insurance stress test 2022 cover letter to firms

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PRA Regulatory Digest - January 2023

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• Open PRA consultations

Top news and publications

• CP1/23 - Financial Services Compensation Scheme – Management Expenses Levy Limit 2023/24.
• Supervisory priorities letters for international banks active in the UK, UK deposit takers, and insurance.
• Insurance Stress Test 2022 Feedback.

Cross cutting publications and updates

CP2/23 – Moving Senior Managers Regime forms from the PRA Rulebook

31 January 2023

This CP sets out the PRA’s proposals to remove certain Senior Managers and Certification Regime (SM&CR) forms from the PRA Rulebook and to extend the length of employment history required in the long form A. The proposals in this CP would result in changes to the Senior Managers Regime –Applications and Notifications Parts of the PRA Rulebook (Appendix 1). The PRA’s proposal to remove certain SM&CR forms from the PRA Rulebook would mean that when the PRA needs to make administrative or other non-material changes to these forms it would not be required to follow the statutory consultation process for rule changes. These forms would be available on the Connect system in the same manner as other regulatory transaction forms. The PRA’s proposal to increase the length of employment history requested in long form A would bring the form in-line with MiFID requirements. This would ensure a consistent user experience with all Senior Managers Function (SMF) applicants providing the same minimum length of employment history. This CP is relevant to all PRA-authorised firms, including credit unions. Forms submitted before the proposed changes take effect would be unaffected.

Letter from the Bank, PRA, and FCA ‘2022 CBEST thematic findings’

Cover letter from the supervisory teams of the Bank, PRA, and FCA to senior management functions with responsibility for cyber, highlighting the thematic findings from the latest cycle of CBEST assessments (details included in the Appendix, which is not published).

CP1/23 - Financial Services Compensation Scheme – Management Expenses Levy Limit 2023/24

12 january 2023.

In this CP, the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) – set out proposals for the Management Expenses Levy Limit (MELL) for the Financial Services Compensation Scheme (FSCS) for 2023/24. This CP is supported by the FSCS's Proposed Budget Update for 2023/24 published alongside this CP.

The FSCS is a fund of last resort to provide compensation for consumers when financial services firms fail. Its other functions include:

• making recoveries from failed financial institutions; 
• promoting consumer awareness of FSCS protection; and  
• verifying account information that firms provide to enable faster pay-out to depositors. 

Under section 223 (1) of the Financial Services and Markets Act 2000 (FSMA), a limit must be set for the total management expenses that the FSCS can levy on financial services firms. The MELL is the maximum amount that the FSCS may levy in a financial year for its operating costs without further rule-making by the FCA and the PRA after consultation. Setting the right MELL ensures that the scheme has sufficient funding to exercise the functions conferred on it by Part XV of FSMA and by rules made by the FCA and the PRA.

This CP is relevant to all FCA and PRA authorised firms. It is not of direct relevance to retail financial services consumers or consumer groups and they do not need to act on it.

Banking publications and updates

Letter from nathanaël benjamin and rebecca jackson ‘international banks active in the uk: 2023 priorities’, 10 january 2023.

Letter to Chief Executive Officers of PRA-regulated international banks active in the UK, setting out the priorities for international banks supervision.

Letter to Chief Executive Officers of PRA-regulated international banks active in the UK

Letter from David Bailey and Charles Woods ‘UK Deposit Takers Supervision: 2023 priorities’

Letter to Chief Executive Officers of PRA-regulated UK Deposit Takers, setting out the priorities for UK deposit takers supervision.

Letter to Chief Executive Officers of PRA-regulated UK Deposit Takers

Insurance publications and updates

Insurance stress test 2022 feedback, 23 january 2023.

Letter sent to firms participating in the Insurance Stress Test 2022 launched in May 2022, providing the results.

Insurance Stress Test 2022 feedback

Letter from Charlotte Gerken and Shoib Khan ‘Insurance Supervision: 2023 priorities’

Letter to Chief Executive Officers of PRA-regulated Insurance firms, setting out the priorities for insurance supervision.

Letter to Chief Executive Officers of PRA-regulated Insurance firms

PRA statement on the recalculation of the Transitional Measure on Technical Provisions (TMTP)

6 January 2023

This statement highlights the PRA's recent invitation to insurance firms to recalculate the Transitional Measure on Technical Provisions.

More information

Bank Underground – a blog for Bank of England staff to share views that challenge – or support – prevailing policy orthodoxies. The views expressed here are those of the authors, and are not necessarily those of the Bank of England or its policy committees.

Bank Overground – the purpose of Bank Overground is to share our internal analysis. Each bite-size post summarises a pieces of analysis that support a policy or operational decision.

