Articles - PRA's consultaion paper on Solvency II:Transitional Measures

 The CP is of interest to all UK insurance firms within the scope of Solvency II and to the Society of Lloyd’s. It should be read alongside the relevant European legislation, previous consultations on Solvency II, and relevant parts of the PRA Rulebook.

 Summary of proposals covered by the CP

  

 The proposed rules in this CP are designed to ensure a smooth transition towards the full requirements of the new regime. The Directive specifies a transitional on risk-free rates, for which firms must apply to the PRA for approval to use, and which is designed to enable firms to transition from their current discount rate requirements to the corresponding Solvency II requirements. The Directive also specifies a transitional on technical provisions, for which firms must apply to the PRA for approval to use, and which is calculated as an adjustment to the relevant risk-free interest rate term structure.

  

 The draft supervisory statements in this consultation set out the PRA’s expectations regarding the calculation and application process to be used for these transitional measures. They also set out the PRA’s expectations of firms in relation to how participations in (re)insurance firms are reflected in the Solvency Capital Requirement at the solo level.

  

 The PRA is required to transpose the Directive by Tuesday 31 March 2015 and the Solvency II regime will apply to all affected firms from 1 January 2016.

  

 Responses

 This consultation closes on Friday 20 February 2015.

 Please address any comments or enquiries here

  

 To download the paper please click on the document below.