The Solvency 2 and Insurance (Amendment, etc.) (EU Exit) Regulations 2019

Regulation 2

SCHEDULE 1 U.K. Matters in respect of which the Treasury may make regulations

1.—(1) Specifying the information which is necessary for the supervision of insurance and reinsurance undertakings M1 . U.K.

(2) The information specified must include that which is necessary—

(a) to assess the system of governance applied by the undertakings, the business they are pursuing, the valuation principles applied for solvency purposes, the risks faced and the risk-management systems, and their capital structure, needs and management;

(b) to make any appropriate decisions resulting from the exercise of their supervisory rights and duties;

(c) to determine the nature, the scope and the format of the information which they require insurance and reinsurance undertakings to submit at the following points in time:

(i) at predefined periods;

(ii) upon occurrence of predefined events;

(iii) during enquiries regarding the situation of an insurance or reinsurance undertaking;

(d) to obtain any information regarding contracts which are held by intermediaries or regarding contracts which are entered into with third parties; and

(e) to require information from external experts, such as auditors and actuaries.

(3) The information must be specified to comprise the following—

(a) qualitative or quantitative elements, or any appropriate combination thereof;

(b) historic, current or prospective elements, or any appropriate combination thereof; and

(c) data from internal or external sources, or any appropriate combination thereof.

(4) The information must be specified to comply with the following principles—

(a) it must reflect the nature, scale and complexity of the business of the undertaking concerned, and in particular the risks inherent in that business;

(b) it must be accessible, complete in all material respects, comparable and consistent over time; and

(c) it must be relevant, reliable and comprehensible.

Commencement Information

I1 Sch. 1 para. 1 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M1 Article 35(1) to (4) of the Solvency 2 Directive.

2.  Specifying the deadlines for the submission of the information referred to in paragraph 1(2)(a) to (e) M2 . U.K.

Commencement Information

I2 Sch. 1 para. 2 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M2 Article 35(9) of the Solvency 2 Directive.

3.  Laying down further specifications for the circumstances under which a capital add-on may be imposed M3 . U.K.

Commencement Information

I3 Sch. 1 para. 3 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M3 Article 37(6) of the Solvency 2 Directive.

4.  Laying down further specifications for the methodologies for the calculation of capital add-ons M4 . U.K.

Commencement Information

I4 Sch. 1 para. 4 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M4 Article 37(7) of the Solvency 2 Directive.

5.  Specifying the elements of the system of governance and system of risk management and in particular the areas to be covered by the asset–liability management and investment policy of insurance and reinsurance undertakings M5 . U.K.

Commencement Information

I5 Sch. 1 para. 5 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M5 Article 50(1)(a) of the Solvency 2 Directive.

6.  Specifying the functions of risk management, compliance, internal audit and actuarial functions M6 . U.K.

Commencement Information

I6 Sch. 1 para. 6 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M6 Article 48 of the Solvency 2 Directive; Article 50(1)(b) of the Solvency 2 Directive.

7.  Specifying the information which must be disclosed and the deadlines for the annual disclosure of the information in the solvency and financial condition report. U.K.

Commencement Information

I7 Sch. 1 para. 7 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

8.  Laying down the methods and assumptions to be used in the valuation of assets and liabilities M7 . U.K.

Commencement Information

I8 Sch. 1 para. 8 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M7 Article 75(1) of the Solvency 2 Directive; Article 75(2) of the Solvency 2 Directive.

9.  Laying down the following— U.K.

(a) actuarial and statistical methodologies to calculate the best estimate M8 ;

(b) the methodologies, principles and techniques for the determination of the relevant risk-free interest rate term structure to be used to calculate the best estimate M9 ;

(c) the circumstances in which technical provisions must be calculated as a whole, or as a sum of a best estimate and a risk margin, and the methods to be used in the case where technical provisions are calculated as a whole M10 ;

(d) the methods and assumptions to be used in the calculation of the risk margin including the determination of the amount of eligible own funds necessary to support the insurance and reinsurance obligations and the calibration of the cost-of-capital rate M11 ;

(e) the lines of business on the basis of which insurance and reinsurance obligations are to be segmented in order to calculate technical provisions M12 ;

(f) the standards to be met with respect to ensuring the appropriateness, completeness and accuracy of the data used in the calculation of technical provisions, and the specific circumstances in which it would be appropriate to use approximations, including case-by-case approaches, to calculate the best estimate M13 ;

