Santa's 'Omnibus 3' joke was not so
The main document released was a supervisory statement (along with a video explaining what a 'supervisory statement is!), which followed on from a recent consultation on how the PRA plan to apply EIOPA's preparatory guidelines.
That blog post is effectively still relevant, as virtually nothing changed as a result of the consultation which, at 18 responses, was appallingly participated in, and is perhaps symptomatic of the malaise with which the topic has been infected by during 2013.
The three areas where the PRA have provided specific clarifications following the consultation were;
- Sys Gov Guideline 30 (Securitised Instruments) - note that they will tell EIOPA that it is badly drafted, but that ultimately firms should focus on intended outcomes of it if in doubt
- Sys Gov Guideline 41 (Actuarial Function) - confirm that the function will need to provide opinions on the reinsurance arrangements and underwriting policies during transition
- Reporting - Confirm that submissions in XBRL are expected by June 2015, but give some wriggle room should EIOPA not fix the templates!
Julian Adams took time off from his new YouTube career to speak at the event as well - the speech, lovingly titled "A Turning Point", has been published, and from a UK Solvency II Programme perspective. I took the following from it;
General Solvency II
- "Certainty" on timetable, so while he appreciates that firms "downsized their Solvency II programmes", "...now is the time to reassess priorities" - so go tell your CFOs you need another cheque!
- "Expects to have discussions with firms" on the effect of the agreed matching adjustment on capital and technical provisions.
- On the 16-year transition to full Solvency II technical provisions, they are pleased "...to have the safeguard of the transitional floor" which will keep the old regime relevant for years to come
- The Commission "...hope to have a stable version [of delegated acts] ready by March", though won't be publishing them until summer. Does that mean we'll get another leak, like in October 2011?
- "...it is important that firms stay appraised of developments in delegated acts, implementing technical standards and guidance to be issued by the Commission and EIOPA" - PRA seemingly distancing themselves as an influencer at this point, and positioning itself as an administrator
- To that end, the PRA Handbook will follow "intelligent copy-out" rules, so the only elaboration we should expect in future outside of materials produced in the low countries will be in the form of Supervisory Statements (see above!)
- Some technical actuarial papers will be released by the PRA in the New Year
- Reminder for standard formula firms that they will need to make sure their SCR calculation is suitable, including consideration of USPs/PIM
Specific to the PRA's application of EIOPA Preparatory Guidance
- "...emphasis is on preparations for Solvency II and not its early implementation"
- "We are not gold plating any of the guidelines" - no definition of what "gold plating" means though, which would have been useful.
- "[Proportionality] does not mean that firms can select which requirements to comply with or not"
- Expect incremental improvement in the quality of ORSA Supervisory Reports submitted between 2014 and 2015
- Industry Working Group on Reporting has been set up, as there is evidently enough discord within the UK at the prospect of parallel running numbers to justify a PRA/Industry jam session. That said, July 2015 remains the PRA expectation for XBRL reporting to come in from firms within the thresholds
- For IMAP, "it is critical that firms keep to their allocated submission slot" - if you miss, you "...will join the end of the queue", which might help free up some purse strings!
- "...no longer possible" to offer any flexibility to firms in the IMAP space.