Guidance

SoP – Dealing with insurers in financial difficulties

Chapter

The PRA’s consent to write-down manager appointment and statement of suitability

Printed on: 06/11/2024

Rulebook at: 19/09/2023

3

The PRA’s consent to write-down manager appointment and statement of suitability

13

The effect of section 377A(3)(a) of FSMA is that a write-down order cannot take effect until the appointment of a write-down manager takes effect under section 377G of FSMA.

  • 19/09/2023

14

The write-down manager is appointed by court order[10] either at the same time as making a write-down order or at a later date.[11] Multiple persons may be appointed to the role (acting jointly or separately).[12]

  • 10. Section 377G(1) of FSMA.
  • 11. Section 377G(2)(a) of FSMA.
  • 12. Section 377G(6) of FSMA.
  • 19/09/2023

15

Upon appointment, the write-down manager is an officer of the court[13] and is subject to any directions the court may give at the time of appointment[14] or subsequently.[15] The write-down manager does not act as an agent or representative of the PRA. Moreover, the firm remains in control of the conduct of its business throughout, and is ultimately responsible for compliance with the write-down order and the implementation of the write-down plan.

  • 13. Paragraph 2 of Schedule 19A to FSMA.
  • 14. Section 377G(2)(c) of FSMA.
  • 15. Paragraphs 6 or 7(4) of Schedule 19A to FSMA.
  • 19/09/2023

16

The process under section 377C of FSMA applies to an application for the appointment of a write-down manager,[16] meaning that (as above):

  1. (a) the PRA’s consent is required before making such an application;
  2. (b) such consent must be:
    1. (i) in writing; and
    2. (ii) filed with the court with the relevant application; and
  3. (c) the PRA is required to consult the FCA before giving or refusing such consent.
  • 16. Section 377G(4) of FSMA, which applies section 377C of FSMA (subject to certain modifications, which are not relevant for present purposes).
  • 19/09/2023

17

In addition, the court may only appoint a person as write-down manager if:

  1. (a) the PRA has provided the court with a statement that the person is suitably qualified; and
  2. (b) the person has provided the court with a statement that they consent to the appointment.[17]
  • 17. Section 377G(5) of FSMA.
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18

In deciding whether to consent to the making of an application for the appointment of a person as write-down manager (and in providing the associated statement of suitability), the PRA will consider all relevant factors, including those set out below, in the context of its statutory objectives. As with write-down orders, the decision whether to appoint a person as write-down manager is for the court. The provision of consent (and a statement of suitability) by the PRA does not mean that a given candidate will ultimately be appointed by the court as write-down manager.

  • 19/09/2023

19

The PRA expects the firm to propose a candidate for appointment as write-down manager.

  • 19/09/2023

20

The PRA expects the proposed write-down manager to:

  1. (a) be independent – any direct or indirect interest or connection they have or have had in the insurer should not prejudice their status;
  2. (b) work for an employer that is independent – any direct or indirect interest or connections they have or have had in the insurer should not prejudice their status;
  3. (c) have relevant knowledge, both practical and theoretical, and experience of the types of insurance business transacted by the insurer;
  4. (d) be a licensed insolvency practitioner, a suitably qualified insurance professional or an actuary, as may be appropriate to the firm and the write-down plan contemplated;
  5. (e) have appropriate professional indemnity insurance (or similar arrangements) in place;
  6. (f) provide the PRA with sufficient detail to enable it to make the statement required under section 377G(5)(a) of FSMA;
  7. (g) be willing and ready to provide the statement required under section 377G(5)(b) of FSMA; and
  8. (h) have the appropriate time and capacity to undertake the work required in connection with:
    1. (i) the development of the write-down plan;
    2. (ii) the application to court for a write-down order;
    3. (iii) the monitoring of the insurer’s affairs18 and any other functions anticipated in connection with the implementation of the write-down plan; and
    4. (iv) the provision of regular reports to the PRA and the FCA.[19]
  • 19. Paragraph 3(4) of Schedule 19A to FSMA.
  • 19/09/2023

21

The principles set out in PRA supervisory statement (SS) 7/14 – Reports by skilled persons, [20] also apply to the PRA’s consideration of whether to consent to an application for the appointment of a person as write-down manager (and the associated statement of suitability).

  • 19/09/2023

22

If an appropriate candidate is not identified by the insurer, the PRA may put forward a member of its own staff for appointment as write-down manager. In such a case, the PRA would still be required to consent to the application and provide a statement of suitability, though not all the factors set out in paragraph 20 would be relevant.

  • 19/09/2023