(g) specifications with respect to the requirements as to the matching adjustment to the relevant risk-free interest rate term structure set out in regulation 39 and 42 of the Solvency 2 Regulations 2015 M14 , including the methods, assumptions and standard parameters to be used when calculating the impact of the mortality risk stress referred to in regulation 42(4)(h) M15 of the Solvency 2 Regulations 2015;

(h) specifications with respect to the requirements for the calculation of the matching adjustment M16 including assumptions and methods to apply in the calculation of the matching adjustment and the fundamental spread;

(i) methods and assumptions for the calculation of the volatility adjustment in regulation 43 of the Solvency 2 Regulations 2015 M17 , including a formula for the calculation of the spread referred to in regulation 4B(3) and (6) of those Regulations.

Commencement Information

I9 Sch. 1 para. 9 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M8 Article 77(2) of the Solvency 2 Directive.

M9 Article 77(2) of the Solvency 2 Directive

M10 Article 77(4) of the Solvency 2 Directive.

M11 Article 77(5) of the Solvency 2 Directive.

M12 Article 80 of the Solvency 2 Directive.

M13 Article 82 of the Solvency 2 Directive.

M14 S.I. 2015/575.

M15 Article 77(1)(e) of the Solvency 2 Directive.

M16 Article 77c of the Solvency 2 Directive.

M17 Article 77d of the Solvency 2 Directive.

10.  Specifying the treatment of participations, within the meaning of regulation 2 of the Solvency 2 Regulations 2015 M18 , in financial and credit institutions with respect to the determination of own funds M19 . U.K.

Commencement Information

I10 Sch. 1 para. 10 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M18 Regulation 4(2) of these Regulations inserts into regulation 2 of the Solvency 2 Regulations 2015 the definition of “participating undertaking”, which is derived from Article 212 of the Solvency 2 Directive.

M19 Article 92(1a) of the Solvency 2 Directive.

11.  Providing a list of own-fund items deemed to fulfil the criteria for the classification of own fund items into tiers M20 , which contains for each own-fund item a precise description of the features which determined its classification. U.K.

Commencement Information

I11 Sch. 1 para. 11 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M20 Article 94 of the Solvency 2 Directive.

12.  Laying down the quantitative limits referred to in Article 98(1) and (2) of the Solvency 2 Directive M21 . U.K.

Commencement Information

I12 Sch. 1 para. 12 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M21 Article 98(1) and (2) of the Solvency 2 Directive; Article 99(a) of the Solvency 2 Directive.

13.  Laying down the adjustments that should be made to reflect the lack of transferability of those own-fund items that can be used only to cover losses arising from a particular segment of liabilities or from particular risks (ring-fenced funds) M22 . U.K.

Commencement Information

I13 Sch. 1 para. 13 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M22 Article 99(b) of the Solvency 2 Directive.

14.  Setting out the methodology and the requirements for the calculation of the standard deviations which permit the sharing of claims payments in respect of health risk amongst insurance and reinsurance undertakings and which meet the criteria set out in Article 109a(5)(a) to (d) of the Solvency 2 Directive (reading references in that Article to “Member States” as including the United Kingdom) M23 . U.K.

Commencement Information

I14 Sch. 1 para. 14 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M23 Article 109a(5) of the Solvency 2 Directive.

15.  Providing for— U.K.

(a) a standard formula, in order to calculate the Solvency Capital Requirement;

(b) the design of the Basic Solvency Capital Requirement and risk modules, including but not limited to non-life underwriting risk, life underwriting risk, health underwriting risk, market risk, counterparty default risk M24 ;

(c) the methods, assumptions and standard parameters to be calibrated to the confidence level referred to in Article 101(3) of the Solvency 2 Directive and to be used when calculating each of the risk modules or sub-modules of the basic Solvency Capital Requirement, the symmetric adjustment mechanism and the appropriate period of time, expressed in the number of months, and the appropriate approach for integrating a duration-based equity risk sub-module referred to in Article 304 of the Solvency 2 Directive (reading references in that Article to “Member States” as including the United Kingdom) in the Solvency Capital Requirement as calculated in accordance with the standard formula;

(d) the correlation parameters and the procedures for updating those parameters M25 ;

(e) where insurance and reinsurance undertakings use risk-mitigation techniques, the methods and assumptions to be used to assess the changes in the risk profile of the undertaking concerned and to adjust the calculation of the Solvency Capital Requirement;

(f) the qualitative criteria that the risk-mitigation techniques referred to in point (e) must fulfil in order to ensure that the risk has been effectively transferred to a third party M26 .

