Prudential Regulation Authority Rulebook

4.1

Where 2.1(1) applies, each participating Solvency II undertaking that is a firm in the group and each relevant insurance group undertaking must ensure that eligible own funds are available in the group which are always at least equal to the group SCR as calculated in accordance with 7 to 12.

[Note: Art. 218(2) of the Solvency II Directive]

4.2

Where 2.1(2) applies, each relevant insurance group undertaking must ensure that eligible own funds are available in the group which are always at least equal to the group SCR as calculated in accordance with 14.

[Note: Art. 218(3) of the Solvency II Directive]

4.3

Relevant insurance group undertakings must have procedures in place to identify deteriorating financial conditions within the groups of which they are members and must immediately notify the group supervisor when that deterioration occurs.

[Note: Art. 218(4) and Art. 136 of the Solvency II Directive]

4.4

The changes to this rule are effective from 23:00 on 31/12/2020.

Relevant insurance group undertakings must:

1. (1) immediately inform the PRA as soon as they observe that the group SCR is no longer complied with, or where there is a risk of non-compliance within the next three months;
2. (2) within two months from the observation of non-compliance with the group SCR, submit a realistic recovery plan in accordance with Undertakings In Difficulty 5.1 for approval by the PRA;
3. (3) take the measures necessary to achieve, within six months (or such longer period as the PRA may determine) from the observation of non-compliance with the group SCR, the re-establishment of the level of eligible own funds covering the group SCR or the reduction of the risk profile to ensure compliance with the group SCR; and
4. (4) if the PRA has extended the period referred to in (3) by reason of the declaration:
1. (a) (before IP completion day) by EIOPA; or
2. (b) (on or after IP completion day) by the PRA pursuant to regulation 4A of the Solvency 2 Regulations,
5. of an exceptional adverse situation affecting the group, submit a progress report to the PRA every three months setting out the measures taken and the progress made to re-establish the level of own funds covering the group SCR or to reduce the risk profile to ensure compliance with the group SCR.

[Note: Art. 218(4) and Art. 138(1)–(4) of the Solvency II Directive]