The Standard Formula: A Guide to Solvency II – Chapter 13: Supervision

• The system of governance, including the ORSA.
• The technical provisions.
• The capital requirements.
• The investment rules.
• The quality and quantity of own funds.
• Where the (re)insurance undertaking uses a full or partial IM, ongoing compliance with the requirements for full and partial IMs.⁶⁶⁷

The Solvency II Directive leaves it to supervisory authorities of the respective member states to decide the minimum frequency and scope of these reviews, with due regard to nature, scale and complexity of the activities of the firm concerned.⁶⁶⁸ The Directive does, however, stipulate that these reviews must be conducted “regularly”.⁶⁶⁹ The EIOPA has published guidelines to promote consistency in processes and practices within the supervisory review process, while allowing national supervisory authorities sufficient flexibility to adapt their actions to take into account the specificities of the firms involved, their own markets and other supervisory priorities.⁶⁷⁰ For the review process to be effective and remedial, supervisory authorities have been given “necessary” powers to require the remediation of any weaknesses or deficiencies identified in the review.⁶⁷¹

Supervision of Outsourced Activities

While firms are able to outsource activities and functions, they must take necessary steps to ensure that the following conditions are satisfied where they do so:

• The service provider must cooperate with supervisory authorities of the (re)insurance undertaking in connection with the outsourced function or activity.
• The (re)insurance undertaking, its auditors and the supervisory authorities must have effective access to data relating to the outsourced functions or activities.
• Supervisory authorities must have effective access to the business premises of the service provider and must be able to exercise those rights of access.⁶⁷²

The state where the service provider is located must permit the firm’s “home” supervisory authority to carry out on-site inspections at the service provider’s premises.⁶⁷³ However, such inspections may be delegated to the supervisory authority where the service provider is located, subject to agreement among the regulatory bodies.⁶⁷⁴

Where a supervisory authority is unable to exercise its right to carry out an on-site inspection, in accordance with Article 38 of the Solvency II Directive, the supervisory authority may refer the matter to the EIOPA and seek its assistance in resolving the disagreement with the cross-border supervisory authority.⁶⁷⁵ The EIOPA is also able to participate in on-site inspections at the premises of service providers where they are carried out jointly by two or more supervisory authorities.⁶⁷⁶

2. The Reporting Framework

The Solvency II Directive allows supervisory authorities to determine the nature, scope and format of the information sought from undertakings, which they may require firms to submit:

• At predefined periods.
• Upon occurrence of predefined events.
• During enquiries regarding the situation of an insurance or reinsurance undertaking.⁶⁷⁷

The Level 2 Delegated Regulation (which is directly applicable in the UK as retained EU law) provides more detail on the reporting obligations of Solvency II firms. The suite of information that firms are required to submit to supervisory authorities can be segregated into four key components. These are as follows:

• The SFCR.
• The Regular Supervisory Report (RSR).
• The ORSA.
• Annual and quarterly quantitative reporting templates (QRTs) specifying in greater detail and supplementing the information presented in the SFCR and RSR.⁶⁷⁸

The RSR and the additional quantitative reporting requirements will be the focus of this chapter. For more information on the ORSA, please see Chapter 10: Governance Requirements.

General Reporting Obligations of (Re)insurance Undertakings

There is a general obligation to provide supervisory authorities with all information that is necessary for the purposes of supervision.⁶⁷⁹ Relatedly, supervisory authorities have the power to require all information necessary to conduct supervision. It should be noted that supervisory authorities are empowered to determine the nature, scope and format of the information that they require (re)insurance undertakings to provide.⁶⁸⁰ At a minimum, the information supplied must enable supervisory authorities to (i) assess the system of governance applied by the firms, the business they are pursuing, the valuation principles applied for solvency purposes, the risks faced and the risk-management systems, and their capital structure, needs and management; and (ii) make any appropriate decisions resulting from the exercise of their supervisory rights and duties.⁶⁸¹

The information supplied by firms must be reflective of the nature, scale, complexity of the business and risks inherent to the firm. Such information must also be accessible, complete, consistent, relevant and reliable. Further, firms must have a written policy supported by appropriate systems and structures to allow them to fulfil their reporting requirements. The information supplied by firms must comprise the following:

• Qualitative or quantitative elements, or any appropriate combination thereof.
• Historic, current or prospective elements, or any appropriate combination thereof.
• Data from internal or external sources, or any appropriate combination thereof.⁶⁸²

The Regular Supervisory Report

The RSR must be submitted in electronic form at least every three years, notwithstanding the fact that supervisory authorities may require a firm to submit its RSR at the end of any financial year.⁶⁸³ Notably, even when there is no requirement to submit an RSR in relation to a given financial year, firms must still submit a report setting out any material changes that have occurred in the firm’s business and performance, system of governance, risk profile, valuation for solvency purposes and capital management over the given financial year, and provide a concise explanation about the causes and effects of such changes.⁶⁸⁴ The deadline to submit the RSR is currently set at no later than 14 weeks after the firm’s financial year end.⁶⁸⁵

Supervisory authorities are able to limit regular supervisory reporting, or exempt firms from reporting on an item-by-item basis, where:

• The submission of that information would be overly burdensome in relation to the nature, scale and complexity of the risks inherent in the business of the firm.
• The submission of that information is not necessary for the effective supervision of the firm.
• The exemption does not undermine the stability of the financial systems concerned.
• The firm is able to provide the information on an ad hoc basis.⁶⁸⁶

In determining eligibility for available exemptions, supervisory authorities have been instructed to give priority to the smallest of firms.⁶⁸⁷

However, the potential exemption referred to above can only be granted to (re)insurers that do not represent more than 20% of a jurisdiction’s life and non-life insurance or reinsurance market respectively, where the non-life market share is based on gross written premiums and the life market share is based on gross technical provisions.⁶⁸⁸ Further, supervisory authorities must not exempt any (re)insurer from reporting on an item-by-item basis that is a part of a “group” for the purposes of the Solvency II Directive, unless the firm can demonstrate that reporting on an item-by-item basis is inappropriate, given the nature, scale and complexity of the risks inherent in the business of the group and taking into account the objective of financial stability.⁶⁸⁹

As part of efforts to make the supervision regime more proportional, the Amendments referred to in Section 1 above will adapt the reporting requirements to be better suited to the size, nature and complexity of each firm. New, simplified reporting requirements for “small and non-complex undertakings” are introduced, facilitating their access to exemptions and limitations for regular supervisory reporting; there is the possibility such undertakings will be given permission to submit their RSR every five years, instead of every three years.⁶⁹⁰ The Amendments also extend the submission deadline for all undertakings for the RSR from 14 weeks to no later than 18 weeks after the undertaking’s financial year ends.⁶⁹¹

The UK has already implemented some simplifications to reduce reporting burdens under its Solvency II regime, with some additional reforms taking effect on 31 December 2024.⁶⁹² The UK reforms focus on reducing the volume of information that Solvency II firms are required to report, making it less burdensome for firms while ensuring that the PRA still receives the necessary information to conduct effective supervision. In December 2023, the PRA removed the requirement to submit the RSR for all Solvency II firms, including UK branches of international insurers.⁶⁹³ The PRA recognised that the report was burdensome to prepare and that the triennial reporting frequency of the RSR would not provide timely information.⁶⁹⁴ The PRA views that the remainder of the framework allows for collection of information that is important for supervision.⁶⁹⁵

Content Requirements of the Regular Supervisory Report

The Level 2 Delegated Regulation fleshes out in great specificity the content requirements of the RSR, set out in Articles 307 to 311 of the Level 2 Delegated Regulation, and these requirements are summarised below.

