Challenge.
A UK-authorised non-life insurer, operating as part of a large international group, was required to develop a Solvent Exit Analysis (SEA) in accordance with the Prudential Regulation Authority's evolving expectations under SS11/24 and PS20/24.
The firm had a relatively low-complexity underwriting model, focused on short-tail business and supported by a stable risk profile. However, its operating model introduced additional complexity, with a significant reliance on group-provided infrastructure, outsourced services and intra-group arrangements.
While the SEA represented a substantial step forward in formalising solvent exit planning, the client faced several challenges. These included demonstrating that the SEA was complete, proportionate and aligned with regulatory expectations, articulating clearly how operational dependencies and resource constraints would be managed in an exit scenario and ensuring that governance and decision-making frameworks were robust and transparent.
In addition, the Board required independent assurance that the SEA provided a sufficiently strong foundation to withstand regulatory scrutiny. This included clarity on where enhancements were required, how material they were and how best to prioritise them to achieve full compliance in an efficient and proportionate manner.
Our Approach.
Artex UK Advisory was engaged to undertake an independent assurance review of the client's SEA, with a focus on regulatory alignment, completeness and practical applicability.
Our approach was structured around a comprehensive assessment of the SEA against the PRA's requirements under SS11/24 and PS20/24. This involved reviewing the SEA in detail to determine whether all required components were present, appropriately developed and proportionate to the firm's size, risk profile and business model.
A key feature of the approach was the application of a proportionality lens, recognising that the expectations for solvent exit planning must be tailored to the nature and relative complexity of the firm. This ensured that recommendations were both pragmatic and aligned to the regulator's intent.
The review was supported by a structured gap analysis framework, allowing findings to be clearly categorised, mapped to specific regulatory requirements and prioritised based on their importance for regulatory alignment. This enabled the client to differentiate between critical gaps and more incremental improvements.
Outputs were designed with a strong focus on Board usability, providing a clear and concise summary of key findings, strengths and areas for enhancement. This ensured that senior stakeholders could readily understand the implications of the review and oversee the next phase of development.
Importantly, the assurance review focused on the framework, structure and narrative of the SEA. It didn't extend to re-performing underlying financial modelling or independently validating group-level processes, instead relying on the assumptions and supporting materials underpinning the SEA itself.
Our Solution.
Artex UK Advisory delivered a comprehensive SEA Assurance Review, combining diagnostic assessment with a clear, actionable roadmap for enhancement.
The review covered all core components of the SEA, including exit options, execution pathways, governance arrangements, financial resources, operational dependencies and monitoring frameworks. Focus was placed on ensuring the SEA demonstrated a coherent and credible approach to managing a solvent exit in practice.
The output of the review was a detailed Gap Analysis, which provided:
- A complete inventory of findings, each mapped to specific PRA requirements
- Clear prioritisation based on importance for regulatory alignment
- Practical, targeted recommendations to address each identified gap
The analysis assessed the client's SEA against a baseline model for being directionally sound and proportionate in the context of the firm's risk profile. This included feedback on the preferred exit pathway, operational dependencies and prudence of the assumptions within the financial considerations.
The report assessed completeness of the solvent exist analysis against core factors including:
- The completeness and structure of exit options analysis
- The way indicators and triggers were defined
- Capital and liquidity visibility
- The clarity of execution planning, the strength of the governance arrangements
- Barriers and dependencies to specific exit scenarios
This structured approach enabled the client to clearly understand where the analysis was in line with best practice, where change may be appropriate and why any suggested changes were important in the context of regulatory expectations.
Outcome.
The engagement provided the client with clear, independent assurance over its solvent exit planning, together with a practical and prioritised pathway to achieving full regulatory alignment.
The review confirmed that the SEA represented a strong and proportionate foundation, reflecting a sound understanding of the firm's risk profile, operational model and exit considerations. This provided immediate reassurance to the Board and senior stakeholders.
Through the Gap Analysis, the client gained a clear and actionable enhancement plan, enabling efficient prioritisation of remediation actions in line with their importance for regulatory compliance. This allowed management to focus on the areas of greatest impact, while maintaining a proportionate and pragmatic approach to implementation.
The engagement also strengthened internal understanding of key dependencies, resource constraints and execution risks, supporting more robust operational and strategic planning. Improved clarity around triggers, governance and execution pathways enhanced the firm's overall exit readiness.
As a result, the engagement positioned the client to move forward with confidence, with a clear roadmap to achieving full compliance while embedding a more structured and sustainable approach to solvent exit planning.
