The Solvency 2 and Insurance (Amendment, etc.) (EU Exit) Regulations 2019
2019 No. 407
Exiting The European Union
Financial Services
The Solvency 2 and Insurance (Amendment, etc.) (EU Exit) Regulations 2019
Made 28th February 2019
Coming into force in accordance with regulation 1(2)
The Treasury make the following Regulations in exercise of the powers conferred by section 8(1) of the European Union (Withdrawal) Act 20181.
In accordance with paragraph 1(1) of Schedule 7 to the European Union (Withdrawal) Act 2018, a draft of these Regulations has been laid before and approved by a resolution of each House of Parliament.
PART 1
General provision
Citation and commencement
1.—(1) These Regulations may be cited as the Solvency 2 and Insurance (Amendment, etc.) (EU Exit) Regulations 2019.
(2) These Regulations come into force on exit day.
PART 2
Power to make regulations in respect of the regulation of insurance and reinsurance firms
Matters previously dealt with under the Solvency 2 Directive
2.—(1) The Treasury may by regulations made by statutory instrument make provision in respect of the matters specified in Schedule 1.
(2) Regulations under paragraph (1) may—
(a)
(a) modify provision made by or under an enactment;
(b)
(b) make different provision for different purposes;
(c)
(c) include incidental, supplementary, consequential, transitional, transitory or saving provision.
(3) For the purposes of paragraph (2)(a), “enactment” does not include an enactment comprised in primary legislation.
(4) A statutory instrument which contains regulations under paragraph (1) is subject to annulment in pursuance of a resolution of either House of Parliament.
PART 3
Functions of the PRA
Technical standards
3. The Prudential Regulation Authority (“PRA”) may make technical standards in respect of the matters specified in Schedule 2.
Provisions deemed as PRA rules
4. The provisions of Delegated Regulation (EU) 2015/35specified in Schedule 3 are deemed to be rules made by the PRA under section 137G of the Financial Services and Markets Act 20002—
(a) which may accordingly be amended or revoked under that section,
(b) to which the provisions of Part 9A of the Financial Services and Markets Act 2000 apply as they would to rules made under that section, and
(c) which come into force on exit day.
PART 4
Amendment of primary legislation
Amendment of the Financial Services and Markets Act 2000
5.—(1) The Financial Services and Markets Act 2000 is amended as follows.
(2) In section 284A (transformer vehicles)3, in subsection (9), omit “an EU instrument and”.
(3) In section 316 (direction by a regulator)4, in subsection (4), omit paragraph (b).
PART 5
Amendment of subordinate legislation
Amendment of the Solvency 2 Regulations 2015
6. The Solvency 2 Regulations 20155are amended in accordance with this Part.
Interpretation
7.—(1) In Part 1 (citation, commencement and interpretation), regulation 2 (interpretation) is amended as follows.
(2) For paragraph (1) substitute—
“1 In these Regulations—
“capital add-on” means the amount by which the solvency capital requirement of an insurance undertaking or reinsurance undertaking, or a group, is increased by the PRA;
“college of supervisors” means a permanent but flexible structure for the co-operation, co-ordination and facilitation of decision making concerning the supervision of a group;
“common management relationship” means a relationship between two or more undertakings which satisfies the following conditions—
(a) the undertakings are not connected in the manner described in section 1162 of, and Schedule 7 to, the Companies Act 2006, and
(b) either—
(i) the undertakings are managed on a unified basis pursuant to a contract with one of them, or provisions in the undertakings’ respective memoranda or articles of association, or
(ii) the administrative, management or supervisory bodies of those undertakings consist, for the major part, of the same persons in office during the financial year in respect of which it is being decided whether such a relationship exists;
“Financial Conglomerates Directive” means Directive 2002/87/ECof the European Parliament and of the Council of 16 December 2002 on the supplementary supervision of credit institutions, insurance undertakings, and investment firms in a financial conglomerate, as it had effect immediately before exit day;
“FSMA” means the Financial Services and Markets Act 2000;
“insurance holding company” means a parent undertaking which is not a mixed financial holding company and the main business of which is to acquire and hold participations in subsidiary undertakings, where those subsidiary undertakings are exclusively or mainly insurance or reinsurance undertakings, or third-country insurance or reinsurance undertakings, at least one of such subsidiary undertakings being an insurance or reinsurance undertaking;
