PRA Solvent Exit Planning Rules Took Effect June 30, 2026: What UK Insurers Must Document, Who Is Out of Scope and What Supervisors Can Now Request

UK insurers had to be ready for a new kind of regulatory request from June 30, 2026. That is the date on which the Prudential Regulation Authority's rules on solvent exit planning for insurers took effect. They were set out in policy statement PS20/24, published on December 18, 2024, which contains the final rules, the policy and the PRA's feedback to its earlier consultation, CP2/24. The accompanying supervisory statement is SS11/24, "Solvent exit planning for insurers." The implementation date was postponed from the proposed fourth quarter of 2025 to June 30, 2026. Advisory firm BDO, in its regulatory update, said the work needed to meet the expectations proved complex and time-consuming for many insurers.

The concept is easy to state. A solvent exit is an orderly wind-down in which a firm stops writing new business and runs off or transfers its existing policies, meeting its obligations to policyholders without going into insolvency. The PRA wants every in-scope insurer to have thought through how it would do that before it is needed. In scope are UK Solvency II firms, non-Directive firms and the Society of Lloyd's. Out of scope are firms already in passive run-off, UK branches of overseas insurers and Lloyd's managing agents. The managing agents' exclusion was a change from the consultation, which the PRA made citing the structure of the Lloyd's market. Linklaters notes that the PRA considers these changes will not significantly affect firms other than managing agents, and that if the Insurer Resolution Regime is introduced the PRA will consider amending the policy.

The core requirement is the Solvent Exit Analysis, or SEA. All in-scope firms prepare one as part of business-as-usual activities, and supervisors may request it from June 30, 2026. The PRA does not prescribe a template. The analysis can be a standalone document or a discrete section of an existing document such as the own risk and solvency assessment, the capital management plan or the recovery and resolution plan, and firms can draw on and adapt existing work. A solo firm may submit a group-wide SEA if its PRA supervisor agrees. Detail should be proportionate to the firm's nature, scale and complexity; the PRA says a simple small firm's analysis might be only a few pages.

The PRA sets out what an SEA must contain. It should cover the solvent exit actions the firm could take, including at least an option for running off policyholder liabilities, and forward-looking solvent exit indicators that reflect the firm's risk profile. It must identify potential barriers and risks to carrying out an exit, the resources and costs involved, communications, and governance and decision-making, including who would decide whether to start an exit. It should include assurance, which can be internal or external, as the firm thinks appropriate. It must explain how liabilities other than those to policyholders would be met during a run-off. And it should state an absolute minimum level of financial resources, below which a successful exit is unlikely. The PRA expects firms to keep meeting the Threshold Conditions and PRA rules throughout an exit and to tell it immediately if they may fall short.

A separate, more detailed document comes into play only in a narrower situation. A Solvent Exit Execution Plan is prepared once solvent exit becomes a reasonable prospect for the firm, and the firm then manages and monitors the exit. In the consultation the PRA proposed a one-month deadline for producing it; the final policy removed that, and the PRA will set the timescale with each firm. The PRA kept a requirement to update the SEA, and its response to comments referred to updating every three years or whenever there is a material change, although the policy page should be checked for the exact wording.

What the policy does not do is also stated. The PRA says it is not intended to change solvency capital requirement levels or to build an extra capital buffer. It is aligned with the International Association of Insurance Supervisors' Insurance Core Principle 12.1 and with Fundamental Rule 8, and it points to the Financial Conduct Authority's Wind-down Planning Guide and its TR22/1 review as examples of good practice. On cost, the PRA estimated the net present value of costs to industry at about £50 million, falling to about £42 million after the managing agents were excluded.

BDO places the deadline within a busy 2026 agenda. The PRA's business plan for 2026/27, published in April, covers new liquidity reporting for insurers, scrutiny of life insurers' use of funded reinsurance so that it does not compromise policyholder protection or financial stability, and, with the FCA, new requirements for reporting operational incidents and third-party relationships. From June 2026, firms are also expected to demonstrate a credible timetable for meeting the PRA's climate-related risk management expectations in supervisory statement SS5/25.

For firms, the practical position is that an SEA should now exist and be ready to produce if a supervisor asks. Readers should consult SS11/24 and the PRA Rulebook instrument for the binding text.