Commencement Information

I15 Sch. 1 para. 15 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M24 Article 104 of the Solvency 2 Directive.

M25 Annex IV of the Solvency 2 Directive.

M26 Article 111(1)(a) to (f) of the Solvency 2 Directive.

16.  Providing for— U.K.

(a) the methods and parameters to be used when assessing the capital requirement for operational risk;

(b) the methods and adjustments to be used to reflect the reduced scope for risk diversification of insurance and reinsurance undertakings relating to ring-fenced funds;

(c) the method to be used when calculating the adjustment for the loss absorbing capacity of technical provisions or deferred taxes M27 ;

(d) the subset of standard parameters in the life, non-life and health underwriting risk modules that may be replaced by undertaking-specific parameters as set out in regulation 47 of the Solvency 2 Regulations 2015;

(e) the standardised methods to be used by the insurance or reinsurance undertaking to calculate the undertaking-specific parameters referred to in point (d), and any criteria with respect to the completeness, accuracy, and appropriateness of the data used that must be met before supervisory approval is given together with the procedure to be followed for such approval;

(f) the simplified calculations provided for specific sub-modules and risk modules, as well as the criteria that insurance and reinsurance undertakings, including captive insurance and reinsurance undertakings, shall be required to fulfil in order to be entitled to use those simplifications M28 ;

(g) the approach to be used with respect to related undertakings within the meaning of regulation 2 of the Solvency 2 Regulations 2015 in the calculation of the Solvency Capital Requirement, in particular the calculation of the equity risk sub-module, taking into account the likely reduction in the volatility of the value of those related undertakings arising from the strategic nature of those investments and the influence exercised by the participating undertaking on those related undertakings M29 ;

(h) how to use external credit assessments from external credit assessment institutions (ECAIs) in the calculation of the Solvency Capital Requirement in accordance with the standard formula and the allocation of external credit assessments to a scale of credit quality steps referred to in Article 3 of the Commission Delegated Regulation 2015/35 M30 , which must be consistent with the use of external credit assessments from ECAIs in the calculation [F1 , for the purposes of Regulation (EU) No 575/2013 and CRR rules as defined in section 144A of the Financial Services and Markets Act 2000,] of the capital requirements for credit institutions as defined in Article 4(1)(1) of Regulation (EU) No 575/2013 and financial institutions as defined in Article 4(1)(26) thereof;

(i) the detailed criteria for the equity index referred to in Article 3(3)(b) of Commission Delegated Regulation 2015/35;

(j) the detailed criteria for the adjustments for currencies pegged to the euro for the purpose of facilitating the calculation of the currency risk sub-module referred to in Article 3(3)(c) of Commission Delegated Regulation 2015/35;

(k) the conditions for a categorisation of regional governments and local authorities referred to in Article 3(3)(a) of the Commission Delegated Regulation 2015/35 M31 .

Textual Amendments

F1 Words in Sch. 1 para. 16(h) inserted (17.8.2022) by The Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2022 (S.I. 2022/838), regs. 1(2), 16 (with regs. 24-26)

Commencement Information

I16 Sch. 1 para. 16 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M27 Article 108 of the Solvency 2 Directive.

M28 Article 109 of the Solvency 2 Directive.

M29 Article 109 of the Solvency 2 Directive.

M30 Article 3 has been inserted into the Commission Delegated Regulation by regulation 8(5) of these Regulations, to onshore Article 109a(1) of the Solvency 2 Directive.

M31 Article 111(1)(g) to (q) of the Solvency 2 Directive.

17.  Setting out the adaptations to be made to the internal model requirements, namely the use test, statistical quality standards, calibration standards, profit and loss attribution, validation standards and documentation standards in light of the limited scope of the application of the partial internal model M32 . U.K.

Commencement Information

I17 Sch. 1 para. 17 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M32 Article 114(1)(a) of the Solvency 2 Directive.

18.  Setting out the manner in which a partial internal model is to be fully integrated into the Solvency Capital Requirement standard formula and the requirements for the use of alternative integration techniques M33 . U.K.