“method 1” and “method 2” have the meaning given in rule 1.2 of the Group Supervision part of the PRA Rulebook;
“mixed-activity insurance holding company” means a parent undertaking other than an insurance undertaking, a third-country insurance undertaking, a reinsurance undertaking, a third-country reinsurance undertaking, an insurance holding company or a mixed financial holding company, which includes at least one insurance or reinsurance undertaking among its subsidiary undertakings;
“non-UK solvency 2 parent” means a parent undertaking which is—
(a) a third-country insurance undertaking, or
(b) an insurance holding company or mixed financial holding company with its head office outside the United Kingdom;
“parent undertaking” means—
(a) a parent undertaking, within the meaning of section 420 of FSMA, or
(b) an undertaking which, in the opinion of the PRA, effectively exercises a dominant influence over another undertaking;
“participating undertaking” means —
(a) an undertaking which is either a parent undertaking or other undertaking which holds a participation, or an undertaking linked with another undertaking by a common management relationship, or
(b) an undertaking which holds, directly or indirectly, voting rights or capital in another undertaking over which, in the opinion of the PRA, it effectively exercises a significant influence;
“regulated entity” has the meaning given in regulation 1(2) of the Financial Conglomerates and Other Financial Groups Regulations 20046;
“related undertaking” means either a subsidiary undertaking or other undertaking in which a participation is held, or an undertaking linked with another undertaking by a common management relationship;
“Solvency 2 Directive” means Directive 2009/138/ECof the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II), as it has effect immediately before exit day;
“Solvency 2 Regulation” means Commission Delegated Regulation (EU) 2015/35of 10 October 2014 supplementing Directive 2009/138/ECof the European Parliament and of the Council on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II);
“subsidiary undertaking” means—
(a) a subsidiary undertaking, within the meaning of section 420 of FSMA, or
(b) an undertaking over which, in the opinion of the PRA, a parent undertaking effectively exercises a dominant influence;
“supervisory authority” means the national authority, or the national authorities, empowered to supervise third-country insurance undertakings or third-country reinsurance undertakings;
“third country” means a country other than the United Kingdom;
“third-country insurance undertaking” means an undertaking which would require authorisation as an insurance undertaking in accordance with the United Kingdom law which implemented Article 14 of the Solvency 2 Directive, if its head office were situated in the United Kingdom;
“third-country reinsurance undertaking” means an undertaking which if its head office were situated in the United Kingdom—
(a) would require permission under Part 4A of FSMA to carry out regulated activities relating to reinsurance, and
(b) immediately before exit day, would have required authorisation as a reinsurance undertaking in accordance with Article 14 of the Solvency 2 Directive;
“UK solvency 2 parent” means a parent undertaking with its head office in the United Kingdom which is—
(a) an insurance undertaking or reinsurance undertaking which is a participating undertaking in at least one insurance undertaking, reinsurance undertaking or third-country insurance undertaking,
(b) an insurance holding company, or
(c) a mixed financial holding company;
“ultimate non-UK solvency 2 parent” means a non-United Kingdom solvency 2 parent which has no parent undertaking which is a United Kingdom solvency 2 parent or non-United Kingdom solvency 2 parent;
“ultimate UK solvency 2 parent” means a United Kingdom solvency 2 parent which has no parent undertaking which is a United Kingdom solvency 2 parent.”
(3) After paragraph (1) insert—
“1A In these Regulations, reference to a “group” is to a group of undertakings that—
(a) does not include any undertaking not included in the scope of group supervision in accordance with a direction issued by the PRA under section 138A of FSMA; and
(b) either—
(i) consists of a participating undertaking, its subsidiaries and the entities in which the participating undertaking or its subsidiaries hold a participation, as well as undertakings linked to each other by a common management relationship, or
(ii) is based on the establishment...
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