PRA Publishes Solvency II Review Considerations for year-end 2023

The PRA has published its Solvency II Review Considerations for year-end 2023. The statement outlines the upcoming changes to HM Treasury (HMT) and the Prudential Regulation Authority’s (PRA)’s Solvency II reforms, set to take effect by the end of 2023. These changes stem from PRA consultation papers (CP14/22 and CP 12/23), the PRA’s consideration of responses to those CPs, and HMT’s recent reforms to Solvency II regulations (Insurance and Reinsurance Undertakings (Prudential Requirements) (Risk Margin) Regulations 2023).

It specifically details alterations to the PRA’s regulatory reporting requirements and the transitional measure on technical provisions (TMTP). It also provides information to assist firms with their implementation of the risk margin calculation taking into account HMT’s regulations, removal of specific reporting templates, and modifications to the financial resource requirement (FRR) test. Notably, the statement covers the cessation of Regular Supervisory Reports (RSRs), the deletion of selected Solvency II reporting templates, and the revised approach to the FRR test in connection with the TMTP recalculation.

Furthermore, it highlights the risk margin reforms introduced by HMT and provides guidance on how firms may interpret and apply these changes, particularly concerning Periodical Payment Orders (PPOs). The statement emphasises the transitional phase for implementation and signals the PRA’s forthcoming decisions based on responses and ongoing considerations.

Jasmine Zacher