S.I. No. 437/1986 - European Communities (Life Assurance Accounts, Statements and Valuations) Regulations, 1986

ARRANGEMENT OF REGULATIONS.

PART I PRELIMINARY

Article

1. Citation.

2. Application.

3. Interpretation: General.

4. Direction by the Minister.

PART II. GENERAL.

5. Periodic actuarial investigation.

6. Amount of liabilities and value of assets.

7. Accounts and returns laid before Annual General Meeting.

8. Modification of Insurance Acts in relation to accounts and other documents.

9. Deposit of documents with Minister.

10. Lodging of documents; laying before Oireachtas.

11. Penalties.

PART III. ACCOUNTS AND STATEMENTS.

Article

12. Application.

13. Annual accounts.

14. Contents and form of accounts.

15. Revenue account.

16. Additional information.

17. Profit and loss account.

18. Balance sheet.

19. Periodic actuarial investigation.

20. Signature of documents.

21. Audit and auditors' report.

22. Certificates.

23. Transitional provisions.

PART IV. DETERMINATION OF LIABILITIES.

24. Application.

25. Life assurance business.

26. Life assurance liabilities.

27. Nature and term of assets.

28. Avoidance of future valuation strain.

29. Valuation of future premiums.

30. Acquisition expenses.

31. Rates of interest.

32. Rates of mortality and disability.

33. Expenses.

34. Options.

35. Contracts not to be treated as assets.

36. No credit for profits from voluntary discontinuance.

PART V. VALUATION OF ASSETS.

37. Interpretation: Part V.

38. Application.

39. Shares in and debts due from dependants.

40. Valuation of assets and liabilities of dependants for the purposes of Article 39.

41. Debts and other rights.

42. Land.

43. Equipment.

44. Unlisted securities.

45. Recognised unit trusts.

46. Listed investments.

47. Life interests, reversionary interests etc.

48. Other assets.

49. Assets to be taken into account only to a specified extent.

PART VI. IMPLICIT ITEMS.

Article

50. Application.

51. Valuation.

52. Information to be submitted.

53. Future profits: Items comprising the estimated annual profit.

54. Future profits: Average period left to run.

55. Future profits: The multiplying factor.

56. Zillmerising.

57. Hidden reserves.

PART VIII. REINSURANCE, MATCHING, LOCALISATION, DOCUMENTS OF TITLE, REGISTER.

58. Interpretation: Part VII.

59. Reinsurance.

60. Matching.

61. Localisation.

62. Documents of title.

63. Register.

SCHEDULES

Schedule 1 Summary of accounts to be completed annually (Forms 1 to 24).

Schedule 2 Forms of account and additional information (Forms 1 to 21).

Schedule 3 Certificates by auditors, directors and actuary (Forms 22 to 24).

Schedule 4 Abstract of valuation report prepared by the appointed actuary (Forms 25 to 30).

Schedule 5 Statement of life assurance business by the appointed actuary (Forms 31 to 44).

Schedule 6 Value of dependants.

Schedule 7 Assets to be taken into account only to a specified extent.

S.I. No. 437 of 1986.

EUROPEAN COMMUNITIES (LIFE ASSURANCE ACCOUNTS, STATEMENTS AND VALUATIONS) REGULATIONS, 1986.

I, MICHAEL NOONAN, Minister for Industry and Commerce, in exercise of the powers conferred on me by section 3 of the European Communities Act, 1972 (No. 27 of 1972), and the Industry, Trade, Commerce and Tourism (Alteration of Name of Department and Title of Minister) Order, 1986 (S.I. 41 of 1986), and for the purpose of giving effect to Council Directive 79/267/EEC* hereby make the following Regulations:

*OJ L63, 13.3.1979, pp 1-18.

PART I. PRELIMINARY

1 Citation.

1.

1. These Regulations may be cited as the European Communities (Life Assurance Accounts, Statements and Valuations) Regulations, 1986.

2 Application.

2.

2. (1) These Regulations apply to the accounts, statements and valuations (as hereinafter specified) of every undertaking authorised to transact life assurance business, in respect of the financial year of the undertaking ending in the year in which these Regulations are made (or such later financial year as the Minister may, in respect of a particular undertaking, by direction prescribe) and all subsequent financial years.

• (2) These Regulations do not apply to a Community undertaking (other than an Irish head office undertaking) or to a Community deposit undertaking, in relation to life assurance business carried on by it outside the State.

3 Interpretation: General.

3.

3. (1) In these Regulations, except where the context otherwise requires—

"appointed actuary" means the person appointed to act as actuary to an undertaking to carry out any function relating to the business of that undertaking which is required by the Insurance Acts and Regulations to be undertaken by an actuary, being a person having the qualifications and experience prescribed by or under the said Acts and Regulations;

"authorisation" means an authorisation under the Regulations of 1984;

"capital at risk" has the meaning assigned to it in the Regulations of 1984;

"cede" and "cession" in relation to reinsurance, include retrocede and retrocession;

"charges for management" means amounts chargeable in respect of the management of an internal linked fund in accordance with the conditions of those contracts of insurance under which property linked benefits are linked to the value of the fund or units of the fund;

"claim" means a claim against an undertaking under a contract of insurance;

"claims payable" means the amount due to be paid by an undertaking during a financial year in respect of claims whether or not paid during that year;

"commission payable" means, in relation to a financial year of an undertaking, the amounts, whether or not paid during that year, which are recorded during that year as due to intermediaries and cedants in respect of the inception, amendment or renewal of contracts of insurance;

"community undertaking" means a life assurance undertaking whose head office is in a member State;

"community branch undertaking" means a life assurance undertaking having its head office in the territory of another member State;

"community deposit undertaking" means a life assurance under-taking whose head office is not situated in the territory of another member State and whose required community minimum solvency margin is supervised in another member State in accordance with Article 30 of the Directive;

"contract of insurance" includes a contract of reinsurance;

"deposit back arrangement" in relation to any contract of reinsurance means an arrangement whereby an amount is deposited by the reinsurer with the cedant;

"designated assets" has the meaning assigned to it in Article 38 (9);

"the Directive" means the EEC Council Directive 79/267/EEC;

"direction" means a direction issued by the Minister in accordance with Article 4;

"External branch undertaking" means a life assurance undertaking whose head office is not situated in the territory of a member State and which is not a Community deposit undertaking or an Irish deposit undertaking;

