LONDON (Reuters) – The Bank of England said it was monitoring falling capital levels carefully at insurers that use their own computer models for calculating capital requirements.
David Rule, executive director of insurance supervision at the Bank of England’s Prudential Regulation Authority, said an analysis of internal models has not suggested any generalised dilution of standards.
Large insurers are allowed to use their own models, while smaller firms must use the so-called standard approach set out by regulators.
“Nonetheless, the significant reduction in internal model capital compared to the standard formula is not a trend we would expect to continue over time. We will be watching it carefully,” Rule told a conference held by the Association of British Insurers on Tuesday.
(Reporting by Huw Jones, editing by Louise Heavens)