BoE Statement on Recalculating Transitional Measures Under Solvency II
BoE notified that it will be willing to accept applications from firms to recalculate transitional measure on technical provisions (TMTP) as at September 30, 2019. Solvency II Directive allows firms to apply to their supervisory authority for approval to use the TMTP. Under the Directive, recalculation is permitted, at the initiation of either the firm or PRA every 24 months or more frequently, where the risk profile of the firm has materially changed.
In line with the supervisory statement SS6/16 on the maintenance of TMTP under Solvency II, BoE has been monitoring market conditions since the previous biennial TMTP recalculation (as at December 31, 2017) and has been considering whether changes in market conditions since the end of June can reasonably be considered to have been sustained. In any application, BoE expects firms to be able to demonstrate that a material change in risk profile has occurred. This is relevant to all firms with the current TMTP approval. Firms should note that to expedite the application process, BoE would expect applications at this time to use firms’ existing TMTP calculation methodology. Applications received at this time would be in addition to the expected biennial TMTP recalculation as at December 31, 2019.
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Keywords: Europe, UK, Insurance, Solvency II, Reinsurance, TMTP, Transitional Measure, SS6/16, BoE
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