Content Requirements

Business and Performance (Article 307)

In relation to the business of the undertaking:

• The main trends and factors that contribute to the development, performance and position of the undertaking over its business planning time period including the undertaking’s competitive position and any significant legal or regulatory issues.
• A description of the business objectives of the undertaking, including the relevant strategies and timeframes.

On the underwriting performance of the undertaking:

• Information on the undertaking’s underwriting income and expenses by material line of business and material geographical areas where it writes business during the reporting period, a comparison of the information with that reported on the previous reporting period and the reasons for any material changes.
• An analysis of the undertaking’s overall underwriting performance during the reporting period.
• Information on the undertaking’s underwriting performance by line of business during the reporting period against projections, and significant factors affecting deviations from these projections.
• Projections of the undertaking’s underwriting performance, with information on significant factors that might affect such underwriting performance over its business planning time period.
• Information on any material risk mitigation techniques purchased or entered into during the reporting period.

In relation to the performance of the undertaking’s investments:

• Information on income and expenses with respect to investment activities during the last reporting period, a comparison of the information reported in the previous period and reasons for any material changes.
• An analysis of the undertaking’s overall investment performance during the reporting period and also by relevant asset class.
• Projections of the undertaking’s expected investment performance, with information on significant factors that might affect such investment performance, over its business planning time period.
• The key assumptions that the undertaking makes in its investment decisions with respect to the movement of interest rates, exchange rates and other relevant market parameters, over its business planning time period.
• Information about any investments in securitisation, and the undertaking’s risk management procedures in respect of such securities or instruments.

In addition, information of any material income and expenses, other than underwriting or investment income and expenses, over the undertaking’s business planning time period should be provided together with any other material information regarding the undertaking’s business and performance.

System of Governance (Article 308)

In relation to the governance systems:

• Information allowing the supervisory authorities to gain a good understanding of the system of governance within the undertaking, and to assess its appropriateness to the undertaking’s business strategy and operations.
• Information relating to the undertaking’s delegation of responsibilities, reporting lines and allocation of functions.
• The remuneration entitlements of the members of the AMSB, over the reporting period and a comparison of the information with that reported on the previous reporting period and the reasons for any material changes.

In relation to fit and proper requirements:

• A list of the persons in the undertaking that are responsible for key functions.
• Information on the policies and processes established by the undertaking to ensure that those persons are fit and proper.

In relation to the risk management system:

• Information on the undertaking’s risk management strategies, objectives, processes and reporting procedures for each category of risk.
• Information on significant risks that the undertaking is exposed to over the lifetime of its (re)insurance obligations and how these have been captured in its overall solvency needs.
• Information on any material risks that the undertaking has identified and that are not fully included in the calculation of the SCR.
• Information on how the undertaking fulfils its obligation to invest all its assets in accordance with the PPP.
• Information on how the undertaking verifies the appropriateness of credit assessments from external credit assessments institutions including how and the extent to which credit assessments from external credit assessments institutions are used.
• Results of the assessments regarding the extrapolation of the RFR, the MA and the VA.

In relation to the ORSA:

• A description of how the ORSA is performed, internally documented and reviewed.
• A description of how the ORSA is integrated into the management process and into the decision-making process of the undertaking.

In relation to the internal control system of the undertaking:

• Information on the key procedures that the internal control system includes.
• Information on the activities performed during the reporting period.
• Information on the undertaking’s compliance policy, the process for reviewing that policy, the frequency of review and any significant changes to that policy during the reporting period.

In relation to the internal audit function of the undertaking:

• A description of internal audits performed during the reporting period, with a summary of the material findings and recommendations reported to the undertaking’s AMSB, and any action taken with respect to these findings and recommendations.
• A description of the undertaking’s internal audit policy, the process for reviewing that policy, the frequency of review and any significant changes to that policy during the reporting period.
• A description of the undertaking’s audit plan, including future internal audits and the rationale for these future audits.
• Where the persons carrying out the internal audit function assume other key functions in accordance with Article 271(2), a qualitative and quantitative assessment of the criteria set out in points (a) and (b) of Article 271(2) of the Level 2 Delegated Regulation.

In relation to outsourcing:

• Where the undertaking outsources any critical or important operational functions or activities, the rationale for the outsourcing and evidence that appropriate oversight and safeguards are in place.
• Information on the service providers to whom any critical or important operational functions or activities have been outsourced and how the undertaking ensures that the service providers comply with provisions of the Level 2 Delegated Regulation.
• A list of the persons responsible for the outsourced key functions in the service provider.

In relation to the actuarial functions, an overview of the activities undertaken by the actuarial function in each of its areas of responsibility during the reporting period, describing how the actuarial function contributes to the effective implementation of the undertaking’s risk management system together with any other material information regarding the undertaking’s system of governance.

Risk Profile (Article 309)

Qualitative and quantitative information regarding the risk profile of the (re)insurance undertaking, for all of the following categories of risk:

• Underwriting risk.
• Market risk.
• Credit risk.
• Liquidity risk.
• Operational risk.
• Other material risks.

In relation to each of the risks outlined above, the RSR must include the following:

• On risk exposure of the insurance or reinsurance undertaking, including the exposure arising from off-balance sheet positions and the transfer of risk to SPVs:
  • An overview of any material risk exposures anticipated over the business planning time period given the undertaking’s business strategy, and how these risk exposures will be managed.
  • Where the undertaking sells or repledges collateral, the amount of that collateral.
  • Where the undertaking has provided collateral, the nature of the collateral, the nature and value of assets provided as collateral and the corresponding actual and contingent liabilities created by that collateral arrangement.
  • Information on the material terms and conditions associated with the collateral arrangement.
  • A complete list of assets and how those assets have been invested in accordance with the PPP.
  • Where the undertaking has entered into securities lending or borrowing transactions, repurchase or reverse repurchase agreements including liquidity swaps, information on their characteristics and volume.
  • Where the undertaking sells variable annuities, information on guarantee riders and hedging of the guarantees.
• Information regarding the volume and nature of the loan portfolio of the undertaking.
• Information on the material risk concentrations to which the undertaking is exposed and an overview of any future risk concentrations anticipated over the business planning time period given that undertaking’s business strategy, and how these risk concentrations will be managed.
• On risk mitigation techniques of the undertaking:
  • Information on the techniques currently used to mitigate risks, and a description of any material risk mitigation techniques that the undertaking is considering purchasing or entering into over the business planning time period given the undertaking’s business strategy, and the rationale for and effect of such risk mitigation techniques.
  • Where the (re)insurance undertaking holds collateral, the value of the collateral, and information on the material terms and conditions associated with the collateral arrangement.
• With respect to liquidity risk, information regarding the expected profit included in future premiums for each line of business, the result of the qualitative assessment and a description of methods and main assumptions used to calculate the expected profit included in future premiums.
• On risk sensitivity of the undertaking:
  • A description of the relevant stress tests and scenario analysis carried out by the undertaking, including their outcome.
  • A description of the methods used and the main assumptions underlying those stress tests and scenario analysis.
• Information regarding quantitative data that is necessary for determining dependencies between the risks covered by the risk modules or sub-modules and of the basic SCR.
• Any other material information regarding the risk profile of the undertaking.

