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    PRA Consults on Availability of Group Own Funds Under Solvency II

    July 22, 2019

    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.

     

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    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

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