PS13/26 – Insurance third-country branches: policy implementation and other updates

Policy statement 13/26

• Related links

  • CP20/25 – Insurance third-country branches: policy implementation and other updates

Published on
21 May 2026

1: Overview

1.1 This Prudential Regulation Authority (PRA) policy statement (PS) provides feedback to responses the PRA received to consultation paper (CP) 20/25 – Insurance third-country branches: policy implementation and other updates.

1.2 Drawing on experience gained through the rollout of the Solvency II reforms and changes in third-country branches policy framework, CP20/25 set out a discrete set of proposals to address newly identified inconsistencies across various areas of those reforms, further streamline the policy framework and clarify the expectations for branches. CP20/25 also proposed raising the threshold for subsidiarisation from £500 million to £600 million to reflect the impact of inflation since it was set. In aggregate, the proposals in the CP were expected to support the international competitiveness and growth of the UK economy.

1.3 This PS also contains the PRA’s final policy in the form of updated policy materials, including supervisory statements (SSs) and statements of policy, as well as amended rules, as follows:

• Third Country Branches and Reporting Parts of the PRA Rulebook (Appendix 1);
• SS44/15 – Solvency II: third-country insurance and pure reinsurance branches (Appendix 2);
• SoP7/24 – The PRA’s approach to insurance branch authorisation and supervision (Appendix 3);
• SoP6/24 – Solvency II regulatory reporting waivers (Appendix 4);
• SS41/15 – Solvency II: applying EIOPA Set 2, System of Governance and ORSA Guidelines (Appendix 5);
• SoP1/19 – Interpretation of EU Guidelines and Recommendations: Bank of England and PRA approach after the UK’s withdrawal from the EU (Appendix 6); and
• SS19/16 – Solvency II: ORSA (Appendix 7).

1.4 This PS is relevant to all third-country branch undertakings (as defined in the PRA Rulebook) and any insurance or reinsurance undertaking that is not headquartered in the UK or Gibraltar and is seeking to operate as a branch in the UK. These proposals do not apply to Swiss general insurers, as defined in the PRA Rulebook, to which different requirements apply.

Background

1.5 In CP20/25, the PRA proposed to:

• increase the threshold of insurance liabilities covered by the Financial Services Compensation Scheme (FSCS), above which the PRA may expect the third country insurance undertaking to establish a subsidiary, rather than a third-country branch (subsidiarisation threshold), from £500 million to £600 million;
• make new rules based on quantitative thresholds, which will replace the modification by consent (MbC) of Solvency II Reporting 2.2(1) for third country insurance branches (reporting MbC) and amend the reporting requirements currently set out in the reporting MbC;
• amend existing rules to permanently embed the relief currently provided through the modification by consent for pure reinsurance branches (pure reinsurance branch MbC);
• clarify the expectations for third-country branch undertakings for completing an Own Risk and Self Assessment (ORSA) report and the resolution report;
• restate selected relevant remaining EIOPA Branch Guidelines on the Supervision of branches of third-country insurance undertakings(Branch Guidelines) in the PRA’s rules and policies, and disapply the remaining Branch Guidelines; and
• address minor inconsistencies across various third-country branch policy areas.

1.6 In determining its policy, the PRA considers representations received in response to consultation, publishing an account of them and the PRA’s response (‘feedback’). Details of any significant changes are also published. In this PS, the ‘Summary of responses’ section contains a general account of the representations made in response to the CP and the ‘Feedback to responses’ chapter contains the PRA’s feedback.

1.7 In carrying out its policymaking functions, the PRA is required to have regard to various matters. In CP20/25, the PRA explained how it had regard to the most relevant of these matters in relation to the proposed policy. The ‘Changes to draft policy’ section of this chapter refers to that explanation, taking into account consultation responses where relevant.

Summary of responses

1.8 The PRA received 14 responses to the CP. The names of respondents to the CP who consented to their names being published are set out at Appendix 9. As well as those who consented, we also received 6 responses from respondents who did not consent to us publishing their names.

1.9 Respondents strongly supported the PRA’s proposal of increasing the subsidiarisation threshold, stating that it would improve long-term planning certainty and facilitate more efficient capital utilisation. However, some respondents asked for the threshold to be increased further, in line with inflation.

