The PRA has published a Supervisory Statement setting out its approach to branch authorisation and supervision, and a Policy Statement in response to its December 2017 consultation on the same topic.
The Supervisory Statement is a little late for insurers that sought to ensure that they were prepared for a hard Brexit at the end of March 2019 – it will probably be of most interest to European insurers which have passported into the UK and are yet to determine whether to establish a UK subsidiary or to apply for authorisation as a third country branch (following Brexit, EU member states will be third country branches).
The Supervisory Statement states that, when considering applications for authorisation as a third country branch, the PRA will assess regulatory equivalence between the UK and the branch’s home jurisdiction, and will consider its ability to supervise the insurer. The Statement also sets a threshold for liabilities of a third country branch which are covered by the FSCS. The PRA’s view is that a branch should consider authorisation as a subsidiary where it has liabilities covered by the FSCS in excess of £500 million.
The Supervisory Statement was published in draft as part of the December 2017 consultation, and the final version contains only minimal changes from the draft. The most significant is that the FSCS liabilities threshold was increased from £200 million to £500 million.