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Application provision

1.1 Unless otherwise stated, this Part applies to:

  1. (1) every UK Solvency II firm:
    1. (a) that is a member of a group for which the PRA is the group supervisor;
    2. (b) that is a member of a group for which a supervisory authority (other than the PRA) is the group supervisor, subject to (c) and to the extent this Part gives effect to the Solvency II EEA implementing measures in the EEA State of its group supervisor; and
    3. (c) where the group supervisor of a group of which a firm is a member is a supervisory authority in an EEA State other than the UK, the requirements of the Solvency II EEA implementing measures in that EEA State apply to the firm in relation to its capacity as a member of that group;
  2. (2) in accordance with Insurance General Application 3, the Society as a mixed activity insurance holding company, as modified by 21; and
  3. (3) a UK holding company.

10.1

01/01/2016

Where a Solvency II undertaking has more than one related Solvency II undertaking, the group solvency calculation of the group must be carried out by including each of those related Solvency II undertakings.

Additional Notes


[Note: Art. 225 of the Solvency II Directive]

10.2

01/01/2016

In respect of a related Solvency II undertaking with its head office in an EEA State other than that of the Solvency II undertaking for which the group solvency calculation of the group is carried out, the group solvency calculation must take account of the SCR and the own funds eligible for the SCR as laid down in the Solvency II EEA implementing measures of that other EEA State.

Additional Notes


[Note: Art. 225 of the Solvency II Directive]

10.3

01/01/2016

  1. (1) When calculating the group solvency of a Solvency II undertaking in a group, the situation of each intermediate holding company must be taken into account.
  2. (2) For the sole purpose of that calculation, the intermediate holding company must be treated as if it were a Solvency II undertaking subject to the SCR Rules in respect of the SCR and were subject to the same conditions as are laid down in the Own Funds Part of the PRA Rulebook in respect of own funds eligible for the SCR.
  3. (3) In cases where an intermediate holding company holds subordinated debt or other eligible own funds subject to limitation in accordance with Own Funds 4 or any applicable Solvency II Regulations, they must be recognised as eligible own funds up to the amounts calculated by application of the limits in Own Funds 4 or any applicable Solvency II Regulations to the total eligible own funds outstanding at the level of the group as compared to the group SCR.
  4. (4) Any eligible own funds of an intermediate holding company, which would require prior authorisation from a supervisory authority in accordance with Article 90 of the Solvency II Directive, may be included in the calculation of the group solvency of the group only in so far as they have been duly authorised by the group supervisor.

Additional Notes


[Note: Art. 226 of the Solvency II Directive]

10.4

01/01/2016

  1. (1) Subject to (2), when calculating, in accordance with method 2, the group solvency of a Solvency II undertaking in a group which is a participating undertaking in a third country insurance undertaking or third country reinsurance undertakingthat third country insurance undertaking or third country reinsurance undertaking must, solely for the purposes of that calculation, be treated as a related Solvency II undertaking.
  2. (2) If the third country in which that third country insurance undertaking or third country reinsurance undertaking has its head office makes it subject to authorisation and imposes on it a solvency regime that is assessed to be equivalent under Article 227 of the Solvency II Directive, the calculation in (1) must take into account, as regards that undertaking, the requirement equivalent to the SCR and the capital items eligible to satisfy that requirement as laid down by that third country.

Additional Notes


[Note: Art. 227 of the Solvency II Directive]

10.5

01/01/2016

When calculating the group solvency of a Solvency II undertaking in a group which is a participating undertaking in a credit institution, investment firm or financial institution, the participating Solvency II undertaking must either:

  1. (1) apply method 1 or method 2 in Annex I to Directive 2002/87/EC with any necessary changes, provided that method 1 in that Annex must be applied only where the group supervisor is satisfied as to the level of integrated management and internal control regarding the undertakings which would be included in the scope of consolidation and provided always that the method chosen must be applied in a consistent manner over time; or
  2. (2) if the group supervisor so determines (either at the request of the participating undertaking or on its own initiative), deduct any such participation from the own funds eligible for the group SCR of the participating undertaking.

Additional Notes


[Note: Art. 228 of the Solvency II Directive]

10.6

01/01/2016

Where the information necessary for calculating the group solvency of a Solvency II undertaking in a group, concerning a related undertaking with its head office in an EEA State or a third country, is not available to the group supervisor then:

  1. (1) the book value of that related undertaking in the participating Solvency II undertaking must be deducted from the own funds eligible for the group SCR; and
  2. (2) the unrealised gains connected with that participation must not be recognised as own funds eligible for the group SCR.

Additional Notes


[Note: Art. 229 of the Solvency II Directive]