PRA sets out policy on solvent exit planning for insurers

Following a consultation, the PRA has published a policy statement on solvent exit planning for insurers.

The PRA had proposed new rules and expectations that firms must prepare for a solvent exit as part of their business-as-usual activities, and document those preparations in a Solvent Exit Analysis (SEA). It also proposed new expectations – applicable where a solvent exit became a reasonable prospect for a firm – on how a firm should prepare a detailed Solvent Exit Execution Plan (SEEP), and manage and monitor a solvent exit.

Overall, respondents supported the proposed policy’s aims to minimise the risks that might arise in a disorderly cessation of PRA-regulated activities. They also generally supported:

• the distinction between the different types of preparations to be made by all firms during business-as-usual (in a SEA), versus by firms when there is a reasonable prospect of solvent exit (in a SEEP); and
• the PRA’s position that solvent exit planning should be proportionate to the firm’s nature, scale, and complexity.

The Preparations for Solvent Exit Instrument will come into force on 30 June 2026, and firms are expected to meet the expectations in the supervisory statement by that date.