Explainers – from Interest rates and inflation through to bank failures and financial crises , Explainers uses everyday examples and engaging visuals to bring economics to life.

European and International developments – readers are referred to the following websites:

• European Banking Authority
• European Insurance and Occupational Pensions Authority
• Basel Committee on Banking Supervision
• International Association of Insurance Supervisors
• Financial Stability Board

Other prudential regulation releases

Pra regulatory digest - july 2024, pra practitioner panel: annual report 2023/24, the prescribed persons (reports on disclosures..., the prescribed persons (reports on disclosures of information) regulations 2017 – annual report 2023/24, cp11/24 – international firms: updates to..., cp11/24 – international firms: updates to ss5/21 and branch reporting.

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• UK Financial Services Law
• PRA - Prudential Regulation Authority
• Dear CEO Letters

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Letter from the PRA ‘Insurance Stress Test 2022 (IST 2022)’

Stefan Claus Technical Head of Division, Insurance

Patrick Connolly Head of Division, Retail and Commercial General Insurance Supervision

Andrew Dyer Head of Division, Retail Life Insurance Supervision

Shoib Khan Head of Division, Major Life Groups Supervision

Catherine Nelson Acting Head of Division, London Market Insurance Supervision

4 August 2021

Insurance Stress Test 2022 (IST 2022)

We will be asking the largest regulated life and general insurers to carry out the next concurrent insurance stress test (IST) in 2022, as set out in the letter ‘ Insurance Stress Test 2019 and Covid-19 stress testing: feedback for general and life insurers ’ published on Wednesday 17 June 2020. The purpose of this letter is to support your future plans, by setting out the timelines and high-level scope for the 2022 exercise.

Benefits of insurance stress testing for the PRA Stress testing is an important tool in helping supervisors and firms understand the impact of real-world scenar

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4th May 2022

PRA issues Insurance Stress Test 2022 cover letter to firms Trend

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Insurance Stress Test 2022 cover letter to firms

Related links related links.

• Stress testing

Please send any comments to [email protected] . If you are a firm, please include your firm’s name and FRN in the subject of the email.

IST 2022 scenario specifications, guidelines and instructions, data templates, and requirements for the Results and Basis of Preparation report

• Life Insurance Stress Test 2022 - Scenario Specification, Guidelines and Instructions Final (PDF 0.7MB)
• Life Insurance Stress Test 2022 V2.0 - Template (XLSX 0.6MB)
• General Insurance Stress Test 2022 - Scenario Specification, Guidelines and Instructions Final V2 (PDF 1.8MB)
• General Insurance Stress Test 2022 V2.0 - Template (XLSX 0.8MB)
• Requirements for the "Results and Basis of Preparation" report (PDF 0.4MB)

Solvency II Technical Information for use in the Life Insurance Stress Test 2022 scenario

• Risk-free curves as of 31 December 2021 - LIST Stage 1 (XLSX 0.5MB)
• Risk-free Volatility Adjustment portfolios as of 31 December 2021 - LIST Stage 1 (XLSX 0.2MB)
• Smith-Wilson extrapolation parameters as of 31 December 2021 - LIST Stage 1 (XLSX 0.5MB)
• Risk-free Fundamental Spreads, Probability of Default and Cost of Downgrade as of 31 December 2021 - LIST Stage 1 (XLSX 1.1MB)
• Risk-free curves as of 31 December 2021 - LIST Stages 2 to 4 (XLSX 0.5MB)
• Risk-free Volatility Adjustment portfolios as of 31 December 2021 - LIST Stages 2 to 4 (XLSX 0.2MB)
• Smith-Wilson extrapolation parameters as of 31 December 2021 - LIST Stages 2 to 4 (XLSX 0.5MB)
• Risk-free Fundamental Spreads, Probability of Default and Cost of Downgrade as of 31 December 2021 - LIST Stages 2 to 4 (XLSX 1.1MB)

Question and answer log 

• Insurance Stress Test 2022: Question and answer log (XLSX 0.6MB)

Other prudential regulation releases

Pra regulatory digest - july 2024, pra practitioner panel: annual report 2023/24, the prescribed persons (reports on disclosures..., the prescribed persons (reports on disclosures of information) regulations 2017 – annual report 2023/24, cp11/24 – international firms: updates to..., cp11/24 – international firms: updates to ss5/21 and branch reporting.

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Daily Financial Regulation Update -- Thursday, May 5, 2022

PH Fintech Tracker on Executive Order for Digital Assets

Major Developments

Federal Reserve Board

Federal Reserve issues FOMC statement

May 4, 2022

The Federal Open Market Committee issued a statement along with a document entitled, "Plans for Reducing the Size of the Federal Reserve's Balance Sheet."

