Following revisions to its third country branch policies as part of the Solvency UK reforms, on 16 September 2025, the PRA published CP20/25 proposing further reforms which seek to address identified inconsistencies, further streamline the policy framework, clarify expectations and enhance regulatory transparency. Responses close on 16 December 2025 and the majority of the proposals would be expected to be implemented on 31 December 2026.

The proposals on which the PRA is consulting are:

  • Subsidiarisation threshold: The PRA proposes to increase the threshold of liabilities covered by the Financial Services Compensation Scheme (FSCS) above which it may expect a third country insurer to establish a subsidiary (rather than a branch) from £500m to £600m, which seeks to alleviate branches approaching the current threshold from subsidiarisation costs in the near future and is expected by the PRA to deliver a net industry benefit of at least £4m over the near term. In the consultation, the PRA explicitly links this threshold to the costs to the FSCS of a single third-country branch undertaking failure and the maximum annual FSCS levy cap for general insurance.
  • Reporting simplification
    • The PRA proposes to absorb widely used Modifications by Consent (MbC) into the PRA Rulebook on the basis of quantitative thresholds and absorb the pure reinsurance branch MbC into the PRA Rulebook. The MbCs for third country branches provide for quarterly and annual reporting reliefs. The MbC for pure reinsurance branches exempts them from the Investments part of the PRA Rulebook (including the Prudent Person Principle). By incorporating these exemptions as rules rather than MbCs assessed on a case by case basis, they are expected to reduce the resources required to administer these reliefs.
    • The PRA also proposes to adjust reporting requirements for smaller branches (excluding pure reinsurances branches) by: (i) reinstating two annual reporting templates to plug a data gap left by the Solvency UK reforms; and (ii) discontinuing quarterly reporting to reduce the administrative burden for firms.
  • Clarification of the expectations for third country branch undertakings for completing an Own Risk and Self Assessment and the recently introduced Resolution Report.
  • Guidance and restatement of 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 disapplying the remaining Branch Guidelines.
  • Addressing minor inconsistences across various third-country branch policy areas to improve clarity for firms.

To find out more or to discuss any of the implications of the proposals, please contact our insurance team.