How solvent exit planning impacts insurers' existing requirements

PS20/24: Solvent exit planning documents that will impact insurers:

1. Solvent Exit Analysis (SEA) – A business-as-usual document outlining how firms will wind down regulated activities while remaining solvent. This must be updated at least every three years or following any material changes.
2. Solvent Exit Execution Plan (SEEP) – A plan developed only when solvent exit becomes a prospect or upon PRA request, which outlines the steps and governance to implement the solvent exit.

How does PS20/24 differ from insurers' existing requirements?

While insurers are already subject to risk, capital, and contingency planning requirements, for example, through the Own Risk and Solvency Assessment (ORSA) and recovery and resolution planning (RRP), the requirements in PS20/24 specifically focus on how a firm would exit the insurance market in a solvent state.

The PRA views solvent exit planning as a prudent business practice and expects firms to demonstrate that they can achieve a solvent exit without harm to policyholders or the wider market.

The requirements in PS20/24 aim to help insurers plan for a proactive exit while still solvent, as opposed to reactive measures during a crisis. As part of this, insurers will need to consider how they would cease regulated activity without entering into financial distress.

We have set out a summary of how the requirements in PS20/24 differ from relevant existing requirements for insurers:

How does solvent exit planning fit in with insurers' existing requirements?

Solvent exit planning should be integrated into existing strategic and risk management frameworks. The SEA can be a standalone document or included as a subsection of a firm’s ORSA, capital management plan, or recovery and resolution plan if appropriate. Firms are encouraged to embed the SEA into their existing processes, linking it to capital planning, group strategy, and risk appetite.

Key integration points include:

• ORSA: ORSA analysis can be used to support assumptions in the SEA about future solvency, operational resilience, and capital requirements during the solvent exit.
• Capital management plans: Consider whether resources would be sufficient to finance a solvent exit.
• Recovery and resolution planning: Ensure there is a clear distinction between solvent exit scenarios and recovery or resolution triggers.
• Governance: Set up clear governance arrangements to manage solvent exit planning, ensuring Board oversight. Assign Senior Manager (SMF) accountability for solvent exit planning preparations (including the review and approval of the SEA), escalation and decision-making regarding a solvent exit, and monitoring the execution of a solvent exit.

What are the next steps for insurers?

Existing regulatory requirements for insurers have focused on recovery and resolution. These processes often assume that firms are either in distress or heading toward insolvency. The new requirements bridge a gap between business-as-usual and crisis management, and formalise a more structured and proactive approach to exit planning.

To meet the 30 June 2026 implementation deadline, firms should:

• Conduct a gap analysis to assess how current risk frameworks support solvent exit readiness and to identify any gaps that need to be addressed.
• Develop a proportionate SEA tailored to the firm’s size and complexity.
• Ensure that solvent exit planning draws on and complements existing risk and governance frameworks.
• Ensure that appropriate governance arrangements, such as board oversight for solvent exit planning, are in place.

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