"financial year" means, in relation to an undertaking, the period in respect of which the accounts of the undertaking are made up, whether that period is a year or not;

"gross premiums" in relation to a financial year—

• (a) means premiums after deduction of discounts, refunds, and rebates of premium but before deduction of premiums for reinsurance ceded and of commission payable by the undertaking, and

• (b) includes premiums receivable by the undertaking under reinsurance contracts accepted by the undertaking;

"guarantee fund" has the same meaning as in the Regulations of 1984;

"implicit items" has the meaning assigned to it in Article 50;

"industrial assurance business" has the meaning assigned to it in the Regulations of 1984;

"insurance" includes assurance;

"the Insurance Acts and Regulations" means the Insurance Acts, 1909 to 1985, regulations made under them and regulations relating to insurance business made under the European Communities Act, 1972 ;

"insurance agent" means any person who holds an appointment in writing from an insurer to act on behalf of the insurer in relation to a person proposing to effect a policy of insurance, but does not include an insurance broker or an employee of an insurer when the employee is acting for that insurer;

"insurance broker" means an insurance broker or a person acting in an equivalent or corresponding capacity, but does not include an insurance agent or an employee of an insurer when the employee is acting for that insurer;

"insurer" means the holder of an authorisation under the Regulations of 1984;

"intermediary" means an insurance broker, an insurance agent or a person acting in any equivalent or corresponding capacity and any other person acting on behalf of the holder of an authorisation (other than an employee of such holder), or of another person in relation to the insurance business of such holder;

"internal linked fund" means an account to which an undertaking appropriates certain linked assets and which may be sub-divided into units the value of which is determined by the undertaking by reference to the value of those linked assets;

"Irish deposit undertaking" means a life assurance undertaking whose head office is not situated in the territory of another member State and whose required community minimum solvency margin is supervised in the State in accordance with Article 30 of the Directive;

"Irish head office undertaking" means a life assurance undertaking whose head office is in the State;

"life assurance" means insurance of a class specified in Schedule 1 to the Regulations of 1984;

"life assurance business assets" and "life assurance business liabilities" mean respectively assets of a life assurance undertaking which are, for the time being, identified as representing the life assurance fund or funds maintained by the undertaking in respect of its life assurance business and liabilities of the undertaking which are attributable to its life assurance business;

"life assurance liabilities" means liabilities of a life assurance undertaking arising under or in connection with contracts for life assurance business including liabilities arising from deposit back arrangements;

"linked assets" means life assurance business assets of an undertaking which are, for the time being, identified in the records of the undertaking as being assets by reference to the value of which property linked benefits are to be determined;

"linked contract" means a contract falling within Class III of life assurance business as specified in Schedule I to the Regulations of 1984 and "non-linked contract" shall be construed accordingly;

"management expenses" means expenses incurred in the administration of an undertaking or its business which are not commission payable;

"mathematical reserves" means the provision made by a life assurance undertaking to cover liabilities (excluding liabilities which have fallen due and liabilities arising from deposit back arrangements) arising under or in connection with contracts for life assurance business;

"minimum guarantee fund" has the same meaning as in the Regulations of 1984;

"minimum solvency margin" has the same meaning as in the Regulations of 1984;

"the Minister" means the Minister for Industry and Commerce;

"permanent health contracts" means contracts falling within Class IV of Schedule I to the Regulations of 1984;

"permanent health insurance" has the meaning assigned to it in the Regulations of 1984;

"premiums" includes the consideration for the granting of an annuity;

"premiums receivable" means—

• (a) in the case of a linked contract the liability under which has been valued on the basis of premiums actually received by the undertaking in a financial year, the amount of premiums received in respect of that contract, and

• (b) in any other case, the premiums recorded in the undertaking's books, in respect of a financial year as due to it in respect of contracts commencing in that year or contracts commencing in earlier financial years but not accounted for in the undertaking's revenue account prior to that financial year, whether or not received by the undertaking during that financial year, after deducting discounts, refunds and rebates of premiums as recorded in respect of the same period; and for the purpose of determining whether a premium is due no account shall be taken of any credit arrangements made in respect thereof;

"profit and loss account" in relation to an undertaking not trading for profit, means an income and expenditure account;

"property linked benefits" means benefits provided for under any contract the effecting of which constitutes the carrying on of life assurance business, and which are determined by reference to the value of, or the income from, property of any description (whether or not specified in the contract) or by reference to fluctuations in, or an index of, the value of property of any description (whether or not specified in the contract);

"receivable" in relation to income during a financial year, means, unless otherwise specified, such amounts as become due to the undertaking, whether or not received by the undertaking during that year, including (where appropriate) income which has accrued;

"the Regulations of 1984" means the European Communities (Life Assurance) Regulations, 1984 (S.I. 57 of 1984);

"reinsurance" includes reassurance;

"reinsurance" and "reinsurer" include retrocession and retrocessionaire, respectively;

"reinsurance premiums payable" means the premiums recorded in an undertaking's books during a financial year as due by it to reinsurers in respect of reinsurance contracts commencing in that year or reinsurance contracts commencing in earlier financial years but not accounted for in the undertaking's revenue account prior to that financial year, whether or not paid by the undertaking during that financial year, after deducting discounts, refunds and rebates of premiums as recorded in the same period, and for the purpose of determining whether a premium is due no account shall be taken of any credit arrangement made in respect thereof;

"required minimum solvency margin" means the greater of the appropriate required solvency margin and the amount of the appropriate minimum guarantee fund and "required Community minimum solvency margin" and "required Irish minimum solvency margin" shall be construed accordingly;

"supervisory authority" means, in respect of any territory, the authority charged by law with the duty of supervising the activities of undertakings in that territory;

"undertaking" means the holder of an authorisation under the Regulations of 1984;

"unit of account" for the purposes of the Regulations of 1984 and these Regulations, means the ECU used by the European Monetary Co-operation Fund; the conversion value of which, to the currency of the State, shall be, as from 31 December of each year, the rate published in the Official Journal of the Communities for the last day of the preceding October for which conversion values of the ECU were published for the currencies of all States that were then member States;

"the valuation date" in relation to an actuarial investigation, means the date to which the investigation relates;

"zillmerising" means the method known by that name for modifying the net premium reserve method of valuing a life assurance policy by increasing the part of the future premiums for which credit is taken so as to allow for initial expenses.

• (2) For the purposes of supplying any information under any Schedule to these Regulations (or in any Form therein) words and expressions used in any such Schedule (or in any Form therein) shall, unless otherwise specified, have the meanings assigned to them in the appropriate Part of these Regulations.

