May 2024
On 15 May 2024, the PRA published a `Dear CEO' letter with its feedback (PDF 165 KB) from a thematic review of recovery planning. The feedback is based on analysis of the recovery planning capabilities of around 70 non-systemic banks and building societies.
The PRA finds that there are significant areas for improvement, especially regarding the development of recovery scenarios and calculation of recovery capacity.
While directly addressed to non-systemic banks, there is direct read-across to insurers' recovery / solvent exit planning. Indeed, the PRA's `effective practice' examples provide useful additional pointers which complement the draft PRA Supervisory statement (SS) Solvent Exit planning for insurers (PDF 1.7 MB), which is due to be finalised in the second half of 2024.
In this article, we review the implications of the PRA's Dear CEO letter and consider five key takeaways for insurers looking to prepare a solvent exit plan.