Legislation – The Insurance and Reinsurance Undertakings (Prudential Requirements) (Amendment and Miscellaneous Provisions) Regulations 2024

Part 2 of these Regulations makes provision about the calculation of the risk margin, which is the amount of capital that insurance and reinsurance undertakings are required to hold to ensure that they are able to transfer their liabilities to another insurer if required. Part 2 restates Articles 37 (calculation of the risk margin) and 39 (cost-of-capital rate) of Commission Delegated Regulation (EU) 2015/35 of 10 October 2014 supplementing Directive 2009/138/EC of the European Parliament and of the Council on the taking-up and pursuit of the business of insurance and reinsurance (Solvency II) (“Regulation 2015/35”). Articles 37 and 39 and other remaining provisions of Regulation 2015/35 are revoked by section 1(1) of, and Schedule 1 to, the Financial Services and Markets Act 2023 (c. 29) and the revocations will be brought into force on 31st December 2024 by the Financial Services and Markets Act 2023 (Commencement No. 6) Regulations 2024 (S.I. 2024/620 (C.39)).

Part 3 makes provision for saving legislation that is due to be revoked that applies to a Gibraltar group or a Gibraltar undertaking. The effect of this provision is that the revoked legislation, together with any modifications, will continue to apply to a Gibraltar group or a Gibraltar undertaking until Schedule 2A to the Financial Services and Markets Act 2000 (c. 8) (“FSMA 2000”) comes fully into force.

Part 4 makes amendments to FSMA 2000, including in particular replacing the definitions of “insurance undertaking” and “reinsurance undertaking” in section 417(1). “Insurance undertaking” and “reinsurance undertaking” will include all insurance and reinsurance undertakings authorised as such under FSMA 2000, including overseas undertakings, and Lloyd’s.

Part 5 makes amendments to the Companies Act 2006 (c. 46) following the revocation of regulation 42 of the Solvency 2 Regulations 2015 (S.I. 2015/575) by section 1(1) of, and Schedule 1 to, the Financial Services and Markets Act 2023 (c. 29); the revocation was brought into force on 30th June 2024 (see the Financial Services and Markets Act 2023 (Commencement No. 4 and Transitional and Saving Provisions) (Amendment) Regulations 2023 (S.I. 2023/1382)). The Insurance and Reinsurance Undertakings (Prudential Requirements) (Transitional Provisions and Consequential Amendments) Regulations 2024 (S.I. 2024/594) convert matching adjustment approvals granted by the PRA under regulation 42 of those Regulations to matching adjustment permissions under section 138BA of FSMA 2000.

Part 6 makes consequential amendments to secondary legislation. Regulation 12 amends the Financial Services and Markets Act 2000 (Disclosure of Confidential Information) Regulations 2001 (S.I. 2001/2188) to permit the disclosure of confidential information if this is necessary to allow the PRA to publish individual stress tests results for insurance and reinsurance undertakings.

Rules made by the PRA are available on www.prarulebook.co.uk and copies of the rules can be obtained from the PRA, 20 Moorgate, London EC2R 6DA, where they are also available for inspection.

The Financial Services Act 2019 of Gibraltar (Act. No. 2019-26) is published on gibraltarlaws.gov.gi. A hard copy of specified provisions in that Act may be obtained from HM Treasury, 1 Horse Guards Road, SW1A 2HQ.

A full impact assessment has not been produced for this instrument as no, or no significant, impact on the private, voluntary or public sector is foreseen. A de minimis impact assessment is available from HM Treasury, 1 Horse Guards Road, London, SW1A 2HQ and is published with the Explanatory Memorandum alongside this instrument on www.legislation.gov.uk.