The Prudential Regulation Authority’s (PRA) final Policy Statement on solvent exit planning for insurers (PS20/24) introduces a significant new requirement: all PRA‑regulated insurers (excluding firms in passive run‑off, UK branches of overseas insurers and Lloyd’s managing agents) must be able to evidence how they could exit the market in an orderly and solvent way. At the heart of the new requirements is the Solvent Exit Analysis (SEA), a comprehensive but proportionate document setting out feasible exit strategies, potential triggers, key risks and barriers, and the firm’s ability to protect policyholders while avoiding disorderly wind‑down, insolvency or the need for resolution. The SEA must be in place by 30 June 2026.
Crucially, firms must also carry out sufficient assurance over their solvent exit preparations. This means Boards will need independent, meaningful assurance – often from internal audit – to validate that the SEA and any subsequent Solvent Exit Execution Plan (SEEP) are credible, proportionate and aligned with regulatory expectations. With the 30 June 2026 deadline approaching, the assurance requirement is becoming just as important as the technical development of the SEA itself.
What the SEA must cover
The SEA should provide a concise, actionable plan for how the firm would wind-down, settle liabilities, and return capital to stakeholders without insolvency. It should be proportionate to the nature, scale and complexity of the firm and, at a minimum, set out:
- solvent exit actions and timelines
- solvent exit indicators and monitoring
- analysis of potential barriers and risks to executing a solvent exit
- financial and non-financial resources and costs
- communication strategy for stakeholders
- governance and decision-making
In addition, firms are required to undertake adequate assurance activities for its solvent exit preparations. These assurance activities can be performed internally or externally and might include reviews by internal audit functions or external specialists, as well as obtaining challenge from Boards.
Implications for internal audit functions
Solvent exit planning introduces a new regulatory requirement where Boards will require meaningful, independent assurance and are likely to look to their internal audit functions as their first “port of call”. Internal audit will have a critical role in assessing whether the SEA is credible and proportionate, with suitable governance around it. Given the upcoming June 2026 deadline, if they haven’t already, Heads of Internal Audit should now be preparing and asking the following questions:
- In light of the upcoming deadline, how well progressed are my firm’s SEA preparations?
- How will my firm meet the assurance requirements and what is the role of the internal audit function?
- What is a suitable internal audit approach to providing assurance over the SEA – eg ongoing monitoring or shadowing of the SEA development process and/or a review of the SEA document once its drafted or approved by the Board?
- What is the ongoing assurance role for the internal audit function post the June 2026 deadline?
- Does my team have the necessary knowledge, skills and experience to critically assess the SEA or is some external expertise needed?
PRA expectations and industry insights
The PRA conducted an industry webinar in February 2026 and reiterated proportionality, that SEA’s don’t need to be lengthy and that firms are not expected to submit SEAs to the PRA unless requested. They also emphasised that firms should leverage existing work within ORSAs, capital management plans and recovery and resolution plans.
When reviewing SEAs, the PRA will focus on:
- Credible baseline solvent run‑off plan
- Financial and non‑financial resources to support an orderly exit
- How a firm’s business model and cost base change during run‑off
- Any niche or concentrated product exposures that may affect substitutability.
The PRA also shared what “good” looks like: strong SEAs are concise, justify key assumptions, explain why any preferred exit strategy is credible compared with a simple run‑off, and are written in a way that informs BAU strategic and risk decisions. The PRA also highlighted common challenges including accurately sizing liabilities, navigating legal constraints, limited market appetite for certain books, and maintaining uninterrupted policyholder service as operations scale down.
Common issues seen in practice
PKF’s work across solvent exit and wind‑down planning highlights recurring challenges that internal audit functions should consider when providing assurance over the SEA:
1. Overly simplistic exit scenarios
Firms sometimes rely on single‑event stresses, unrealistic timelines or generic scenarios that don’t reflect their business model.
Internal audit focus: Assess governance and challenge around scenario design and provide independent critique where needed.
2. Poor integration with risk management framework
Exit indicators, triggers and monitoring can become standalone rather than tied to existing ORSA and risk appetite frameworks.
Internal audit focus: Check alignment with BAU governance, risk metrics and monitoring processes.
3. Lack of firm‑wide ownership
Solvent exit is sometimes treated purely as a compliance task, leading to incomplete assessments of resource needs and run‑off operations.
Internal audit focus: Evaluate whether all relevant functions have contributed to SEA development.
4. Operational “pinch points” not identified
Firms often miss practical barriers such as incomplete contract registers, outsourced service dependencies, key‑person risks or fragile legacy systems.
Internal audit focus: Review how effectively operational bottlenecks have been surfaced and whether mitigations are credible.
How we can help
With the deadline approaching, insurers will soon need assurance whether their SEA is credible, proportionate and aligned to PRA requirements. PKF can support internal audit functions with:
- Co-source support – reviewing SEAs on behalf of the inhouse internal audit function. We can either run these co-source audits independently or with some involvement or support from the inhouse team.
- Subject matter expertise (SME) provision – providing access to PKF SMEs to assist inhouse internal audit teams with their own audit planning, fieldwork and reporting. We can be flexible as to the amount of SME support you need.
- Briefing / training session – providing a briefing or training session to share our knowledge and insights on SEAs and potential internal audit focus areas and approaches.
With the June 2026 deadline fast approaching, now is the critical time to assess whether your SEA is credible, proportionate and PRA‑ready. If you require advice, assurance or any other support, please contact Jess Wills or Martin Watson.