1.10 In terms of reporting proposals:

• several respondents welcomed the absorption of MbCs into the PRA Rulebook, however one respondent noted the cliff edge for the few branches that would transition to full reporting as a result of this proposal;
• respondents commented that the proposal to reinstate two annual reporting templates would be costly, although most agreed with the policy objective; and
• all respondents welcomed the discontinuation of quarterly reporting as part of the reporting amendments for smaller branches.

1.11 Respondents welcomed the restatement of the remaining Branch Guidelines. In addition, respondents welcomed additional guidance on the ORSA and resolution report, and other minor clarifications.

Changes to draft policy

1.12 This PS takes account of how the policy advances the PRA objectives and of significant matters that the decision maker had regard to. These are as set out in CP20/25, with the changes/additional points set out in this section.

1.13 Where the final rules differ from the draft in the CP in a way which is, in the opinion of the PRA, significant, the Financial Services and Markets Act 2000 (FSMA)footnote [1] requires the PRA to publish:

• details of the differences together with an updated cost benefit analysis (CBA); and
• a statement setting out in the PRA’s opinion whether the impact of the final rules on mutuals is significantly different from the impact that the draft rule would have had on mutuals, or the impact that the final rule will have on other PRA-authorised firms.

1.14 The PRA has made one significant change to draft policy. In CP20/25, the PRA proposed to absorb the reporting MbC into the PRA Rulebook on the basis of quantitative thresholds. The PRA noted that under the proposed thresholds, two or three of the largest branches would be required to transition to full reporting. One respondent questioned the estimated CBA of this proposal, for affected branches, and stated that the proposals would be costlier than envisaged.

1.15 Following further analysis, the PRA has concluded that quarterly reporting from larger branches (ie those above the quantitative thresholds) delivers limited additional supervisory value relative to the costs that would be incurred. Therefore, the PRA has amended the draft policy to discontinue quarterly reporting for all branches, rather than only for branches falling under the thresholds (smaller branches), as proposed in the CP. This change will not materially impact primary objectives and will advance the secondary competitiveness and growth objective by reducing the operational burden for affected branches.

1.16 In addition, the PRA has delayed the implementation of transitioning to full reporting for the affected branches by one year, until 31 December 2027.

1.17 The PRA has accordingly updated the cost benefit analysis, estimating that these changes will reduce ongoing costs (on an annualised basis) by ~£0.03 million for the affected firms. While the PRA notes this positive change it considers that the overall CBA has not been materially affected as a result.

1.18 Further, the PRA has made the following minor changes to clarify the final policy and address responses:

• in SoP7/24, paragraph 2.30, to clarify that the number for FSCS-protected liabilities should be aligned with the relevant reporting in IR.05.04 and IR.05.03;
• in SS44/15, to clarify that when a third country branch undertaking ORSA is submitted, the additional content would usually be in the form of a branch annex, and to clarify cross-referencing between the ORSA and the resolution report (Article 49 of the reporting part of the PRA Rulebook) is acceptable;
• in SS44/15, paragraph 3.4D, to clarify that the information referred to in the paragraph relates to branch available assets, rather than branch assets, for alignment with the heading of the relevant chapter and the substance of the Branch Guidelines;
• in SoP1/19, deleted the reference to the Branch Guidelines, since following restatement/disapplication, these are no longer relevant; and
• other minor corrections to improve the grammar and readability of the rules and policy materials.

1.19 The PRA does not consider the changes in the ‘Changes to draft policy’ section to be significant and will not further alter the cost benefit analysis presented.

1.20 The PRA also does not consider that any of the amendments discussed in the ‘Changes to draft policy’ section will have a significantly different impact on mutuals relative to the impact on other PRA-authorised firms.

1.21 When making rules, the PRA is required to comply with several legal obligations. In CP20/25, the PRA published its explanation of why the rules proposed by the CP were compatible with its objectives and with its duty to have regard to the regulatory principles.footnote [2]

1.22 The PRA has had further regard to regulatory principle that the consultation responses: burden or restriction which is imposed on a person, or on the carrying on of an activity, should be proportionate to the benefits. The PRA considers that the limited prudential benefit to the PRA of quarterly reporting is not high enough to warrant the associated cost on the industry.

Implementation and next steps

1.23 The increase of the subsidiarisation threshold will be implemented immediately, from 21 May 2026, alongside the related clarification in SoP7/24.

