S.I. No. 23/1996 - European Communities (Insurance Undertakings: Accounts) Regulations, 1996

I. Technical account - Non-life insurance
1. Earned premiums, net of reinsurance:
(a) gross premiums written (1)	___
(b) outward reinsurance premiums(-)(2)	___	___
(c) change in the gross provision for unearned premiums and in the gross provision for unexpired risks (+/-)(3)	___
(d) change in the provision for unearned premiums, reinsurers' share(+/-)(3)	____	____	____
2. Allocated investment return transferred from the non-technical account (Item III.6)(8)(9)	2. Allocated investment return transferred from the non-technical account (Item III.6)(8)(9)	2. Allocated investment return transferred from the non-technical account (Item III.6)(8)(9)	2. Allocated investment return transferred from the non-technical account (Item III.6)(8)(9)
(a) allocated by class of business
accident and health	___
motor	___
marine, aviation and transport	___
fire and other damage to property	___
liability business	___
miscellaneous pecuniary loss	___
(b) total:		___
3. Other technical income, net of reinsurance		___
4. Claims incurred, net of reinsurance: (4)
(a) claims paid
(aa) gross amount	___
(bb) reinsurers' share(-)	___	___
(b) change in the provision for claims
(aa) gross amount	___
(bb) reinsurers' share(-)	___	___	___
5. Changes in other technical provisions, net of reinsurance, not shown under other headings(+/-)			___
6. Bonuses and rebates, net of reinsurance (5)			___
7. Net operating expenses:
(a) acquisition costs (6)	___
(b) change in deferred acquisition costs(+/-)	___
(c) administrative expenses (7)	___
(d) reinsurance commissions and profit participation(+/-)	___	___
7a. Investment charges. (8)
(a) By class of business:
accident and health	___
motor	___
marine, aviation and transport	___
fire and other damage to property	___
liability business	___
miscellaneous pecuniary loss	___
(aa) investment management expenses, including interest	___
(bb) value adjustments on investments	___
(cc) losses on the realisation of investments	___
(b) total:		___
8. Other technical charges, net of reinsurance		___
9. Change in the equalisation provision(+/-)		___
10. Sub-total (balance on the technical account for non-life insurance business (item III.1)		___
II. Technical account - Life assurance business
1. Earned premiums, net of reinsurance;
(a) gross premiums written (1)		___
(b) outward reinsurance premiums(-)(2)		___
(c) change in the provision for unearned premiums, net of reinsurance(+/-)(3)		___	___
2. Investment income: (8)(9)
(a) income from participating interests, with a separate indication of that derived from group undertakings _ (b) income from other investments, with a separate indication of that derived from group undertakings _ (aa) income from land and buildings (bb) income from other investments (c) value re-adjustments on investments (d) gains on the realisation of investments	___ ___	___ ___ ___ ___	___
3. Unrealised gains on investments ( 10)			___
4. Other technical income, net of reinsurance			___
5. Claims incurred, net of reinsurance:(4) (a) claims paid (aa) gross amount (bb) reinsurers' share(-)	___ ___	___
(b) change in the provision for claims (aa) gross amount (bb) reinsurers' share(-)	___ ___	___	___
6. Change in other technical provisions, net of reinsurance, not shown under other headings(+/-): (a) Life assurance provision, net of reinsurance (3) (aa) gross amount (bb) reinsurers' share(-)	___ ___	___
(b) other technical provisions, net of reinsurance		___	___
7. Bonuses and rebates, net of reinsurance (5)			___
8. Net operating expenses: (a) acquisition costs (6) (b) change in deferred acquisition costs (c) administrative expenses (7) (d) reinsurance commissions and profit participation		___ ___ ___ ___	___
9. Investment expenses and charges: (8) (a) investment management expenses, including interest (b) value adjustments on investments (c) losses on the realisation of investments		___ ___ ___	___
10. Unrealised losses on investments (10)			___
11. Other technical charges, net of reinsurance			___
11a. Tax attributable to the life assurance business			___
12. Allocated investment return transferred to the non-technical account(-) (item III.4) (9)			___
12a. Transfers to or from the fund for future appropriations			___
13. Sub-total (balance on the technical account - life assurance business) (item III.2)			___
III. Non-technical account
1. Balance on the technical account - non-life insurance business (item I.10)			___
2. Balance on the technical account - life assurance business (item II.13)			___
3. Investment income (8)
(a) income from participating interests, with a separate indication of that derived from group undertakings ____		___
(b) income from other investments, with a separate indication of that derived from group undertakings ___ (aa) income from land and buildings (bb) income from other investments	___ ___	___
(c) value re-adjustments on investments		___
(d) gains on the realisation of investments		___	___
3a. Unrealised gains on investments (10)			___
4. Allocated investment return transferred from the life assurance technical account (item II.12) (9)			___
5. Investment charges: (8)
(a) investment management expenses, including interest		___
(b) value adjustments on investments		___
(c) losses on the realisation of investments		___	___
5a. Unrealised losses on investments (10)			___
6. Allocated investment return transferred to the non-life insurance technical account (item I.2) (9)			___
7. Other income			___
8. Other charges, including value adjustments			___
9. Tax on profit or loss on ordinary activities			___
10. Profit or loss on ordinary activities after tax			___
11. Extraordinary income			___
12. Extraordinary charges			___
13. Extraordinary profit or loss			___
14. Tax on extraordinary profit or loss			___
15. Other taxes not shown under the preceding items			___
16. Profit or loss for the financial year			___

Notes on the profit and loss account format

• (1) Gross premiums written

(Non-life insurance technical account; item I.1. (a))

