Solvency II: Volatility adjustment permissions

First published on 15 November 2024

This statement of policy (SoP) sets out the Prudential Regulation Authority's (PRA's) approach to granting regulatory permissions in relation to the volatility adjustment (VA), as well as variations to those permissions, and the circumstances in which the PRA may consider revoking a firm's VA permission.

This SoP is relevant to all UK Solvency II firms, the Society of Lloyd's, its members and managing agents, referred to collectively as 'firms'. It is particularly relevant to firms with permission to apply the VA, or those seeking permission to apply the VA.

This SoP should be read in conjunction with the Technical Provisions Part and the Investments Parts of the PRA Rulebook, supervisory statement 9/18 - Solvency II: Internal models - modelling of the volatility adjustment, and the PRA's approach to insurance supervision document.