Valuation for Solvency Purposes (Article 310)

• Any important information, other than that already disclosed in the SFCR of the (re)insurance undertaking regarding the valuation of its assets, technical provisions and other liabilities for solvency purposes.
• A description of the relevant assumptions about future management actions and policyholder behaviour.
• Information to comply with the reporting requirements of the undertaking in relation to valuation for solvency purposes.⁶⁹⁶

Capital Management (Article 311)

In relation to the own funds of the undertaking:

• Information on the material terms and conditions of the main items of own funds held by the undertaking.
• The expected developments of the undertaking’s own funds over its business planning time period given the undertaking’s business strategy, and appropriately stressed capital plans and whether there is any intention to repay or redeem any own-fund item or plans to raise additional own funds.
• The undertaking’s plans on how to replace BOF items that are subject to the transitional arrangements.

In relation to deferred taxes:

• A description of the calculated amount of deferred tax assets without assessing their probable utilisation, and the extent to which those deferred tax assets have been recognised.
• For the deferred tax assets that have been recognised, a description of the amounts being recognised as likely to be utilised by reference to probable future taxable profit and by reference to the reversion of deferred tax liabilities relating to income taxes levied by the same taxation authority.
• A detailed description of the underlying assumptions used for the projection of probable future taxable profit.
• An analysis of the sensitivity of the net deferred tax assets to changes in the underlying assumptions referenced in the prior bullet.

In relation to the capital requirements:

• Quantitative information on the undertaking’s SCR split by risk modules where the undertaking applies the standard formula, and by risk categories where the undertaking applies an IM.
• The expected developments of the undertaking’s anticipated capital requirements over its business planning time period given the undertaking’s business strategy.
• An estimate of the undertaking’s SCR determined in accordance with the standard formula, where the supervisory authority requires the undertaking to provide that estimate pursuant to Article 112(7) of the Solvency II Directive.
• For the future profit projected for the purpose of the loss-absorbing capacity of deferred taxes:
  • A description, and the relevant amount of each of the components used to demonstrate a positive value of the increase in deferred tax assets.
  • A detailed description of the underlying assumptions used for the projection of probable future taxable profit.
  • An analysis of the sensitivity of the value of the adjustment to changes in the underlying assumptions referred to above.
• Where an IM is used to calculate the SCR:
  • The results of the review of the causes and sources of profits and losses, for each major business unit and how the categorisation of risk chosen in the IM explains those causes and sources of profits and losses.
  • Information on whether, and if so to what extent, the risk profile of the undertaking deviates from the assumptions underlying the undertaking’s IM.
  • Information about future management actions used in the calculation of the SCR.
• Information on any reasonably foreseeable risk of noncompliance with the undertaking’s capital requirements, and the undertaking’s plans for ensuring that compliance with each is maintained.
• Any other material information regarding the capital management of the (re)insurance undertaking.

Reporting Market Risk Sensitivities

While there is no equivalent requirement under the Solvency II Directive, the PRA requires additional reporting on data collection of market risk sensitivities for firms with material exposure to market risk, specifically with respect to sensitivities affecting the solvency position arising out of changes in market conditions.⁶⁹⁷ The requirement is addressed to firms holding or intending to hold material quantities of assets exposed to market risk.⁶⁹⁸

The PRA has stated that it will inform firms individually, through their usual supervisory contacts, if they fall within scope.⁶⁹⁹ Firms within the scope of the reporting requirement are those most exposed to market risks, i.e., primarily Category 1 and 2 firms in the life sector, and any other category life firm or general insurance firm, or composite insurance firm that demonstrates material market risk exposures.⁷⁰⁰

The PRA requires such in-scope firms to report sensitivities to various changes in market risks twice a year.⁷⁰¹ Market risk covers a range of exposures including equity prices, property prices, swap rates, sovereign rates, spreads on corporate bonds over swap rates, downgrades on credit-risk affected assets, inflation and exchange rates, and may include new risks that develop over time.⁷⁰² The report must show the impact of market risks on assets, technical provisions, own funds, the SCR and other liabilities.⁷⁰³

A new version of PRA SS7/17 was published on 29 February 2024, which is due to take effect from 31 December 2024.⁷⁰⁴ This has been updated to reflect the revised calculation requirements on the Transitional Measure of Technical Provisions following the new PRA PS: PRA PS2/24.

3. Quantitative Reporting

Independent of the RSR, though thematically closely aligned, firms are required to submit to their supervisor information necessary to adequately supervise the firm by way of annual and quarterly quantitative templates, containing specific, detailed information.⁷⁰⁵

Standardised Template Reporting

The PRA requires that quantitative information be submitted in the relevant format as provided in the Solvency II Regulations or in the form of any national specific templates (NSTs). The form and technical content requirements of the quantitative templates were initially set out in the Commission Implementing Regulation (EU) 2015/2450, subsequently repealed and replaced on 31 December 2023.⁷⁰⁶ The driving principle was to address the variability in reporting and regulatory supervision within the European Union. In standardising the reporting template, (re)insurance undertakings should have been able to provide consistent and comparable data to supervisory authorities.

There is an extensive set of annexes containing the various reporting templates that cover various aspects of a firm’s financial and solvency position. The templates are designed to capture both basic information⁷⁰⁷ but also detailed information on assets and liabilities,⁷⁰⁸ own funds,⁷⁰⁹ technical provisions and other relevant metrics such as the capital requirements.⁷¹⁰ In order to reinforce the standardisation principle, the templates are highly structured, with specific fields and formats that must be adhered to, ensuring uniformity in the data presented to regulators.

In respect of any given firm, the templates are intended to provide an easy, accessible and accurate overview of:

• Its system of governance.
• The business it pursues.
• The valuation principles applied by the firm for solvency purposes.
• The risks faced by the firm.
• Its risk management systems.
• Its capital structure, capital needs and capital management.

