Prudential Regulation Authority Rulebook

1.1

This supervisory statement is of interest to all UK insurance firms within the scope of Solvency II, the Society of Lloyd’s, and firms that are part of a Solvency II group that will determine and classify capital instruments under the Solvency II own funds regime, together with their advisors. This statement should be read alongside all relevant European legislation and relevant parts of the Prudential Regulation Authority (PRA) Rulebook.

1.2

This supervisory statement covers the following topics:

• liability management and capital reduction;
• principal loss-absorbency mechanism for Tier 1 instruments subject to limitation (‘restricted Tier¹’ or rT1);
• external rT1 instruments which write down on trigger; and
• additional considerations for instruments intended to contribute to group own funds.