UPDATE 2-Bank of England approves capital models for 19 UK insurers

* BoE approves 19 internal models

* Includes top two insurers Aviva, Prudential

* Some insurers applying for later approval

* Insurers haven't yet released solvency ratios (Adds BoE, Aviva quotes, detail)

By Carolyn Cohn

LONDON, Dec 5 (Reuters) - British insurers Aviva andPrudential and the Lloyd's of London insurance marketwere among 19 firms to have their capital calculation modelsapproved by the Bank of England on Saturday, enabling them tolower costs under new rules.

Approval means the insurers can use their internal models todetermine how much capital they hold to ensure they can meetpolicyholder commitments under European Union Solvency IIcapital rules that come into force next month.

Without such endorsement, firms must use a standardcalculation method of their solvency set out by regulators,which typically leads to higher capital requirements. That couldforce companies to raise fresh capital or put pressure ondividend payments to shareholders.

Dutch insurer Delta Lloyd this week ditched itsmodel and opted for the standard formula. It now plans to raise1 billion euros ($1.1 billion) in fresh capital.

"Going forward we will monitor insurers' models carefully inorder to ensure they continue to deliver an appropriate level ofcapital," Andrew Bailey, chief executive of the Bank ofEngland's Prudential Regulation Authority, said in a statement.

The insurers approved include all the FTSE 100 insurerswhich submitted their internal models in this round, along withScottish Widows, part of British bank Lloyds. The Bankof England had said "around 20" models had been submitted forapproval.

"We are pleased to receive internal model approval which,whilst expected, is the final major step before our adoption ofSolvency II," said Tom Stoddard, Aviva's chief financialofficer, in a statement.

None of the British firms have yet released details of theirSolvency II ratios, with most saying they plan to do soalongside the release of annual results in the first quarter ofnext year. Prudential plans to release solvency ratio details atan investor day on Jan 19.

The numbers applying for model approval has fallendrastically from around 120, according to a note fromconsultants PwC.

Insurers say applying for approval can entail documentationrunning to tens of thousands of pages and cost more than 100million pounds ($150 million) for the larger firms.

The Bank of England said it had not disclosed whether modelshad been rejected or withdrawn. Industry participants say someinternal models may have been sent back to the drawing board atan earlier stage of the application process.

A number of insurers are planning to apply for modelapproval later than the Jan 2016 start date for Solvency II, theBank said in the statement.

FTSE 100 firm Direct Line is applying to use aninternal model from mid-2016 and will use a standard model untilthen.

A spokesman for Rothesay Life, whose backers include GoldmanSachs, said the insurer was deciding whether to apply fora partial internal model next year.

The following insurers' models were approved:

Amlin Plc

Aspen Insurance UK Ltd

Aviva Plc

British Gas Insurance Ltd

Just Retirement Ltd

Legal & General Group Plc

Markel International Insurance Company Ltd

MBIA UK Insurance Ltd

The National Farmers' Union Mutual Insurance Society Ltd

Pacific Life Re Ltd

Pension Insurance Corporation Plc

Phoenix Group

Prudential Plc

QBE European Operations Plc

RSA Insurance Group Plc

Scottish Widows Group

Society of Lloyd's

Standard Life Plc

Unum European Holding Company ($1 = 0.6618 pounds)

(Additional reporting by Huw Jones; Editing by Keith Weir)