PRA Finalizes Policy on Supervisory Approach for Insurance SPVs
PRA published final policy (in PS13/20) setting out the approach and expectations for authorization and supervision of insurance special purpose vehicles (ISPVs or insurance SPVs). PS13/20 presents amendments to the Insurance Special Purpose Vehicle Part of the PRA Rulebook, contains an updated supervisory statement SS8/17 on authorization and supervision of ISPVs, and sets out the New Risk Assumption Notification Form for multi-arrangement ISPVs or MISPVs. PS13/20 also presents feedback to responses to the consultation paper CP19/19 on updates to the authorization and supervision of ISPVs.
PS13/20 is relevant to parties that wish to apply for, or that have obtained authorization, as an ISPV. It is also relevant to insurers and reinsurers seeking to use UK ISPVs as risk mitigation in accordance with Solvency II. Post consultation, PRA has amended the wording of paragraph 3.4 in SS8/17 to improve readability, in addition to correcting certain references in paragraph 3.30. As per PRA, these changes do not alter the policy intent and have a significant impact on firms, or a differential impact on mutuals. Therefore, PRA has not updated the cost-benefit analysis that accompanied the CP19/19.
The policy in SS8/17 took effect on the publication of PS13/20—that is, on May 22, 2020. The amendments to the Insurance Special Purpose Vehicle Part of the PRA Rulebook and the New Risk Assumption Notification Form for MISPV will be effective from May 26, 2020. The policy set out in PS13/20 has been designed in the context of the withdrawal of UK from EU and entry into the transition period, during which time the UK remains subject to European law. PRA will keep the policy under review to assess whether any changes would be required due to changes in the UK regulatory framework at the end of the transition period, including the changes arising once any new arrangements with EU take effect. PRA has assessed that the policy would not need to be amended under the EU (Withdrawal) Act 2018.
Related Links
Effective Date: May 22, 2020/May 26, 2020
Keywords: Europe, UK, Insurance, Reinsurance, Solvency II, ISPV, PRA Rulebook, PS13/20, SS8/17, Special Purpose Vehicle, PRA
Featured Experts
Paul McCarney
Insurance product strategist; insurance domain expert; extensive experience developing risk assessment frameworks for insurers
Brian Robinson
Actuary; risk management specialist; corporate and capital modelling expert
Previous Article
IASB Expects to Publish Further Amendments to IFRS 17 in June 2020Related Articles
FINMA Approves Merger of Credit Suisse and UBS
The Swiss Financial Market Supervisory Authority (FINMA) has approved the takeover of Credit Suisse by UBS.
BOE Sets Out Its Thinking on Regulatory Capital and Climate Risks
The Bank of England (BOE) published a working paper that aims to understand the climate-related disclosures of UK financial institutions.
OSFI Finalizes on Climate Risk Guideline, Issues Other Updates
The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.
APRA Assesses Macro-Prudential Policy Settings, Issues Other Updates
The Australian Prudential Regulation Authority (APRA) published an information paper that assesses its macro-prudential policy settings aimed at promoting stability at a systemic level.
BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending
BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.
HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks
The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.
MFSA Sets Out Supervisory Priorities, Issues Reporting Updates
The Malta Financial Services Authority (MFSA) outlined its supervisory priorities for 2023
German Regulators Issue Multiple Reporting Updates for Banks
Deutsche Bundesbank published the nationally deactivated validation rules for the German Commercial Code (HGB) users on the taxonomy 3.2, which became valid from December 31, 2022
BCBS Report Examines Impact of Basel III Framework for Banks
The Basel Committee on Banking Supervision (BCBS) published results of the Basel III monitoring exercise based on the June 30, 2022 data.
PRA Consults on Prudential Rules for "Simpler-Regime" Firms
Among the recent regulatory updates from UK authorities, a key development is the first-phase consultation, from the Prudential Regulation Authority (PRA), on simplifications to the prudential framework that would apply to the simpler-regime firms.