In order to effectively achieve the original objective of the quantitative reporting system, the introduction of updated regulations refine the original reporting requirements addressing the evolving needs of the market and also the wider business landscape. The changes revise and expand upon the original set of templates used for reporting; notable changes include the introduction of templates for emerging risks⁷¹¹ and sustainability-related disclosures⁷¹² and revised templates to align with new market practices. The introduction of sustainability-related reporting reflects the growing cognisance of these areas in the regulatory landscape. The templates themselves are designed to align with international standards and framework, such as the Task Force on Climate-Related Financial Disclosures’ recommendations, to ensure consistency and comparability of the reported information.

Subject to certain exemptions outlined below, the general requirement is for the quantitative reporting information to be submitted on both an annual and quarterly basis.⁷¹³ Deadlines for submission in the UK of the quantitative reporting analysis are:

• No later than 14 weeks for the UK (or 16 weeks in the case of the EU⁷¹⁴) after the end of a firm’s financial year end in respect of annual reporting.⁷¹⁵
• No later than five weeks after the end of any quarter.⁷¹⁶

In any event where such date is not a business day, the reporting must be submitted no later than the business day immediately following such prescribed deadline.

UK-Specific Templates

The PRA maintains a separate suite of NSTs, which can be found on the PRA website,⁷¹⁷ to supplement and address areas that stem from specific national requirements or the intricacies of local markets which were not catered for in the original Solvency II harmonised templates. Subject to particular exceptions,⁷¹⁸ there are specific types of firms that are required to submit specific NSTs, including assessable mutuals, firms writing suretyship business and long-term insurers.⁷¹⁹

Notwithstanding Brexit, the form of reporting is consistent: eXtensible business reporting language must be used for submission, ensuring data consistency and facilitating automated processing.⁷²⁰

The PRA Approach – Simplification and Exemption

The PRA has two main goals: a general goal to enhance the safety and stability of the firms it oversees, and a specific goal for (re)insurance firms, which is to help ensure an adequate level of protection for policyholders. In addition to the mechanical issues with the standardised reporting, feedback from firms suggested that there had been unintended consequences, specifically being required to adhere to a level of detail and quantity of reporting inappropriate to specific kinds of firms.

Beginning in 2021, the PRA consulted on simplifications to the quantitative reporting regime focusing on reducing the volume of financial information firms are required to give to the PRA with a view to implementation with a low administrative burden, removing the requirement to report several QRTs for all firms and reducing the reporting frequency of the MCR templates from quarterly to a semi-annual basis.⁷²¹

To further aid a streamlined approach, the PRA categorises firms according to their potential to adversely affect the stability of the UK financial system by failing, coming under operational or financial stress, or because of the inherent way in which the firm conducts its business.⁷²² Additionally, the PRA also looks at whether the services provided by a firm can be substituted for another, and to what extent such actions could mitigate the impact of any potential collapse, including in stressed circumstances. The different categories are outlined below.

• Category 1: The most significant insurers whose size, interconnectedness, complexity and business type give them the capacity to cause very significant disruption to the UK financial system (and to economic activity more widely) by failing or by carrying on their business in an unsafe manner.
• Category 2: Insurers whose size, interconnectedness, complexity and business type give them the capacity to cause some disruption to the UK financial system (and to economic activity more widely) by failing or by carrying on their business in an unsafe manner.
• Category 3: Insurers whose size, interconnectedness, complexity and business type give them the capacity to cause minor disruption to the UK financial system by failing or by carrying on their business in an unsafe manner, but where difficulties across a whole sector or subsector have the potential to generate disruption.
• Category 4: Insurers whose size, interconnectedness, complexity and business type give them almost no capacity individually to cause disruption to the UK financial system by failing or by carrying on their business in an unsafe manner, but where difficulties across a whole sector or subsector have the potential to generate disruption.

Following on from the categorisation of firms and responding to feedback received, the PRA published a PRA SS confirming the changes to the scope of quantitative reporting requirements in February 2023. In the statement, the PRA considered that some firms would be eligible to apply for a “modification by consent”, whereby a firm may limit its regular supervisory reporting where the predefined submission period is less than one year.⁷²³ Generally, firms designated as category three or four by the PRA (whether as an individual entity or part of a group) will be eligible to apply for the quarterly reporting exemption.

While the term “exemption” is used both in this chapter and by the PRA, it should not be considered a complete exemption. At the individual firm level, the exemption from quarterly reporting does not apply to (i) reporting of own funds and balance sheet templates in the second quarter; and (ii) the basic information and content of submission templates. Group level undertakings that meet the relevant criteria in Article 254 of the Solvency II Directive may not be required to submit any group level quarterly reporting templates.⁷²⁴

Irrespective of any exemption granted to any category of firm, the PRA may nonetheless still require a firm to provide the information ordinarily required under the quarterly reporting regime, notwithstanding the exemption held. As a matter of good practice, firms should be capable of readily responding to any such requests.

Exemptions may be considered for category one and two firms on an individual basis. Groups should not submit a formal application for the exemption in the first instance but should discuss the merits of their proposal with the relevant supervisor.

Firms are expected to notify their supervisor as soon as they believe there are any reasons that could impact its suitability for holding the reporting exemption. To the extent the PRA revokes any consent, it is expected that the relevant firm will resume reporting within six months from the date of notification of the waiver. It is clear from the guidance that firms should proactively manage their reporting, whether or not they are obliged to share the information with the PRA, as best practice.

4. Capital Add-Ons

In exceptional circumstances, supervisory authorities may require a capital add-on for a (re)insurance undertaking, meaning that such undertaking shall be required to maintain more capital than would otherwise be required pursuant to the SCR. As an overarching principle within the Solvency II Directive, the imposition of a capital add-on is “exceptional” and “should only be used as a measure of last resort, when other supervisory measures are ineffective or inappropriate”. “Exceptional” should also be viewed through the lens of the specific firm in question rather than in relation to the total number of capital add-ons in a specific market.⁷²⁵

Given the extraordinary nature for the imposition of a capital add-on, there are very limited circumstances in which it will be imposed, those being in a situation, as judged by the supervisory body, where:⁷²⁶

• The risk profile of the insurance or reinsurance undertaking deviates significantly from the assumptions underlying the SCR calculated using the standard formula and either:
  • The requirement to use the IM is inappropriate or ineffective.
  • A full or partial IM is being developed.
• The risk profile of the undertaking deviates significantly from the assumptions underlying the SCR as calculated using an internal or partial model because certain quantifiable risks are captured insufficiently and the adaptation of the model to better reflect the given risk profile has failed within an appropriate timeframe.
• The system of governance of the undertaking deviates significantly from the standards dictated by the Solvency II Directive and those deviations prevent it from being able to properly identify, measure, monitor, manage and report the risks that it is or could be exposed to and that the application of other measures is, in itself, unlikely to improve the deficiencies sufficiently within an appropriate timeframe.
• The undertaking applies the MA, the VA or the transitional measures, and the supervisory authority concludes that its risk profile deviates significantly from the assumptions underlying those adjustments and transitional measures.