(Life assurance technical account; item II.1. (a))

This item shall comprise all amounts due during the financial year in respect of insurance contracts entered into regardless of the fact that such amounts may relate in whole or in part to a later financial year, and shall include inter alia:

• (a) premiums yet to be written, where the premium calculation can be done only at the end of the year;

• (b) single premiums including annuity premiums and, in life assurance business, single premiums resulting from bonus and rebate provisions in so far as they shall be considered as premiums under the terms of the contract;

• (c) additional premiums in the case of half-yearly, quarterly or monthly payments and additional payments from policyholders for expenses borne by the undertaking;

• (d) in the case of co-insurance, the undertaking's portion of total premiums;

• (e) reinsurance premiums due from ceding and retroceding insurance undertakings, including portfolio entries, after deduction of—

• (i) portfolio withdrawals credited to ceding and retroceding insurance undertakings, and

• (ii) cancellations.

The amounts to which this note relates shall not include the amounts of taxes or duties levied with premiums.

• (2) Outward reinsurance premiums

(Non-life insurance technical account: item I.1. (b))

(Life assurance technical account item 11.1. (b))

This item shall comprise all premiums paid or payable in respect of outward reinsurance contracts entered into by the undertaking. Portfolio entries payable on the conclusion or amendment of outward reinsurance contracts shall be added; portfolio withdrawals receivable shall be deducted.

• (3) Change in the provision for unearned premiums, net of reinsurance

(Non-life insurance technical account: items I.1. (c) and 1.1.(d))

(Life assurance technical account: items II.1. (c) and II.6. (a))

In the case of life assurance, the change in unearned premiums may be included either in item II.1 (c) or in item II.6. (a) of the life assurance technical account.

• (4) Claims incurred, net of reinsurance

(Non-life insurance technical account: item I.4) (Life assurance technical account: item II.5)

This item shall comprise all payments made in respect of the financial year including the provision for claims but excluding the provision for claims for the preceding financial year.

These amounts shall include annuities, surrenders, entries and withdrawals of loss provisions to and from ceding insurance undertakings and reinsurers, external and internal claims management costs and charges for claims incurred but not reported such as are referred to in paragraphs 27(3) and 29 of Part II (Valuation Rules) of this Schedule.

Sums recoverable on the basis of subrogation and salvage within the meaning of sub-paragraph (7) of the said paragraph 27 shall be deducted.

Where the difference between:

• (a) the loss provision made at the beginning of the year for outstanding claims incurred in previous years, and

• (b) the payments made during the year on account of claims incurred in previous years and the loss provision shown at the end of the year for such outstanding claims,

is material it shall be shown in the notes to the accounts, broken down by category and amount.

• (5) Bonuses and rebates, net of reinsurance

(Non-life insurance technical account: item I.6)

(Life assurance technical account: item II.7)

Bonuses shall comprise all amounts chargeable for the financial year which are paid or payable to policyholders and other insured parties or provided for their benefit, including amounts used to increase technical provisions or applied to the reduction of future premiums, to the extent that such amounts represent an allocation of surplus or profit arising on business as a whole or a section of business, after deduction of amounts provided in previous years which are no longer required.

Rebates shall comprise such amounts to the extent that they represent a partial refund of premiums resulting from the experience of individual contracts.

Where material, the amount charged for bonuses and that charged for rebates shall be disclosed separately in the notes to the accounts.

• (6) Acquisition costs

(Non-life insurance technical account: item I.7. (a))

(Life assurance technical account: item II.8. (a))

This item shall comprise the costs arising from the conclusion of insurance contracts. They shall cover both direct costs, such as acquisition commissions or the cost of drawing up the insurance document or including the insurance contract in the portfolio, and indirect costs, such as advertising costs or the administrative expenses connected with the processing of proposals and the issuing of policies.

In the case of life assurance, policy renewal commissions shall be included under item II.8. (c) in the life assurance technical account.

• (7) Administrative expenses

(Non-life insurance technical account; item I.7. (c))

(Life assurance technical account: item II.8. (c))

This item shall include the costs arising from premium collection, portfolio administration, handling of bonuses and rebates, and inward and outward reinsurance. They shall, in particular, include staff costs and depreciation provisions in respect of office furniture and equipment in so far as these need not be shown under acquisition costs, claims incurred or investment charges.

Item II.8. (c) shall also include policy renewal commissions in respect of life assurance.

• (8) Investment income and charges.

(Non-life insurance technical account: items I.2 and 7a.)

(Life assurance technical account: items II.2 and II.9) (Non-technical account: items III.3 and III.5)

• (a) Investment income and charges relating to non-life insurance shall be disclosed in the non-technical account. Investment income and those charges attributable to the non-life technical account shall be allocated to that account by class of business, grouped as in the Revenue Account of the annual returns submitted in accordance with the European Communities (Non-life Insurance Accounts) Regulations, 1977 ( S.I. No. 401 of 1977 ). The proportion of this and the basis on which they have been allocated as between the various classes shall be disclosed in the notes to the accounts.

• (b) Investment income and charges relating to life assurance shall be disclosed in the life assurance technical account.

• (c) In the case of an undertaking carrying on both life assurance and non-life insurance business, investment income and charges shall, to the extent that they are directly connected with the carrying on of the life-assurance business be disclosed in the life assurance technical account.

• (9) Allocated investment return

(Non-life insurance technical account: item I.2)

(Life assurance technical account: item II.2)

(Non-technical account: items III.4 and III.6)

Where part of the investment return is transferred to the non-life insurance technical account, the transfer from the non-technical account shall be deducted from item III.6 and added to item I.2.

