The Solvency 2 Regulations 2015

PART 2 U.K. Supervision

Exercise of PRA and FCA functions U.K.

3.—(1) The PRA and FCA must in the exercise of their functions as supervisory authorities under [F1 the United Kingdom law which implemented the Solvency 2 Directive]—

F2 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F2 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c) in times of exceptional movements in the financial markets take into account the potential pro-cyclical effects of their actions.

Textual Amendments

F1 Words in reg. 3(1) substituted (31.12.2020) by The Solvency 2 and Insurance (Amendment, etc.) (EU Exit) Regulations 2019 (S.I. 2019/407), regs. 1(2), 8(2)(a) (as amended by S.I. 2020/1385, regs. 1(2), 54(2))

F2 Reg. 3(1)(a)(b) omitted (31.12.2020) by virtue of The Solvency 2 and Insurance (Amendment, etc.) (EU Exit) Regulations 2019 (S.I. 2019/407), regs. 1(2), 8(2)(b) (as amended by S.I. 2020/1385, regs. 1(2), 54(2))

Review of capital add-ons U.K.

4.  Where the PRA imposes a capital add-on, it must review the capital add-on at least once a year.

[F3 Non-compliance with solvency capital requirement and exceptional adverse situations U.K.

4A.— (1) The PRA may extend the period of six months in which an insurance undertaking or reinsurance undertaking must take the measures necessary to achieve the re-establishment of the level of eligible own funds covering the solvency capital requirement or the reduction of its risk profile to ensure compliance with the solvency capital requirement by up to—

(a) three months, or

(b) in the event of a declaration by the Prudential Regulation Committee of the Bank of England under paragraph (2) and considering all relevant factors including the average duration of the technical provisions, seven years.

(2) The Prudential Regulation Committee of the Bank of England must declare the existence of exceptional adverse situations in the conditions set out in paragraph (3).

(3) Exceptional adverse situations exist where the financial situation of insurance or reinsurance undertakings representing a significant share of the market or of the affected lines of business are seriously or adversely affected by one or more of the following conditions—

(a) a fall in financial markets which is unforeseen, sharp and steep;

(b) a persistent low interest rate environment;

(c) a high-impact catastrophic event.

(4) The Prudential Regulation Committee of the Bank of England must assess on a regular basis whether the conditions referred to in paragraph (3) still apply.

(5) The Prudential Regulation Committee of the Bank of England must declare when an exceptional adverse situation has ceased to exist.

(6) An extension granted under paragraph (1)(b) must be withdrawn where the insurance undertaking or reinsurance undertaking submits to the PRA a progress report that shows that there was no significant progress in achieving the re-establishment of the level of eligible own funds covering the solvency capital requirement or the reduction of the risk profile to ensure compliance with the solvency capital requirement between the date of the observation of non-compliance of the solvency capital requirement and the date of the submission of the progress report.]

Textual Amendments

F3 Regs. 4A-4D inserted (31.12.2020) by The Solvency 2 and Insurance (Amendment, etc.) (EU Exit) Regulations 2019 (S.I. 2019/407), regs. 1(2), 8(3) (as amended by S.I. 2020/1385, regs. 1(2)(4), 54(2)(3), S.I. 2019/1390, regs. 1(4), 11(2) and S.I. 2019/960, regs. 1(3), 10(3) (as amended by S.I. 2020/1301, regs. 1, 3, Sch. para. 40(e)(i)(f))); 2020 c. 1, Sch. 5 para. 1(1))

Duty to publish technical information U.K.

F4 4B.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F4 Regulations revoked (30.6.2024 for the revocation of regs. 4B, 42, otherwise prosp.) by Financial Services and Markets Act 2023 (c. 29), s. 86(3), Sch. 1 Pt. 2 (with s. 1(4)); S.I. 2023/1382, reg. 5(b)

[F5 Powers in relation to Gibraltar undertakings U.K.

4C.— (1) If this regulation applies, the PRA may impose any requirement in relation to a Gibraltarian insurance undertaking or a Gibraltarian reinsurance undertaking (the Gibraltarian undertaking) which it could impose if—

(a) the undertaking's permission was a Part 4A permission (as defined by section 55A(5) of FSMA); and

(b) the PRA was entitled to exercise its power under section 55M(3) of FSMA.

