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
IAIS Adopts ComFrame, ICS, and Holistic Framework for Systemic RiskRelated Articles
APRA Finalizes Reporting Standard for Operational Risk Requirements
APRA finalized the reporting standard ARS 115.0 on capital adequacy with respect to the standardized measurement approach to operational risk for authorized deposit-taking institutions in Australia.
ECB Publishes Guide for Determining Penalties for Regulatory Breaches
ECB published a guide that outlines the principles and methods for calculating the penalties for regulatory breaches of prudential requirements by banks.
MAS Sets Out Good Practices to Manage Operational Risks Amid COVID
MAS and The Association of Banks in Singapore (ABS) jointly issued a paper that sets out good practices for the management of operational and other risks stemming from new work arrangements adopted by financial institutions amid the COVID-19 pandemic.
ACPR Announces New Data Collection Application for Banks and Insurers
ACPR announced that a new data collection application, called DLPP (Datalake for Prudential), for collecting banking and insurance prudential data will go into production on April 12, 2021.
BCB Maintains CCyB at 0%, Initiates First Cycle of Regulatory Sandbox
BCB announced that the Financial Stability Committee decided to maintain the countercyclical capital buffer (CCyB) for Brazil at 0%, at least until the end of 2021.
EBA Consults on Pillar 3 Disclosure Standards for ESG Risks Under CRR
EBA is consulting on the implementing technical standards for Pillar 3 disclosures on environmental, social, and governance (ESG) risks, as set out in requirements under Article 449a of the Capital Requirements Regulation (CRR).
ESAs Issue Advice on KPIs on Sustainability for Nonfinancial Reporting
ESAs Issue Advice on KPIs on Sustainability for Nonfinancial Reporting
EIOPA Launches Study on Non-Life Underwriting Risk in Internal Models
EIOPA has launched a European-wide comparative study on non-life underwriting risk in internal models, also kicking-off of the data collection phase.
SRB Publishes Overview of Resolution Tools Available in Banking Union
SRB published an overview of the resolution tools available in the Banking Union and their impact on a bank’s ability to maintain continuity of access to financial market infrastructure services in resolution.
EU Amends CRD4 and CRD5 as Part of Capital Markets Recovery Package
EU published Directive 2021/338, which amends the Markets in Financial Instruments Directive (MiFID) II and the Capital Requirements Directives (CRD 4 and 5) to facilitate recovery from the COVID-19 crisis.