Solvency Capital Requirement: Deviation and Calculation of Capital Add-Ons

The PRA will calculate the capital add-on as the difference between:⁷²⁷

• The SCR of the undertaking, excluding any previous capital add-ons, if the standard formula or the IM (as appropriate) were to be amended to reflect that undertaking’s actual risk profile.
• The SCR of the undertaking, excluding any previous capital add-ons.

The requirement to use an IM is inappropriate where the estimated financial resources necessary to produce the IM are themselves disproportionate to the size of the deviation in the firm’s risk profile from the assumptions underpinning the SCR.⁷²⁹ Similarly, circumstances where the requirement to use an IM is ineffective include where no IM has been developed or where the developed IM fails to meet the approval conditions.⁷²⁹

Additionally, in determining the extent of deviations from the SCR (described above), the supervisory body will consider a variety of factors, including:⁷³⁰

• The nature, type and size of any deviation.
• The likelihood and severity of any adverse impact on policyholders.
• The level of sensitivity of the assumptions to which the deviation relates.
• The anticipated duration and volatility of the deviation over the duration of the deviation.

In order to provide firms with more comfort, the PRA provides numerical information in addition to situational guidance in its response, which is outlined below.⁷³¹ However, this guidance is contained within the Level 2 Delegated Regulation and is applicable to all relevant jurisdictions.⁷³²

Profile Deviation	PRA Determination
< 10%	There is a possibility that the firm’s risk profile may deviate significantly when compared to the original SCR assessment.
10% < 15%	There is a rebuttable presumption that the conclusion will be the firm’s risk profile deviates significantly when compared to the original SCR assessment, unless there is evidence to the contrary using the risk factors outlined.
≥ 15%	There is an expectation that the conclusion will be the firm’s risk profile deviates significantly when compared to the original SCR assessment

Governance: Deviation and Calculation of Capital Add-On

When assessing a significant deviation with respect to governance (noted above), the supervisory body will consider a variety of factors, including:⁷³³

• The effect of the deviation on the sound and prudent management of the business and whether such deviation arises from an inadequate implementation of a requirement relating to the system of governance or a failure to implement such a requirement.
• The likelihood and severity of any adverse impact on policyholders and beneficiaries.
• The different ways of organising an effective system of governance that is proportionate to the nature, scale and complexity of the risks inherent in the business of the firm.
• The probable financial loss the firm could incur as a consequence of the deviation.
• The anticipated duration of the deviation.

In calculating the add-on for a deviation from governance standards, the supervisory authority should take into account the relevant factors outlined in Article 277, summarised above, and also any capital add-ons set in respect of previous deviations of other (re)insurance undertakings with similar risk profiles provided that, in the case of the UK, the PRA is able to state the reasons for their decision and the statement itself is compliant with the provisions of the professional secrecy requirements as set out in Section 348 of the FSMA.⁷³⁴

Matching Adjustment: Deviation and Calculation of Capital Add-Ons

In determining whether a firm’s risk profile deviates significantly from the assumptions underlying the MA, VA and transitional measures, the factors to be considered by the supervisory body are identical to those concerning the SCR deviation set out in the subsection SCR: Deviation and Calculation of Capital Add-Ons above. In addition, where the deviation relates to the MA, VA or transitional measures, the PRA may only impose a capital add-on where the deviation underlying those assumptions and transitional measures is temporary and does not justify revoking the supervisory approval for the use of the adjustment or the transitional measure (as appropriate).⁷³⁵

The capital add-on calculation in respect of firms applying the MA, VA and transitional measures will be calculated based on the total of:

• The negative of the amount of eligible own funds that would be calculated if the adjustment or transitional measure was modified in such a way that the assumptions underlying the adjustment or transitional measure would fit the actual assets, liabilities and risk profile of the firm.
• The amount of the SCR, excluding any previous or simultaneous capital add-on, that would be calculated if the adjustment or transitional measure was modified in such a way that the assumptions underlying the adjustment or transitional measure would fit the actual assets, liabilities and risk profile of the undertaking.
• The amount of eligible own funds.
• The negative of the amount of the SCR of the firm, excluding any previous or simultaneous capital add-on.⁷³⁶

In calculating the amounts referenced in Section 4 above, the relevant considerations are the features of a particular undertaking’s assets, liability or risk profile that gave rise to the deviations from the assumptions underlying the adjustment or transitional measure in the first instance.⁷³⁷

The PRA: Setting and Removing a Capital Add-On

The PRA should initially notify the relevant firm of its intention to apply a capital add-on, which should include a deadline by which the relevant firm should respond.

The PRA may request the firm to perform a calculation of a capital add-on according to one of the methods set out in this section.

If the PRA receives information it deems to be insufficient, it may request the entity to provide further information necessary for making a decision on setting a capital add-on at a later date to be set by the PRA. If the firm anticipates its inability to meet the deadline, it should notify the PRA immediately.

After having received all pertinent information, the PRA will notify the relevant firm in writing of its decision to set a capital add-on. The decision of the PRA must be sufficiently detailed to enable the firm to understand the steps needed to be taken and remedies implemented in order that the capital add-on be removed. The PRA should supply to the firm:

• The reasons and rationale for setting the capital add-on.
• The methodology for calculating the capital add-on and the amount thereof.
• The date from which the capital add-on is applicable.
• The deadline by which the undertaking is expected to have remedied the deficiency that led to the capital add-on (where appropriate).
• The content and frequency of any progress reports to be provided (where appropriate).

The PRA will continue to review the capital add-on on a regular basis, the frequency of which is to be reviewed on a case-by-case basis. The PRA also expects that the firm make every effort to remedy the deficiencies that led to the imposition of a capital add-on and that the firm inform it in the event that there is a material change to the circumstances that led to the situation causing the capital add-on.⁷³⁸ The driving goal of all parties will be to have the capital add-on in place for as short a timeframe as possible.

