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LONDON (Alliance News) - Aviva PLC and Prudential PLC were among 19 insurers whose own capital models were approved by the Bank of England on Saturday, allowing them to have more control over the level of capital they hold.
The new Solvency II insurance rules, which are set to come into force on January 1, 2016, are designed to strengthen protection of insurance policyholders across the EU, and the PRA's stamp of approval enables insurers on the list of 19 to use their own internal models to calculate their capital levels from day one of the new regime.
Legal & General Group PLC, RSA Insurance Group PLC and Standard Life PLC were three other insurers in the FTSE 100 index of the biggest companies listed in London to have their full or partial internal capital models approved by the central bank's Prudential Regulation Authority. Scottish Widows, owned by Lloyds Banking Group PLC, was another insurer to receive approval for its own model.
"Going forward we will monitor insurers' models carefully in order to ensure they continue to deliver an appropriate level of capital," Andrew Bailey, deputy governor at the Bank of England and chief executive of the Prudential Regulation Authority.
Internal models are in contrast to the standard model, which is a calculation of capital requirements by insurers' regulators. Generally speaking, an internal model will require less capital to be held. The Bank of England has been processing about 300 Solvency II applications, with "around 20" seeking approval of their internal models from the start of the Solvency II regime.
Just Retirement Ltd and Phoenix Group, part of the FTSE 250 index, were among the 19 insurers to receive either full or partial internal model approval. Direct Line Insurance Group PLC has previously said it will begin the new regime on the standard formula, and intends to operate an internal model from mid-2016.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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