Federal Reserve Bank of New York

Statement Regarding Plans for Reducing SOMA Holdings of Treasury Securities, Agency Debt, and Agency Mortgage-Backed Securities

The Federal Reserve Bank of New York issued a statement in response to the FOMC Plans for Reducing the Size of the Federal Reserve's Balance Sheet.

Federal Agencies

U.S. Department of the Treasury

Quarterly Refunding Statement of Deputy Assistant Secretary for Federal Finance Brian Smith

Deputy Assistant Secretary for Federal Finance Brian Smith issued Treasury's Quarterly Refunding Statement.

Report to the Secretary of the Treasury from the Treasury Borrowing Advisory Committee

The Treasury Borrowing Advisory Committee issued a report to the Secretary of the Treasury and released minutes from its meeting held on May 3, 2022.

• Meeting Minutes

Office of the Comptroller of the Currency

OCC to Host Virtual Innovation Office Hours

The Office of the Comptroller of the Currency announced that it will host virtual Innovation Office Hours on June 14-15, 2022, to promote responsible innovation in the federal banking system.

• Press Release

Securities and Exchange Commission

Sample Letter to Companies Regarding Disclosures Pertaining to Russia's Invasion of Ukraine and Related Supply Chain Issues

The Securities and Exchange Commission issued a sample letter containing potential comments that the Division may issue to companies based on their specific facts and circumstances regarding disclosures pertaining to Russia's invasion of Ukraine and related supply chain issues.

• Sample Letter

National Credit Union Administration

NCUA Chair Todd M. Harper Remarks at Inclusiv's 2022 Annual Conference

National Credit Union Administration Chair Todd M. Harper gave remarks at the 2022 Inclusiv Annual Conference.

International

• European Commission

Commission approves German umbrella scheme to support companies in context of Russia's invasion of Ukraine

The European Commission has approved a German umbrella scheme with a budget of around €11 billion to support companies across sectors in the context of Russia's invasion of Ukraine.

Speech by President von der Leyen at the EP Plenary on the social and economic consequences for the EU of the Russian war in Ukraine

Commission President von der Leyen gave a speech at the EP Plenary on the social and economic consequences of the Russian war in Ukraine on the EU and reinforcing the EU's capacity to act.

European Banking Authority

EBA provides its advice to the EU Commission on non-bank lending

The European Banking Authority (EBA) published a Report on non-bank lending in response to the European Commission's February 2021 Call for Advice on this topic. The EBA's proposals aim at addressing risks arising from the provision of lending by non-bank entities in the areas of supervision, consumer protection, anti-money laundering and countering the financing of terrorism (AML/CFT), macro and microprudential risks.

• Bank of England

Insurance Stress Test 2022 cover letter to firms

The Prudential Regulation Authority (PRA) issued a letter to the largest PRA-regulated life and general insurers launching the 2022 Insurance Stress Test exercise.

Administration Changes

• Vice Chair for Supervision – Michael S. Barr nominated April 15, 2022
• Governor – Lisa Cook nominated January 14, 2022 (nomination hearing held on February 3, 2022; tied-committee vote March 16, 2022 full Senate vote to consider nomination March 29, 2022)
• Governor – Phillip Jefferson, nominated January 14, 2022 (nomination hearing held on February 3, 2022); committee approval March 16, 2022)

Federal Deposit Insurance Corporation

• Chair – Vacant (Martin Gruenberg serves as Acting Chair)
• Vice Chairman – Vacant
• Comptroller – Vacant (Michael Hsu serves as Acting Comptroller)

Commodity Futures Commission

• Three (3) Commissioner Vacancies

Appointments/Confirmation Hearings

U.S. Department of the Treasury - Janet Yellen (effective January 26, 2021)

• Treasury Announces New Acting Director of the Office of Financial Research (February 18, 2022)

Federal Reserve Board – Jerome H. Powell (effective February 4, 2022, named Chair Pro Tempore pending Senate confirmation)

• Waters Applauds Nominations of Sarah Bloom Raskin, Lisa Cook, and Philip Jefferson to Leadership Roles in the Federal Reserve (January 14, 2022)
• Senate Banking Committee Chair Brown Statement on Nomination of Michael Barr for Federal Reserve Vice Chair for Supervision (April 15, 2022)
• Senate Banking Committee Ranking Member Toomey Statement on Nomination of Michael Barr for Federal Reserve Vice Chair for Supervision (April 15, 2022)

Federal Reserve Bank of New York – John C. Williams (effective June 18, 2018)

• New York Fed Names Michelle Neal as Head of the Markets Group (January 20, 2022)

