PRA Consults on Availability of Group Own Funds Under Solvency II
PRA published a consultation paper (CP16/19) that sets out its proposed approach to the determination of the availability of subordinated liabilities and preference shares in group own funds. CP16/19 also sets out the expectations from firms in presenting the relevant analysis to PRA. The Appendix to CP16/19 sets out proposed amendments to the supervisory statement (SS9/15) on group supervision under Solvency II, to reflect the proposed approach. CP16/19 closes on October 21, 2019 and the proposals in this consultation would take effect on publication of the final policy.
CP16/19 is relevant to all insurance firms within the scope of group supervision under the Solvency II Directive and to the Society of Lloyd’s. In July 2018, PRA had published CP15/18 on group own funds availability, which set out the proposed approach of PRA to the determination of the availability of group own funds and its expectations of firms in presenting relevant analysis to PRA. The consideration of responses to CP15/18, by PRA, were set out in the Policy Statement 9/19 and were included in an updated version of SS9/15. Further to these publications, the proposals in CP16/19 would clarify PRA expectations of firms seeking to demonstrate that the Solvency II assumption that subordinated liabilities and preference shares are not available to meet losses elsewhere in the group is inappropriate in a firm’s specific case. The proposals set out in CP16/19 have been designed in the context of the current UK and EU regulatory framework. PRA has assessed that the proposals will not be affected in the event that UK leaves EU with no implementation period in place.
Related Links
Comment Due Date: October 21, 2019
Keywords: Europe, UK, Insurance, Solvency II, Group Own Funds, SS9/15, CP16/19, Group Supervision, SCR, Subordinated Liabilities, Preference Shares, PRA
Featured Experts
Adam Koursaris
Asset and liability management expert; capable modeler; risk and capital specialist
Cassandra Hannibal
Life insurance actuary; risk management and economic capital specialist
Jerome Ogrodzki
Insurance asset and liabilities modeling specialist; stochastic modeling expert
Previous Article
RBNZ Reviews Restrictions on Policy for Loan to Value RatioRelated Articles
EC to Defer Application of SFDR Standards Till July 2022
The European Commission (EC) announced plans to defer the application of 13 regulatory technical standards under the Sustainable Finance Disclosure Regulation (2019/2088) by six months, from January 01, 2022 to July 01, 2022.
BoE Consults on Approach to Setting MREL, Publishes Bail-In Guidance
The Bank of England (BoE) published a consultation paper on approach to setting minimum requirement for own funds and eligible liabilities (MREL), an operational guide on executing bail-in, and a statement from the Deputy Governor Dave Ramsden.
EBA Seeks Views on Proportionality Assessment Methodology
The European Banking Authority (EBA) is seeking preliminary input on standardization of the proportionality assessment methodology for credit institutions and investment firms.
US Agencies Propose Changes to Call Reports and Instructions
Certain regulatory authorities in the US are extending period for completion of the review of certain residential mortgage provisions and for publication of notice disclosing the determination of this review until December 20, 2021.
PRA Finalizes Rulebook Definition of Higher Paid Material Risk-Taker
The Prudential Regulation Authority (PRA) published the policy statement PS18/21, which introduces an amendment in the definition of "higher paid material risk taker" in the Remuneration Part of the PRA Rulebook.
EBA Examines Asset Encumbrance in Banking Sector
The European Banking Authority (EBA) published its annual report on asset encumbrance in banking sector.
EBA Publishes Methodological Guide to Mystery Shopping
The European Banking Authority (EBA) published a methodological guide to mystery shopping.
APRA Issues Update on Capital Reform Policy Settings for Banks
The Australian Prudential Regulation Authority (APRA) released a letter to authorized deposit-taking institutions to provide an update on key policy settings for the capital framework reforms, which will come into effect from January 01, 2023.
CPMI-IOSCO Assess Continuity Planning of Market Infrastructures
The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) published a report that assesses the business continuity planning activities of financial market infrastructures or FMIs.
ESMA Responds to Proposal Related to Sustainability Standards Board
The European Securities and Markets Authority (ESMA) has responded to the IFRS consultation on targeted amendments to the IFRS Foundation constitution to accommodate an International Sustainability Standards Board (ISSB) to set IFRS Sustainability Standards.
