In this consultation paper (CP), the Prudential Regulation Authority (PRA) sets out the approach that it proposes to take to the publication of Solvency II technical information (TI) after the end of the transition period (TP). The proposals included in this CP, which would apply at the end of the TP, are as follows:
- the PRA’s published TI would be derived by adopting the same technical methodologies embodied within the European Insurance and Occupational Pensions Authority’s (EIOPA’s) TI as at the end of the TP, with some limited exceptions. The exceptions are set out in a draft Statement of Policy (SoP), and are generally items that the PRA must change as a result of the UK’s changed legal status of having withdrawn from the EU, and the resulting alterations in information flows between the PRA and EIOPA. These changes would also contribute to the TI being relevant and credible for UK firms;
- the criteria that the PRA would use to determine the PRA relevant currencies to publish, which would be based on the relative materiality of technical provisions denominated in each currency, and the currencies for which firms have volatility adjustment (VA) or matching adjustment (MA) authorisation;
- the PRA’s approach to determining VA reference portfolios (which would inform the calculation of the VA), in light of the loss of sharing of regulatory returns data between the PRA and EIOPA; and
- the publication of TI on the PRA website, and, where there is a deviation in the future from EIOPA’s technical methodology, a PRA publication that describes this deviation.
This CP is relevant to all UK Solvency II firms, including in respect of the Solvency II groups provisions, to the Society of Lloyd’s and its managing agents. Non-Directive firms are out of the scope of this CP.
The proposed implementation date for the proposals in this CP would be at the end of the TP, which is expected to be 11pm on Thursday 31 December 2020.
Responses and next steps
This consultation closes on Wednesday 30 September 2020. The PRA invites feedback on the proposals set out in this consultation. Please address any comments or enquiries to CP05_20@bankofengland.co.uk.
The proposals set out in this CP have been designed in the context of the UK’s withdrawal from the EU and entry into the TP, during which time the UK remains subject to European law. The PRA will keep the policy under review to assess whether any changes would be required due to changes in the UK regulatory framework at the end of the transition period, including those arising once any new arrangements with the EU take effect. The PRA has assessed that the proposals would not need to be amended under the EU (Withdrawal) Act 2018 (EUWA). Please see PS5/19 ‘The Bank of England’s amendments to financial services legislation under the European Union (Withdrawal) Act 2018 for further details.