Prudential Regulation Authority Rulebook

7.1

If on 31 December 2015 a firm complies with the pre-Solvency II MCR but does not hold sufficient eligible own funds to cover the MCR then:

1. (1) the firm must comply with Minimum Capital Requirement 2.1 by 31 December 2016;
2. (2) Undertakings in Difficulty 4.1 will apply from 31 December 2016; and
3. [Note: Art. 131 of the Solvency II Directive]
4. (3) until 31 December 2016 a firm must:
1. (a) inform the PRA immediately where it observes that the pre-Solvency II MCR is no longer complied with or where there is a risk of non-compliance within the next three months; and
2. (b) within one month from the observation of non-compliance with the pre-Solvency II MCR, submit, for approval by the PRA, a short-term realistic finance scheme to restore, within three months of that observation, its capital resources, at least to the level of the pre-Solvency II MCR or to reduce its risk profile to ensure compliance with the pre-Solvency II MCR.

7.2

Any finance scheme submitted under 7.1(3)(b) must at least include particulars or evidence concerning the following:

1. (1) estimates of management expenses, in particular current general expenses and commissions;
2. (2) estimates of income and expenditure in respect of direct business, reinsurance acceptances and reinsurance cessions;
3. (3) a forecast balance sheet;
4. (4) estimates of the capital resources intended to cover the pre-Solvency II MCR; and
5. (5) the firm’s overall reinsurance policy.