Solvency UK (UK prudential regime for insurers)

On December 31, 2024, the United Kingdom stops applying Solvency II to the letter. The Treasury and the Prudential Regulation Authority bring Solvency UK into force, the product of a review launched after Brexit to remove the parts of the EU text judged ill-suited to the London market. The risk margin, judged too sensitive to rates and too high for annuities in payment, is cut by the PRA by roughly 65% in life and roughly 30% in non-life, per its September 2024 text. The matching adjustment, which lets annuity writers discount their liabilities with the yield on the long-term assets they hold, is opened to a wider range of assets with predictable cash flows, notably infrastructure and unrated corporate debt, under supervisory control, and an investment acceleration mechanism (the MA Investment Accelerator) is meant to speed up placement into those assets. Application thresholds have been raised to exempt small firms, and reporting is lightened. For an annuity writer, the own funds gain is significant, since the risk margin weighs heavily on its balance sheet. France and the European Union read the exercise closely, since their own Solvency II review, adopted in 2025, goes in a similar direction on the risk margin and on the role of risk-free rates.