PRA updates insurance branch policy, raises threshold to £600m
The Prudential Regulation Authority (PRA) has finalized its policy for third-country insurance branches, raising the subsidiarisation threshold from £500 million to £600 million. The policy statement provides feedback to a previous consultation and outlines updated rules.
Raising the bar for subsidiaries
The PRA's updated policy raises the subsidiarisation threshold for third-country insurance branches from £500 million to £600 million.
This adjustment reflects the impact of inflation since the previous setting and aims to support the UK's international competitiveness and growth.
Respondents to the consultation strongly supported the increase, noting it would improve long-term planning certainty and facilitate more efficient capital utilisation.
While some advocated for further increases in line with inflation, the PRA expects to revisit its approach to subsidiarisation in due course, potentially involving further increases or automatic indexation.
The policy statement also finalizes rules to absorb existing modifications by consent (MbCs) into the PRA Rulebook, aiming to streamline the framework and clarify expectations for branches, particularly regarding reporting requirements and ORSA reports.
Streamlining reporting, delaying full transition
A significant change from the draft policy is the decision to discontinue quarterly reporting for all third-country branches, not just smaller ones.
The PRA concluded that quarterly reporting from larger branches delivers limited supervisory value relative to the incurred costs.
This amendment reduces operational burden and advances the secondary competitiveness objective.
Additionally, the implementation of transitioning to full reporting for affected branches is delayed by one year, until 31 December 2027.
Other minor changes clarify cross-referencing between ORSA and resolution reports, and align FSCS-protected liabilities with relevant reporting.
Most changes will be implemented on 31 December 2026.