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54.—(1) An insurance undertaking, reinsurance undertaking or third-country insurance undertaking may apply to the PRA for permission to—
(a)apply a transitional deduction to its technical provisions or to such of its technical provisions as are contained within an homogenous risk group; or
(b)recalculate the amount of those technical provisions (and any matching adjustment or volatility adjustment to those technical provisions) at periods of 24 months or less.
(2) The PRA must approve an application made under paragraph (1)(a) if—
(a)conditions 1 and 2 are satisfied; and
(b)condition 3 is satisfied or would be satisfied if the amount of the approved deduction were limited.
(3) The PRA must approve an application made under paragraph (1)(b) if condition 4 is satisfied.
(4) The PRA may also grant the approval referred to in paragraph (1)(b) other than on an application under that paragraph if condition 4 is satisfied.
(5) Where the PRA approves an application under paragraph (2), the PRA may—
(a)make the approval subject to a condition limiting the amount of the approved deduction; or
(b)at any time after granting approval, vary the approval so that—
(i)the approval is subject to a condition limiting the amount of the approved deduction; or
(ii)if the approval is already subject to a condition imposed under sub-paragraph (a) or (b)(i), amend the condition to change the limit.
(6) A limit specified in a condition imposed under paragraph (5) must be no larger than is necessary to ensure that condition 3 is satisfied.
(7) Where the PRA grants approval under paragraph (2), (3) or (4) the undertaking may apply to vary the approval.
(8) Paragraphs (2) to (6) apply to an application to vary an approval under paragraph (7) as they would apply to an application for the approval as varied.
(9) The PRA must revoke an approval granted under paragraph (2) if—
(a)condition 1 or 2 is not satisfied;
(b)condition 3 cannot be satisfied by imposing a condition limiting the amount of the approved deduction; or
(c)condition 5 is satisfied.
(10) In this regulation—
(a)“GENPRU 1.2.26R” means the rule known as GENPRU 1.2.26R (requirement to have adequate financial resources) in the PRA’s General Prudential Sourcebook as at 31st December 2015, treated as having been made by the PRA on 7th March 2013 under the Financial Services Act 2012 (Transitional Provisions) (Rules and Miscellaneous Provisions) Order 2013(1);
(b)“INSPRU 7” means the rules and guidance known as INSPRU 7 (individual capital assessment) in the PRA’s Prudential Sourcebook for Insurers as at 31st December 2015, made or treated as having been made by the PRA on 7th March 2013 under FSMA and the Financial Services Act 2012 (Transitional Provisions) (Rules and Miscellaneous Provisions) Order 2013; and
(c)conditions specified in the first column of Table 3 have the meaning given in the second column of Table 3.
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