Prudential Regulation Authority Rulebook

1.1

This supervisory statement is addressed to UK Solvency II firms and to the Society of Lloyd’s. It sets out how the Prudential Regulation Authority (PRA) expects to deal with firms in the circumstances envisaged by Article 144 of the Solvency II Directive, where a firm does not meet the minimum capital requirement (MCR) and where either the PRA considers that the finance scheme it has submitted is manifestly inadequate or the firm fails to comply with the approved scheme within three months from the observation of non-compliance with the MCR.

1.2

It is also addressed to firms in run-off which may fall within the ambit of the transitional provision set out in Transitional Measures 2 in the Transitional Measures Part of the PRA Rulebook.

1.3

This statement should be read alongside all relevant European legislation as well as the Undertakings in Difficulty Part of the PRA Rulebook.

1.4

This statement expands on the PRA’s general approach as set out in its insurance approach document.^[1] By clearly and consistently explaining its expectations of firms in relation to the particular areas addressed, the PRA seeks to advance its statutory objectives of ensuring the safety and soundness of the firms it regulates, and contributing to securing an appropriate degree of protection for policyholders. The PRA has considered matters to which it is required to have regard, and it considers that this statement is compatible with the Regulatory Principles and relevant provisions of the Legislative and Regulatory Reform Act 2006. This statement is not expected to have any direct or indirect discriminatory impact under existing UK law.

1.5

This statement has been subject to public consultation^[2] and reflects the feedback that was received by the PRA.