(2) This regulation applies if—

(a) the Gibraltarian undertaking is contravening, or is at material risk of contravening, in respect of its activities in the United Kingdom, any requirement applying to that undertaking in or under these Regulations, the Solvency 2 Regulation, or UK law which implemented the Solvency 2 directive (“a relevant requirement”);

(b) the undertaking has, in purported compliance with any relevant requirement imposed on it, knowingly or recklessly given the PRA information which is false or misleading in a material particular; or

(c) subject to paragraph (3), it is desirable to impose the requirement in order to advance any of the PRA's objectives.

(3) The PRA may not impose a requirement in reliance on paragraph (2)(c) if doing so would, before IP completion day, have been considered to constitute financial supervision of the undertaking unless the conditions in paragraph (4) are satisfied.

(4) The conditions in this paragraph are satisfied if—

(a) the requirement to be imposed is necessary and appropriate to protect against the risk of disruption to the continuity of financial services that could, in the opinion of the PRA, threaten financial stability in the United Kingdom;

(b) the FSC has not, in the opinion of the PRA, taken measures to ensure the contravention or risk of contravention is remedied; and

(c) no reorganisation measures have been commenced by the FSC or other authorities in Gibraltar in relation to the undertaking.

(5) For the purposes of this regulation, “reorganisation measures” means any measures by the FSC or other Gibraltarian authorities which are intended to preserve or restore the financial situation of the Gibraltar insurance or reinsurance undertaking concerned (“the relevant undertaking”) and which affect pre-existing rights of parties other than the relevant undertaking itself, including but not limited to measures involving the possibility of a suspension of payments, suspension or enforcement measures or reduction of claims.

(6) Nothing in this regulation affects the powers of the FSC or any other Gibraltarian authority.

Textual Amendments

F5 Regs. 4A-4D inserted (31.12.2020) by The Solvency 2 and Insurance (Amendment, etc.) (EU Exit) Regulations 2019 (S.I. 2019/407), regs. 1(2), 8(3) (as amended by S.I. 2020/1385, regs. 1(2)(4), 54(2)(3), as amended by The Financial Services (Miscellaneous) (Amendment) (EU Exit) (No. 3) Regulations 2019 (S.I. 2019/1390), regs. 1(4), 11(2) and as amended by S.I. 2019/960, regs. 1(3), 10(3) (as amended by S.I. 2020/1301, regs. 1, 3, Sch. para. 40(e)(i)(f))); 2020 c. 1, Sch. 5 para. 1(1))

Procedure on the exercise of powers under regulation 4C U.K.

4D.— (1) A requirement takes effect—

(a) immediately, if the notice given under paragraph (3) states that that is the case;

(b) on such date as may be specified in the notice; or

(c) if no date is specified in the notice, when the matter to which it relates is no longer open to review.

(2) A requirement may be expressed to take effect immediately (or on a specified date) only if the PRA, having regard to the ground on which it is exercising the power under regulation 4C, considers that it is necessary for the requirement to take effect immediately (or on that date).

(3) If the PRA proposes to impose a requirement under regulation 4C on a Gibraltar insurance or reinsurance undertaking, or imposes such a requirement with immediate effect, it must give the undertaking written notice.

(4) The notice must—

(a) give details of the requirement;

(b) inform the undertaking of when the requirement takes effect;

(c) state the PRA's reasons for imposing the requirement and for its determination as to when the requirement takes effect;

(d) inform the undertaking that it may make representations to the PRA within such period as may be specified in the notice (whether or not it has referred the matter to the Upper Tribunal); and

(e) inform it of its right to refer the matter to the Upper Tribunal.

(5) The PRA may extend the period allowed under the notice for making representations.

(6) If, having considered any representations made by the undertaking, the PRA decides—

(a) to impose the requirement proposed, or

(b) if it has been imposed, not to rescind the requirement,

it must give the undertaking written notice.

(7) If, having considered any representations made by the undertaking, the PRA decides—

(a) not to impose the requirement proposed,

(b) to impose a different requirement from that proposed, or

(c) to rescind a requirement which has effect,

it must give it written notice.

(8) A notice given under paragraph (6) must inform the undertaking of its right to refer the matter to the Upper Tribunal.

(9) A notice under paragraph (7)(b) must comply with paragraph (4).

(10) If a notice informs a person of the person's right to refer a matter to the Upper Tribunal, it must give an indication of the procedure on such a reference.]

Textual Amendments

F5 Regs. 4A-4D inserted (31.12.2020) by The Solvency 2 and Insurance (Amendment, etc.) (EU Exit) Regulations 2019 (S.I. 2019/407), regs. 1(2), 8(3) (as amended by S.I. 2020/1385, regs. 1(2)(4), 54(2)(3), as amended by The Financial Services (Miscellaneous) (Amendment) (EU Exit) (No. 3) Regulations 2019 (S.I. 2019/1390), regs. 1(4), 11(2) and as amended by S.I. 2019/960, regs. 1(3), 10(3) (as amended by S.I. 2020/1301, regs. 1, 3, Sch. para. 40(e)(i)(f))); 2020 c. 1, Sch. 5 para. 1(1))

Passporting: notification of home state regulator U.K.

