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The Solvency II Directive allows firms to apply to their supervisory authority for approval to use the TMTP. Under the Directive, recalculation is permitted, at the initiation of either the firm or the Prudential Regulation Authority (PRA):
The purpose of the draft supervisory statement is to provide clarity on the PRA’s expectations for, and process applicable to, recalculations of this transitional measure.
It should be read in conjunction with the Solvency II Firms: Transitional Measures Part of the PRA Rulebook, the rules in the rest of the Solvency II Firms section of the PRA Rulebook, the Solvency II Regulations 2015 (2015/575) and with the European Insurance and Occupational Pensions Authority (EIOPA) Level 3 Guidelines.
The draft statement should also be read alongside Supervisory Statement 17/15 ‘Solvency II: transitional measures on risk-free interest rates and technical provisions’ and the ‘Management of the Run-Off of TDTP relief in future years’ section of the Directors’ letter published on 16 September 2015.
The PRA welcomes views on this consultation by Friday 13 May 2016.