PRA Publishes Final Policy on Maintenance of TMTP Under Solvency II
PRA published the policy statement (PS25/19) that contains the final supervisory statement (SS6/16) on maintenance of the transitional measure on technical provisions (TMTPs) under Solvency II. The final policy is intended to provide further clarity on the consistency of Solvency I and Solvency II methodologies, in addition to the additional guidance for firms seeking to simplify the recalculation methodology of TMTPs. The expectations that have been set out in SS6/16 come into effect on November 14, 2019, which is also the publication date for PS25/19.
PS25/19 also provides feedback to responses to the consultation paper CP11/19, which had proposed to update SS6/16. PRA has received six responses to this consultation. A number of respondents considered the proposal limiting firms’ making changes to their Solvency I methodology to be unduly restrictive. Additionally, respondents generally welcomed the additional guidance for firms proposing to use proportionate approaches to the TMTP recalculation methodology. After considering the responses, PRA has made the following key changes to the draft policy:
- New text to acknowledge that the distinction between a methodology and assumption change may rely on judgment (paragraph 3.2 of SS6/16)
- A new paragraph providing additional clarity on PRA expectations for firms using a simplified methodology for TMTP recalculation (paragraph 4.18E of SS6/16)
The policy set out in PS25/19 has been designed in the context of the current UK and EU regulatory framework. PRA will keep the policy under review to assess whether any changes would be required due to changes in UK regulatory framework, including those arising once any new arrangements with EU take effect. In the event that UK leaves EU with no implementation period in place, PRA has assessed that the policy would not need to be amended under the EU (Withdrawal) Act 2018, also known as EUWA.
Related Links
Effective Date: November 14, 2019
Keywords: Europe, UK, Insurance, Reinsurance, Pillar 2, Solvency II, TMTP, Transitional Measure, PS25/19, SS6/16, CP11/19, 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
IMF Publishes Reports on 2019 Article IV Consultation with HungaryRelated Articles
EBA Publishes Regulatory Standards to Identify Shadow Banking Entities
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying the criteria to identify shadow banking entities for the purposes of reporting large exposures.
EU Agencies Update LCR Rule and Macro-Prudential Policy Recommendation
The European Commission (EC) published the Delegated Regulation 2022/786 with regard to the liquidity coverage requirements for credit institutions under the Capital Requirements Regulation (CRR).
OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities
The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.
EBA Proposes Standards to Support Secondary NPL Markets
The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.
EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution
The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).
EBA Issues Standards for Crowdfunding Service Providers Under ECSPR
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.
EU to Amend Credit Risk Adjustment Rules; ESAs Submit Queries on SFDR
The European Council published a draft Commission Delegated Regulation to amend the regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.
EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution
The European Securities and Markets Authority (ESMA) published a paper that examines the systemic risk posed by increasing use of cloud services, along with the potential policy options to mitigate this risk.
MAS Amends Notice 635 and Issues Second Proposal on Green Taxonomy
The Monetary Authority of Singapore (MAS) published amendments to Notice 635, which sets out requirements that a bank in Singapore has to comply with when granting an unsecured non-card credit facility to individuals.
EC Consults on PSD2 and Open Finance; EU Reaches Agreement on DORA
The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.