• Blog
  • 2 Min Read
  • January 7, 2016

PRA Bridges Solvency II Regulatory Gap

Written by:
Tom Lee

While Bermuda is in the final steps of its quest for Solvency II equivalence, the Bermuda Monetary Authority (BMA) has not yet been granted equivalence by the European Parliament and Council. Approval is expected in the next three to six months; in the meantime, Solvency II reporting requirements remain unclear and uncertain.

In an effort to add certainty to the reporting requirements for Bermuda-headquartered insurers with a presence in the United Kingdom, the Prudential Regulation Authority (PRA) published a modification to its reporting requirements. This modification is intended to act as a bridge from 1 January 2016 to 1 January 2017, or until Bermuda’s equivalence is confirmed and takes effect.

According to the PRA’s rule modification, Bermuda insurance groups and the UK holding company must provide:

  1. A copy of the most recently available annual regulatory return for the group prior to 1 January 2016, and a copy of every subsequent group return as soon as practicable after it is submitted to the BMA;
  2. Notification of any expected or actual breach of the BMA capital requirement for the group, and of any material difference between the position disclosed in the most recently available group return and that existing at 1 January 2016;
  3. Reports on intragroup transactions in accordance with Solvency II requirements in content, format, and deadline; in this regard groups are required to report on intragroup transactions on an annual basis with 2016 reporting due to be submitted in May 2017, using specific quantitative reporting templates. In addition, in accordance with Article 245 of the Directive any very significant intragroup transactions must be reported as soon as practicable;
  4. At least two weeks’ notice of any repatriation of capital from the relevant insurance group undertaking or EEA sub-group to the wider group;
  5. A copy as soon as practicable of any group Own Risk and Solvency Assessment (ORSA), or equivalent, which is required by the BMA.

Click here to read the complete Modification by Consent of the Solvency II Group Supervision rules 20.1 & 20.2 with reference to Bermudian-parented undertakings.

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