# The Insurance and Reinsurance Undertakings (Prudential Requirements) (Transitional Provisions and Consequential Amendments) Regulations 2024, Note: Explanatory note

Extent: E+W+S+N.I.

(This note is not part of the Regulations)
Regulation 42 of the Solvency 2 Regulations 2015 (S.I. 2015/575) (matching adjustment) and related legislation, including in particular regulation 4B of those Regulations (duty to publish technical information) and Articles 53 (calculation of the matching adjustment) and 54 (calculation of the fundamental spread) of Commission Delegated Regulation (EU) 2015/35 of 10 October 2014 supplementing Directive 2009/138/EC of the European Parliament and of the Council on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II), are revoked by section 1(1) of, and Schedule 1 to, the Financial Services and Markets Act 2023 (c. 29). The revocations come into force on 30th June 2024, see the Financial Services and Markets Act 2023 (Commencement No. 4 and Transitional and Saving Provisions) (Amendment) Regulations 2023 (S.I. 2023/1382).
Regulation 42 requires insurance and reinsurance firms wishing to apply a matching adjustment to first obtain the approval of the Prudential Regulation Authority (“PRA”). Approval to apply a matching adjustment allows a firm which holds long-term assets which match the cash flows of long-term insurance liabilities to recognise as capital part of as yet unearned future cash flows. With effect from 30th June 2024, regulation 42 and related provisions are restated with modifications by the Insurance and Reinsurance Undertakings (Prudential Requirements) Regulations 2023 (S.I. 2023/1347). Further provision about the calculation of the matching adjustment is to be set out in PRA rules.
Regulation 3 ensures that existing matching adjustment approvals granted by the PRA to firms under regulation 42 of the Solvency 2 Regulations 2015 continue to be effective from 30th June 2024. Matching adjustment approvals are converted to matching adjustment permissions under section 138BA of the Financial Services and Markets Act 2000. Firms holding matching adjustment approvals will not need to apply to the PRA for fresh permissions as of 30th June 2024. The rule modifications for the purposes of section 138BA(2)(b) are set out in regulation 3(4).
Regulations 4 to 6 make amendments to legislation consequential on the revocation of regulations 4B and 42 of the Solvency 2 Regulations 2015 and Articles 53 and 54 of Commission Delegated Regulation (EU) 2015/35.
Rules made by the PRA are available on www.prarulebook.co.uk and copies of the rules can be obtained from the PRA, 20 Moorgate, London EC2R 6DA, where they are also available for inspection.
A full impact assessment has not been produced for this instrument as no, or no significant, impact on the private, voluntary or public sector is foreseen. A de minimis impact assessment is available from HM Treasury, 1 Horse Guards Road, London SW1A 2HQ and is published with the Explanatory Memorandum alongside this instrument on www.legislation.gov.uk.

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Source: https://www.legislation.gov.uk/uksi/2024/594/note (the official version)
Page: https://openlegislation.uk/insurance-and-reinsurance-undertakings-prudential-requirements-transitional-provisions-and-consequential-amendments-regulations-2024/note/enacted
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.