Prudential Regulation Authority Rulebook

1.1

Unless otherwise stated, this Part applies to every insurer under write-down but not to affected market participants or the Society.

1.2

In this Part, the following definitions shall apply:

affected person

has the meaning given in 2.1.

capital market investment

means an agreement which is, or forms part of, an arrangement involving the issue of a capital market investment, as defined in paragraph 6 of Schedule ZA2 to the Insolvency Act 1986.

client money

has the meaning given in the FCA Handbook for the purposes of CASS 5 of the FCA Handbook.

financial contract

has the meaning given in paragraph 6 of Schedule 19C to FSMA (Relevant contracts).

financial counterparty

means any party to a financial contract other than the insurer under write-down.

relevant contract of insurance

has the meaning given in sub-paragraph 3(2) of Schedule 19C to FSMA (Restriction on policyholder surrender rights).

specified information

means the information specified in Chapter 3.

trade creditor

means any person who supplies goods or services to the insurer under write-down in circumstances where:

1. (1) a liability in respect of such supply has been reduced pursuant to a write-down order; or
2. (2) the supplier is affected by paragraph 2 of Schedule 19B to FSMA (Moratorium on proceedings) or paragraph 7 of Schedule 19C to FSMA (Restrictions on termination etc).

write-down manager

has the meaning given to the term ‘manager’ in section 377G(1) of FSMA (The manager).

write-down order

has the meaning given in section 377A(1) of FSMA (Write-down orders).

2.1

For the purposes of section 377F(3) of FSMA, an affected person in relation to an insurer under write-down is:

1. (1) every policyholder of the insurer under write-down;
2. (2) every reinsurer of the insurer under write-down;
3. (3) every trade creditor of the insurer under write-down;
4. (4) every financial counterparty of the insurer under write-down;
5. (5) every holder of a capital market investment issued by the insurer under write-down (or a trustee acting on behalf of such persons); and
6. (6) every intermediary who has placed business with the insurer under write-down where that business may be affected by the write-down, or where the intermediary is a debtor or creditor of the insurer under write-down or holds client money in connection with such business.

3.1

For the purposes of section 377F(4)(a) of FSMA, the following information is specified:

1. (1) the fact a write-down order has been made;
2. (2) details of where a copy of the write-down order may be obtained or inspected;
3. (3) an explanation of why the application for a write-down order was made and by whom;
4. (4) an explanation of the effect of the write-down order and of the impact of Chapter 5A of the Policyholder Protection Part, and must in particular include a summary of:
1. (a) how the contractual and associated rights and obligations of affected persons are affected as a result of the write-down order;
2. (b) how payments will be made by the insurer under write-down and whether and in what quantity payments will be reduced, including after taking into account the effect of Chapter 5A of the Policyholder Protection Part;
3. (c) the rights and obligations affected persons have in connection with the write-down order and the write-down manager, including the right to apply to court to vary or revoke a write-down order or to challenge the actions of the write-down manager; and
4. (d) where the insurer under write-down carries out relevant contracts of insurance, the effect of Part 2 of Schedule 19C to FSMA (Policyholder surrender rights), including the process for applying for consent under paragraph 5 of Schedule 19C of FSMA (Consent to exceed surrender limit);
5. (5) a summary of the effect of Part 3 of Schedule 19C to FSMA (Termination etc of relevant contracts), including the process for applying for consent under paragraph 8 of Schedule 19C of FSMA (Consent to terminate relevant contracts);
6. (6) a statement that the insurer under write-down continues to be regulated by the PRA and the FCA;
7. (7) a summary of the functions of the court, the write-down manager and the insurer under write-down, the PRA and the FCA; and
8. (8) contact details for the insurer under write-down and the write-down manager, with a statement directing affected persons to contact those parties with queries.

4.1

For the purposes of section 377F(4)(b) of FSMA, this Chapter specifies the form and manner in which specified information must be given.

4.2

Specified information may be provided in different packs for different purposes, with each such pack containing only such information as is relevant to the intended recipient. This may include:

1. (1) a pack intended for policyholders which contains only such specified information as is relevant to them; and
2. (2) a pack intended for other affected persons which contains only such specified information as is relevant to them.

4.3

Specified information must be given in writing in English on paper or another format available and accessible to the affected person, provided that:

1. (1) anything which enables the affected person to store specified information addressed personally to them is accessible for future reference and for a period of time adequate for the purposes of the specified information and which allows the unchanged reproduction of the specified information stored; and
2. (2) the provision of specified information by means of electronic communications shall be treated as appropriate if there is evidence that the affected person has regular access to the internet. The provision by the affected person of an e-mail address is sufficient evidence.

4.4

An affected person is entitled, upon request and without charge, to receive specified information on paper. An affected person is also entitled to change the means of communication used.

4.5

Copies of specified information must also be available on a website, and:

1. (1) affected persons must be notified of the address of the website, and the place on the website where the specified information may be accessed;
2. (2) the specified information must be up to date; and
3. (3) the specified information must be accessible continuously by means of that website for a period of time adequate for the purposes of the specified information.