This statement of policy (SoP) sets out the Prudential Regulation Authority’s (PRA’s) approach to adaptations relating to the Standard Formula, which is the default methodology for the calculation of the Solvency Capital Requirement (SCR) by UK Solvency II firms, as set out in the PRA Rulebook.
This SoP is relevant to all UK Solvency II firms, the Society of Lloyd’s and its members and managing agents, referred to collectively as ‘firms’. It is most relevant to firms that use the Standard Formula to calculate their SCRs.
This SoP covers the PRA’s approach to the following topics:
(a) undertaking specific parameter (USP) and group specific parameter (GSP) permissions;
(b) investments in a securitisation; and
(c) permissions relating to the adjustment for loss-absorbing capacity of deferred taxes (LACDT).
This SoP should be read in conjunction with the SCR – Standard Formula and SCR – Undertaking Specific Parameters Parts of the PRA Rulebook relevant to the Standard Formula and the PRA’s approach to insurance supervision.
Current version
Published on 15 November 2024. Effective from 31 December 2024.
- Following PS15/24 – Review of Solvency II: Restatement of Assimilated Law