Regulatory Alerts2025-10-03
GFSC Guidance Note Solvency 2: Subordinated Guarantees and the Quality of Capital for Insurers
The Gibraltar Financial Services Commission issued this guidance to regulate the use of subordinated guarantees in connection with capital instruments for insurance firms under the Insurance Companies Regulations 2020. The regulator requires that such guarantees must not undermine the quality of capital held by firms to meet solvency requirements, mandating that any additional potential liabilities be accounted for in the guarantor's capital resources. Firms must ensure guarantees either replace existing subordinated liabilities with equivalent features or result in the disqualification of the guaranteed amount from Tier 1 capital to maintain regulatory compliance.
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