Solvency II: Capital add-ons

Statement of policy

First published on 28 February 2024

This statement of policy (SoP) sets out the approach that the Prudential Regulation Authority (PRA) expects to use in relation to capital add-ons (CAOs). 

It covers:

  • the circumstances under which the PRA expects to consider setting a CAO;
  • the methodologies the PRA expects to use to calculate a CAO;
  • information relevant to the use of CAOs at group level;
  • the process the PRA intends to follow when setting a CAO; and
  • the ongoing monitoring, reporting, and removal of a CAO.

This SoP is relevant to all UK Solvency II firms, the Society of Lloyd’s, its members and managing agents, herein referred to collectively as ‘firms’. This SoP is also relevant to all UK holding companies.

This SoP should be read in conjunction with the Solvency II internal models: Permissions and ongoing monitoring SoP, and the Solvency Capital Requirements and Group Supervision Parts of the PRA Rulebook.

Future version

Published on 28 February 2024. Effective from 31 December 2024.

- Following PS2/24 – Review of Solvency II: Adapting to the UK insurance market