1.24 For branches that will transition from limited to full reporting as a result of the proposal to absorb the reporting MbC, the change will be implemented on 31 December 2027. The minor change in SoP1/19, regarding the deletion of the reference to the branch guidelines, will be implemented on 1 January 2027. All other changes will be implemented on 31 December 2026, including the revocations of two MbCs, whereby:

• the pure reinsurance branch MbC directions will automatically cease to apply – there will be no action required from the firms; and
• the reporting MbC will be expressly revoked by the PRA, with this PS providing firms with at least six months’ notice prior to revocation, in line with the PRA’s approach in paragraph 2.8 of SoP6/24 (see Appendix 8 for the template of the revocation notice).

1.25 Unless otherwise stated, any remaining references to EU or assimilated legislation refer to the version of that legislation which forms part of assimilated law.footnote [3]

2: Feedback to responses

2.1 The sections below have been structured broadly along the same lines as the chapters of the CPs, with some areas rearranged to better respond to related issues. The responses have been grouped as follows:

• subsidiarisation threshold;
• absorption of reporting MbC into the PRA Rulebook;
• reporting amendments for smaller branches;
• absorption of pure reinsurance branch MbC into the PRA Rulebook;
• guidance updates;
• EIOPA Branch Guideline restatements; and
• other minor updates.

Subsidiarisation threshold

2.2 In Chapter 2 of CP20/25, the PRA outlined its suggested changes to the third-country branch subsidiarisation threshold, proposing to increase the threshold from £500 million to £600 million.

2.3 Five respondents welcomed the proposed increase in the subsidiarisation threshold. One of those respondents noted that the change improves long-term planning certainty and facilitates more efficient capital utilisation. Another commented that they would support exploring further increases to the subsidiarisation threshold above the FSCS levy cap for general insurance, provided it does not result in any material increase of the FSCS levy. Two respondents welcomed the PRA’s willingness to review and increase the subsidiarisation threshold.

Approach to subsidiarisation

2.4 Three respondents suggested that the PRA increase the threshold further, in line with inflation. Two of them suggested the PRA automatically increase the threshold in line with inflation going forward to avoid unnecessary ‘prudential drag’, whereby the static threshold fails to account for wider market and economic conditions, leading to a reduction in risk appetite in real terms. The other respondent noted that while supportive of future increases in line with inflation, they were not supportive continuous changes to the threshold, as this would make planning difficult.

2.5 One respondent noted that in the past, the PRA took the same approach to insurers and banks but now appears to be taking a stricter approach for insurers.footnote [4] They also expressed concerns around undermining of the PRA’s secondary competitiveness and growth objective by the lack of transparency that could lead to investment leaving the UK. They suggested the PRA consider how regulators in other countries address similar situations by discussing risk mitigation, rather than setting a threshold. The respondent also asked when and how the threshold would be updated next, to help with forward planning.

2.6 One respondent noted the inherently volatile nature of FSCS liabilities, which can be impacted by settlement patterns and catastrophic events among other things. They also suggested that the PRA should use net FSCS liabilities (ie after reinsurance) for linking to the FSCS levy cap, which they felt would more accurately reflect FSCS exposure. Another respondent supported this point, noting that the linkage to the levy cap ignores reinsurance and the branch undertaking’s capital, which contribute to policyholder protection.

2.7 The PRA expects to revisit its approach to subsidiarisation for insurance branches in due course, which may involve further increasing the threshold or automatic indexation. As part of this future review, the PRA will consider whether the threshold’s alignment to the FSCS levy cap for general insurance remains appropriate. The PRA agrees that considerations may be different for insurance and banking sectors, as insurance claims typically crystalise across several years following an insurer failure. Reinsurance is another difference between insurance and banking that may be considered as part of the review. The current approach of using gross liabilities ensures consistency between firms, as reinsurance arrangements vary. The PRA will take the above responses into account in its future policymaking.

The threshold in practice

2.8 Three respondents noted that the subsidiarisation threshold, in practice, serves as a hard limit. Two of these respondents suggested that the threshold should instead be an indicative threshold that triggers firm discussions regarding subsidiarisation. They advised that the PRA should consider contextual factors such as the firm’s country of domicile, supervisability, capitalisation, diversification and reinsurance. One of the respondents also noted the statistics of insurance failures, outlining that non-life insurer failures have mostly involved unrated insurers writing niche and high-risk business such as motor, taxi or specialist construction risks.

