The PRA published consultation CP20/25 on 16 September 2025, clarifying and making some adjustments to rules introduced in 2024 for insurers regarding third-country branches.
This consultation addresses:
Increasing the threshold third country branches need to become subsidiaries from £500m to £600m in liabilities covered by FSCS.
Clarifying reporting requirements and their thresholds in the PRA rulebook, and reintroducing two annual reporting templates.
In this article
What does this mean?
The Subsidiarisation threshold
The PRA views inflation, rather than growth, as causing some branches to have artificially approached the current £500m FSCS liability threshold to become a UK subsidiary. Accordingly, it proposes increasing the threshold to £600m. Additionally, SS44/15 will be updated requiring branches to inform the PRA where they are projected to exceed the subsidiarisation threshold within the next three years.
Rulebook amendments
Reinstating two annual reporting templates and discontinuing quarterly reporting: Annual reporting templates IR.19.01.01 (non-life insurance claims) and IR.20.01.01 (development of the distribution of the claims incurred) will be reinstated for all third country branches. Quarterly reporting for smaller branches (category 3 and 4), namely the need for a branch balance sheet in Q2 of the branch financial year, will cease.
Absorbing Modifications by Consent into PRA rulebook: The current reporting process for third country and pure reinsurance branches is heavily governed by Modifications by Consent (MbC). The PRA proposes absorbing these into the PRA Rulebook to reduce the administrative burden for firms.
Reporting requirements will now be based on thresholds rather than PRA firm category. The following thresholds will apply:
Branches (excluding pure reinsurance) with at least £1bn gross written premiums, or £2bn in branch provisions per annual regulatory data for the previous financial year, will need to submit the full regulatory reporting suite for third country branches.
All other branches (excluding pure reinsurance) will maintain their reduced reporting requirements.
Additionally, for pure reinsurers, investments will no longer need to comply with the Prudent Person Principle at branch level, removing the need for MbCs.
Restating EIOPA Branch Guidelines: The PRA intends to restate and disapply some guidelines which do not apply to the UK or are covered materially by other policy or supervisory statements. An appendix of these changes is available here.
Branch ORSA and Resolution Reports Clarification: Removal of branch capital holding and reporting requirements has left many firms unclear on what should be included in required branch Own Risk and Solvency Assessments (ORSA).
Current guidance will be updated to clarify the PRA should be sent an ORSA for the insurance undertaking (i.e. the legal entity, rather than the branch), including a high level summary of solvency position, rationale for capital buffers and a stress testing results overview. The PRA will use this to judge whether the branch maintains “adequate worldwide financial resources” and “there is no significant risk that its liabilities cannot be met as they fall due” as per Chapter 13 - Solvency II Third Country Branches part of the PRA rulebook.
Current guidance in SS44/15 on triennial resolution reports for branches will be updated to clarify expectations for branches, but will not materially change what is required.
What do firms need to do?
Larger third-country branches should prepare to reassess whether their liabilities, forecast for the coming three years means they need to become subsidiaries given proposed increased subsidiarisation thresholds.
All third country branches should review processes and procedures to prepare for reporting changes.
Branches should review what requirements apply to them based on the new quantitative metrics.
While there is some additional headroom in respect of subsidiarisation thresholds, branches still need to take a view of how large they will be over a three-year forecasting basis and engage with the PRA if they will breach either the current £500m threshold, or the proposed £600m threshold.
While the absorption of MbC into the PRA Rulebook should streamline and clarify what the requirements are, branches will need to make sure their internal data collection, governance and submission processes are aligned with the proposals. This is particularly important for the two templates which are being reinstated. Although there is a proposed year-long lead-time to these being introduced, as with all reporting requirements, timeliness and accuracy is critical.
Given the new quantitative metrics, rather than the previous use of PRA firm categorisation, branches should review what requirements will apply to them to ensure they do not inadvertently misreport.
Next steps
The consultation closes on 16 December 2025. A Statement of Policy (SoP) is expected in H1 2026.
The PRA plans to implement the rulebook changes on 31 December 2026, and to update the subsidiarisation threshold in H1 2026 upon publication of the SoP.
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