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Application provision

1.1 Unless otherwise stated, this Part applies to:

  1. (1) a UK Solvency II firm;
  2. (2) the Society, in accordance with General Application 3
  3. (3) managing agents, in accordance with General Application 3; and
  4. (4) (in respect of 3.8 only) a UK ISPV.

7.1

01/01/2016

If on 31 December 2015 a firm complies with the pre-Solvency II MCR but does not hold sufficient eligible own funds to cover the MCR then:

  1. (1) the firm must comply with Minimum Capital Requirement 2.1 by 31 December 2016;
  2. (2) Undertakings in Difficulty 4.1 will apply from 31 December 2016; and
  3.       [Note: Art. 131 of the Solvency II Directive]
  4. (3) until 31 December 2016 a firm must:
    1. (a) inform the PRA immediately where it observes that the pre-Solvency II MCR is no longer complied with or where there is a risk of non-compliance within the next three months; and
    2. (b) within one month from the observation of non-compliance with the pre-Solvency II MCR, submit, for approval by the PRA, a short-term realistic finance scheme to restore, within three months of that observation, its capital resources, at least to the level of the pre-Solvency II MCR or to reduce its risk profile to ensure compliance with the pre-Solvency II MCR.

7.2

01/01/2016

Any finance scheme submitted under 7.1(3)(b) must at least include particulars or evidence concerning the following:

  1. (1) estimates of management expenses, in particular current general expenses and commissions;
  2. (2) estimates of income and expenditure in respect of direct business, reinsurance acceptances and reinsurance cessions;
  3. (3) a forecast balance sheet;
  4. (4) estimates of the capital resources intended to cover the pre-Solvency II MCR; and
  5. (5) the firm’s overall reinsurance policy.