The PRA has recognised opposition to its proposed clampdown on solvent schemes in a Supervisory Statement (see SS3/14) published on 25 April 2014. The PRA's previous language, describing its dislike of solvent insurers' use of schemes of arrangement to achieve an early exit from the market, has been softened in response to criticism that its approach was "hard and inflexible". It remains to be seen whether a change of wording brings with it recognition that solvent schemes may come with the support of the vast majority of policyholder creditors and not simply be about giving shareholders early access to their capital. In practice, we expect that insurers wishing to promote solvent schemes will still face a sceptical regulator. For some key messages, and a discussion of issues and impacts, read our briefing.
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