Jurisdiction(s):
United Kingdom

Key definition

Solvency II definition

What does Solvency II mean? In legal practice, Solvency II describes the risk‑based prudential regime that determines how insurers and reinsurers assess capital, value technical provisions and manage risk, informing authorisations, M&A and portfolio transfers, reinsurance arrangements, and regulatory reporting. The term is defined in legislation: in the EU by Directive 2009/138/EC (and related delegated/implementing measures). In Ireland, Solvency II applies in full and is supervised by the Central Bank of Ireland. In the UK (England & Wales, Scotland and Northern Ireland), the regime derives from retained EU law and PRA rules; it is being reformed as “Solvency UK” under the Financial Services and Markets...

Solvency II and UK pension schemes: indirect impacts, abandoned IORP II holistic balance sheet proposals, and post-Brexit Solvency UK reforms (including bulk annuity implications)

Published by a LexisNexis Pensions expert

Practice notes

ARCHIVED: This archived Practice Note reviews the impact of solvency ii (a European risk-based solvency capital regime applying to insurance and reinsurance companies and in force from 1 January 2016) on UK pensions. It is not maintained and is for background information only.

What is Solvency II?

Solvency II establishes a harmonised prudential framework for insurance and reinsurance companies across Europe. It consists primarily of:

The Solvency II Directive 2014/17/EU (OJ L 60/34) (Solvency II).
Regulatory technical standards and non-binding guidelines, including Commission Delegated Regulation (EU) 2015/35 (the Solvency II Delegated Regulation).

Developed in response to the 2008 financial crisis, which revealed that risks had been underestimated, the regime requires insurers to measure risk, report it, and hold appropriate capital.

The objective of Solvency II is to strengthen protection for consumers of insurance products by embedding risk management and governance requirements, and by mandating a market-consistent valuation of an insurer’s assets and liabilities. The underlying intention is that sound risk and governance practices enable insurers to keep the promises they make to their clients...

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Web page updated on 21/05/2026

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