2.9 Two respondents commented that there are more effective solutions available to the PRA in practice, than to require subsidiarisation, noting that costs relating to subsidiarisation would be passed on to UK policyholders. One of these respondents believed that risk-based analysis considering factors such as volatility of business written, for branches operating near the subsidiarisation threshold would deliver better outcomes for protecting UK policyholders.

2.10 As set out in paragraph 2.29–2.32 of SoP7/24, the PRA notes that the expectation for insurance third-country branches to have under £600 million of insurance liabilities covered by the FSCS is not a 'hard threshold’. The PRA has, on occasion, allowed firms to temporarily exceed it, where there was an agreed glidepath of firms coming back within the threshold.

2.11 The PRA reiterates that it will discuss the appropriateness of maintaining authorisation as a third-country branch with any insurers approaching the subsidiarisation threshold. The PRA will assess each case on its own merits. The PRA confirms that where third-country branches can put in place sufficient mitigation (such as, but not limited to, business transfers, limitations on new business, demonstrable run-off profile for FSCS business), it will consider whether the expectation of subsidiarisation remains proportionate.

Other

2.12 One respondent sought guidance on how FSCS protected liabilities are measured and another on the definition of FSCS liabilities used in SoP7/24.

2.13 The PRA clarifies that FSCS liabilities should be aligned with the figures reported in IR.05.04 and IR.05.03 templates. It has accordingly made a minor change in SoP7/24, paragraph 2.30.

2.14 Having considered all the responses, the PRA has decided to proceed with the proposed increase in the subsidiarisation threshold as set out in CP20/25, from £500 million to £600 million. This uplift materially mitigates the prudential drag arising since 2018, while ensuring that the potential cost to the FSCS of the failure of a single third-country branch undertaking would not exceed the maximum annual FSCS levy cap for general insurance. The increased threshold will allow branches approaching the current threshold to continue operating under their existing business models, without materially increasing risks to the PRA’s objectives. As stated above, the PRA will review both the level of the threshold and the methodology behind it in due course.

Absorption of Reporting Modification by Consent (MbC) into the PRA Rulebook

2.15 In Chapter 3 of CP20/25, the PRA proposed to absorb the reporting MbC for category 3 and 4 branches into the PRA Rulebook on the basis of new quantitative thresholds. Under the proposed rules, only branches (excluding pure reinsurance branches) with at least £1 billion in gross written premiums or £2 billion in branch provisionsfootnote [5] (reporting thresholds), would be required to submit the full reporting suite applicable to third-country branch undertakings. The remaining branches (smaller branches) would report a subset of these templates consistent with the current reporting MbC and as adjusted by the reporting amendments for smaller branches, as outlined in the ‘Reporting amendments for smaller branches’ section of this PS.

2.16 Four respondents welcomed the proposals to absorb MbCs into the PRA Rulebook. One of these respondents commented that it will create a more efficient, transparent, and streamlined regulatory framework for third-country branches and will reduce unnecessary administrative complexity.

2.17 One respondent stated that they ‘mostly welcomed’ the changes but raised concerns about the cliff effect for the few branches that would be required to transition to full reporting. They challenged the PRA’s estimated cost of transitioning of circa £30,000 on an annualised basis (ie for each of affected two-three branches).

2.18 The PRA acknowledges the increased reporting burden on the few branches that would move into scope of full reporting. As outlined in paragraph 1.15, the PRA has re-examined the reporting suite and has noted that practices around quarterly recalculation of insurance reserves differ across the industry. Due to this lack of consistency and divergences in data quality, the PRA has concluded that the quarterly reporting provides limited prudential value for all branches, compared to the costs of their production. Therefore, the PRA will discontinue quarterly reporting for all branches, rather than just smaller branches, as detailed in the ‘Reporting amendments for smaller branches’ section. The PRA estimates that for branches transitioning to full reporting, this change will reduce the total direct annualised costs by around £31,000, thus reducing the resulting burden by around a quarter relative to the proposals in the CP for these branches.

2.19 The same respondent sought clarification on the quantitative assumptions used by the PRA to determine the reporting thresholds.