5. Supervisory Convergence and Information Sharing

Supervisory Convergence

In exercising the various supervisory tools and practices under the laws, regulations and administrative requirements adopted pursuant to the Solvency II Directive, supervisory authorities must give due regard to “convergence”.⁷³⁹ For that purpose, it must be ensured that:

• Supervisory authorities participate in the EIOPA’s activities.
• Supervisory authorities make every effort to comply with the guidelines and recommendations issued by the EIOPA in accordance with Article 16 of Regulation (EU) No 1094/2010 and state reasons if they do not do so.
• National mandates conferred on the supervisory authorities do not inhibit the performance of their duties as members of the EIOPA or under the Solvency II Directive.⁷⁴⁰

Confidentiality of Information

An obligation of professional secrecy binds all persons who are working or have worked for the supervisory authorities (including auditors and experts acting on behalf of supervisory authorities).⁷⁴¹ Similar restrictions exist on the ability of the PRA and FCA to disclose confidential information.⁷⁴²

Persons bound by professional secrecy must not disclose any confidential information received in the course of performing their duties to any person or authority, save for cases covered by criminal law.⁷⁴³ There is an exception allowing such persons to share a summary or aggregate form of confidential information, such that the individual firm cannot be identified.⁷⁴⁴ However, where a firm is placed into insolvency procedures, it is possible to divulge confidential information that does not concern third parties involved in attempts to rescue that firm in civil or criminal proceedings.⁷⁴⁵

Additionally, where supervisory authorities receive confidential information, they may only use it in the course of their duties and for the following purposes:

• To check that the conditions governing the taking-up of the business of (re)insurance are met and to facilitate the monitoring of the conduct of such business, especially with regard to the monitoring of the technical provisions, the SCR, the MCR and the system of governance.
• To impose sanctions.
• In administrative appeals against decisions of the supervisory authorities.
• In court proceedings under the Solvency II Directive.⁷⁴⁶

Permitted Exchange of Information

The obligation of professional secrecy does not preclude the exchange of information between supervisory authorities of different member states. Information exchanged in this manner should, however, be subject to the obligation of professional secrecy.⁷⁴⁷ The EIOPA may be provided with all information necessary to enable it to carry out its duties.⁷⁴⁸

Information may also be disclosed to supervisory authorities of third countries but only if the information to be disclosed is subject to guarantees of professional secrecy at least equivalent to those under the Solvency II Directive.⁷⁴⁹ Further, this exchange is only permitted where the disclosed information is intended to be used for the performance of supervisory functions of those third country authorities or bodies.⁷⁵⁰ Where, however, the information to be disclosed to a third country originates in another member state, it cannot be disclosed without the express agreement of the supervisory authority of that member state.⁷⁵¹

The PRA has obligations to cooperate with other bodies that have functions similar to the PRA, whether or not situated in the United Kingdom (but noting that the FCA is specifically excluded).⁷⁵² Cooperation may include sharing information that the PRA is not prevented from disclosing.⁷⁵³

There are additional circumstances where the exchange of information is permitted as follows:⁷⁵⁴

• Exchange of information between several supervisory authorities in the same member state in the discharge of their supervisory functions.
• Exchange of information, in the discharge of their supervisory functions, between supervisory authorities and any of the following that are situated in the same member state:
  • Authorities responsible for the supervision of credit institutions and other financial organisations and the authorities responsible for the supervision of financial markets.
  • Bodies involved in the liquidation and bankruptcy of (re)insurance undertakings and in other similar procedures.
  • Persons responsible for carrying out statutory audits of the accounts of (re)insurance undertakings and other financial institutions.
  • Authorities responsible for supervising credit and financial institutions.⁷⁵⁵
• The disclosure, to bodies that administer compulsory winding-up proceedings or guarantee funds, information necessary for the performance of their duties.

The exchange of information between supervisory authorities noted above can also take place between different member states.⁷⁵⁶ Further information may be permitted to be exchanged between supervisory authorities and any of the following:⁷⁵⁷

• The authorities responsible for overseeing the bodies involved in the liquidation and bankruptcy of (re)insurance undertakings and other similar procedures.
• The authorities responsible for overseeing the persons charged with carrying out statutory audits of the accounts of (re)insurance undertakings, credit institutions, investment firms and other financial institutions.
• Independent actuaries of (re)insurance undertakings carrying out legal supervision of those undertakings and the bodies responsible for overseeing such actuaries.

However, in order to exchange information under the circumstances noted in the paragraph above, member states must ensure that the following conditions are met: (i) the information must be for the purpose of carrying out the overseeing or legal supervision; (ii) the information received must be subject to the obligation of professional secrecy; and (iii) where the information originates in another state, it must not be disclosed without the express agreement of the supervisory authority from which it originates and, where appropriate, solely for the purposes for which that authority gave its agreement.⁷⁵⁸

The exchange of information between supervisory authorities and any authorities or bodies responsible may also be authorised for the detection and investigation of breaches of company law. The aim behind allowing such exchanges is to strengthen the stability and integrity of the financial system.⁷⁵⁹ To permit this exchange, however, member states must ensure that the following conditions are met: (i) the information must be intended for the purpose of detection and investigation of breaches of company law; (ii) the information received must be subject to the obligation of professional secrecy; and (iii) where the information originates in another member state, it shall not be disclosed without the express agreement of the supervisory authority from which it originates and, where appropriate, solely for the purposes for which that authority gave its agreement.⁷⁶⁰

The Solvency II Directive provides for two additional circumstances where the disclosure of information by supervisory authorities is permitted:

• To other departments of their central government administrations responsible for legislation on the supervision of credit institutions, financial institutions, investment services and (re)insurance undertakings and to inspectors acting on behalf of those departments. Such disclosure is only permitted, however, where necessary for reasons of prudential control.⁷⁶¹
• To central banks, monetary authorities, payment systems overseers and the European Systemic Risk Board.⁷⁶²

6. Obligations of Auditors Under Solvency II

Persons carrying out statutory audits for Solvency II firms are obligated to promptly report, to the relevant supervisory authority, any fact or decision concerning that firm of which they have become aware while carrying out the audit and which is liable to bring about any of the following:

• A material breach of the laws, regulations or administrative provisions that lay down the conditions governing authorisation or which specifically govern pursuit of the activities of the firm.
• The impairment of the continuous functioning of the firm.
• A refusal to certify the accounts or to the expression of reservations.
• Noncompliance with the capital requirements.⁷⁶³

Auditors performing statutory audits for firms must also report any facts or decisions of which they become aware in relation to an undertaking, which has close links with the firm for which the audit is being performed, resulting from a control relationship.⁷⁶⁴ The Solvency II Directive clarifies that a good faith disclosure by an auditor pursuant to the provisions laid out in this section will not constitute a breach of any confidentiality obligation imposed by contract, or by any legislative, regulatory or administrative provision.⁷⁶⁵

Auditors performing statutory audits for firms in the UK are also under reporting obligations. The circumstances mandating disclosure by auditors in the UK are largely similar to those outlined above.⁷⁶⁶

7. Acquisitions Involving Qualifying Holdings

Notification Requirements

The Solvency II Directive requires the “proposed acquirer” of a “qualifying holding” in a (re)insurance undertaking to notify supervisory authorities in writing when it decides to acquire the firm but before it is actually acquired.⁷⁶⁷ This notification must include the size of the relevant holding as well as any other relevant information that is needed to carry out a prudential assessment under Article 58.⁷⁶⁸ The information submitted should, however, be proportional to the nature of the proposed acquirer and the proposed acquisition, and the proposed acquirer should not be made to submit information that is not relevant for the prudential assessment.⁷⁶⁹