Part of the investment return disclosed in the life assurance technical account may (to the extent that it is not attributable in the life assurance fund) be transferred to the non-technical account. The amount transferred shall be deducted from item III.12 and added to item III.4.

In the case of non-life insurance, allocated return may be transferred from one part of the profit and loss account to another in accordance with best accounting practices. The amount and reasons for such transfers and the bases on which they are made shall be disclosed in the notes to the accounts.

• (10) Unrealised gains and losses on investments.

(Life assurance technical account: items II.3 and III.10.)

(Non-technical account: items III.3a and III.5a.)

Variations between the valuation of investments at their current value or by means of one of the methods referred to in paragraph 19 of the Schedule to the Act of 1986 and their valuation at purchase price shall be treated as follows:

• (a) where they relate to investments shown as assets under D of the balance sheet format they shall be fully disclosed in items II.3 and II.10 in the profit and loss account.

• (b) in life assurance business those which do not fall under paragraph (a) of this note may be disclosed in full or in part in items II.3 and II.10 in the profit and loss account.

• (c) in non-life insurance business they may be disclosed in full or in part in items III.3a and III.5a in the profit and loss account.

In the case of both paragraphs (b) and (c) of this note, where a partial disclosure is made, that shall be disclosed in the notes to the accounts, together with the full amount of the unrealised gains or losses, as the case may be, and the reasons for which the partial disclosure was made.

PART II VALUATION RULES

CHAPTER 1 HISTORICAL COST ACCOUNTING RULES

PRELIMINARY

General rules

• (2) Where investments are shown as provided in sub-paragraph (1), their current value shall be disclosed on the balance sheet or in the notes to the accounts.

• (a) its purchase price or production cost, or

• (b) where it is estimated that any such asset will have a residual value at the end of the period of its useful economic life, its cost less that estimated residual value,

shall be reduced by provisions for depreciation calculated to write off that amount systematically over the period of the asset's useful economic life.

• (2) Where an asset falling to be included under Assets item C.II, C.III, C.IV or F.III in the balance sheet format (set out in Chapter 2 of Part 1 of this Schedule) has diminished in value, provisions for diminution in value may be made in respect of it and the amount to be included in respect of it may be reduced accordingly, and any such provisions which are not shown separately in the profit and loss account shall be disclosed (either separately or in aggregate) in a note to the accounts.

• (3) Provisions for diminution in value shall be made in respect of any asset to which this paragraph applies which has diminished in value if the reduction of its value is expected to be permanent (whether its useful economic life is limited or not), and the amount to be included in respect of it shall be reduced accordingly; and any such provisions which are not shown separately in the profit and loss account shall be disclosed (either separately or in aggregate) in a note to the accounts.

• (4) Where the reasons for which any provision was made in accordance with sub-paragraph (2) or (3) have ceased to apply to any extent, that provision shall be written back to the extent that it is no longer necessary, and any amounts written back in accordance with this sub-paragraph which are not shown separately in the profit and loss account shall be disclosed (either separately or in aggregate) in a note to the accounts.

Goodwill

• (2) Subject to sub-paragraph (3), the amount of the consideration for any goodwill acquired by an undertaking shall be reduced by provisions for depreciation calculated to write off that amount systematically over a period chosen by the directors of the undertaking.

• (3) The period chosen shall not exceed the useful economic life of the goodwill in question.

• (4) In any case where any goodwill acquired by an undertaking is included as an asset in the undertaking's balance sheet the period chosen for writing off the consideration for that goodwill and the reasons for choosing that period shall be disclosed in a note to the accounts.

• (2) If the net realisable value of any asset referred to in sub-paragraph (1) is lower than its cost the amount to be included in respect of that asset shall be the net realisable value.

• (3) Where the reasons for which any provision for diminution in value was made in accordance with sub-paragraph (2) have ceased to apply to any extent, that provision shall be written back to the extent that it is no longer necessary.

Miscellaneous and supplementary provisions

Excess of money owed over value received as an asset item

• (2) Where any such amount is treated as an asset, then—

• (a) it shall be written off by reasonable amounts each year and shall be completely written off before repayment of the debt, and

• (b) if the current amount is not shown as a separate item in the undertaking's balance sheet it shall be disclosed in a note to the accounts.

Determination of cost

• (2) In addition, there may be included in the cost of an asset constructed by the undertaking—

• (a) a reasonable proportion of the costs incurred by the undertaking which are only indirectly attributable to the construction of that asset, but only to the extent that they relate to the period of construction; and

• (b) interest on capital borrowed to finance the construction of that asset, to the extent that it accrues in respect of the period of construction;

provided that, in a case to which sub-paragraph (b) relates, the inclusion of the interest in determining the cost of that asset and the amount of the interest so included is disclosed in a note to the accounts.

• (2) The methods to which sub-paragraph (1) relates are the following:

• (a) the method known as "first in, first out" (FIFO);

• (b) a weighted average price;

• (c) any other method similar to either of the other methods mentioned in this sub-paragraph.

• (3) Where in the case of any undertaking:

• (a) the cost of assets falling to be included under any item shown in the undertaking's balance sheet has been determined by the application of any method permitted by this paragraph, and

• (b) the amount shown in respect of that item differs materially from the relevant alternative amount given below in this paragraph,

the amount of that difference shall be disclosed in a note to the accounts.

