December 2015
The UK’s Prudential Regulation Authority (PRA) has granted approval for 19 carriers’ internal models, effective from 1 January 2016.
Among the P&C carriers to receive the green light were Amlin, Aspen UK, Markel International, QBE Europe, RSA and Lloyd’s of London.
John Parry, director of finance, and Sean McGovern, chief risk officer and general counsel at Lloyd’s, commented: “This is an important milestone for Lloyd’s and required a great deal of collective effort from the Lloyd’s market and the Corporation of Lloyd’s over a number of years.
“We are extremely grateful for the work that involved so many across the market to help achieve this outcome. We would also like to note the widespread support and commitment to the Internal Model Application, which reflects the unique nature of Lloyd’s capital efficiency and security.”
Markel’s president William Stovin said that approval of its model was a “resounding endorsement” of the carrier’s management, controls and capitalisation.
The remaining 13 were: Aviva; British Gas Insurance; Just Retirement; Legal & General; finance specialist MBIA UK Insurance; the National Farmers’ Union Mutual Insurance Society; Pacific Life Re; Pension Insurance Corporation; Phoenix Group; Prudential; Scottish Widows; Standard Life; and Unum European Holding Company.
Andrew Bailey, deputy governor of prudential regulation at the Bank of England and CEO of the PRA, said: “Today marks a major milestone in the implementation of Solvency II in the UK. The PRA has approved 19 insurers’ internal models for use from day one of the new regime. Going forward we will monitor insurers’ models carefully in order to ensure they continue to deliver an appropriate level of capital.”
The PRA has not disclosed instances where an insurer’s application to use an internal model had been either rejected or withdrawn. In addition, a number of insurers are planning to apply for model approval later than 1 January 2016.
Last week, The Insurance Insider reported that Ace was believed to have asked for a deferral.
It is understood some 120 carriers had initially applied to have an internal model but many abandoned their plans, deterred by changing rules, the large amount of manpower required and suggestions that the PRA did not have enough staff to cope with the demand in the run-up to the deadline.
Outside the UK, the German regulator has also been busy approving internal models, with Munich Re, Allianz, Talanx and Hannover Re among those to get their Solvency II preparations signed off. Scor has also received the green light for its model from the French regulator.