• (3) In these Regulations, any reference to life assurance business shall, in relation to a Community branch undertaking and a Community deposit undertaking, be taken to refer to life assurance business carried on by it through an agency or branch in the State; and accordingly, any reference to, or requirement imposed in respect of the accounts and balance sheets (including any notes, statements, reports and certificates annexed thereto) shall be taken as referring to, or imposing the requirement in respect of business carried on through that agency or, as the case may be, that branch.

• (4) In these Regulations, any reference to life assurance business shall—

• (a) in relation to an External branch undertaking, be taken to refer to its entire life assurance business and to any life assurance business carried on by it through an agency or branch in the State; and

• (b) in relation to an Irish deposit undertakings, be taken to refer to its entire life assurance business and to any life assurance business carried on by it through an agency or branch in any member State;

and accordingly, any reference to, or requirement imposed in respect of, the accounts and balance sheets (including any notes, statements, reports and certificates annexed thereto) relevant to life assurance business shall be taken as referring to or, as the case may be, imposing the requirement in respect of—

• (i) accounts prepared in respect of its entire life assurance business, and

• (ii) accounts prepared in respect of the life assurance business carried on, in the case of an External branch undertaking, by the agency or branch in the State and, in the case of an Irish deposit undertaking, by the agencies or branches in question in the member State taken together.

• (5) In these Regulations, a reference to a Part, Article or Schedule is to a Part, Article or Schedule of these Regulations and a reference to a paragraph is to the paragraph of the Article in which the reference occurs, unless it is indicated that reference to some other provision is intended.

• (6) In these Regulations, any reference to a numbered Form is a reference to the Form so numbered in Schedules 1 to 5 below.

4 Direction by the Minister

4.

4. (1) The Minister may, on the application or with the consent of any undertaking, issue a direction in writing that specified provisions of these Regulations shall not apply to the undertaking or shall apply to it with such modifications as may be specified in the direction.

• (2) A direction may be subject to conditions.

• (3) A direction may be revoked at any time by the Minister and the Minister may at any time vary the direction on the application or with the consent of the undertaking to which it applies.

• (4) A direction shall, subject to paragraph (3), apply for such period of time as shall be stated in the direction.

PART II. GENERAL.

5 Periodic actuarial investigation

5.

5. (1) Every undertaking which carries on life assurance periodic business—

• (a) shall, once in every period of 12 months, cause an investigation to be made into its financial condition in respect of that business by the person who for the time being is its appointed actuary; and

• (b) when such an investigation has been made, or when at any other time an investigation into the financial condition of the undertaking has been made with a view to the distribution of profits, or the results of which are made public, shall cause an abstract of the actuary's report of the investigation to be made.

• (2) An investigation to which subparagraph (1) (b) of this Article relates shall include—

• (a) a valuation of the liabilities of the undertaking attributable to its life assurance business; and

• (b) a determination of any excess over those liabilities of the assets representing the fund or funds maintained by the undertaking in respect of that business and, where any rights of life assurance policyholders to participate in profits relate to particular parts of such a fund, a determination of any excess of assets over liabilities in respect of each of those parts.

• (3) At least once in every period of 5 years an undertaking to which paragraph (1) applies shall prepare a statement of its life assurance business at the date to which the accounts of the undertaking are made up for the purposes of an investigation in pursuance of subparagraph (a) of that paragraph.

• (4) For the purposes of any investigation to which this Article applies, the amount of any liabilities and the value of any assets shall be determined in accordance with Parts IV and V, as appropriate.

6 Amount of liabilities and value of assets

6.

6. Unless otherwise provided in these Regulations, in the documents which an undertaking is required to prepare in accordance with these Regulations—

• (a) the amount or value given for a liability or an asset of the undertaking shall be the amount or value of that liability or asset as determined in accordance with the provisions of Parts IV and V, as appropriate;

• (b) where there are no applicable valuation regulations, then,

• (i) in the case of asset of the undertaking other than a linked asset, the value given shall be the value which the asset would have if valuation regulations were applicable, and

• (ii) in the case of a linked asset of the undertaking, the value given shall be the value of that asset as determined in accordance with generally accepted accounting concepts, bases and policies or other generally accepted methods appropriate for insurance undertakings.

7 Accounts and returns laid before Annual General Meeting

7.

7. (1) Every undertaking shall forward to the Minister each year two copies of the accounts and returns laid before its annual general meeting (or the annual general meeting of the body of which it is a branch or agency) for that year.

• (2) The accounts and returns referred to in paragraph (1) shall be forwarded not later than one month after the annual general meeting.

8 Modification of Insurance Acts in relation to accounts and other documents

8.

8. The accounts, balance sheets, notes, statements, reports and certificates set out in Schedules 1 to 5 are in substitution for the accounts, balance sheets, abstracts or statements specified in the Insurance Acts 1909 to 1985, insofar as they relate to undertakings authorised or deemed to be authorised under the Regulations of 1984.

9 Deposit of documents with Minister.

9.

9. (1) Every account, balance sheet, note, statement, report and certificate required by Part III to be prepared shall be printed and five copies thereof shall be deposited with the Minister within six months after the close of the period to which the account, balance sheet, note, statement, report or certificate relates: provided that, if in any case it is made to appear to the Minister that the circumstances are such that a period longer than six months should be allowed, the Minister may extend that period by such period not exceeding three months as he thinks fit.

• (2) One of the copies of any document deposited under paragraph (1) shall be signed by the appropriate person or persons described in Article 20.

• (3) The Minister shall consider the documents deposited under paragraph (1), and if any such document appears to him to be inaccurate or incomplete in any respect he shall communicate with the undertaking with a view to the correction of any such inaccuracies and the supply of deficiencies.

• (4) There shall be deposited with every revenue account and balance sheet of an undertaking any report on the affairs of the undertaking submitted to the shareholders or policyholders of the undertaking in respect of the financial year to which the revenue account and balance sheet relate.

• (5) In these Regulations, any reference to an account or balance sheet includes a reference to any note, statement, report of certificates annexed thereto giving information authorised or required by virtue of Part III of these Regulations to be so given.

10 Lodging of documents; laying before Oireachtas

10.

10. (1) Any document submitted to the Minister under these Regulations shall be lodged in the Companies Registration Office and shall there be open to inspection by any person, and copies of such documents may be procurred by any person on payment of such fees as the Minister may from time to time fix.

