CENTRAL BANK CONSULTS ON CAPITAL QUALITY

The Bank of England’s Prudential Regulation Authority has launched two consultations as it continues its focus on insurers. Last month the Governor of the Bank of England (BoE), Mark Carney, warned insurers to expect more scrutiny and accountability going forward. On Friday the PRA began consulting on the use of subordinated guarantees and the quality of capital for insurers. So called CP9/14 sets out the PRA’s expectations of insurers in relation to the use of subordinated guarantees, which “should not undermine the quality of capital held by insurers to meet capital requirements”, it said. The statement, which applies to life insurers, general insurers and mutual insurers, looks ahead to Solvency II, it added. The PRA also launched a consultation on a draft supervisory statement that sets out its expectations of firms in relation to existing rules on the valuation of financial assets. The statement seeks to reduce the risk to the regulator’s objectives caused by intended or unintended misstatement of values and capital resources, it said in a paper. Both consultations close on July 11.