Commencement Information

I18 Sch. 1 para. 18 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M33 Article 114(1)(b) of the Solvency 2 Directive.

19.  To provide for the better assessment of the risk profile and management of the business of insurance and reinsurance undertakings regarding the use of internal models M34 . U.K.

Commencement Information

I19 Sch. 1 para. 19 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M34 Article 127 of the Solvency 2 Directive.

20.  Specifying the calculation of the Minimum Capital Requirement M35 . U.K.

Commencement Information

I20 Sch. 1 para. 20 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M35 Article 128 and 129 of the Solvency 2 Directive; Article 130 of the Solvency 2 Directive.

21.  Laying down the specifications for the circumstances under which a proportionate additional capital charge may be imposed when the requirements provided for in Articles 5 or 6 of Regulation (EU) 2017/2402 have been breached M36 . U.K.

Commencement Information

I21 Sch. 1 para. 21 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M36 Article 135(2)(c) of the Solvency 2 Directive.

22.  Supplementing the types of exceptional adverse situations and specifying the factors and criteria to be taken into account in declaring the existence of exceptional adverse situations and in determining the extension to recovery period in accordance with regulation 4A of the Solvency 2 Regulations 2015 M37 . U.K.

Commencement Information

I22 Sch. 1 para. 22 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M37 Article 143(1) of the Solvency 2 Directive.

23.  Specifying the criteria for assessing whether the solvency regime of a third country that applies to reinsurance activities of undertakings with their head office in that third country is equivalent to that laid down in the United Kingdom law which implemented Title I of the Solvency 2 Directive M38 . U.K.

Commencement Information

I23 Sch. 1 para. 23 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M38 Article 172(1) of the Solvency 2 Directive.

24.  Specifying the following criteria for supervisory approval of special purpose vehicles— U.K.

(a) the scope of authorisation;

(b) mandatory conditions to be included in all contracts issued;

(c) fit and proper requirements of the persons running the special purpose vehicle;

(d) fit and proper requirements for shareholders or members having a qualifying holding in the special purpose vehicle;

(e) sound administrative and accounting procedures, adequate internal control mechanisms and risk-management requirements;

(f) accounting, prudential and statistical information requirements;

(g) solvency requirements M39 .

Commencement Information

I24 Sch. 1 para. 24 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M39 Article 211(2) of the Solvency 2 Directive.

25.  Specifying the criteria for assessing whether the solvency regime of a third country is equivalent to that laid down in the United Kingdom law which implemented Title I, Chapter V of the Solvency 2 Directive M40 . U.K.

Commencement Information

I25 Sch. 1 para. 25 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M40 Article 227(3) of the Solvency 2 Directive.

26.  Specifying— U.K.

(a) the technical principles and methods set out in regulations 16-19 and 45 of the Solvency 2 Regulations 2015 M41 ;

(b) the application of regulation 20 of the Solvency 2 Regulations 2015 M42 ;

reflecting the economic nature of specific legal structures M43 ;

Commencement Information

I26 Sch. 1 para. 26 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M41 Article 220-229 of the Solvency 2 Directive.

M42 Article 230-233 of the Solvency 2 Directive.

M43 Article 234 of the Solvency 2 Directive.

27.  Providing a definition of a “significant risk concentration”. U.K.

Commencement Information

I27 Sch. 1 para. 27 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

28.  Providing a definition of a “significant intra-group transaction”. U.K.

Commencement Information

I28 Sch. 1 para. 28 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

29.  Providing a definition of “significant branch”M44 . U.K.

Commencement Information

I29 Sch. 1 para. 29 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M44 Article 248(8) of the Solvency 2 Directive.

30.  Further specifying the information which must be disclosed and the deadlines for the annual disclosure of the information as regards the single solvency and financial condition report, and the report on the solvency and financial condition report at the level of the group M45 . U.K.

Commencement Information

I30 Sch. 1 para. 30 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M45 Article 256(2) of the Solvency 2 Directive.

31.  Specifying the criteria for assessing whether the prudential regime in a third country for the supervision of groups is equivalent to that laid down in the United Kingdom law which implemented Title III of the Solvency 2 Directive M46 . U.K.

Commencement Information

I31 Sch. 1 para. 31 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M46 Article 260(2) of the Solvency 2 Directive.

32.  Specifying the criteria to be met in relation to the standard parameters to be used for equities that an undertaking purchased on or before 1 January 2016 when calculating the equity risk sub-module in accordance with the standard formula, including the equities that may be subject to the transitional period M47 . U.K.

