On August 11, 2014, a consultation paper regarding the transposition of the Solvency II Directive into the Prudential Regulation Authority PRA (“PRA”) rules was published. The paper sets out changes to the PRA’s rules required to implement the Directive as amended by Omnibus Directive II.

The paper, CP 16/14 (http://www.bankofengland.co.uk/pra/Documents/ publications/cp/2014/cp1614.pdf), considers:

  • Changes to primary legislation and the PRA Handbook to implement Omnibus II;
  • Areas not covered previously, such as proposals in relation to surplus funds, and areas where the PRA has further developed its approach;
  • Feedback on responses to the previous consultation paper, CP 12/13; and
  • An economic cost benefit analysis of the most material rule changes proposed in this consultation paper.

The PRA is seeking responses by November 7, 2014.

An update on implementation was published on August 29, 2014, providing information regarding (i) the relationship between the risk margin and calibration of non-hedgeable risks; and (ii) assessing credit risk for matching adjustment portfolios (http://www.bankofengland.co.uk/pra/Documents/s olvency2/solvency2updateaugust2014.pdf).