• (2) The Minister shall, as soon as may be, lay before each House of the Oireachtas copies of all documents submitted to him under these Regulations and may append to such documents any explanatory statement by or commentary which he thinks fit.

11 Penalties.

11.

11. (1) A person (within the meaning of the Regulations of 1984) who fails to comply with any provision of these Regulations shall be guilty of an offence and shall be liable on summary conviction to a fine not exceeding IR£1,000.

• (2) Where an offence under these Regulations is committed by a body corporate and is proved to have been so committed with the consent or connivance of or to be attributable to any neglect on the part of a director, manager, secretary or other officer of the body corporate, the director, manager, secretary or other officer or any person purporting to act in such capacity shall, as well as the body corporate, be guilty of an offence and shall be liable to be proceeded against and punished accordingly.

• (3) A prosecution for an offence under these Regulations may be brought by the Minister.

PART III. ACCOUNTS AND STATEMENTS.

12 Application.

12.

12. This Part applies with respect to the accounts and statements (as hereinafter specified) required to be prepared by every undertaking pursuant to Article 23 (1) and (2) of the Regulations of 1984 and these Regulations.

13 Annual accounts.

13.

13. Every undertaking shall, in respect of each financial year of the undertaking, prepare such of the accounts prescribed in Schedule 1 as are appropriate to the undertaking.

14 Contents and form of accounts.

14.

14. Every account, balance sheet, note, statement, report and certificate required to be prepared by an undertaking pursuant to Article 13 shall be prepared in the manner hereinafter specified and shall fairly state the information provided on the basis required by these Regulations.

15 Revenue account

15.

15. The revenue account required to be prepared by every undertaking pursuant to Article 13 shall comply with the requirements of Schedule 2 and shall be in Form 1 completed (as may be appropriate) as specified in the instructions to that Form so, however, that—

• (i) every such undertaking shall prepare a separate account in Form 1 in respect of each life assurance business fund maintained by it, and

• (ii) where there is more than one fund for life assurance business or for industrial assurance business, the undertaking shall also prepare a summary form for life assurance business or for industrial assurance business as the case may require.

16 Additional information.

16.

16. Every undertaking shall, in accordance with Article 13 and Schedule 2, including the instructions thereto, prepare—

• (a) in respect of life assurance business—

• (i) Forms 2 to 4 and 6, and

• (ii) Such of Forms 8 to 14 and 21 as are appropriate;

and

• (b) in respect of industrial assurance business—

• (i) Forms 2, 3, 5 and 7 to 9, and

• (ii) Such of Forms 10 to 14 and 21 as are appropriate.

17 Profit and loss account.

17.

17. The profit and loss account required to be prepared by every undertaking under Article 13 shall comply with the requirements of Schedule 2 and shall be prepared in Form 18.

18 Balance sheet.

18.

18. The balance sheet required to be prepared by every undertaking in accordance with Article 13, shall comply with the requirements of Schedule 2 and shall be in Forms 15 to 17, 19 and 20 completed (as may be appropriate) as specified in the instructions to those Forms.

19 Periodic actuarial investigation.

19.

19. Save in relation to subparagraph (a) (ii) of this paragraph, for the purposes of Article 5, life assurance business and industrial assurance business shall be treated separately and—

• (a) the abstract of the report of the actuary on life assurance business—

• (i) shall comply with the requirements of Schedule 4 and shall contain the information (together with such of Forms 25 to 28 as may be appropriate) specified in that Schedule, and

• (ii) except in the case of a Community branch undertaking and a Community deposit undertaking shall also include Form 30 and, where appropriate, Form 29; and

• (b) the statement of life assurance business shall comply with the requirements of Schedule 5 and shall contain the information (together with Forms 31 to 44) specified in that Schedule.

20 Signature of documents.

20.

20. (1) One of the copies of any document required to be prepared in accordance with this Part, except an auditors' report, shall be signed by persons described in paragraph (2) or (3).

• (2) In respect of any document relating to business carried on through an Irish head office undertaking, the copy shall be signed by—

• (a) in any case—

• (i) where there are more than two directors of the undertaking, at least two of those directors and, where there are not more than two directors, all the directors; and

• (ii) the chief executive, if any, of the undertaking or (if there is no chief executive) the secretary;

and

• (b) in the case of an abstract or statement under Article 5, the actuary who made the investigation to which the abstract relates or by reference to which the statement was prepared.

• (3) In respect of any document relating to business carried on through an agency or branch in the state by a Community branch undertaking, Community deposit undertaking or an External branch undertaking or through agencies or branches in any Member State taken together by an Irish deposit undertaking, the copy shall be signed by—

• (a) in any case—

• (i) the authorised agent referred to in Article 12 (1) (d) or 28 (1) (d) of the Regulations of 1984 or, where the representative is a legal person, the person designated in Article 12 (2) of the Regulations of 1984; and

• (ii) an officer or employee of the undertaking who, either alone or jointly with others, is responsible for the conduct of the whole of the insurance business carried on by the undertaking in the State and employed at the office of the undertaking in accordance with Article 4 (2) (b) of the Regulations of 1984; and

• (iii) a member of the board of directors or governing body of the undertaking;

and

• (b) in the case of an abstract or statement under Article 5, the actuary who made the investigation to which the abstract relates or by reference to which the statement was prepared.

• (4) One of the copies of any auditors' report shall be a copy signed by the auditor.

21 Audit and auditors' report.

21.

21. The documents referred to in Articles 15, 16, 17 and 18 and the certificate referred to in Article 22 (a), shall be audited by a person duly qualified under the Companies Acts, 1963 to 1986, who shall make a report in Form 22 in accordance with the requirements of Part I of Schedule 3.

22 Certificates

22.

22. There shall be annexed to the documents referred to in Articles 15, 16, 17 and 18—

• (a) a certificate in accordance with the requirements of Part 2 of Schedule 3 and shall be in Form 23 which shall be signed by the persons required by Article 20 to sign the documents to which the certificate relates; and

• (b) a certificate in accordance with the requirements of Part 3 of Schedule 3 and shall be in Form 24 which shall be signed by the appointed actuary.

23 Transitional provisions.

23.

23. (1) An undertaking shall not be required to include in any account or balance sheet prepared in accordance with this Part, any information relating to the financial year of the undertaking immediately preceding that financial year to which these Regulations first apply.

