Solvent exit planning for Gibraltar insurers

The GFSC guidance note on solvent exit planning, published 13 June 2025, sets out the requirements for insurers in Gibraltar.

A solvent exit is the process where an insurer ceases business while remaining solvent. As part of business-as-usual (BAU) activities, the GFSC requires insurers to prepare for an orderly solvent exit by producing a Solvent Exit Analysis (SEA). This analysis must be refreshed every three years, or sooner if the insurer’s risk profile changes. Additionally, firms must prepare a Solvent Exit Execution Plan (SEEP) when a solvent exit becomes a reasonable prospect.

Who needs to comply?

The GFSC solvent exit requirements apply to all Gibraltar insurers (except those in passive runoff) and Gibraltar branches of overseas insurers.

When does it take effect?

The Gibraltar Government is expected to legislate to align with the PRA’s implementation date of 30 June 2026. Insurers should therefore act now to ensure timely and thorough preparation.

Key elements of a Solvent Exit Analysis (SEA)

Insurers should ensure the SEA covers the following core elements:

• Main options for solvent exit – Outline potential exit options and actions required to cease business while solvent, including timelines.
• Identify/set Solvent exit indicators – Identify both stressed and non-stressed indicators that may point towards a solvent exit, and set financial and non-financial metrics for them.
• Monitoring indicators – Track forward-looking indicators, including actuals and projected levels, and the ongoing appropriateness of the indicators.
• Trigger points – Define the points at which the firm could run off existing policy liabilities in full if new business permissions were removed.
• Barriers and risks – Highlight risks or obstacles that could impact solvent exit actions.
• Resource planning – Set out the financial and non-financial resources required for a solvent exit, including estimated additional costs.
• Stakeholders and communication – Identify internal and external stakeholders, with a communication plan for solvent exit scenarios.

Governance requirements for SEA

Insurers must establish clear governance arrangements, with a Regulated Individual accountable for:

• Preparing and approving the SEA.
• Escalation and decision-making processes.
• Monitoring the execution of a solvent exit.

Insurers must also demonstrate the capability to produce, review and update the SEA.

Assurance

Adequate assurance activities (internal or external) should be in place over solvent exit preparations.

What to do when solvent exit becomes a reasonable prospect

At this stage, insurers should:

• Prepare a Solvent Exit Execution Plan (SEEP).
• Ensure the Board challenges, reviews and approves the SEEP.
• Align the SEEP with the insurer’s business model, structure, operations and risk strategy.
• Include in the SEEP details of both financial and non-financial resources.

Industry insights on solvent exit planning

Solvent exit planning builds on other initiatives such as recovery and resolution planning for Internationally Active Insurance Groups and wind-down planning.

Solvent exit vs recovery and resolution planning

• Recovery and resolution focuses on stressed events; solvent exit also considers strategic exits.
• Both require identification and monitoring of triggers.
• Considering operational processes in advance increases readiness and understanding of financial resource needs.
• Both exercises highlight barriers to exit, improving preparedness.
• Solvent exit may be the next option if recovery to BAU is not possible, meaning firms should leverage recovery planning in the SEA.

Lessons from wind-down planning

• The SEA can build on existing risk management processes (risk appetite, tolerances, etc.).
• The firm’s risk maturity will influence effort required—lead times are often 6–9 months.
• Robust modelling and monitoring of solvent exit triggers is essential.
• Diversity of thought improves scenario design.
• Non-financial triggers are significant and leveraging Operational Resilience work can be useful.
• Boards and committees may need training to fully understand requirements and assist the governance process.

What next?

With the GFSC’s solvent exit planning requirements due to take effect, Gibraltar insurers should begin preparations now. Establishing a clear Solvent Exit Analysis (SEA) and Execution Plan (SEEP) will not only support regulatory compliance but also strengthen operational resilience, governance, and stakeholder confidence.

As firms move forward, there are a number of practical considerations that can support readiness. For example, many insurers are drawing on market insights into how peers are approaching solvent exit planning preparations, and how regulated entities have approached similar regimes in other jurisdictions. Others are finding value in Board and management-level training to deepen understanding of the GFSC guidance, or in performing structured gap analyses to ensure their plans are comprehensive and robust.

Experience also suggests that designing and implementing the SEA and SEEP benefits from early engagement across functions, alongside clear governance and external assurance over their approach. An independent review can add further confidence that preparations will stand up to regulatory scrutiny and stakeholder challenge.

Taking these steps now will help Gibraltar insurers not only comply with upcoming requirements but also enhance their long-term resilience and credibility with regulators, customers and markets.

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