PRA statement on the recalculation of the Transitional Measure on Technical Provisions (TMTP)

This statement highlights the PRA's recent invitation to insurance firms to recalculate the Transitional Measure on Technical Provisions.
Published on 06 July 2022

In line with Supervisory Statement (SS) 6/16 ‘Maintenance of the transitional measure on technical provisions’ under Solvency II’, the PRA has been monitoring market conditions since the previous biennial TMTP recalculation in December 2021. The PRA also considers whether changes in market conditions since then can reasonably be considered to have been sustained. In the PRA’s view, recent movements in risk free rates meet the threshold for a material change in risk profile as set out in SS6/16. 

The PRA would be willing to accept applications from firms to recalculate TMTP as at Thursday 30 June 2022. As set out in SS6/16, as part of any application, the PRA expects firms to be able to demonstrate that a material change in risk profile has occurred.

Firms should note that in order to expedite the application process, the PRA would expect applications at this time to use firms’ existing TMTP calculation methodologies – as set out in SS6/16. The PRA would expect firms to discuss in advance of an application any proposal for simplifications to methodologies.