• (2) Any reference in any provision of these Regulations to a document submitted to the Minister or prepared in respect of a financial year of an undertaking which is a financial year of the undertaking preceding that to which these Regulations first apply shall be construed as a reference to the document so submitted or prepared in accordance with the corresponding provisions of the Insurance Acts and Regulations previously in force.

PART IV. DETERMINATION OF LIABILITIES.

24 Application.

24.

24. This Part applies with respect to the determination of the amount of liabilities of undertakings for the purposes of any investigation to which Article 5 applies and for all other purposes of the Insurance Acts and Regulations.

25 Life assurance business.

25.

25. (1) Subject to this Part, the amount of liabilities of an undertaking shall be determined in accordance with generally accepted accounting concepts, bases and policies or other generally accepted methods appropriate for undertakings.

• (2) In determining under paragraph (1) the amount of liabilities of an undertaking, all contingent and prospective liabilities shall be taken into account but not liabilities in respect of share capital.

26 Life assurance liabilities.

26.

26. The determination of the amount of life assurance liabilities ( other than liabilities which have fallen due for payment before the valuation date) shall be made on actuarial principles and shall make proper provision for all liabilities on prudent assumptions in regard to the relevant factors; and that amount shall in the aggregate not in any case be less than the amount calculated in accordance with Articles 27 to 36.

27 Nature and term of assets.

27.

27. The determination of the amount of life assurance liabilities shall take into account the nature and term of the assets representing the life assurance fund and the value placed upon them and shall include appropriate provision against the effects of possible future changes in the value of the assets on their adequacy to meet the liabilities.

28 Avoidance of future valuation strain.

28.

28. The amount of the liability determined in respect of a group of contracts shall not be less than such amount as, if the assumptions adopted for the valuation were to remain unaltered and were fulfilled in practice, would enable liabilities similarly determined at all times in the future to be covered from resources arising solely from the contracts and the assets covering the amount of the liability determined at the current valuation.

29 Valuation of future premiums.

29.

29. (1) The method of valuation adopted in determining the amount of the liability under each category of contract shall be such that it is generally accepted actuarially as an appropriate method to use in determing the liability under contracts of the category in question.

• (2) Where further specified premiums are payable by the policyholder under a contract (not being a linked life assurance contract) under which benefits (other than benefits arising from a distribution of profits) are determined from the outset in relation to the total premiums payable thereunder, then, subject to Article 30—

• (a) where the premiums under the contract are at a uniform rate throughout the period for which they are payable, the premiums to be valued shall be not greater than such level premiums as, if payable for the same period as the actual premiums under the contract and calculated according to the rates of interest and rates of mortality or disability which are to be employed in calculating the liability under the contract, would have been sufficient at the outset to provide for the benefits under the contract according to the contingencies upon which they are payable, exclusive of any additions for profits, expenses or other charges;

• (b) where the premiums under the contract are not at a uniform rate throughout the period for which they are payable, the premiums to be valued shall be not greater than such premiums as would be determined on the principles set out in subparagraph (a) of this paragraph modified as appropriate to take account of the variations in the premiums payable by the policyholder in each year;

save that a premium to be valued shall in no year be greater than the amount of the premium payable by the policyholder.

• (3) Where the terms of the contract have changed since the contract was first made (the terms of the contract being taken to change for the purposes of this paragraph if the change is indicated in an endorsement on the policy but not if a new policy is issued), then, for the purposes of paragraph (2), it shall be assumed that those changes from the time they occurred were provided for in the contract at the time it was made.

• (4) For contracts falling within paragraph (2), the provisions of that paragraph may be departed from where the nature of the business is such that an alternative valuation method is considered more appropriate, provided that in the aggregate, the mathematical reserves determined are not less than those calculated in accordance with Articles 27 to 36.

• (5) Where under a contact (not being a linked life assurance contract)—

• (a) each premium paid increases the benefits (other than benefits arising from a distribution of profits) provided under the contract, or

• (b) the amount of a premium payable in future is not determinable until it comes to be paid,

future premiums and the corresponding liability may be left out of account so long as adequate provision is made against any risk that the increase in the liabilities of the company resulting from the payment of future premiums might exceed the amount of the premiums.

30 Acquisition expenses.

30.

30. (1) In order to take account of acquisition expenses, the maximum annual premium to be valued under Article 29 may (subject to paragraph (2)) be increased by an amount not greater than the equivalent, taken over the whole period of premium payments and calculated according to the rates of interest and rates of mortality or disability employed in valuing the contract, of 3.5 per cent (or the defined percentage, if it is lower than 3.5 per cent) of the relevant capital sum under the contract.

• (2) For the purposes of paragraph (1) "the defined percentage" is the percentage arrived at by taking (for all contracts of the same type as the contract in question for which an adjustment is made) the average of the percentages of the relevant capital sum under each such contract that represent the acquisition costs for which, after allowing for the effects of taxation, allowance is made in the premiums.

• (3) The increase permitted by paragraph (1) shall be subject to the limitation that the amount of a future premium valued shall not in any event be greater than the amount of the premium actually payable by the policyholder.

• (4) For the purposes of this Article—

• (a) in the case of contracts other than temporary assurances, the relevant capital sum under a contract shall be arrived at in accordance with Article 56 (1);

• (b) in the case of temporary assurances, the relevant capital sum shall be the sum assured on the valuation date.

31 Rates of interest.

31.

31. (1) In determining the rates of interest to be used in calculating the present value of future payments by or to an undertaking, regard shall be had to the yields on the existing assets attributed to the life assurance business and, to the extent appropriate, to the yield which it is expected will be obtained on sums to be invested in the future.

• (2) For the purposes of paragraph (1), the assumed yield on an asset attributed to the life assurance business, before any adjustment to take account of the effect of taxation, shall not exceed the yield on that asset calculated in accordance with paragraphs (3) to (6), reduced by 7.5 per cent of that yield.

• (3) For the purpose of calculating the yield on an asset—

• (a) the asset shall be valued in accordance with Part V excluding any provision under which assets may be taken at lower book values for the purposes of any investigation to which Article 5 applies, and

• (b) where a particular asset is required to be taken into account only to a specified extent by the operation of Article 49, the future income to be taken into account (whether interests, dividends or repayments of capital) shall be correspondingly reduced.

• (4) For fixed interest investments (that is to say, investments which are fixed interest securities as defined in Article 37 (1)) the yield on an asset, subject to paragraph (6), shall be that annual rate of interest which if used to calculate the present value of future payments of interest before the deduction of tax and the present value of repayments of capital, would result in the sum of those amounts being equal to the value of the asset.

