Prudential Regulation Authority Rulebook

1.1

This Part applies to:

1. (1) a UK Solvency II firm;
2. (2) in accordance with Insurance General Application 3, the Society, as modified by 7;
3. (3) in accordance with Insurance General Application 3, managing agents, as modified by 7; and
4. (4) third country branch undertakings excluding Swiss general insurers.

1.2

This Part applies to an actuary appointed under 2 or appointed under or as a result of a statutory provision other than in FSMA.

1.3

In this Part, the following definitions shall apply:

Chief Executive function

has the meaning given in Insurance – Senior Management Functions 3.1.

With-Profits Actuary function

has the meaning given in Insurance – Senior Management Functions 8.2.

2.1

A firm must appoint an external actuary if it does not have the capability within the firm or the firm’s group to comply with Conditions Governing Business 6.1 or the relevant requirements of the Solvency II Regulations.

2.2

A firm carrying on with-profits insurance business must appoint one or more actuaries to perform the With-Profits Actuary function in respect of all classes of its with-profits insurance business.

2.3

A firm must:

1. (1) when it becomes aware that a vacancy of an actuary required under 2.1 or 2.2 will arise or has arisen:
1. (a) notify the PRA; and
2. (b) give reasons for the vacancy,
2. without delay, using the form referred to in Notifications 10.3;
3. (2) appoint an actuary to fill any vacancy of an actuary required under 2.1 or 2.2;
4. (3) ensure that the replacement actuary can take up the vacant post at the time the vacancy arises or as soon as reasonably practicable after that; and
5. (4) when a new actuary is appointed:
1. (a) notify the PRA of that appointment; and
2. (b) advise the PRA of the name and business address of the actuary appointed and the date from which the appointment has effect,

using the form referred to in Notifications 10.3.

2.4

Where a firm fails to appoint an actuary under 2.1 or 2.2 within 28 days of a vacancy arising the PRA may appoint an actuary to perform either of the functions in 2.1 or 2.2 for that firm on the following terms:

1. (1) the actuary to be remunerated by the firm on the basis agreed between the actuary and firm or, in the absence of agreement, on a reasonable basis; and
2. (2) the actuary to perform the function required under 2.1 or 2.2 until he resigns or the firm appoints another actuary.

2.5

A firm must comply with and is bound by the terms on which an actuary has been appointed by the PRA.

2.6

Where the PRA appoints an actuary to perform either of the functions in 2.1 or 2.2 for a firm, the requirements under 2.1 and 2.2 to make appointments under those rules still apply to that firm.

3.1

Before a firm appoints an actuary under 2.1 or 2.2, it must take reasonable steps to ensure that the actuary has the required skill and experience to perform his functions under the regulatory system commensurate with the nature, scale and complexity of the firm’s business and the requirements and standards under the regulatory system to which it is subject.

3.2

A firm must not appoint as actuary a person who is disqualified under Part XXII of FSMA (Auditors and Actuaries) from acting as an actuary either for that firm or for a relevant class of firm.

3.3

A firm must take reasonable steps to ensure that an actuary, which it is planning to appoint or has appointed, provides information to the PRA about the actuary’s qualifications, skills, experience and any other relevant matters in accordance with the reasonable requests of the PRA.

4.1

A firm must take reasonable steps to ensure that an actuary that it appoints:

1. (1) does not perform the function of Chief Executive function;
2. (2) does not, if he is to perform the With-Profits Actuary function, become a member of the firm's governing body; and
3. (3) does not perform any other function on behalf of the firm which could give rise to a significant conflict of interest.

5.1

An actuary appointed to perform the With-Profits Actuary function must:

1. (1) advise the firm's management, at the level of seniority that is reasonably appropriate, on key aspects of the discretion to be exercised affecting those classes of the with-profits insurance business of the firm in respect of which he has been appointed;
2. (2) advise the firm's governing body as to whether the assumptions used to calculate the future discretionary benefits within the technical provisions under Technical Provisions 9.1 are consistent with the firm's PPFM in respect of those classes of the firm's with-profits insurance business;
3. (3) at least once a year, report to the firm's governing body on key aspects (including those aspects of the firm's application of its PPFM on which the advice described in (1) has been given) of the discretion exercised in respect of the period covered by his report affecting those classes of with-profits insurance business of the firm;
4. (4) request from the firm such information and explanations as he reasonably considers necessary to enable him properly to perform the duties in (1) to (3);
5. (5) advise the firm as to the data and systems that he reasonably considers necessary to be kept and maintained to provide the duties in (4); and
6. (6) in the case of a friendly society to which this section applies, perform the function of appropriate actuary under section 12 (Reinsurance) of the Friendly Societies Act 1992 or section 23A (Reinsurance) of the Friendly Societies Act 1974 as applicable, in respect of those classes of its with-profits insurance business covered by his appointment.

6.1

An actuary appointed under this Part must be objective in performing his duties.

6.2

An actuary appointed under this Part must take reasonable steps to satisfy himself that he is free from bias, or from any conflict of interest from which bias may reasonably be inferred. He must take appropriate action where this is not the case.

6.3

When carrying out his duties, an actuary appointed under this chapter must pay due regard to generally accepted actuarial practice.

6.4

An actuary must notify the PRA without delay if the actuary:

1. (1) is removed from office by a firm;
2. (2) is formally notified of such removal from office;
3. (3) resigns before the term of office expires;
4. (4) is not re-appointed by a firm; or
5. (5) is disqualified from being the actuary of:
1. (a) any undertaking or particular class of undertaking; or
2. (b) any firm or particular class of firm.

6.5

In the circumstances set out in 6.4, the actuary must notify the PRA without delay:

1. (1) of any matter connected with the removal or ceasing of the office of actuary that the actuary thinks ought to be drawn to the PRA's attention; or
2. (2) that there is no such matter.

7.1

This Part applies to the Society and managing agents separately.