Under this regime, a proposed acquirer includes any natural or legal person or such persons acting in concert, and a qualifying holding means a direct or indirect holding in an undertaking that represents 10% or more of the capital or voting rights or which makes it possible to exercise a significant influence over the management of that undertaking. A proposed acquisition includes: (i) a direct or indirect acquisition of a qualifying holding in a (re)insurance undertaking, or (ii) an acquisition involving a further direct or indirect increase in a qualifying holding in a (re)insurance undertaking, as a result of which the proportion of voting rights or capital held by the proposed acquirer would reach or exceed 20%, 30% or 50% or where the target (re)insurance undertaking would become a subsidiary of the proposed acquirer.⁷⁷⁰

The notification requirement also applies where a person (natural or legal) decides to reduce their qualifying holding so that the proportion of the voting rights or capital held would fall below 20%, 30% or 50% or where the target (re)insurance undertaking would cease to be a subsidiary of that person.⁷⁷¹

If a (re)insurance undertaking becomes aware of any acquisitions or disposals of holdings in its capital that cause those holdings to exceed or fall below any of the 20%, 30% or 50% thresholds that trigger the notification requirement outlined above, it must notify the supervisory authority at the point at which it becomes aware of such fact.⁷⁷² It must also, at least annually, inform supervisory authorities of the names of shareholders and members possessing qualifying holdings and the size of these holdings.⁷⁷³

Assessment Period

Having received the notification required, the supervisory authority must acknowledge receipt promptly in writing to the proposed acquirer within two working days. ⁷⁷⁴ The following timelines subsequently apply:

• Supervisory authorities have a maximum period of 60 working days from the date of the written acknowledgement of receipt of the notification to carry out the assessment (assessment period). Supervisory authorities must mention this deadline in the acknowledgement of receipt.⁷⁷⁵
• Supervisory authorities may request additional information that is necessary to complete the assessment up until the 50th working day of the assessment period with any such requests for information in writing.⁷⁷⁶
• Any responses by the proposed acquirer to the requests for further information must be given within 20 working days. Supervisory authorities may, however, extend this period by up to 30 working days where the proposed acquirer is: (i) situated or regulated outside the European Union, or (ii) not subject to supervision under the Solvency II Directive.⁷⁷⁷
• If the supervisory authority decides to oppose the proposed acquisition on conclusion of the assessment, it must inform the proposed acquirer in writing with the reasons for the decision, within two working days of making the decision.⁷⁸⁸
• If the supervisory authority does not oppose the proposed acquisition within the assessment period in writing, it shall be deemed to be approved.⁷⁷⁹
• Where the supervisory authority approves the proposed acquisition, it may stipulate a maximum period within which the acquisition must be concluded, and extend it where appropriate.⁷⁸⁰

Assessment Criteria

In assessing the proposed acquisition, supervisory authorities should ensure the sound and prudent management of the target firm.⁷⁸¹ In this regard, they must assess the suitability of the proposed acquirer and the financial soundness of the proposed acquisition in light of the following criteria:

• The reputation of the proposed acquirer.
• The reputation and experience of any person who will direct the business of the target firm as a result of the proposed acquisition.
• The financial soundness of the proposed acquirer, in particular in relation to the type of business pursued and envisaged in the target firm.
• Whether the target firm will be able to comply and continue to comply with the prudential requirements under the Solvency II Directive and other applicable directives, in particular, whether the group of which it will become part has a structure that makes it possible to exercise effective supervision, effectively exchange information among the supervisory authorities and determine the allocation of responsibilities among the supervisory authorities.
• Whether there are reasonable grounds to suspect that, in connection with the proposed acquisition, money laundering or terrorist financing is being or has been committed or attempted, or that the proposed acquisition could increase the risk thereof.⁷⁸²

Prior conditions may not be imposed with respect to either the level of holding that must be acquired or from examining the proposed acquisition in terms of the economic needs of the market.⁷⁸³ Supervisory authorities can only oppose the proposed acquisition if there are reasonable grounds for doing so on the basis of the above criteria or if the information provided by the proposed acquirer is incomplete.

Regulated Financial Undertakings

The relevant supervisory authorities are instructed to work in “full consultation” with each other when carrying out an assessment of an acquisition in which the proposed acquirer is any one of the following:

• A credit institution, (re)insurance undertaking, investment firm or management company⁷⁸⁴ authorised in another member state or in a sector other than that in which the acquisition is proposed.
• The parent undertaking of any entity mentioned above.
• A natural or legal person controlling any entity mentioned above.⁷⁸⁵

Under any of the circumstances mentioned in the paragraph above, supervisory authorities are required to cooperate with each other and provide each other with any information that is essential or relevant for the assessment, both on request and on their own initiative.⁷⁸⁶

Supervisory Powers Under the Acquisition Regime

Where the influence exercised by a proposed acquirer is likely to operate against the sound and prudent management of the target firm, the supervisory authority of the target firm must take appropriate measures to put an end to that situation. Such measures may consist, for example, of: (i) injunctions, (ii) penalties against directors and managers, or (iii) suspension of voting rights attached to shares held by the shareholders or members in question.⁷⁸⁷ Supervisory authorities are instructed to take similar measures in a situation where a proposed acquirer fails to comply with the notification requirements.⁷⁸⁸

In a situation where a holding is acquired despite opposition from a supervisory authority, member states must ensure their laws provide for suspending the corresponding voting rights or annulling any votes cast.⁷⁸⁹

_______________

641 Article 29 of the Solvency II Directive; “PRA’s Approach to Supervision of the Banking and Insurance Sectors”, 31 July 2023.

642 Paragraph 33, “Consultation Paper on Proposals for Solvency II 2020 Review”, (EIOPA-BoS-19-304 25), June 25 2019.

643 COM(2021) 581 final, “Proposal for a Directive of the European Parliament and of the Council”, 22 September 2021.

644 Paragraphs 2 and 13, ibid.

645 Paragraph 63, ibid.

646 Article 1(2), COM(2021)0582, “Proposal for a Directive of the European Parliament and of the Council”, 19 January 2024.

647 Article 1(13), ibid.

648 Article 1(13), ibid.

649 PRA PS2/24.

650 Paragraph 8.10, ibid.

651 Paragraph 8.11, ibid.

652 Paragraph 10.18,ibid.

653 Article 30(2) of the Solvency II Directive.

654 Article 30(1), ibid.

655 Article 30(3), ibid.

656 Article 31(3) of the Solvency II Directive.

657 (1) Article 31(2), ibid; and (2) Part 1A and 9A of the FSMA for the PRA’s obligation to publish certain documents and guidance.

658 Article 34(1) of the Solvency II Directive.

659 Article 34, ibid.

660 Article 34(7), ibid.

661 Article 34(6), ibid.

662 Parts 2, 3, 4A, 5, 9A and 14 of the FSMA.

663 Article 36(1) of the Solvency II Directive.

664 ibid.

665 Article 36(4), ibid.

666 Article 36(3), ibid.

667 Article 36(2), ibid.

668 Article 36(6), ibid.

669 ibid.

