Portfolio Transfers in 2015 - PRA Update
On Wednesday, the PRA set out its approach to Part VII transfers for insurance business for the rest of 2015.
This is prompted by competing pressures on its limited resources and what it describes as a "spike" in the number of firms seeking to complete transfers in advance of implementation of Solvency II in January 2016.
The PRA will continue to work on transfers where the fee has been paid, and which are on track to complete in 2015. However, it will be more selective in committing to new transfers for the rest of 2015 and more specific about what it will and won't do. It will consider new transfers on a case by case basis, and only where the timetable is "credible and realistic". Where the PRA does commit to a new transfer:
- it will review only documentation in final draft form
- it must receive this - including the final draft independent expert's report (IE Report) - at least six weeks before the directions hearing
- if not, it may request the applicant to defer the directions hearing
- it will not review anything (e.g. policyholder communications and waiver requests) until it has received the IE Report.
Firms that fail to get their transfer done this year will then be reliant on the Solvency II transitional provisions to escape its effects. Given that these are in some cases as short as one year (e.g. for MCR) we can expect 2016 to be a busy year too.
If you have any queries related to this, please contact George Belcher on +44 (0)20 3060 6552 or Vivien Tyrell on +44 (0)20 3060 6153.