRA will keep the policy under review to assess whether any changes would be required due to changes in the UK regulatory framework, including those arising once any new arrangements with the European Union take effect.