Consumer Financial Protection Bureau - Rohit Chopra (effective October 12, 2021)

Securities and Exchange Commission - Gary Gensler (effective April 17, 2021)

Small Business Administration - Isabella Casillas Guzman (effective March 16, 2021)

• Statement by Administrator Guzman Applauding President Biden's Appointees to Lead SBA Regional Offices (November 18, 2021)
• Statement by Administrator Guzman Applauding President Biden's New Appointees to the U.S. Small Business Administration (December 6, 2021)
• Statement by Administrator Guzman Applauding President Biden's New Appointees to the U.S. Small Business Administration (January 25, 2022)

Commodity Futures Trade Commission – Rostin Behnam (effective December 17, 2021)

• Kristin Johnson, Nominee for Commissioner of the Commodity Futures Trading Commission (September 13, 2021)
• Statement of CFTC Chairman Rostin Behnam on the U.S. Senate Confirmations of Christy Goldsmith Romero, Kristin N. Johnson, Summer Kristine Mersinger, and Caroline D. Pham (March 29, 2022)

Financial Crimes Enforcement Network

• FinCEN Announces Acting Director and New Deputy Director (April 2, 2021)

National Credit Union Administration - Todd M. Harper

• Anthony Cappetta Appointed President of the Central Liquidity Facility (January 26, 2022)

U.S. Department of Housing and Urban Development - Marcia Fudge (effective March 10, 2021)

Federal Housing Finance Agency – Sandra L. Thompson

U.S. Department of Education - Dr. Miguel Cardona (effective March 2, 2021)

• Secretary Cardona Statement on Confirmation of Education Department Officials Brown, Rodriguez and Graham (October 6, 2021)
• Statement from Secretary Miguel Cardona on the Confirmation of Catherine Lhamon as Assistant Secretary for the Office for Civil Rights (October 20, 2021)
• Statement by U.S. Secretary of Education Miguel Cardona on the Confirmation of Sandra Bruce as the Department's Inspector General (December 3, 2021)
• Statement by U.S. Secretary of Education Miguel Cardona on President Biden's Nomination of LaWanda Toney (December 16, 2021)

PH Client Alerts

Click here to read more from our Coronavirus series.

Legislation/Legislative Updates

Click here to view the full text of the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act"), Enacted March 27, 2020.

Click here to view the full text of the Paycheck Protection Program Increase Act of 2020, Enacted April 24, 2020.

Click here to view the full text of the Paycheck Protection Program Flexibility Act of 2020, Enacted June 5, 2020.

Click here to view the full text of the Consolidated Appropriations Act, 2021, Enacted December 27, 2020.

Click here to view the full text of the American Rescue Plan of 2021, Enacted March 11, 2021.

Click here to view the full text of the PPP Extension Act of 2021, Enacted March 30, 2021.

Click here to view a running list of proposed legislation from the Senate Committee on Banking, Housing, and Urban Affairs, Senate Committee on Small Business and Entrepreneurship, House Committee on Financial Services, and House Committee on Small Business.

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• US Department of the Treasury
• Small Business Administration (USA)
• CARES Act 2020 (USA)

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Professional development

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Insurance Stress Test 2022 – Request for technical input

Related links related links.

• Letter from Anna Sweeney and Charlotte Gerken ‘Insurance Supervision: 2022 priorities’

The PRA will be conducting an insurance stress test for the largest regulated life and general insurers from May 2022.

The PRA is now launching the second request for technical input, which includes updated scenarios together with the scenario calibration, specifications, and guidance; quantitative data templates; and a ‘Results and basis of preparation’ (RBP) report.

We are seeking feedback on any aspects of the stress test from firms and other industry participants by Thursday 17 March 2022. Please send any comments to  [email protected] . If you are a firm, please include your firm’s name and FRN in the subject of the email. 

• Results and Basis of Preparation (RBP) report (PDF 0.6MB)
• Life Insurance Stress Test 2022 – Template (XLSX 0.2MB)
• Life Insurance Stress Test 2022 – Scenario specification, guidelines, and instructions (PDF 1.2MB)
• General Insurance Stress Test 2022 – Template (XLSX 0.8MB)
• General Insurance Stress Test 2022 – Scenario specification, guidelines, and instructions (PDF 2.4MB)

Other prudential regulation releases

Pra regulatory digest - july 2024, pra practitioner panel: annual report 2023/24, the prescribed persons (reports on disclosures..., the prescribed persons (reports on disclosures of information) regulations 2017 – annual report 2023/24, cp11/24 – international firms: updates to..., cp11/24 – international firms: updates to ss5/21 and branch reporting.

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