670 The EIOPA Guidelines on supervisory review process (EIOPA-BoS-14/179 EN).

671 Article 36(5) of the Solvency II Directive.

672 Article 38(1), ibid (transposed in Paragraph 7.4, Conditions Governing Business Part of the PRA Rulebook).

673 Article 38(2), ibid.

674 Ibid.

675 (1) Article 38(2) of the Solvency II Directive; and (2) Article 19 of Regulation (EU) No 1094/2010 (as amended by Regulation (EU) 2019/2175).

676 Article 38(2), ibid.

677 Article 35(2)(a), ibid.

678 Article 304 of the Level 2 Delegated Regulation.

679 Article 35(1) of the Solvency II Directive (transposed in Paragraph 2.1, Reporting Part PRA Rulebook).

680 Article 35(2), ibid.

681 Article 35(1), ibid (transposed in Paragraph 2.2, Reporting Part of the PRA Rulebook).

682 Article 35(3)-(5), ibid (transposed in Paragraphs 2.3 to 2.5, Reporting Part of the PRA Rulebook).

683 Article 312 of the Level 2 Delegated Regulation.

684 Ibid.

685 Ibid.

686 Article 35(7) of the Solvency II Directive.

687 Ibid.

688 Ibid.

689 ibid.

690 Article 1(16), COM(2021)0582, “Proposal for a Directive of the European Parliament and of the Council”, 19 January 2024.

691 Article 1(18), ibid.

692 (1) PRA CP12/23; and (2) PRA PS3/24.

693 PRA PS3/24.

694 Paragraph 3.29, ibid.

695 Ibid.

696 Article 263 of the Level 2 Delegated Regulation.

697 PRA SS7/17 was first published in October 2017. The current version in force was published in September 2020.

698 Paragraph 1.2, ibid.

699 Paragraph 2.1, ibid.

700 Ibid.

701 Paragraph 3.1, ibid.

702 Paragraph 3.2, ibid.

703 Paragraph 3.3, ibid.

704 PRA SS7/17.

705 Article 35(5) of the Solvency II Directive (transposed in Paragraph 2.5, Reporting Part of the PRA Rulebook).

706 Commission Implementing Regulation (EU) 2023/894.

707 Template S.01.01.

708 Template S.02.01.

709 Template S.23.01.

710 Template S.28.01.

711 Template S.30.01.

712 Templates S.40.01/S.41.01.

713 Paragraph 2.8, Reporting Part of the PRA Rulebook.

714 Article 1(18), COM(2021)0582, “Proposal for a Directive of the European Parliament and of the Council”, 19 January 2024.

715 (1) Article 312 of the Level 2 Delegated Regulation; and (2) Paragraph 2.10, Reporting Part of the PRA Rulebook.

716 (1) Article 312 of the Level 2 Delegated Regulation; and (2) Paragraph 2.11, Reporting Part of the PRA Rulebook.

717 Section 1(f): National Specific Templates, “Regulatory Reporting — Insurance Sector”.

718 Paragraph 2.7, Reporting Part PRA Rulebook.

719 Paragraph 2.6, ibid.

720 Article 3, Commission Implementing Regulation (EU) 2023/894.

721 PRA CP11/21.

722 Section 19 of “The PRA’s Approach to Supervision of the Banking and Insurance Sectors” Bank of England PRA, published in July 2023.

723 Paragraph 1 of the PRA SS11/15.

724 (1) Section 165 of the FSMA; (2) Regulation 31 of the Solvency II Regulations; and (3) Paragraph 17.3, Group Supervision Part of the PRA Rulebook.

725 Recital 27 of the Solvency II Directive.

726 Article 37(1), ibid.

727 Article 282 of the Level 2 Delegated Regulation.

728 Article 280, ibid.

729 Title I, Chapter VI, Section 4, Subsections 1 and 3 of the Solvency II Directive.

730 (1) Article 280 of the Level 2 Delegated Regulation; and (2) PRA Statement of Policy “Solvency II: Capital Add-Ons”, published in February 2024.

731 PRA Statement of Policy “Solvency II: Capital Add-Ons”, published in February 2024.

732 Article 280 of the Level 2 Delegated Regulation.

733 (1) Article 277 of the Level 2 Delegated Regulation; and (2) PRA Statement of Policy “Solvency II: Capital Add-Ons”, published in February 2024.

734 (1) Article 286 of the Level 2 Delegated Regulation; and (2) PRA Statement of Policy “Solvency II: Capital Add-Ons”, published in February 2024.

735 (1) Article 278 of the Level 2 Delegated Regulation; and (2) PRA Statement of Policy “Solvency II: Capital Add-Ons”, published in February 2024.

736 (1) Article 286 of the Level 2 Delegated Regulation; and (2) PRA Statement of Policy “Solvency II: Capital Add-Ons”, published February 2024.

737 (1) Article 285 of the Level 2 Delegated Regulation; and (2) “PRA Statement of Policy “Solvency II: Capital Add-Ons”, published in February 2024.

738 Article 37(3) of the Solvency II Directive.

739 Article 71(2), ibid.

740 Ibid.

741 Article 64, ibid.

742 Section 348 of the FSMA.

743 Article 64 of the Solvency II Directive.

744 Ibid.

745 Ibid.

746 Article 67, ibid.

747 Article 65, ibid.

748 Article 65a, ibid.

749 Article 66, ibid.

750 Ibid.

751 Ibid.

752 Article 354B of the FSMA.

753 Ibid.

754 Article 68(1) of the Solvency II Directive.

755 Obliged entities are listed in points (1) and (2) of Article 2(1) of Directive (EU) 2015/849 of the European Parliament and of the Council for Compliance with that directive.

756 Article 68(1) of the Solvency II Directive.

757 Article 68(2), ibid.

758 Ibid.

759 Article 68(3), ibid.

760 Article 68(3), ibid.

761 Article 69, ibid.

762 Article 70, ibid.

763 Article 72(1), ibid.

764 Ibid.

765 Article 72(2), ibid.

766 (1) SI 2001/2587; (2) Regulation 2(2) of the FSMA 2000 (Communications by Auditors); and (3) Regulations 2001 and Section 342(3) of the FSMA.

767 Article 57 of the Solvency II Directive.

768 Ibid.

769 Article 59(4), ibid.

770 Article 57, ibid.

771 Ibid.

772 Article 61, ibid.

773 Ibid.

774 Article 58(1), ibid.

775 Ibid.

776 Article 58(2), ibid.

777 Articles 58(2)-(3), ibid.

778 Article 58(4), ibid.

779 Article 58(5), ibid.

780 Article 58(6), ibid.

781 Article 59(1), ibid.

782 Ibid.

783 Article 59(3), ibid.

784 Article 2(1)(b) of the UCITS Directive (2009/65/EC).

785 Article 60(1) of the Solvency II Directive.

786 Article 60(2), ibid.

787 Article 62, ibid.

788 Ibid.

789 Ibid.

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