Featured Product

    PRA Statement on Regulatory Changes Impacting Calculation of SCR

    November 20, 2019

    PRA published a statement reminding firms that the deferred part of the Delegated Regulation (EU) 2019/981, which was published by EC on June 18, 2019, will come into effect on January 01, 2020. This may impact the calculation of the Solvency Capital Requirement (SCR). Delegated Regulation (EU) 2019/981 amends Delegated Regulation (EU) 2015/35, which supplements the Solvency II Directive (2009/138/EC).

    The changes under discussion relate to:

    • Standard Formula component loss-absorbing capacity of deferred tax (LACDT)
    • Segmentation of non-life insurance and reinsurance obligations
    • Standard deviations for the non-life premium and reserve risk sub-module
    • Segmentation of Not Similar to Life Techniques (NSLT) health insurance and reinsurance obligations
    • Standard deviations for the NSLT health premium and reserve risk sub-module

    Among the changes made to LACDT, there will be a requirement that any increases in deferred tax assets after a stress event shall not be included within the calculation of the tax adjustment to the SCR, unless firms are able to demonstrate to the satisfaction of PRA that it is probable that future taxable profit will be available, against which that increase can be utilized (Article 207 2a in the revised delegated regulation). PRA notes that the change to LACDT regulations will also be relevant for firms that use a Partial Internal Model for the SCR, where LACDT is not included within the scope of that model.

     

    Related Links

    Effective Date: January 01, 2020

    Keywords: Europe, UK, Insurance, Reinsurance, Solvency II, SCR, Loss-Absorbing Capacity, Deferred Tax, Capital Requirements, Regulation 2019/981, Regulation 2015/35, EC, PRA

    Featured Experts
    Related Articles
    News

    APRA Publishes Proposal to Increase Transparency of Banking Data

    APRA proposed to substantially increase the volume and breadth of data it makes publicly available on authorized deposit-taking institutions, including banks, credit unions, and building societies.

    December 05, 2019 WebPage Regulatory News
    News

    ESMA Consults on Guide to Internal Controls for Credit Rating Agencies

    ESMA launched a consultation on the guidelines on internal controls for credit rating agencies (CRAs).

    December 05, 2019 WebPage Regulatory News
    News

    EU Finalizes Directive and Prudential Rules for Investment Firms

    EU published, in the Official Journal of the European Union, the Directive (2019/2034) and Regulation (2019/2033) on the prudential requirements and supervision of investment firms.

    December 05, 2019 WebPage Regulatory News
    News

    OSFI Revises Guideline on Principles for Management of Liquidity Risk

    OSFI finalized Guideline B-6 on the principles for the management of liquidity risk.

    December 05, 2019 WebPage Regulatory News
    News

    PRA Consults on Framework to Manage Outsourcing and Third-Party Risk

    PRA published a consultation paper CP30/19 that sets out proposals to modernize the regulatory framework on outsourcing and third-party risk management.

    December 05, 2019 WebPage Regulatory News
    News

    BoE, PRA, and FCA Consult to Strengthen Operational Resilience

    BoE, PRA, and FCA published a shared policy summary and coordinated consultation papers on new requirements to strengthen operational resilience in the financial services sector.

    December 05, 2019 WebPage Regulatory News
    News

    EC Amends Rule on Mapping of External Credit Assessment Institutions

    EC published the implementing regulation (EU) 2019/2028, which amends Regulation 2016/1799, regarding the mapping tables specifying correspondence between the credit risk assessments of external credit assessment institutions (ECAIs) and the credit quality steps set out in the Capital Requirements Regulation.

    December 04, 2019 WebPage Regulatory News
    News

    EBA Issues Second Part of Advice on Implementation of Basel III in EU

    EBA published the second part of its advice on the implementation of Basel III in EU, which complements the report published on August 05, 2019.

    December 04, 2019 WebPage Regulatory News
    News

    EU Approves European Council Proposal on CCP Recovery and Resolution

    EU ambassadors approved the position of European Council on a proposed framework for clearing houses and their authorities to prepare for and deal with financial difficulties.

    December 04, 2019 WebPage Regulatory News
    News

    OSFI Releases Guideline on Foreign Bank Branch Deposit Requirements

    OSFI released the final version of Guideline A-10 on foreign bank branch deposit requirements, along with guideline impact analysis statement.

    December 04, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 4268