Prudential Regulation Authority Rulebook

1.1

Unless otherwise stated, 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 16; and
3. (3) in accordance with Insurance General Application 3, managing agents, as modified by 16.

1.2

In this Part, the following definitions shall apply:

cost-of-capital rate

means the rate (above the relevant risk-free interest rate) that must be used in the determination of the cost that a UK Solvency II firm would incur in order to hold an amount of eligible own funds equal to the SCR necessary to support the insurance and reinsurance obligations over their lifetime, as specified in the Solvency II Regulations. 

volatility adjustment approval

means the approval granted to a firm by the PRA to permit it to apply a volatility adjustment for the purposes of calculating the best estimate.