“The Standard Formula’s” Rob Chaplin once again gives listeners a look at how to address some of the intricacies of Solvency II. In this episode, he is joined by Feargal Ryan for a discussion on how insurers should navigate the Solvency II framework when they’re facing financial difficulty and failing to meet their solvency or minimum capital requirements.
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When U.K. insurers observe they cannot comply with requirements under Solvency See more +
“The Standard Formula’s” Rob Chaplin once again gives listeners a look at how to address some of the intricacies of Solvency II. In this episode, he is joined by Feargal Ryan for a discussion on how insurers should navigate the Solvency II framework when they’re facing financial difficulty and failing to meet their solvency or minimum capital requirements.
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When U.K. insurers observe they cannot comply with requirements under Solvency II, there are detailed steps that one must take.
Feargal Ryan, European counsel in Skadden’s Financial Institutions Group, and host Rob Chaplin, head of the firm’s Financial Institutions Group in Europe, break down insurers’ obligations. They explain differences between the Solvency Capital Requirement (SCR) and Minimum Capital Requirement (MCR) and examine the Prudential Regulation Authority’s (PRA’s) requirements.
Key Points
SCR Compliance. Once non-compliance is observed, the insurer must initiate a dialogue with the PRA, and then take measures to ensure compliance, including submitting a recovery plan to the PRA within two months.
The Recovery Period: An insurer who is out of compliance must take measures to achieve compliance within six months, which may be extended in exceptionally adverse situations.
How the MCR Differs: Unlike with SCR non-compliance, extensions are not given regardless of whether the PRA has declared an exceptional adverse situation.
The PRA’s Powers: The PRA can suspend the permission of an insurer in difficulty and impose any requirements, limitations or restrictions it considers appropriate. Feargal walks listeners through the measures available to the PRA: prohibiting three disposed-of assets, withdrawing authorization and withholding the insurer's solvency certificate. See less -