• (4) Subject to sub-paragraph (5), for the purposes of sub-paragraph (3)(b), the relevant alternative amount, in relation to any item shown in an undertaking's balance sheet, is the amount which would have been shown in respect of that item if assets of any class included under that item at an amount determined by any method permitted by this paragraph had instead been included at their replacement cost as at the balance sheet date.

• (5) The relevant alternative amount may be determined by reference to the most recent actual purchase price before the balance sheet date of assets of any class included under the item in question instead of by reference to their replacement cost as at that date, but only if the former appears to the directors of the undertaking to constitute the more appropriate standard of comparison in the case of assets of that class.

Substitution of original amount where price or cost unknown

• (2) Sub-paragraph (1) applies to assets of a kind which are constantly being replaced, where—

• (a) their overall value is not material to assessing the undertaking's state of affairs; and

• (b) their quantity, value and composition are not subject to material variation.

CHAPTER 2 CURRENT VALUE ACCOUNTING RULES

Preliminary

• (2) Paragraphs 2, 3, 4 and 5 are referred to in this Chapter as "the depreciation rules" and references subsequently in this Schedule to the historical cost accounting rules do not include the depreciation rules as they apply by virtue of paragraph 19.

Current value accounting rules

• (2) Investments falling to be included under Assets item D (unit-linked investments) shall be shown at their current value.

• (2) Assets falling to be included under Assets item F.I (tangible assets and stocks) in the balance sheet format (set out in Chapter 2 of Part I of this Schedule) may be included at a market value determined as at the date of their last valuation or at their current cost.

Valuation of investments

• (2) Where investments are officially listed on an official stock exchange, market value shall mean the value on the balance sheet date or, when the balance sheet date is not a stock exchange trading day, on the last stock exchange trading day before that date.

• (3) Where a market exists for unlisted investments, market value shall mean the average price at which such investments were traded on the balance sheet date or, when the balance sheet date is not a trading day, on the last trading day before that date.

• (4) Where on the date on which the accounts are drawn up listed or unlisted investments have been sold or are to be sold within the short term, the market value shall be reduced by the actual or estimated realisation costs.

• (5) Except where the equity method is applied all investments other than those referred to in sub-paragraphs (2) and (3) shall be valued on a basis which has prudent regard to the likely realisable value.

• (6) In all cases the method of valuation shall be precisely described and the reason for adopting it disclosed in the notes to the accounts.

• (2) Market value shall mean the price at which land and buildings could be sold under private contract between a willing seller and an arm's length buyer on the date of valuation, it being assumed that the property is publicly exposed to the market, that market conditions permit orderly disposal and that a normal period, having regard to the nature of the property, is available for the negotiation of the sale.

• (3) The market value shall be determined through the separate valuation of each land and buildings item, carried out at least every five years in accordance with generally accepted methods of valuation.

• (4) Where the value of any land and buildings item has diminished since the preceding valuation under sub-paragraph (3), an appropriate value adjustment shall be made and the lower value arrived at shall not be increased in subsequent balance sheets unless such increase results from a new determination of market value arrived at in accordance with sub-paragraphs (2) and (3).

• (5) Where on the date on which the accounts are drawn up and buildings have been sold or are to be sold within the short term, the value arrived at in accordance with sub-paragraphs (2) and (4) shall be reduced by the actual or estimated realisation costs.

• (6) Where it is impossible to determine the market value of a land and buildings item, the value arrived at on the basis of the principle of purchase price or production cost shall be deemed to be its current value.

• (7) The method by which the current value of land and buildings has been arrived at and their breakdown by financial year of valuation shall be disclosed in the notes to the accounts.

Application of the depreciation rules

• (2) The amount of any provision for depreciation required in the case of any asset by paragraph 3 as it applies by virtue of sub-paragraph (1) is referred to below in this paragraph as the "adjusted amount", and the amount of any provision which would be required by that paragraph in the case of that asset according to the historical cost accounting rules is referred to as the "historical cost amount".

• (3) Where sub-paragraph (1) applies in the case of any asset the amount of any provision for depreciation in respect of that asset included in any item shown in the profit and loss account in respect of amounts written off assets of the description in question may be the historical cost amount instead of the adjusted amount, provided that the amount of any difference between the two is shown separately in the profit and loss account or in a note to the accounts.

Additional Information to be provided

• (2) The items affected and the basis of valuation adopted in determining the amounts of the assets in question in the case of each such item shall be disclosed in a note to the accounts.

• (3) The purchase price of investments valued in accordance with paragraph 14 shall be disclosed in the notes to the accounts.

• (4) In the case of each balance sheet item valued in accordance with paragraph 15 either—

• (a) the comparable amounts determined according to the historical cost accounting rules, or

• (b) the differences between those amounts and the corresponding amounts actually shown in the balance sheet in respect of that item,

shall be shown separately in the balance sheet or in a note to the accounts.

• (5) In sub-paragraph (4) references, in relation to any item, to the comparable amounts determined as there mentioned are references to—

• (a) the aggregate amount which would be required to be shown in respect of that item if the amounts to be included in respect of all the assets covered by that item were determined according to the historical cost accounting rules, and

• (b) the aggregate amount of the cumulative provisions for depreciation or diminution in value which would be permitted or required in determining those amounts according to those rules.

21.

• (2) The amount of the revaluation reserve shall be shown in the undertaking's balance sheet under Liabilities item A.III in the balance sheet format (set out in Chapter 2 of Part 1 of this Schedule).

• (3) An amount may be transferred from the revaluation reserve to the profit and loss account—

• (a) if the amount was previously charged to that account or represents realised profit, or

• (b) on capitalisation,

and the revaluation reserve shall be reduced to the extent that the amounts transferred to it are no longer necessary for the purpose of the valuation method used.