Commencement Information

I32 Sch. 1 para. 32 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M47 Article 308b(13) of the Solvency 2 Directive.

Regulation 3

SCHEDULE 2 U.K. Matters on which the PRA may make technical standards

1.  Regular supervisory reporting M48 . U.K.

Commencement Information

I33 Sch. 2 para. 1 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M48 Article 35 of the Solvency 2 Directive.

2.  The procedures for decisions to set, calculate and remove capital add-ons M49 . U.K.

Commencement Information

I34 Sch. 2 para. 2 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M49 Article 37 of the Solvency 2 Directive.

3.  The procedures for assessing external credit assessments M50 . U.K.

Commencement Information

I35 Sch. 2 para. 3 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M50 Article 44 of the Solvency 2 Directive.

4.—(1) The following requirements, and other key functions. U.K.

(2) The requirements are that all persons who effectively run an insurance or reinsurance undertaking or have other key functions at all times fulfil the following requirements—

(a) their professional qualifications, knowledge and experience are adequate to enable sound and prudent management; and

(b) they are of good repute and integrity M51 .

Commencement Information

I36 Sch. 2 para. 4 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M51 Article 50 of the Solvency 2 Directive.

5.  Specifying further the conditions for outsourcing, in particular to service providers located in third countries. U.K.

Commencement Information

I37 Sch. 2 para. 5 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

6.  Specifying further the elements of the own risk and solvency assessment M52 . U.K.

Commencement Information

I38 Sch. 2 para. 6 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M52 Article 50 of the Solvency 2 Directive.

7.  The procedures, formats and templates of the annual report of solvency and financial conditions M53 . U.K.

Commencement Information

I39 Sch. 2 para. 7 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M53 Article 56 of the Solvency 2 Directive.

8.  Establishing an exhaustive list of information to be included by proposed acquirers in their notification M54 . U.K.

Commencement Information

I40 Sch. 2 para. 8 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M54 Article 58 of the Solvency 2 Directive.

9.—(1) Specifying the adjustments of the following criteria for suitability of the proposed acquirer and the financial soundness of the proposed acquisition. U.K.

(2) The criteria are—

(a) the reputation of the proposed acquirer;

(b) the reputation and experience of any person who will direct the business of the insurance or reinsurance undertaking as a result of the proposed acquisition;

(c) the financial soundness of the proposed acquirer, in particular in relation to the type of business pursued and envisaged in the insurance or reinsurance undertaking in which the acquisition is proposed;

(d) whether the insurance or reinsurance undertaking will be able to comply and continue to comply with prudential requirements, in particular, whether the group of which it will become part has a structure that makes it possible to exercise effective supervision, effectively exchange information among the supervisory authorities and determine the allocation of responsibilities among the supervisory authorities;

(e) whether there are reasonable grounds to suspect that, in connection with the proposed acquisition, money laundering or terrorist financing is being or has been committed or attempted, or that the proposed acquisition could increase the risk thereof M55 .

Commencement Information

I41 Sch. 2 para. 9 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M55 Article 58 of the Solvency 2 Directive.

10.  Specifying— U.K.

(a) to the extent that United Kingdom legislation or regulatory rules require the use of international accounting standards as adopted by the United Kingdom Government, the consistency of those accounting standards with the valuation approach of assets and liabilities;

(b) the methods and assumptions to be used where quoted market prices are either not available or where international accounting standards as adopted by the United Kingdom Government are either temporarily or permanently inconsistent with the valuation approach of assets and liabilities;

(c) the methods and assumptions to be used in the valuation of assets and liabilities, where the United Kingdom law which implemented Solvency 2 allow for the use of alternative valuation methods M56 .

Commencement Information

I42 Sch. 2 para. 10 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M56 Article 75 of the Solvency 2 Directive.

11.  Specifying— U.K.

(a) the methodologies to be used when calculating the counterparty default adjustment to the calculation of amounts recoverable from reinsurance contracts and special purpose vehicles, designed to capture expected losses due to default of the counterparty;

(b) where necessary, simplified methods and techniques to calculate technical provisions, to ensure the actuarial and statistical methods are proportionate to the nature, scale and complexity of the risks supported by insurance and reinsurance undertakings, including captive insurance and reinsurance undertakings M57 .