2.20 The PRA clarifies that the thresholds were determined based on outlier analysis for the third-country branch population. Several alternatives were considered, but the PRA concluded that increasing the thresholds substantially to accommodate the few outliers would not be prudent.

2.21 In addition, this respondent commented that branches transitioning to full reporting would likely need an additional 12-month transition period.

2.22 The PRA recognises potential challenges with the proposed timeline for transitioning firms and confirms that branches transitioning to full reporting will have an additional 12-month implementation period. Thus, full reporting would be required in relation to each branch's full financial year ending on or after 31 December 2027.

2.23 One respondent commented on paragraph 3.4 in CP20/25, raising concern that unintended consequence of not having supervisory subjectivity (ie replacing categories with quantitative thresholds) is that firms may find themselves being dual regulated in practice by their home state regulator and by the PRA.

2.24 The PRA notes that the use of firm categories in PRA rules (as opposed to quantitative thresholds) would introduce supervisory subjectivity into PRA rules, which would constitute an unlawful sub-delegation of Prudential Regulation Committee powers. As set out in SoP7/24, reliance on home supervisors is an important element of the PRA’s branch supervision framework. The PRA has splits of responsibility agreements with the main jurisdictions, to avoid duplicative work.

Implementation

2.25 The PRA hereby notifies firms that have consented to the reporting MbC, that it will be revoked on 31 December 2026. This aligns with SoP6/24, which notes that the PRA expects to give a 6-month notice to firms before revoking a waiver. The PRA has produced a template of the revocation notice (Appendix 8), which will be issued to affected firms via updating the PRA website in due course.

Reporting amendments for smaller branches

2.26 The PRA proposed to adjust reporting requirements for smaller branches (excluding pure reinsurance branches) – currently set out in the reporting MbC for category 3 and 4 branches, which will be absorbed into the PRA Rulebook (see ‘Absorption of reporting modification by consent’ section in this chapter).

Reinstatement of two annual reporting templates

2.27 The PRA proposed to reinstate annual reporting templates IR.19.01.01 (non-life insurance claims) and IR.20.01.01 (development of the distribution of the claims incurred) for smaller branches, to rectify a data gap arising from legacy oversights in SS44/15, exacerbated by the extension of reporting relief to category 3 branches following the Solvency II review. Smaller branches are branches which fall under the thresholds of £1 billion in gross written premiums and £2 billion in branch provisions, as detailed in the previous section (Reporting MbC move to Rulebook section).

2.28 Two respondents acknowledged the PRA’s aim of addressing data gaps relevant to supervision.

2.29 Eight respondents flagged that the proposal will be time consuming and costly for firms. Two of them made references to the government’s pledge of reducing the administrative cost of regulation on businesses by 25%, claiming that the proposal goes against this pledge.

2.30 One respondent noted the importance for the PRA to consider aggregated compliance costs involved when requiring firms to discontinue, and then reinstate regulatory reporting templates, highlighting ‘intense regulatory activity in H1 2026’. They asked for clarity from the PRA on how it is taking into account the high volume of regulatory activity in shaping its regulatory publications to limit future burden on firms.

2.31 The PRA acknowledges concerns about costs but reiterates the prudential benefits of this data for a holistic view of the UK insurance market for claims/reserving, improving the PRA’s ability to spot emerging risks and advancing the PRA’s primary objectives. The PRA considers that these benefits outweigh the expected costs. Further, the PRA expects that the discontinuation of quarterly reporting (discussed next) will partly offset the impact. The PRA notes its review of Solvency II reporting and disclosure requirements contained within the publication of PS15/24. The PRA considers that the resulting reforms removed a substantial volume of templates from the previous reporting package and that these reinstatements to address a subsequently identified gap represent only a very small fraction of that reduction. The PRA doesn’t expect further material changes to branch reporting in the medium term.

2.32 One respondent specified that the reinstatement of these templates may require system enhancements and process adjustments which will be time intensive, noting that this resource impact would be particularly significant for branches with limited local operational capacity. Several respondents highlighted scenarios whereby the cost impact of the template reinstatement would be substantial – including branches that are fully reinsured to UK parents and branches in run-off. One of the respondents suggested that fully reinsured branches are excluded from the scope of this proposal, and another proposed that only larger branches (the ones above the reporting thresholds) report these templates.