• (4) The revaluation reserve shall not be reduced except as mentioned in this paragraph.

• (5) The treatment for taxation purposes of amounts credited or debited to the revaluation reserve shall be disclosed in a note to the accounts.

• (6) In sub-paragraph (3)(b) "capitalisation", in relation to an amount standing to the credit of the revaluation reserve, means applying it in wholly or partly paying up unissued shares in the undertaking to be allotted to members of the undertaking as fully or partly paid shares.

CHAPTER 3 GENERAL RULES

22.

• (2) The amount included in the balance sheet in respect of these assets shall be their purchase price.

• (3) Where the purchase price of these assets exceeds the amount repayable at maturity, the amount of the difference shall be charged to the profit and loss account or reduced each financial year on a systematic basis, in accordance with best accounting practice, so that it is completely written off when the securities are repaid. That difference shall be shown separately in the balance sheet or in the notes to the accounts.

• (4) Where the purchase price of these assets is less than the amount repayable at maturity, the amount of the difference may be released to income in instalments over the period remaining until repayment. That difference shall be shown separately in the balance sheet or in the notes to the accounts.

Technical provisions

23.

Provision for unearned premiums

24.

• (2) Notwithstanding sub-paragraph (1) statistical methods, in particular proportional and flat rate methods, may be used where they may be expected to give approximately the same results as would be obtained if individual calculations were made under sub-paragraph (1).

• (3) In classes of insurance where the pattern of risk varies over the life of a contract, this shall be taken into account in the calculation methods.

Provision for unexpired risks

25.

• (2) In this paragraph, "unexpired risks" has the same meaning as it has in note 24 on the balance sheet format which is set out in Chapter 2 of Part 1of this Schedule.

Life assurance

26.

• (2) Notwithstanding sub-paragraph (1), statistical or mathematical methods may be used where they may be expected to give approximately the same results as would be obtained if individual calculations were made under sub-paragraph (1).

• (3) A summary of the principal assumptions in making the provision under sub-paragraph (1) or (2) shall be given in the notes to the accounts.

• (4) The computation shall be made on the basis of recognised actuarial methods annually by a Fellow Member of the Society of Actuaries in Ireland, with due regard to the actuarial principles laid down in Council Directive 92/96/EEC.

Provisions for claims outstanding

Non-life insurance

27.

• (2) Notwithstanding sub-paragraph (1), statistical methods may be used if they result in an adequate provision for claims outstanding having regard to the nature of the risks.

• (3) A provision for claims outstanding shall also allow for claims incurred but not reported by the balance sheet date, the amount of the allowance being determined having regard to past experience as to the number and magnitude of claims reported after previous balance sheet dates.

• (4) All claims settlement costs shall be included in the calculation of the provision for claims outstanding, irrespective of their origin.

• (5) Recoverable amounts arising out of subrogation or salvage shall be estimated on a prudent basis and either deducted from the provision for claims outstanding (in which case if the amounts are material they shall be shown in the notes to the accounts) or shown as assets.

• (6) Where benefits resulting from a claim are required to be paid in the form of annuity, the amounts to be set aside for that purpose shall be calculated by recognised actuarial methods.

• (7) In sub-paragraph (5)—–

"salvage" means the acquisition of the legal ownership of insured property;

"subrogation" means the acquisition of the rights of policy holders with respect to third parties;

28.

• (2) The Minister may, on application by the undertaking concerned, permit explicit discounting or deductions (including by way of financial reinsurance) to take account of investment income subject to compliance with the following conditions and any other conditions which the Minister may from time to time consider necessary:

( a ) the expected date for the settlement of claims shall be on average at least four years after the accounting date;

( b ) the discounting or deduction shall be effected on a recognised prudential basis; any change in that basis shall be notified, in advance, to the Minister;

( c ) when calculating the total cost of settling claims, an undertaking shall take account of all factors that could cause increases in that cost;

( d ) an undertaking shall have adequate data at its disposal to construct a reliable model of the rate of claims settlements;

( e ) the rate of interest used for the calculation of present value shall not exceed a prudent estimate of the investment income from assets invested as a provision for claims during the period necessary for the payment of such claims and that rate shall not exceed either of the following:

• (i) a rate derived from the investment income from such assets over the preceding five years;

• (ii) a rate derived from the investment income from such assets during the year preceding the balance sheet date.

• (3) When discounting or effecting deductions, an undertaking shall, in the notes on its accounts, disclose the total amount of provisions before discounting or deduction, the categories of claims which are discounted or from which deductions have been made and, for each category of claims, the methods used, in particular the rates used for the estimates referred to in the clauses (c) and (e) of sub-paragraph (2), and the criteria adopted for estimating the period that will elapse before the claims are settled.

Life assurance business

29.

( a ) be equal to the sums due to beneficiaries, plus the costs of settling claims,

( b ) include the provision for claims incurred but not reported and

( c ) be disclosed in Liabilities item C(2).

30.

Accounting on a non-annual basis

31.

• (2) The method adopted shall be disclosed in the notes together with the reasons for adopting it.

• (3) The method adopted shall be applied systematically in successive years unless circumstances justify a change and where there is a change in the method applied, the effect on the assets, liabilities, financial position and profit or loss shall be disclosed in the notes to the accounts.

• (4) In this paragraph and the Table hereto "underwriting year" means the financial year in which the insurance contracts in the class or type of insurance in question commenced.

Table

Method 1

( a ) The excess of the premiums written over the claims and expenses paid in respect of contracts commencing in the underwriting year shall form a technical provision included in the technical provision for claims outstanding shown in the balance sheet under Liabilities item C.3.

