The Insurance and Reinsurance Undertakings (Prudential Requirements) (Transitional Provisions and Consequential Amendments) Regulations 2024
| Jurisdiction | UK Non-devolved |
| Year | 2024 |
| Citation | SI 2024/594 |
2024 No. 594
Financial Services And Markets
The Insurance and Reinsurance Undertakings (Prudential Requirements) (Transitional Provisions and Consequential Amendments) Regulations 2024
Made 1st May 2024
Laid before Parliament 3rd May 2024
Coming into force 30th June 2024
The Treasury make the following Regulations in exercise of the powers conferred by sections 83(1) and (2) and 84(2) of the Financial Services and Markets Act 20231.
Citation, commencement and extent
1.—(1) These Regulations may be cited as the Insurance and Reinsurance Undertakings (Prudential Requirements) (Transitional Provisions and Consequential Amendments) Regulations 2024.
(2) These Regulations come into force on 30th June 2024.
(3) These Regulations extend to England and Wales, Scotland and Northern Ireland.
Interpretation
2.—(1) In these Regulations—
“insurance undertaking” has the meaning given in section 417(1) of FSMA 20002;
“matching adjustment permission” has the meaning given in regulation 3(2);
“PRA rules” means the rules made by the PRA under FSMA 2000, as they have effect from time to time;
“regulation 42 approval” means an approval referred to regulation 3(1) as it has effect immediately before 30th June 2024;
“reinsurance undertaking” has the meaning given in section 417(1) of FSMA 2000.
(2) Any other term used in these Regulations which is used in PRA rules applicable to insurance and reinsurance undertakings has the same meaning as in those rules.
Transitional provision - approvals under regulation 42 of the Solvency 2 Regulations 2015
3.—(1) This regulation applies where immediately before 30th June 2024 an insurance or reinsurance undertaking has an approval pursuant to regulation 42 of the Solvency 2 Regulations 20153to apply a matching adjustment to a risk-free interest rate term structure in order to calculate the best estimate of a portfolio of life insurance or reinsurance obligations.
(2) On 30th June 2024 the insurance or reinsurance undertaking’s regulation 42 approval becomes a permission granted by the PRA under section 138BA of FSMA 20004to apply the PRA rules with the modifications set out in paragraph (4) such that the undertaking can continue to apply the matching adjustment to a relevant risk-free interest rate term structure in order to calculate the best estimate of a portfolio of life insurance or reinsurance obligations (a “matching adjustment permission”).
(3) A matching adjustment permission is to be treated as if—
(a)
(a) it were granted on the basis of the information supplied by the undertaking and referred to in the undertaking’s regulation 42 approval,
(b)
(b) an application had been made for it in accordance with and in compliance with the applicable requirements of section 138BA of FSMA 2000 and the Financial Services and Markets Act 2000 (Disapplication or Modification of Financial Regulator Rules in Individual Cases) Regulations 20245, and
(c)
(c) all the applicable requirements of regulation 4 of the Insurance and Reinsurance Undertakings (Prudential Requirements) Regulations 20236(application of the matching adjustment) were complied with.
(4) The PRA rules listed in the first column of the table, the relevant text of which is set out in the second column of the table in the same row, are modified as set out in the third column of the table in the same row.
PRA rule |
Relevant text of rule |
Relevant text of rule as modified |
Matching Adjustment rule 1.1 |
Unless otherwise stated, this Part applies to: (1) a UK Solvency II firm; |
Unless otherwise stated, this Part applies to: (1) an insurance or reinsurance undertaking in accordance with the undertaking’s matching adjustment permission; |
Matching Adjustment rule 2.1 |
A firm must not apply a matching adjustment to the relevant risk-free interest rate term structure to calculate the best estimate of its insurance or reinsurance obligations unless it has a matching adjustment permission |
An insurance or reinsurance undertaking may only apply a matching adjustment to the relevant risk-free interest rate term structure to calculate the best estimate of its insurance or reinsurance obligations in accordance with, and only to the extent of, its matching adjustment permission. |
(5) Nothing in this regulation prevents the PRA from varying or revoking a matching adjustment permission in accordance with section 138BA of FSMA 2000 and the Financial Services and Markets Act 2000 (Disapplication or Modification of Financial Regulator Rules in Individual Cases) Regulations 2024.
Consequential amendments to the Solvency 2 Regulations 2015
4.—(1) The Solvency 2 Regulations 2015 are amended as follows.
(2) In regulation 53 (transitional measures on risk-free interest rates), in paragraph (2)(c), after “regulation 42” insert “, or on or after 30th June 2024, a permission given in accordance with section 138BA of FSMA and regulation 4 of the Insurance and Reinsurance Undertakings (Prudential Requirements) Regulations 2023”.
(3) In regulation 547(transitional measures on technical provisions), in paragraph (10), in Table 3, in the second column corresponding to condition 1, for “or 43” substitute “, a permission given in accordance with section 138BA of FSMA and regulation 4 of the Insurance and Reinsurance Undertakings (Prudential Requirements) Regulations 2023, or an approval granted under regulation 43”.
(4) In regulation 58 (modification or waiver of rules), in paragraph (2) omit “42,”.
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