Effective financial management and planning by insurance firms and groups: PRA consultation

The PRA has published a consultation paper which seeks the views on a draft supervisory statement on effective financial management and planning by insurance firms and groups.  The draft supervisory statement is of particular relevance to insurance entities in the scope of Solvency II, the Society of Lloyd’s and managing agents.

The supervisory statement is not intended to introduce new expectations, but to complement existing materials.  The draft supervisory statement focuses on:

  • a framework for the development and maintenance of a risk appetite statement by an insurer;
  • the application of this risk appetite to an insurer’s business and financial plans; and
  • the assessment of the suitability and sustainability of capital distribution plans in the context of this risk appetite.

The expectations set out in the draft supervisory statement include that such risk appetite statements are expected to identify:

  • the levels of capital that are to be maintained in reasonably foreseeable market conditions
  • the insurer’s appetite for the level and volatility of future dividend payments it would be willing to make, and
  • all the material risks that are relevant to the insurer.

The consultation runs until 9 February 2018