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
IFRS 17 subject matter expert; actuary; risk management and capital projection specialist
Jerome Ogrodzki
Insurance asset and liabilities modeling specialist; stochastic modeling expert
Related Articles
BoE Clarifies Approach to Treatment of Payment Holidays on Form PL
BoE published a statistical notice (Notice 2020/9) explaining the approach for treatment of payment holidays on the profit and loss return or Form PL.
BoE Provides Reporting Update on Form AS and Form FV
BoE updated the known issues document for the statistical reporting Forms AS and FV.
FED Announces Capital Requirements for Large Banks
FED announced individual capital requirements for 34 large banks and these requirements go into effect on October 01, 2020.
SRB Publishes Guidance on Implementation of Bail-In Tool
SRB published a set of documents to give operational guidance to banks on implementation of the bail-in tool.
BIS Publishes Update on G20 TechSprint Initiative
BIS published an update on the G20 TechSprint Initiative, which was launched in April 2020 and aims to highlight the potential for technologies to resolve regulatory compliance (regtech) and supervisory (suptech) challenges.
OSFI Provides Update on Implementation of IFRS 17 in Canada
OSFI published a letter that provides an update on the milestones for the implementation of the IFRS 17 standard on insurance contracts.
EBA Provides Clarity on Implementation of Guidance on COVID Reporting
EBA updated the report on the implementation of selected COVID-19 policies.
FSI Note Discusses Challenges Associated with COVID Relief Measures
The Financial Stability Institute (FSI) of BIS published a brief note that examines the supervisory challenges associated with certain temporary regulatory relief measures introduced by BCBS and prudential authorities in response to the COVID-19 pandemic.
BCBS Consults on Principles for Operational Risk and Resilience
BCBS is consulting on the principles for operational resilience and the revisions to the principles for sound management of operational risk for banks.
BoE Updates Template and Definitions for Form ER
BoE updated the reporting template for Form ER as well as the Form ER definitions, which contain guidance on the methodology to be used in calculating annualized interest rates.