( b ) The provision may also be computed on the basis of a given percentage of the premiums written where such a method is appropriate for the type of risk insured.

( c ) If necessary, the amount of this technical provision shall be increased to make it sufficient to meet present and future obligations.

( d ) The technical provision constituted under this method shall be replaced by a provision for claims outstanding estimated in accordance with paragraphs 27 to 29 as soon as sufficient information has been gathered and not later than the end of the third year following the underwriting year.

( e ) The length of time that elapses before a provision for claims outstanding is constituted in accordance with paragraph (d) of this method shall be disclosed in the notes to the accounts.

Method 2

( a ) The figures shown in the technical account or in certain items within it shall relate to a year which wholly or partly precedes the financial year but by no more than 12 months.

( b ) The amounts of the technical provisions shown in the accounts shall, if necessary, be increased to make them sufficient to meet present and future obligations.

( c ) The length of time by which the earlier year to which the figures relate precedes the financial year and the magnitude of the transactions concerned shall be disclosed in the notes to the accounts.

PART III NOTES TO THE ACCOUNTS

Preliminary

General

Disclosure of accounting policies

Sums denominated in foreign currencies

Information supplementing the balance sheet

Share capital and debentures

( a ) the authorised share capital, and

( b ) where shares of more than one class have been allotted, the number and aggregate nominal value of shares of each class allotted.

• (2) In the case of any part of the allotted share capital that consists of redeemable shares, the following information shall be given:

( a ) the earliest and latest dates on which the undertaking has power to redeem those shares,

( b ) whether those shares have to be redeemed in any event or are liable to be redeemed at the option of the undertaking or of the shareholder, and

( c ) whether any premium is payable on redemption and, if so payable, the amount of that premium.

( a ) the reason for making the allotment,

( b ) the classes of shares allotted, and

( c ) as respects each class of shares, the number allotted, their aggregate nominal value and the consideration received by the undertaking for the allotment.

( a ) the number, description and amount of the shares in relation to which the right is exercisable,

( b ) the period during which it is exercisable, and

( c ) the price to be paid for the shares allotted.

• (2) In sub-paragraph (1) "contingent right to the allotment of shares" means any option to subscribe for shares and any other right to require the allotment of shares to any person whether arising on the conversion into shares of securities of any other description or otherwise.

( a ) the reason for making the issue,

( b ) the classes of debentures issued, and

( c ) as respects each class of debentures, the amount issued and the consideration received by the undertaking for the issue.

• (2) Particulars of any redeemed debentures which the undertaking has power to reissue shall also be given.

• (3) Where any of the undertaking's debentures are held by a nominee of or trustee for the undertaking, the nominal amount of the debentures and the amount at which they are stated in the accounting records kept by the undertaking in accordance with section 202 of the Act of 1990, shall be stated.

Assets

( a ) the appropriate amounts in respect of those assets included in the item as at the date of the beginning of the financial year and as at the balance sheet date respectively;

( b ) the effect on any amount included in Assets item B in respect of those assets of—

• (i) any determination during that year of the value to be ascribed to any of those assets in accordance with paragraph 15;

• (ii) acquisitions during that year of any assets;

• (iii) disposal during that year of any assets; and

• (iv) any transfers of assets of the undertaking to and from the item during that year.

• (2) The reference in sub-paragraph (1) (a) to the appropriate amounts in respect of any assets (included in an assets item) as at any date there mentioned is a reference to amounts representing the aggregate amounts determined, as at that date, in respect of assets falling to be included under the item on either of the following bases, that is to say:

( a ) on the basis of cost, determined in accordance with paragraphs 7, 8 and 9;

or

( b ) on any basis permitted by paragraph 14 or 15; leaving out of account in either case any provision for depreciation or diminution in value.

• (3) In addition, in respect of any assets of the undertaking included in any assets item in the undertaking's balance sheet, there shall be stated (by reference to each such item) -

( a ) the cumulative amount of provisions for depreciation or diminution in value of those assets included under the item as at each date mentioned in sub-paragraph (1) (a);

( b ) the amount of any such provision made in respect of the financial year;

( c ) the amount of any adjustments made in respect of any such provisions during that year in consequence of the disposal of any of those assets; and

( d ) the amount of any other adjustments made in respect of any such provisions during that year.

( a ) the years, in so far as they are known to the directors in which the assets were severally valued and the several values; and

( b ) in the case of assets that have been valued during the financial year, the names of the persons who valued them or particulars of their qualifications for doing so and, in either case, the bases of valuation used by them.

( a ) how much of that amount is ascribable to land of freehold tenure and how much to land of leasehold tenure; and

( b ) how much of the amount ascribable to land of leasehold tenure is ascribable to land held on long lease and how much to land held on short lease.

Investments

( a ) how much of that amount is ascribable to listed investments; and

( b ) how much of any amount so ascribable is ascribable to investments in respect of which there has been granted a listing on a recognised stock exchange and how much to other listed investments.

Reserves and provisions

( a ) to or from any reserves, or

( b ) to any provisions for liabilities and charges, or

( c ) from any provision for liabilities and charges otherwise than for the purpose for which the provision was established,

and the reserves or provisions are or would be but for paragraph 3 of Part I of this Schedule shown as separate items in the undertaking's balance sheet, the information mentioned in sub-paragraph (2) shall be given in respect of the aggregate of reserves or provisions included in the same item.

