Supervisory Statement 11/24 – Solvent Exit Planning for Insurers
Pictured: Gareth Truran, Executive Director for Insurance Supervision at the Bank of England. Responsible for supervising UK insurance companies and international insurers.
Context
Solvent exit planning ensures firms are better prepared to exit the market in an orderly manner. Solvent exit improves the outcome for policyholders relative to circumstances such as insolvency being invoked, failed recovery strategies, or claims being written down; and it may also be an option in non-stressed circumstances. Uncertain and overly protracted exits could risk financial stability and the wider market by increasing the likelihood that an insurer’s exit is disorderly. Facilitating a smoother process for insurers to cease PRA-regulated activities supports a well-functioning and competitive market, where new insurers can enter, and unviable insurers can exit with less difficulty.
Businesses Affected
This SS applies to all PRA-regulated insurers except firms in passive run-off, UK branches of overseas insurers and Lloyd’s managing agents, UK Solvency II firms, non-directive firms and the Society of Lloyd’s.
Next Steps for Businesses
Firms should produce an SEA to demonstrate that the firm meets the expectations of the PRA.
The firm should identify and monitor indicators that inform it when it may need to initiate a solvent exit and whether the execution of a solvent exit is likely to be successful.
PRA expects a firm to produce a SEEP when there is a reasonable prospect that the firm may need to execute a solvent exit where it will set out how it will monitor, and respond to, any emerging barriers and risks throughout the execution of a solvent exit.
Call to Action
With SS11/24, the PRA underscores the importance of preparedness in solvent exits. By developing a robust SEA and monitoring key indicators, insurers can ensure an orderly exit that supports both policyholder interests and market stability. Don’t delay—start planning today to meet PRA expectations and safeguard your firm’s future.
For detailed guidance, refer to the Supervisory Statement published by the PRA.
