Review of Solvency II: PRA issues statement on proposed permission requirement for the calculation of loss-absorbing capacity of deferred taxes under the standard formula

Article summary

The Prudential Regulation Authority (PRA) has issued a statement in relation to the proposed permission requirement contained in CP5/24 – Review of Solvency II: Restatement of assimilated law, under section 138BA of the Financial Services and Markets Act 2023 (FSMA 2023), in respect of the recognition of an increase in deferred tax assets by firms in their calculation of the loss-absorbing capacity of deferred taxes (LACDT), as part of its restatement of Article 207 of Commission Delegated Regulation (EU) 2015/35, within the PRA’s policy framework. The PRA say that should it retain that component of the proposals in CP5/24 in its final policy, it is considering whether it is appropriate to introduce a temporary delay in implementing that requirement to provide firms with additional time to submit relevant applications for section 138BA permissions. The PRA plans to publish its final policy position on...