Commencement Information

I43 Sch. 2 para. 11 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M57 Article 86 of the Solvency 2 Directive.

12.  The procedures for the approval of the application of a matching adjustment M58 . U.K.

Commencement Information

I44 Sch. 2 para. 12 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M58 Article 86 of the Solvency 2 Directive.

13.  Specifying the criteria and procedures for granting supervisory approval for the use of ancillary own funds M59 . U.K.

Commencement Information

I45 Sch. 2 para. 13 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M59 Article 92 of the Solvency 2 Directive.

14.  Specifying the methods to be used when approving the assessment and classification of own-fund items which are not covered by the lists specified in Articles 69, 72, 74, 76 and 78 of Regulation (EU) 2015/35 M60 . U.K.

Commencement Information

I46 Sch. 2 para. 14 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M60 Article 97 of the Solvency 2 Directive.

15.  Specifying quantitative limits and asset eligibility criteria where the risks of particular asset classes or financial instruments are not adequately covered by a standard formula sub-module. Those technical standards must apply to assets covering technical provisions, excluding assets held in respect of life insurance contracts where the investment risk is borne by the policy holders M61 . U.K.

Commencement Information

I47 Sch. 2 para. 15 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M61 Article 111 of the Solvency 2 Directive.

16.  The procedures for supervisory approval of undertaking-specific parameters M62 . U.K.

Commencement Information

I48 Sch. 2 para. 16 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M62 Article 111 of the Solvency 2 Directive.

17.  The procedures for— U.K.

(a) the approval of an internal model, and

(b) the approval of major changes to an internal model and changes to the policy for changing an internal model M63 .

Commencement Information

I49 Sch. 2 para. 17 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M63 Article 114 of the Solvency 2 Directive.

18.  Specifying the methodologies for the calculation of a proportionate additional capital charge where the requirements set out in Article 256(2) or (3) of Regulation (EU) 2015/35 have been breached M64 . U.K.

Commencement Information

I50 Sch. 2 para. 18 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M64 Article 135 of the Solvency 2 Directive.

19.  Specifying the recovery plan and the finance scheme required where there is non-compliance, or a risk of non-compliance, with the Solvency Capital Requirement, and with respect to the PRA's powers arising from the Financial Services and Markets Act 2000 to take all measures necessary to safeguard the interests of policy holders in the case of insurance contracts, or the obligations arising out of reinsurance contracts, taking due care to avoid pro-cyclical effects M65 . U.K.

Commencement Information

I51 Sch. 2 para. 19 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M65 Article 143 of the Solvency 2 Directive.

20.  The procedures for granting supervisory approval to establish special purpose vehicles and on the formats and templates to be used for accounting, prudential and statistical information requirements M66 . U.K.

Commencement Information

I52 Sch. 2 para. 20 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M66 Article 211 of the Solvency 2 Directive.

21.  Specifying the identification of a significant risk concentration and the determination of appropriate thresholds for the purposes of identifying the types of risks insurance and reinsurance undertakings in a particular group must report M67 . U.K.

Commencement Information

I53 Sch. 2 para. 21 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M67 Article 244 of the Solvency 2 Directive.

22.  The forms and templates for reporting on significant risk concentrations M68 . U.K.

Commencement Information

I54 Sch. 2 para. 22 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M68 Article 244 of the Solvency 2 Directive.

23.  Specifying the identification of a significant intra- group transaction for the purposes of identifying the type of intra-group transaction insurance and reinsurance undertakings in a particular group must report M69 . U.K.

Commencement Information

I55 Sch. 2 para. 23 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M69 Article 245 of the Solvency 2 Directive.

24.  The procedures, forms and templates for the reporting on significant intra-group transactions by insurance and reinsurance undertakings in a group, including those performed with a natural person with close links to an undertaking in the group M70 . U.K.

Commencement Information

I56 Sch. 2 para. 24 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M70 Article 245 of the Solvency 2 Directive.

25.  The procedures and templates for, and the means of, disclosure of the single and group solvency and financial condition report M71 . U.K.

Commencement Information

I57 Sch. 2 para. 25 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

Marginal Citations

M71 Article 256 of the Solvency 2 Directive.

Regulation 4

SCHEDULE 3 U.K. Provisions deemed to be PRA rules

1.  The correlation coefficients for non-life underwriting risk contained in the correlation matrix in Article 114(3). U.K.

