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.
Effective Date: December 31, 2020
Keywords: Europe, UK, Insurance, Banking, Securities, Solvency II, Technical Information, Volatility Adjustment, PS24/20, Cloud Computing, Brexit Transition, PRA
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