2.33 The PRA recognises that the costs may be disproportionate for a minority of firms, and the rules may not achieve their purpose for others who are fully reinsured to their UK parents. Firms may apply for a waiver, where they consider that the statutory criteria are met. Firms may also find it helpful to have discussions with their supervisors on this topic.

Discontinuation of quarterly reporting

2.34 The PRA proposed to discontinue quarterly reporting for smaller branches.

2.35 Five respondents welcomed this proposal. One of the respondents asked whether the format for reporting could be more flexible as software is costly.

2.36 The PRA notes that XBRL is the standard format used for insurance regulatory reporting and is necessary to support consistent data capture, automated validation, and efficient supervisory analysis across firms. Allowing flexibility in the reporting format (for example, accepting non-XBRL submissions) would undermine these objectives and introduce operational and data quality risks.

Implementation

2.37 The updated list of reporting templates for branches will be included in the Reporting part of the rulebook, as shown in the Rulebook instrument (Appendix 1). Changes will take effect on 31 December 2026.

Absorption of pure reinsurance branch MbC into the PRA Rulebook

2.38 The MbC currently provides relief to pure reinsurance branches from Third Country Branches 8.1 – 8.3 on investments. These rules require branches to comply with the Investments Part of the Rulebook, specifically the Prudent Person Principle (PPP). The PRA proposed to amend the rules so that these investment rules no longer apply to pure reinsurance branches, thereby eliminating the need for this MbC.

2.39 As stated above, four respondents welcomed the proposals to absorb MbCs into the PRA Rulebook. One respondent welcomed the PRA’s recognition of the need to tailor rules to reflect branch-specific risk profiles through regulatory relief for pure reinsurance branches.

2.40 The PRA notes that there have been no changes to the proposed policy in this regard.

Implementation

2.41 For firms that have consented to this MbC, no actions will be needed – the MbC and relevant directions will automatically fall away on 31 December 2026.

Guidance updates

2.42 In CP20/25, the PRA proposed to provide additional guidance in response to frequent queries from firms during the first year of implementation of updated third-country branch policies.

2.43 The PRA proposed to amend Chapter 9 in SS44/15 by adding guidance for branch-specific ORSAs. The main amendment (with a consequential amendment in paragraph 4.2 of SS44/15) sets out that the ORSA should include a high-level summary of the undertaking’s solvency position, including a rationale for capital buffers and an overview of stress testing results.

2.44 The PRA also proposed to update the guidance around the triennial resolution report in SS44/15 as follows:

• clarify that pure reinsurance branches are not expected to calculate available assets, as the asset availability definition in SS44/15 3.4A (which the PRA proposes to convert into a rule with certain modifications as set out in paragraph 5.11) is not relevant to reinsurance policyholders; and
• add content in SS44/15 to clarify expectations for the resolution report content, based on restating relevant parts of Branch Guideline 26 from the EIOPA Branch Guidelines.

2.45 Two respondents supported the ORSA guidance update. Another respondent welcomed the clarification around ORSA requirements but noted difficulties arising from divergence of expectations between the PRA and home supervisors which can lead to unnecessary operational burden for branches. They highlighted the importance of international dialogue to ensure alignment of expectations between supervisors across jurisdictions.

2.46 The PRA agrees that information sharing with home supervisors and supervisory cooperation are important to its approach to the authorisation and supervision of third country branches, as stated in the SoP7/24.

2.47 One respondent said that the PRA should be able to obtain information in ORSAs from the home state regulator and therefore it should not be necessary for branches to report on it.

2.48 The PRA considers retaining ORSA requirements for branches proportionate in view of the deletion of the requirement to produce a Regular Supervisory Report that forms part of the Solvency II reforms implemented at year-end 2023, as per the PRA’s public statement on the Solvency II Review: considerations for year-end 2023.

2.49 Two respondents suggested allowing cross-referencing between the ORSA and resolution report. They also asked for the PRA to explicitly state that a combined ORSA with branch annex is acceptable for ‘proportionate branches’.

2.50 To address these comments, the PRA has amended Chapter 9 of SS44/15 to:

• explicitly state that cross-referencing between the ORSA and resolution report (paragraph 9.5) is acceptable; and
• to clarify that when a third country branch undertaking ORSA is submitted, the additional content would usually be in the form of a branch annex (paragraph 9.3).