• (5) For variable interest investments (that is to say, investments which are not fixed interest securities as defined in Article 37 (1)) the yield on an asset, subject to paragraph (6), shall be the ratio to the value of the asset of the income before deduction of tax which would be received in the period of twelve months following the valuation date on the assumption that the assets will be held throughout that period and that the factors which affect income will remain unchanged, so however that account shall be taken of any changes in those factors known to have occurred by the valuation date and in particular, without prejudice to the generality of the foregoing, of—

( a ) any known changes in the rental income from property or in dividends on equity shares,

( b ) any forecast changes in dividends which have been publicly announced by the valuation date,

( c ) the effect of any alterations in capital structure, and

( d ) the value (at the most recent date for which it is known at the valuation date) of any determinant of the amount of any future interest payment, the said value being deemed to remain unaltered for all subsequent dates.

• (6) In calculating the yield on an asset under this Article—

( a) if the asset does not consist of equity shares or land, an adjustment shall be made to exclude that part of the yield estimated to represent compensation for the risk that the income from the asset might not be maintained or that capital repayments might not be received as they fall due;

( b) for assets which are equity shares or land, adjustments to yields shall be made as appropriate to exclude that part, if any, of the total yield from those assets, taken together, that is needed to compensate for the risk that the aggregate income from those assets taking one year with another might not be maintained;

( c ) in making these adjustments, regard shall be had wherever possible to the yields on risk-free investments of a similar term in the same currency.

• (7) To the extent that it is necessary to make an assumption about the yields which will be obtained on sums to be invested in future, the yield assumed on any investment to be made more than three years after the valuation date shall not exceed 7.5 per cent per annum (before any adjustment to take account of the effect of taxation) or such other lower percentage as the Minister may from time to time determine.

• (8) In no case shall a rate of interest determined for the purposes of paragraph (1) exceed the adjusted overall yield on assets calculated as the weighted average of the reduced yields on the individual assets arrived at under paragraph (2); and when that weighted average is calculated—

( a ) the weight given to each investment shall be its value as an asset determined in accordance with Part V excluding any provision under which assets may be taken at lower book value for the purposes of any investigation to which Article 5 applies, and

( b ) except in relation to the rate of interest used in valuing payments of property linked benefits both the yield and the value of any linked assets shall be omitted from the calculation.

• (9) For the purpose of determining the rates of interest to be used in valuing a particular category of contracts the assets may, where appropriate, be notionally apportioned between different categories of contracts and in such cases the limit under paragraph (8) shall be applied on the basis of the overall yield on the assets apportioned to the contracts in question.

32 Rates of mortality and disability.

32.

32. The amount of the liability in respect of any category of contract shall, where relevant, be determined on the basis of appropriate rates of mortality and disability that take into account—

( a ) relevant published tables of rates of mortality and disability, and

( b ) the rates of mortality and disability experienced in connection with any similar contracts issued by the undertaking in the past.

33 Expenses.

33.

33. (1) Provision shall be made for meeting the expenses likely to be incurred in future in fulfilling the existing contracts, taking account of the effect of taxation as appropriate, but credit may be taken to the extent appropriate for the fractions of future premiums left out of account pursuant to Article 29 (2).

• (2) The provision mentioned in paragraph (1) shall have regard to, among other things, the undertaking's actual expenses in the last twelve months before the valuation date and the contingency that the undertaking may cease to transact new business.

34 Options.

34.

34. (1) Provision shall be made to cover any increase in liabilities caused by policyholders exercising options under their contracts.

• (2) Where a contract includes an option whereby the policyholder could secure a guaranteed cash payment within twelve months following the valuation date, the provision for that option shall be such as to ensure that the value placed on the contract is not less than the amount required to provide for the payments that would have to be made if the option were exercised.

35 Contracts not to be treated as assets.

35.

35. No contract for life assurance business shall be treated as an asset.

36 No credit for profits from voluntary discontinuance.

36.

36. Allowance shall not be made in the valuation for the voluntary discontinuance of any contract if the amount of the liability so determined would thereby be reduced.

PART V. VALUATION OF ASSETS.

37 Interpretation: Part V

37.

37. (1) In this Part, unless the context otherwise requires—

"approved financial institution" means any of the following—

( a ) the Central Bank of Ireland,

( b ) a trustee savings bank within the meaning of the Trustee Savings Bank Acts, 1863 to 1979,

( c ) a licensed bank within the meaning of section 9 of the Central Bank Act, 1971 ,

( d ) the European Investment Bank, the Commission of the European Communities, and the European Coal and Steel Community,

( e ) the Post Office Savings Bank,

( f ) a building society within the meaning of the Building Societies Acts, 1976 to 1984,

( g ) The Agricultural Credit Corporation plc,

( h ) Industrial Credit Corporation plc;

"approved securities" means any of the following—

( a ) securities of the Government (including Savings Certificates),

( b ) securities guaranteed as to capital and interest by the Minister for Finance,

( c ) debentures, debenture stock, certificates of charge or other forms of security issued by and charged on all or any of the property or revenues of the Electricity Supply Board, Coras Iompair1 Éireann, The Agricultural Credit Corporation plc, Bord na Mona, Aer Linte Eireann Teoranta, Aer Lingus Teoranta, Aer Rianta Teoranta, The Housing Finance Agency, Bord Gais Eireann, An Post, Bord Telecom Eireann, Irish Telecommunications Investments Limited and Industrial Credit Corporation plc.

( d ) stocks, securities or mortgages issued by and charged on all or any of the property or revenues of a local authority,

( e ) land bonds issued under the Land Purchase Acts,

( f ) any loan to, or deposit with, an approved financial institution, being an investment authorised by section 1 (inserted by section 1 of the Trustee (Authorised Investments) Act, 1958 ) of the Trustee Act, 1893, as varied by order under section 2 of the said Act of 1958,

( g ) securities issued and guaranteed by the Government of a member State and, with the approval of the Minister, like assets outside a member State.

