The FSA is to introduce a ‘hard' capital adequacy test from the end of 2006.
The FSA issued a statement on capital adequacy following comments made in Royal & SunAlliance's second quarter results, published yesterday.
The FSA said: “In our policy statement PS04/20 issued on 21 July we explained that we would be considering further the issue of a ‘hard' capital adequacy test for groups headed by an insurance holding company.
“We indicated that we would be discussing the matter with firms affected with a view to issuing a supplementary policy statement in September.
“We have now discussed the issue with Royal & SunAlliance and other firms and can state that our intention, subject to FSA board approval of the necessary rules, is to introduce the ‘hard' test from the end of 2006, with public disclosure required of the results of the calculation from end-2005.”