2.51 One of these respondents also asked to confirm proportional branch scenario overlays rather than a full standalone branch scenario suite.

2.52 The PRA reiterates its proportionate approach to branch ORSA submissions, as set out in SS44/15. Branch scenario overlays to undertaking level stress and scenario analysis may be appropriate on a case-by-case basis, subject to discussion with the branch PRA supervisor.

2.53 Three respondents supported the resolution report guidance. One of these respondents asked whether the PRA expects branches to submit an off-cycle report when the clarifications from CP20/25 come out. Two other respondents asked to retain the report for significant legal changes or changes to the branch risk profile only.

2.54 The PRA clarifies that an off-cycle report is not required. The PRA considers that maintenance of the triennial resolution report is important for achieving appropriate UK policyholder protection, ensuring a focus on the relevant legislation regarding priority of claims.

2.55 One respondent asked the PRA to consider removing the resolution report requirement for branches that do not underwrite UK risks through their UK branch.

2.56 The PRA agrees that the resolution report would not meet its purpose for branches that do not underwrite UK risks, since the purpose of the report is UK policyholder protection. Therefore, the PRA has updated the MbC to give third country insurance branches that solely write risks that are not located in the UK (non-UK risks), relief from Article 49 of the Reporting Part of the PRA Rulebook, which relates to the resolution report. Firms that have consented to the direction, should already have communications from their supervision contacts to update their directions. Any firms that have not been contacted should reach out to their supervisors.

2.57 One respondent asked the PRA to provide standardised templates and accompanying guidance to drive consistency and minimise one‑off interpretation costs.

2.58 The PRA will consider sharing further guidance after reviewing and assessing the first resolution report submissions from branches. Branches should have discussions with their PRA supervisor if they need further guidance.

EIOPA Branch Guideline restatements

2.59 In CP20/25 the PRA proposed to restate some of the remaining Branch Guidelines and to disapply the rest. In particular, Guidelines 6, 17 and 19 will be incorporated into the third-country branches part of the PRA Rulebook, with minor adjustments to ensure consistency with the PRA’s and wider legislative framework.

2.60 Three respondents welcomed the proposal, noting benefits such as clarifying expectations and helping to focus compliance. One respondent noted that the proposed branch asset definition does not include text in the Guidelines definition relating to exclusion of notional book amounts and asked for a clarification.

2.61 Branch assets must be assets of the relevant third country branch undertaking. Notional book amounts owing from the undertaking’s non-branch operations to the undertaking’s branch operations are not real assets of the third country branch undertaking and so do not count as branch assets. Therefore, while the PRA does not consider it is necessary to restate the explicit exclusion of such notional amounts found in the Guidelines definition, the PRA confirms for the avoidance of doubt that omitting this text is not intended to change the effect of the definition.

2.62 One respondent noted the importance of avoiding unnecessary divergence (from EU’s Solvency II). One respondent raised concerns about dual compliance mapping and reconciliation between UK and EU expectations. Two respondents asked for clarification on transitional arrangements and equivalence. Another respondent asked the PRA to confirm that no changes would be needed for the branch investment portfolio as a result of the amendments.

2.63 The PRA confirms that the proposals do not change the substance and intent of EIOPA Branch Guidelines. The PRA does not expect the minor changes in restatement to materially affect the vast majority of branches and will therefore not apply any transitional arrangements, with the changes coming in force on 31 Dec 2026. Equivalence, currently known as overseas insurance regimes, has no relevance for these provisions.

Other minor updates

2.64 Two respondents welcomed the other amendments.

1. Sections 138J(5) and 138K(4) of FSMA.
2. Section 138J(2)(d) of FSMA.
3. For further information please see Transitioning to post-exit rules and standards.
4. This is a reference to PS6/25 – International firms: Updates to SS5/21 and branch reporting.
5. Based on the annual regulatory data for the preceding financial year

Based on the annual regulatory data for the preceding financial year

This is a reference to PS6/25 – International firms: Updates to SS5/21 and branch reporting.

For further information please see Transitioning to post-exit rules and standards.

Section 138J(2)(d) of FSMA.

Sections 138J(5) and 138K(4) of FSMA.

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