Affordability and sustainability of distribution strategies


When assessing the affordability and sustainability of distribution strategies of with-profits firms, the PRA will consider whether those strategies are consistent with its objectives. The PRA expects firms not to make distributions from with-profits funds which could endanger the safety and soundness of the overall firm, or which could have a significant negative impact on the benefit security of any group of policyholders.


Firms should not set with-profits distribution strategies which accelerate the transfer of profits outside the with-profits fund and which increase shareholder distributions while posing increased risk to benefit security and the safety and soundness of the firm. This includes the approach firms might take when making or considering special/one-off distributions.


When taking a view on the affordability of distributions from a with-profits fund, firms should give due consideration to the With-Profits 2.1 in the With-Profits Part of the PRA Rulebook, which requires firms to hold assets sufficient to meet liabilities within the with-profits fund.