Prudential Regulation Authority Rulebook

2.1

A UK Solvency II firm means a firm:

1. (1) that satisfies the conditions set out in 2.2, or
2. (2) whose Part 4A permission includes a requirement that it comply with the Solvency II Firms Sector of the PRA Rulebook.

2.2

The conditions referred to in 2.1(1) are, subject to the exclusions in 2.3 to 2.6:

1. (1) the firm is an insurer;
2. (2) the firm has its head office in the UK;
3. (3) the firm’s Part 4A permission does not include a requirement that it must only carry on Solvency II excluded operations;
4. (4) if the firm is a Solvency I firm, it is not excluded pursuant to 2.6;
5. (5) if the firm is a non-Solvency I firm, it is not excluded pursuant to:
1. (a) 2.3 on the Solvency II implementation date; or
2. (b) 2.6;
6. (6) if it obtained its Part 4A permission to effect contracts of insurance and/or carry out contracts of insurance on or after Solvency II implementation date, the firm is not excluded pursuant to:
1. (a) 2.3 on the date it obtains such Part 4A permission, unless 2.5 applies; or
2. (b) 2.6; and
7. (7) the firm is not a pure reinsurer which ceased to conduct new reinsurance contracts before 10 December 2007.

[Note: Art. 2(1), Art. 4(1), (3), (4), Art. 5(2), Art. 7, Art. 9(1), (2), Art. 12(1) of the Solvency II Directive]

2.3

Subject to 2.5, a firm of the kind mentioned in 2.2(5) or 2.2(6) is excluded if it fulfils all of the following conditions:

1. (1) the firm’s annual gross written premium income does not exceed 5,000,000 euro;
2. (2) the total of the firm’s technical provisions, gross of the amounts recoverable from reinsurance contracts and ISPVs, as referred to in Technical Provisions 2.1 to 2.3 does not exceed 25,000,000 euro;
3. (3) where the firm belongs to a group, the total of the technical provisions of the group defined as gross of the amounts recoverable from reinsurance contracts and ISPVs does not exceed 25,000,000 euro;
4. (4) the business of the firm does not include insurance or reinsurance activities covering liability, credit and suretyship insurance risks, unless they constitute ancillary risks; and
5. (5) the business of the firm does not include reinsurance operations:
1. (a) exceeding:
1. (i) 500,000 euro of its gross written premium income; or
2. (ii) 2,500,000 euro of its technical provisions gross of the amounts recoverable from reinsurance contracts and ISPVs; or
2. (b) with more than 10% of its gross written premium income or more than 10% of its technical provisions gross of the amounts recoverable from reinsurance contracts and ISPVs.

[Note: Art. 4(1) of the Solvency II Directive]

2.4

A firm excluded under 2.3 shall cease to be excluded under that rule:

1. (1) from the fourth year if any of the amounts set out in 2.3(1), 2.3(2), 2.3(3) or 2.3 (5) are exceeded in each of the three preceding consecutive years after the Solvency II implementation date; and
2. (2) immediately and for as long as:
1. (a) it exercises EEA rights under the Solvency II Directive;
2. (b) its business includes insurance or reinsurance activities covering liability, credit or suretyship insurance risks, unless they constitute ancillary risks.

[Note: Art. 4(2), Art. 4(4)(2^nd sub-paragraph) of the Solvency II Directive]

2.5

Subject to 2.6, a firm of the kind mentioned in 2.2(6) is not excluded under 2.3 if;

1. (1) any of the amounts set out in 2.3(1), 2.3(2), 2.3(3) or 2.3(5) are expected to be exceeded within five years of the date the firm obtained its Part 4A permission to effect contracts of insurance and/or carry out contracts of insurance;
2. (2) it exercises EEA rights under the Solvency II Directive.

[Note: Art. 4(3), Art. 4(4)(2^nd sub-paragraph) of the Solvency II Directive]

2.6

A firm of the kind mentioned in 2.2(4), 2.2(5) or 2.2(6) is excluded provided

1. (1) it is not exercising EEA rights under the Solvency II Directive; and
2. (2) none of the thresholds set out in 2.3:
1. (a) has been exceeded for three consecutive years; and
2. (b) is expected to be exceeded during the following five years.

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