Undertakings in Difficulty Non-Compliance with the SCR

Application provision

1.1 Unless otherwise stated, this Part applies to:

  1. (1) a UK Solvency II firm; and
  2. (2) in accordance with Insurance General Application 3, the Society, as modified by 6.

3.1

01/01/2016

A firm must:

  1. (1) immediately inform the PRA as soon as it observes that the SCR is no longer complied with, or where there is a risk of non-compliance within the next three months;
  2. (2) within two months from the observation of non-compliance with the SCR, submit a realistic recovery plan for approval by the PRA; and
  3. (3) take the measures necessary to achieve, within six months (or such longer period as the PRA may determine) from the observation of non-compliance with the SCR, the re-establishment of the level of eligible own funds covering the SCR or the reduction of its risk profile to ensure compliance with the SCR.

[Note: Art. 138(1)–(3) of the Solvency II Directive]

3.2

31/12/2020

The changes to this rule are effective from 23:00 on 31/12/2020.

If the PRA has extended the period referred to in 3.1(3), by reason of the declaration;

  1. (1) before IP completion day by EIOPA; or
  2. (2) on or after IP completion day by the PRA pursuant to regulation 4A of the Solvency 2 Regulations,

of exceptional adverse situations affecting the firm, the firm must submit a progress report to the PRA every three months setting out the measures taken and the progress made to re-establish the level of eligible own funds covering the SCR or to reduce its risk profile to ensure compliance with the SCR.


[Note: Art. 138(4) of the Solvency II Directive]