This statement of policy (SoP) sets out the circumstances that could lead to the PRA declaring an exceptional adverse situation for the purpose of the Undertakings in Difficulty and Group Supervision Parts of the PRA Rulebook,. The SoP also sets out the factors that the PRA will consider in determining whether an insurer should be permitted to have an extension of the permissible recovery period during which it should take the necessary measures to restore full cover for its Solvency Capital Requirement (SCR) including where an exceptional adverse situation has been declared.
This SoP is relevant to all UK Solvency II firms, the Society of Lloyd’s, and relevant insurance group undertakings.
This SoP should be read in conjunction with the statutory Threshold Conditions, and the PRA’s Solvent exit planning for insurers policy, as set out in the supervisory statement proposed in consultation paper 2/24 — Solvent exit planning for insurers.
Firms intending to seek an extension of the maximum permissible recovery period following the observation of non-compliance with the SCR or where there is a risk of non-compliance with the requirement in the next three months, should apply for a relevant rule modification or permission, as explained in this SoP. Information about the process for making rule modification and permission applications is contained in Solvency II approvals and rule permissions which includes application forms, details on the application processes, instructions on where to send applications and information relating to how to pay applicable fees.
Future version
Published on 15 November 2024. Effective from 31 December 2024.
- Following PS15/24 – Review of Solvency II: Restatement of assimilated law