The PRA issued its latest Solvency II Directors’ update on 12 February. This covered, at a high level, a large variety of topics demonstrating the sheer numbers of priorities firms are currently trying to juggle. As such it will be of interest to all firms.
For many firms this letter will be the key way that the PRA communicates with them so it is important to consider the contents and the implications for your individual firm. This blog covers the key areas touched on and key points of interest for each one.
|Area||Update||What firms should be doing|
|Solvency II (SII) approvals||
||PRA update says it all!|
These are discussed in more detail in our blog on internal models.
|Firms are advised to make sure that their supervisory team has a clear understanding of the model strengths and weakness and status of model developments.|
|Balance Sheet Review||
||In October PRA said that all firms that would be required to follow the two tier approach would be notified by mid-November.
However it would be good practice for other firms to consider undertaking a similar independent review.
|Appropriateness of SCR||
||PRA will contact firms that they deem not to fit the standard formula in Q2 2015.
If any thematic issues are identified the PRA will provide general guidance in Q2 2015.
||PRA to issue template and guidance before the end of February.
Although not mentioned we suspect that firms will have 3 months to complete.
||If you haven’t already done so submit your test returns by the 2nd April.
You need to provide PRA with user details if you haven’t done so already.
As you can see there is a huge amount going on for both firms and the PRA. Careful planning will be required by firms to ensure that they keep up to date with the PRA feedback and guidance as well as ensuring that they meet all of the deadlines and supply documentation and applications of a suitable quality to ensure a smooth transition to Solvency II.
We expect that even the best prepared firms are likely to require support to ensure a smooth pain free transition to Solvency II. We expect the support required to vary from additional ‘hands on’ support at peak periods to an independent review of key aspects of your Solvency II programme or documentation to provide assurance to senior management or the board. We are happy to discuss your firm’s specific requirements and our flexible approach can ensure that we support you in the most efficient manner.