F6 5.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F6 Reg. 5 omitted (31.12.2020) by virtue of The Solvency 2 and Insurance (Amendment, etc.) (EU Exit) Regulations 2019 (S.I. 2019/407), regs. 1(2), 8(4) (as amended by S.I. 2020/1385, regs. 1(2), 54(2))

EIOPA: information U.K.

F7 6.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F7 Reg. 6 omitted (31.12.2020) by virtue of The Solvency 2 and Insurance (Amendment, etc.) (EU Exit) Regulations 2019 (S.I. 2019/407), regs. 1(2), 8(4) (as amended by S.I. 2020/1385, regs. 1(2), 54(2))

EIOPA and EBA: notifications U.K.

F8 7.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F8 Reg. 7 omitted (31.12.2020) by virtue of The Solvency 2 and Insurance (Amendment, etc.) (EU Exit) Regulations 2019 (S.I. 2019/407), regs. 1(2), 8(4) (as amended by S.I. 2020/1385, regs. 1(2), 54(2))

Other EEA States: information U.K.

F9 8.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F9 Reg. 8 omitted (31.12.2020) by virtue of The Solvency 2 and Insurance (Amendment, etc.) (EU Exit) Regulations 2019 (S.I. 2019/407), regs. 1(2), 8(4) (as amended by S.I. 2020/1385, regs. 1(2), 54(2))

Non-compliance with the minimum capital requirement: provision of information to other supervisory authorities U.K.

F10 9.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F10 Reg. 9 omitted (31.12.2020) by virtue of The Solvency 2 and Insurance (Amendment, etc.) (EU Exit) Regulations 2019 (S.I. 2019/407), regs. 1(2), 8(4) (as amended by S.I. 2020/1385, regs. 1(2), 54(2))

[F11 9A.   This Part applies to the following types of groups—

(a) insurance or reinsurance undertakings—

(i) which are a participating undertaking in at least one insurance undertaking, reinsurance undertaking, Gibraltarian insurance undertaking, Gibraltarian reinsurance undertaking, third-country insurance undertaking or third-country reinsurance undertaking; or

(ii) the parent undertaking of which is a Gibraltarian insurance undertaking or a Gibraltarian reinsurance undertaking;

(b) insurance or reinsurance undertakings, the parent undertaking of which is an insurance holding company or a mixed financial holding company which has its head office in the United Kingdom or Gibraltar,

(c) insurance or reinsurance undertakings, the parent undertaking of which is an insurance holding company or a mixed financial holding company which has its head office in a third country or a third-country insurance or reinsurance undertaking, and

(d) insurance or reinsurance undertakings, the parent undertaking of which is a mixed-activity insurance holding company.

Textual Amendments

F11 Regs. 9A, 9B inserted (31.12.2020) by The Solvency 2 and Insurance (Amendment, etc.) (EU Exit) Regulations 2019 (S.I. 2019/407), regs. 1(2), 9(2) (as amended by S.I. 2020/1385, regs. 1(2), 54(2) and S.I. 2019/680, regs. 1(3), 10(4)(a)(b) (with reg. 11))

9B.   Where the participating insurance or reinsurance undertaking, or participating Gibraltarian insurance or reinsurance undertaking or the insurance holding company or the mixed financial holding company referred to in regulation 9A(a) and (b) is a subsidiary undertaking of—

(a) another insurance or reinsurance undertaking,

(aa) another Gibraltar insurance or reinsurance undertaking;

(b) another insurance holding company, or

(c) another mixed financial holding company,

which has its head office in the United Kingdom or Gibraltar, the United Kingdom law which implemented Articles 218 to 258 of the Solvency 2 Directive apply only at the level of the ultimate UK solvency 2 parent which has its head office in the United Kingdom or in Gibraltar.]

Textual Amendments

F11 Regs. 9A, 9B inserted (31.12.2020) by The Solvency 2 and Insurance (Amendment, etc.) (EU Exit) Regulations 2019 (S.I. 2019/407), regs. 1(2), 9(2) (as amended by S.I. 2020/1385, regs. 1(2), 54(2) and S.I. 2019/680, regs. 1(3), 10(4)(a)(b) (with reg. 11))