Commencement Information

I58 Sch. 3 para. 1 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

2.  The correlation coefficients for life underwriting risk contained in the correlation matrix set out in Article 136(3). U.K.

Commencement Information

I59 Sch. 3 para. 2 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

3.  The correlation coefficients for health underwriting risk contained in the correlation matrix set out in Article 144(3). U.K.

Commencement Information

I60 Sch. 3 para. 3 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

4.  The correlation coefficients for SLT health underwriting risk sub-module contained in the correlation matrix set out in Article 151(3). U.K.

Commencement Information

I61 Sch. 3 para. 4 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

5.  The correlation coefficients for market risk contained in the correlation matrix in Article 164(3). U.K.

Commencement Information

I62 Sch. 3 para. 5 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

6.  Annex 2 - Segmentation Of Non-Life Insurance And Reinsurance Obligations And Standard Deviations For The Non-Life Premium And Reserve Risk Sub-Module. U.K.

Commencement Information

I63 Sch. 3 para. 6 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

7.  Annex 3 - Factor For Geographical Diversification Of Premium And Reserve Risk. U.K.

Commencement Information

I64 Sch. 3 para. 7 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

8.  Annex 4 - Correlation Matrix For Non-Life Premium And Reserve Risk. U.K.

Commencement Information

I65 Sch. 3 para. 8 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

9.  Annex 5 - Parameters For The Windstorm Risk Sub-Module. U.K.

Commencement Information

I66 Sch. 3 para. 9 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

10.  Annex 6 - Parameters For The Earthquake Risk Sub-Module. U.K.

Commencement Information

I67 Sch. 3 para. 10 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

11.  Annex 7 - Parameters For The Flood Risk Sub-Module. U.K.

Commencement Information

I68 Sch. 3 para. 11 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

12.  Annex 8 - Parameters For The Hail Risk Sub-Module. U.K.

Commencement Information

I69 Sch. 3 para. 12 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

13.  Annex 9 - The Geographical Division Of Regions Set Out In Annex V Into Risk Zones. U.K.

Commencement Information

I70 Sch. 3 para. 13 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

14.  Annex 10 - Risk Weights For Catastrophe Risk Zones. U.K.

Commencement Information

I71 Sch. 3 para. 14 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

15.  Annex 11 - Liability Risk Groups, Risk Factors And Correlation Coefficients For The Liability Risk Sub-Module. U.K.

Commencement Information

I72 Sch. 3 para. 15 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

16.  Annex 12 - Groups Of Obligations And Risk Factors For The Sub-Module For Other Non-Life Catastrophe Risk. U.K.

Commencement Information

I73 Sch. 3 para. 16 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

17.  Annex 13 - List Of Regions For Which Natural Catastrophe Risk Is Not Calculated Based On Premiums. U.K.

Commencement Information

I74 Sch. 3 para. 17 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

18.  Annex 14 - Segmentation Of NSLT Health Insurance And Reinsurance Obligations And Standard Deviations For The NSLT Health Premium And Reserve Risk Sub-Module. U.K.

Commencement Information

I75 Sch. 3 para. 18 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

19.  Annex 15 - Correlation Matrix For NSLT Health Premium And Reserve Risk. U.K.

Commencement Information

I76 Sch. 3 para. 19 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

20.  Annex 16 - Health Catastrophe Risk Sub-Module Of The Solvency Capital Requirement Standard Formula. U.K.

Commencement Information

I77 Sch. 3 para. 20 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

21.  Annex 19 - MCR Risk Factors For Non-Life And Health Insurance Or Reinsurance Obligations. U.K.

Commencement Information

I78 Sch. 3 para. 21 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

22.  Annex 22 - Correlation Coefficients For Windstorm Risk. U.K.

Commencement Information

I79 Sch. 3 para. 22 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

23.  Annex 23 - Correlation Coefficients For Earthquake Risk. U.K.

Commencement Information

I80 Sch. 3 para. 23 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

24.  Annex 24 - Correlation Coefficients For Flood Risk. U.K.

Commencement Information

I81 Sch. 3 para. 24 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

25.  Annex 25 - Correlation Coefficients For Hail Risk. U.K.

Commencement Information

I82 Sch. 3 para. 25 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)

26.  Annex 26 - Correlation Coefficients For Subsidence Risk. U.K.

Commencement Information

I83 Sch. 3 para. 26 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)