PRA Finalizes Approach to Publishing Solvency II Technical Information
PRA published the policy statement PS24/20 on the approach for publication of Solvency II technical information at the end of the transition period for Brexit. PRA has retained the methodologies and judgments that EIOPA incorporates in its technical information as at the end of the transition period, with certain exceptions. PS24/20 contains the Statement of Policy explaining the ways in which PRA will fulfill its obligations to publish the technical information necessary for valuation of insurance liabilities for each relevant currency. PS24/20 also presents feedback on the responses received to CP5/20. PS24/20 will come into effect on December 31, 2020, when the transition period for Brexit ends.
PRA had received four responses to the consultation on its approach to the publication of Solvency II information. During the consultation, respondents raised a range of operational concerns with the proposed implementation and publication dates for the technical information. Responses included several requests for clarification, especially concerning the relevant currencies. As a result of the consultation, PRA has clarified its approach to determining PRA relevant currencies and updated the timing of the publication of the volatility adjustment representative portfolios. These changes to the draft policy do not result in any additional requirement on firms compared to the original proposals.
The policy has been designed for the context that the UK is no longer bound by EU law and amendments have been made to the retained EU law under the EU (Withdrawal) Act 2018. The technical information will be impacted by the proposed use of temporary transitional powers at the end of the transition period. The general use of the temporary transitional powers would have the effect of maintaining the current preferential risk treatment and calculation methodologies of EU exposures and assets under the applicable capital frameworks for 15 months, after the end of the transition period. Therefore, the fundamental spreads for EU-27 government bonds will be identical to those published by EIOPA during the 15 months that transitional relief applies. PS24/20 and Statement of Policy are relevant to all UK Solvency II firms, including in respect of the Solvency II groups provisions, and to the Society of Lloyd’s and its managing agents.
In another development, BoE appointed Appvia as a partner to assist in design, construction, and assurance of a new cloud environment. This follows a public procurement process which commenced in January 2020. During the two-year partnership, Appvia will be supporting development and project teams at BoE in testing and deploying code in cloud environments, working with security teams to integrate the cloud into existing operational and security processes and in implementing the information governance compliance for safe and secure collaboration.
Related Links
Effective Date: December 31, 2020
Keywords: Europe, UK, Insurance, Banking, Securities, Solvency II, Technical Information, Volatility Adjustment, PS24/20, Cloud Computing, Brexit Transition, PRA
Featured Experts
Paul McCarney
Insurance product strategist; insurance domain expert; extensive experience developing risk assessment frameworks for insurers
Brian Robinson
Actuary; risk management specialist; corporate and capital modelling expert
Previous Article
IAIS Updates List of Internationally Active Insurance GroupsRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