"asset" includes part of an asset;

"Associated Bank" means an associated bank within the meaning of section 12 of the Central Bank Act, 1942 ;

"company" includes any body corporate;

"computer equipment" means the electro-mechanical and electronic units which made up a computer configuration;

"debenture" includes debenture stock and bonds, whether constituting a charge on assets or not, and loan stock or notes;

"debenture option" means a right exercisable within a specified period, at the option of the holder of the right, to acquire or dispose of any debenture at a specified price;

"debt" includes an obligation to pay a sum of money under a negotiable instrument;

"dependent" has the meaning assigned to it in paragraph (2);

"equity share" means a share of equity share capital;

"equity share capital", in relation to a company, means its issued share capital excluding any part thereof which, neither as respects dividends nor as respects capital, carries any right to participate beyond a specified amount in a distribution;

"fixed interest securities" means securities which under their terms of issue provide for fixed amounts of interest;

"industrial and provident society" means any society registered (or deemed to be registered) under the Industrial and Provident Societies Acts, 1893 to 1978;

"listed" means, in relation to an investment—

( a ) that there has been granted and not withdrawn a listing in respect of that investment on a recognised stock exchange, or

( b ) that dealings in that investment are effected in a securities market recognised by the Minister, being a market in which prices of all securities in which there are dealings are publicly listed and which are supervised by a public body, and

"unlisted" shall be construed accordingly;

"local authority" means any of the following authorities in the State—

( a ) a County Council,

( b ) a Corporation of a County Borough,

( c ) the Corporation of Dun Laoghaire;

"middle market quotation" means—

( a ) in relation to an investment for which two prices are quoted in the official list published for the relevant market, the average of the two prices so quoted for the relevant date or, if no official list has been published for that day, for the most recent day prior to that day for which the official list has been published, and

( b ) in relation to an investment for which one price is quoted in the official list published for the relevant market, the price so quoted for the relevant date or, if no official list has been published for that day, for the most recent day prior to that day for which the official list has been published, and

( c ) in any other case, the nearest equivalent to the average referred to in paragraph (a) which is published or can be reasonably ascertained from information which is published;

"non-life insurance" means insurance of a class specified in Schedule I to the Regulations of 1976;

"non-life insurance business amount" means the aggregate of the undertaking's non-life insurance business liabilities less the aggregate of the following—

( a ) the amount of any non-life insurance business liabilities of the undertaking to related companies, other than insurance liabilities, and

( b ) the value of the debts due or to become due to and other rights of the undertaking under contracts of reinsurance ceded by it (but excluding any rights of recovery in respect of insurance liabilities already discharged by the undertaking) which are non-life insurance business assets of the undertaking;

"non-life insurance business assets" and "non-life insurance business liabilities" mean respectivley assets of a non-life insurance undertaking which are, for the time being, identified as representing the non-life insurance liabilities of the undertaking in respect of its non-life insurance business and liabilities of the undertaking which are attributable to its non-life insurance business;

"price earnings ratio" means—

( a ) for the industrial sector, the price earnings ratio (net) estimated in respect of the Industrial Group index of the Irish Times Cara Indices, and

( b ) for the non-industrial sector, the price earnings ratio (net) estimated in respect of the Financial Group index of the Irish Times Cara Indices, or

( c ) with the consent of the Minister, the price earnings ratio (net) estimated in respect of the appropriate group index of recognised share indices outside the State;

"proper valuation" means, in relation to land, a valuation made by a qualified valuer not more than one year before the relevant date which determined the amount which would be realised at the time of the valuation on an open-market sale of the land free from any mortgage or charge;

"qualified valuer", in relation to any particular type of land in any particular area, means—

( a ) a person who is a fellow of the Society of Chartered Surveyors in the Republic of Ireland or the Royal Institution of Chartered Surveyors and either—

• (i) has knowledge of and experience in the valuation of that particular type of land in that particular area, or

• (ii) has knowledge of and experience in the valuation of land and has taken advice from a valuer who he is satisfied has knowledge of and experience in the valuation of that particular type of land in that particular area, or

• (b) a person who is approved for the time being by the Minister for the purposes of these Regulations;

"recognised stock exchange" is a stock exchange recognised by the Minister;

"the Regulations of 1976" means the European Communities (Non-Life Insurance) Regulations, 1976 (S.I. 115 of 1976);

"related company" means, in relation to an insurance undertaking—

( a ) a dependent of the insurance undertaking, or

( b ) a company of which the insurance undertaking is a dependant, or

( c ) a dependent of a company of which the insurance undertaking is a dependant;

"relevant dateratio" means, in relation to the valuation of any asset for any purpose for which this Part applies, the date when the asset falls to be valued for that purpose;

"securities" has the meaning assigned to it by section 2 of the Central Bank Act, 1971 ;

"share" includes stock;

"share option" means a right exercisable within a specified period, at the option of the holder of the right, to acquire or dispose of any share at a specified price;

"traded option" means a share or debenture option in respect of which permission to deal has been granted on the traded option market of a recognised stock exchange, or an option exchange recognised by the Minister;

• (2) For the purposes of these Regulations, a company is a dependant of an other company if—

( a ) that other company, either alone or with any associate or associates, is entitled to exercise, or control the exercise of 20 per cent or more of the equity voting rights at any general meeting of the first-mentioned company, or

( b ) the first-mentioned company is a dependant of any company which is that other company's dependant.

38 Application.

38.

38. (1) Subject to paragraph (2), this Part applies with respect to the determination of the value of assets of undertakings for the purposes of any investigation to which Article 5 applies and for all other purposes of the Insurance Acts and Regulations.

• (2) Where an undertaking has entered into any contracts providing for the payment of property linked benefits, this Part shall not apply with respect to the determination of the value of the linked assets by reference to the value of which those benefits are to be determined.

• (3) Any asset to which this Part applies (other than cash) for the value of which no provision is made in this Part shall be left out of account for the purpose of representing the life assurance business amount as defined in Article 49 (5).

• (4) Where in accordance with this Part the value of any asset is to be not greater than any specified amount and, in all the circumstances of the case, it appears that the asset is of a lesser value than that amount, such lesser value shall be the value of the asset.

• (5) Notwithstanding paragraph (1) (but subject to the conditions set out in paragraph (6)), an undertaking may, for the purposes of an investigation to which Article 5 applies, elect to assign to any of its assets the value given to the asset in question in the books or other records of the undertaking.

• (6) The conditions referred to in paragraph (5) are—

• (a) that the election shall not enable the undertaking to bring into account any asset for the valuation of which no provision is made in this Part;

• (b) that the value assigned to the aggregate of the assets shall not be higher than the aggregate of the value of those assets as determined in accordance with Articles 39 to 49.

• (7)
• (a) If the Minister is not satisfied as to the valuation of any asset or assets submitted to him he shall notify the undertaking accordingly.