• (2) The information to which sub-paragraph (1) relates is as follows:

( a ) the amount of the reserves or provisions as at the date of the beginning of the financial year and as at the balance sheet date respectively,

( b ) any amounts transferred to or from the reserves or provisions during that year, and

( c ) the source and application respectively of any amounts so transferred.

• (3) Particulars shall be given of each provision included in Liabilities item E.III (other provisions) in the undertaking's balance sheet in any case where the amount of that provision is material.

Provision for taxation

Details of indebtedness

( a ) the aggregate amount of any debts included under that item which are payable or repayable otherwise than by instalments and fall due for payment or repayment after the end of the period of five years beginning with the day next following the end of the financial year, and

( b ) the aggregate amount of any debts so included which are repayable or repayable by instalments any of which fall due for payment after the end of that period;

and in the case of debts to which sub-paragraph (b) relates the aggregate amount of instalments falling due after the end of that period shall also be disclosed for each such item.

• (2) Subject to sub-paragraph (3), in relation to each debt falling to be taken into account under sub-paragraph (1), the terms of payment or repayment and the rate of any interest payable on the debt shall be stated.

• (3) If the number of debts is such that, in the opinion of the directors, compliance with sub-paragraph (2) would result in a statement of excessive length, it shall be sufficient to give a general indication of the terms of payment or repayment and the rates of any interest payable on the debts.

• (4) In respect of each item shown under "creditors" in the undertaking's balance sheet there shall be stated—

( a ) the aggregate amount of any debts included under that item in respect of which any security has been given by the undertaking; and

( b ) an indication of the nature of the securities so given.

• (5) References in this paragraph to an item shown under "creditors" in the undertaking's balance sheet include references, where amounts falling due to creditors within one year and after more than one year are distinguished in the balance sheet —

( a ) in a case within sub-paragraph (1), to an item shown under the latter of those categories, and

( b ) in a case within sub-paragraph (4), to an item shown under either of those categories,

and references to items shown under "creditors" include references to items which would but for paragraph 3(1)(b) of Part I of this Schedule be shown under that heading.

( a ) the amount of the arrears, and

( b ) the period for which the dividends or, if there is more than one class, each class of them are in arrears.

Guarantees and other financial commitments

• (2) The following information shall be given with respect to any other contingent liability not provided for (other than a contingent liability arising out of an insurance contract):

( a ) the amount or estimated amount of that liability;

( b ) its legal nature; and

( c ) whether or not any valuable security has been provided by the undertaking in connection with that liability and, if such security has been so provided, what that security is.

• (3) Where practicable, there shall be stated—

( a ) the aggregate amount or estimated amount of contracts for capital expenditure, so far as not provided for, and

( b ) the aggregate amount or estimated amount of capital expenditure authorised by the directors which has not been contracted for.

• (4) Particulars shall be given of—

( a ) any pension commitments included under any provision shown in the undertaking's balance sheet, and

( b ) any such commitments for which no provision has been made,

and where any such commitment relates wholly or partly to pensions payable to past directors of the undertaking separate particulars shall be given of that commitment so far as it relates to such pensions.

• (5) Particulars shall also be given of any other financial commitments, other than commitments arising out of insurance contracts, which—

( a ) have not been provided for, and

( b ) are relevant to assessing the undertaking's state of affairs.

• (6) Commitments, being commitments to which any sub-paragraph of this paragraph relates, which are undertaken on behalf of or for the benefit of —

( a ) any parent undertaking or fellow subsidiary undertaking of the undertaking, or

( b ) any subsidiary undertaking of the undertaking,

shall be stated separately from the other commitments within that sub-paragraph, and commitments within clause (a) of this sub-paragraph shall also be stated separately from those within clause (b) of this sub-paragraph.

Dealings with or interests in group undertakings

( a ) amounts attributable to dealings with or interests in any parent undertaking or fellow subsidiary undertaking, or

( b ) amounts attributable to dealings with or interests in any subsidiary undertaking of the undertaking,

the aggregate amounts within sub-paragraphs (a) and (b) respectively, shall be shown as separate items, in the balance sheet.

Miscellaneous matters

• (2) Where any outstanding loans made under the authority of section 60 of the Principal Act, other than subsection (13) (a) of that section (which relates to various cases of financial assistance by an undertaking for purchase of its own shares) are included under any item shown in the undertaking's balance sheet, the aggregate amount of those loans shall be disclosed for each item in question.

• (3) The aggregate amount which is recommended for distribution by way of dividend shall be stated.

• (4) Particulars of any restriction on profits available for distribution by virtue of section 224 (2)(b)(i) of the Act of 1990 shall be stated.

Information supplementing the profit and loss account

Separate statement of certain items of income and expenditure

( a ) the amount of the interest on or any similar charges in respect of -

• (i) bank loans and overdrafts, and loans made to the undertaking (other than bank loans and overdrafts) which -

• (I) are repayable otherwise than by instalments and fall due for repayment before the end of the period of five years beginning with the day next following the end of the financial year, or

• (II) are repayable by instalments the last of which falls due for payment before the end of that period,

and

• (ii) loans of any other kind made to the undertaking:

Provided that this sub-paragraph shall not apply to interest or charges on loans to the undertaking from group undertakings, but shall apply to interest or charges on all loans, whether made on the security of debentures or not;

( b ) the amounts respectively set aside for redemption of share capital and for redemption of loans;

( c ) the amount of income from listed and unlisted investments;

( d ) the amount of the remuneration of the auditors and the expenses of the auditors;

( e ) the aggregate amounts of the emoluments of, and compensation in respect of loss of office to, directors and compensation paid to past directors.

