The PRA has issued a Consultation Paper (CP2/24) outlining proposals for PRA-regulated insurers to prepare for an orderly ‘solvent exit’ as part of their business-as-usual activities. The PRA aims to enhance confidence that firms can exit the market with minimal disruption and without relying on insolvency or resolution processes. The proposals include new rules and expectations for firms to prepare for a solvent exit, document preparations in a Solvent Exit Analysis (SEA), and, if a solvent exit becomes likely, develop a detailed Solvent Exit Execution Plan (SEEP), and monitor and manage a solvent exit.
The objective is to facilitate efficient, cost effective, and less disruptive exits, ultimately benefiting policyholders and supporting market stability. The PRA recognises the complexity of barriers to solvent exits and emphasises proportionality in expectations. The proposals cover various types of insurers, excluding firms in passive run-off and UK branches of overseas insurers. The PRA anticipates publishing a Policy Statement in the second half of 2024, with proposed implementation in Q4 2025.
The consultation closes on Friday, 26 April 2024.