• (b) Failing agreement between the undertaking and the Minister on the value placed on the asset or assets by the undertaking, the Minister may call on an independent expert for the purposes of expressing an opinion on the value of the asset or assets in question.

• (c) The independent expert appointed in accordance with subparagraph (b) shall have regard to the provisions of these Regulations.

• (d) The valuation placed on the asset or assets by the independent expert shall be final.

• (e) The costs of any such independent valuation shall be borne by the undertaking.

• (8) Notwithstanding the provision of paragraph (7), the Minister may appoint an independent expert for the purpose of expressing an opinion on the value of any asset or assets of an undertaking.

• (9) For the purposes of these Regulations—

"designated assets" means assets which are admissible in accordance with this Part as representing the life assurance business amount as defined in Article 49 (5).

39 Shares in and debts due or to become due from dependants.

39.

39. (1) In this Article, Article 40 and Schedule 6—

"insurance undertaking" means the holder of an authorisation under the Regulations of 1984 or the Regulations of 1976.

• (2) The value of any share in a dependant of an insurance undertaking shall be not greater than that part of the net asset value of the dependent which would be payable in respect of the share if the dependent were in liquidation and the net asset value were the amount distributable to the shareholders in the winding-up.

• (3) In this Article, "net asset value" means, in relation to a dependant, the amount by which the value of its assets, as determined in accordance with Article 40, exceeds the amount of its liabilities as determined in the case of a dependant which is an insurance undertaking, in accordance with Article 40.

• (4) The value of any debt due, or to become due to an insurance undertaking from a dependant (other than a debt to which Article 41 (2) or (3) applies) shall be the amount which would reasonably be expected to be recovered in respect of that debt (due account being taken of any security held in respect thereof) if the dependant were in liquidation and—

• (a) in the case of a dependant which is an insurance undertaking, the amount realised from its assets and the amount of its liabilities in the liquidation were equal to the value of those assets and the amount of those liabilities, as determined in accordance with Article 40, and

• (b) in the case of a dependant which is not an insurance undertaking, the amount realised from its assets in the liquidation were equal to the value of those assets, as determined in accordance with the said Article 40.

• (5) Any share in a dependant—

• (a) in which there is no excess of assets over liabilities as is mentioned in paragraph (2), or

• (b) in relation to which an insurance undertaking cannot reasonably ascertain the amount of the liabilities of the dependant for the purposes of paragraph (2),

shall be left out of account for the purposes for which this Part applies.

• (6) Where an insurance undertaking is unable to determine the value of any debt due or to become due to the undertaking from a dependant because it cannot reasonably ascertain the amount of the liabilities of the dependant for the purpose of ascertaining what would reasonably be expected to be recovered in respect of that debt in accordance with paragraph (3), the debt shall be left out of account for the purposes for which this Part applies.

40 Valuation of assets and liabilities of dependants for the purposes of Article 39.

40.

40. (1) This Article shall apply with respect to the determination of the value of the assets and the amount of the liabilities of a dependent for the purposes of Article 39.

• (2) In the case of a dependant which is an insurance undertaking,

• (a) subject to paragraph (4) and paragraph 3 of Schedule 6, the value of its assets shall be determined in accordance with this Part;

• (b) subject to paragraph (c), (d), (e), and (f), the amount of its liabilities shall be determined in accordance with Part IV;

• (c) where the dependant carries on non-life insurance business, its non-life insurance business liabilities shall be deemed to include an amount equal to whichever is the greater of 400,000 units of account or 20 per cent of the non-life insurance premium income;

• (d) where the dependant carries on life assurance business, its life assurance business liabilities shall be deemed to include whichever is the greatest of the following three amounts—

• (i) an amount ("the first amount") which is one-sixth of the solvency margin that would be arrived at by regarding the dependant as having its head office in the State (whether it has or not and applying Article 18 of the Regulations of 1984;

• (ii) an amount which is six times the first amount, reduced by the implicit figure within the meaning of subparagraph (e);

• (iii) 800,000 units of account;

• (e) for the purposes of subparagraph (d) (ii) the implicit figure is—

• (i) in the case of a dependant having its head office in the State, the amount of any implicit items relating to future profits, zillmerising or hidden reserves which the dependant is permitted to count by virtue of a direction under Article 4 and the application of Article 17 (2) (e) of the Regulations of 1984 and Part VI of these Regulations;

• (ii) in the case of a dependant having its head office elsewhere than in the State, the amount of any implicit items relating to future profits or zillmerising which would be arrived at by regarding the dependant as having its head office in the State and as having received a direction under Article 4 and by applying Article 17 (2) (e) of the Regulations of 1984 and part VI of these Regulations;

• (f) in any case where the dependant is required to establish a life assurance business fund or funds under the Insurance Acts and Regulations its life assurance business liabilities shall be deemed to be not less than the value of the assets representing that fund or funds.

• (3) In the case of a dependant which is not an insurance undertaking—

• (a) the value of its assets shall be determined in accordance with this Part, subject to the provisions of and the modifications provided for in paragraphs 3 and 4 of Schedule 6.

• (b) subject to paragraph (4), assets of the dependant which are of a relevant description shall be taken into account only to the extent that their value does not exceed the permitted limit applicable to the dependant in relation to those assets; and

• (c) any equipment leased by the dependant exclusively to any person other than its subsidiary or holding company or a subsidiary of its holding company shall be valued as a debt for the purposes of this Part.

• (4) Where—

• (a) the dependant is an insurance undertaking and has assets of a relevant description which are not life assurance business assets or is not an insurance undertaking and has assets of a relevant description;

• (b) the value of such assets exceeds the permitted limit applicable to the dependant in relation to those assets, and

• (c) the insurance undertaking has no assets of the same description of the relevant class, or has assets of the same description of the relevant class and their value is less than the permitted limit applicable to the insurance undertaking in relation to those assets,

then, for the purpose of determining the value of the assets of the dependant, there shall be added to the permitted limit applicable to the dependant in relation to the assets referred to in subparagraph (a) an amount equal to the supplementary amount determined in accordance with Part 1 of Schedule 6.

• (5) In this Article and Schedule 6 — "assets of a relevant description" means assets of a description specified in Part 1 of Schedule 7 or, in the case of a dependant which is not an insurance undertaking, assets which would be of such a description if it were an insurance undertaking;

"insurance undertaking" has the meaning assigned to it in Article 39;