Particulars of tax

• (2) Particulars shall be given of any special circumstances which affect liability in respect of taxation of profits, income or capital gains for the financial year concerned or liability in respect of taxation of profits, income or capital gains for succeeding financial years.

• (3) The following amounts shall be stated:

( a ) the amount of the charge for corporation tax;

( b ) if the amount of the charge to corporation tax would have been greater but for relief from double taxation, the amount which it would have been but for such relief;

( c ) the amount of the charge for income tax; and

( d ) the amount of the charge for taxation payable outside the state of profits, income and (so far as charged to revenue) capital gains.

These amounts shall be stated separately in respect of each of the amounts which is shown under the following items in the profit and loss account, that is to say item III.9 (tax on profit or loss on ordinary activities) and item III.14 (tax on extraordinary profit or loss).

Particulars of business

( a ) gross premiums written,

( b ) gross premiums earned,

( c ) gross claims incurred,

( d ) gross operating expenses, and

( e ) the reinsurance balance.

• (2) The amounts required to be disclosed by sub-paragraph (1) shall be broken down between direct insurance and reinsurance acceptances, if reinsurance acceptances amount to 10 per cent or more of gross premiums written.

• (3) Subject to sub-paragraph (4), the amounts required to be disclosed by sub-paragraphs (1) and (2) with respect to direct insurance shall be further broken down into the following groups of classes —

( a ) accident and health,

( b ) motor third party liability,

( c ) motor other classes,

( d ) marine, aviation and transport,

( e ) fire and other damage to property

( f ) third-party liability,

( g ) credit and suretyship

( h ) legal expenses,

( i ) assistance, and

( j ) miscellaneous,

where the amount of the gross premiums written in direct insurance for each such group exceeds ten million ECU's.

• (4) The amounts relating to the three largest groups of classes in an undertaking's business shall in any event be disclosed.

• (a) gross premiums written, and

• (b) the reinsurance balance.

• (2) The notes relating to gross premiums written shall be broken down between direct insurance and reinsurance acceptances, where reinsurance acceptances amount to 10 per cent or more of gross premiums written, and within direct insurance shall be broken down to indicate—–

• (a) (i) individual premiums,

• (ii) premiums under group contracts,

• (b) (i) periodic premiums,

• (ii) single premiums,

• (c) (i) premiums from non-participating contracts,

• (ii) premiums from participating contracts,

• (iii) premiums from contracts where the investment risk is borne by policy holders.

• (3) Disclosures of any amount required by clause (a), (b) or (c) of sub-paragraph (2) shall not be required where that amount does not exceed 10 per cent of the gross premiums written in direct insurance.

• (a) in the member state of the European Union where there is situated its head office,

• (b) in the other member states of the European Union, and

• (c) in other countries.

• (2) Disclosure of any figure referred to in sub-paragraph (1) above shall not be required if it does not exceed 5 per cent of total gross premiums.

Commissions

Particulars of staff

• (a) the average number of persons employed by the undertaking in the financial year, and

• (b) the average number of persons employed within each category of persons employed by the undertaking.

• (2) The average number required by clause (a) or (b) of sub-paragraph (1) shall be determined by dividing the relevant annual number by the number of weeks in the financial year.

• (3) For the purposes of this paragraph, the relevant annual number shall be determined by ascertaining for each week in the financial year–

• (a) for the purpose of sub-paragraph (1)(a), the number of persons employed under contracts of service by the undertaking in that week, whether throughout the week or not, and

• (b) for the purpose of sub-paragraph (1)(b), the number of persons in the category in question of persons so employed,

and, in either case, adding together all the weekly numbers.

• (4) In respect of all persons employed by the undertaking during the financial year who are taken into account in determining the relevant annual number for the purpose of sub-paragraph (1)(a) there shall also be stated the aggregate amounts respectively of—

• (a) wages and salaries paid or payable in respect of that year to those persons,

• (b) social welfare costs incurred by the undertaking on their behalf, and

• (c) other pension costs so incurred,

save in so far as those amounts or any of them are stated in the profit and loss account.

• (5) The categories of person employed by the undertaking by reference to which the number required to be disclosed by sub-paragraph (1)(b) is to be determined shall be such as the directors may select, having regard to the manner in which the undertaking's activities are organised.

Miscellaneous matters

• (2) Particulars shall be given of any extraordinary income or charges arising in the financial year.

• (3) The effect shall be stated of any transactions that are exceptional by virtue of size or incidence though they fall within the ordinary activities of the undertaking.

PART IV FORM AND CONTENT OF GROUP ACCOUNTS

CHAPTER 1 General Rules

• (2) In particular, for the purpose of note 13 to the balance sheet format (which is set out in Chapter 2 of Part I of this Schedule) and paragraphs 18(6) and 19 of Part III of this Schedule as it applies to group accounts—–

• (a) any subsidiary undertakings of the parent undertaking not included in the consolidation shall be treated as subsidiary undertakings of the group, and

• (b) if the parent undertaking is itself a subsidiary undertaking, the group shall be treated as a subsidiary undertaking of any parent undertaking of that undertaking, and the reference to fellow-subsidiary undertakings shall be construed accordingly.

• (2) A subsidiary undertaking may be excluded from consolidation if its inclusion is not material for the purpose of giving a true and fair view, but two or more undertakings may be excluded only if they are not material taken together.

• (3) In addition, a subsidiary undertaking may be excluded from consolidation where—–

• (a) severe long-term restrictions substantially hinder the exercise of the rights of the parent undertaking over the assets or management of that undertaking, or

• (b) the information necessary for the preparation of group accounts cannot be obtained without disproportionate expense or undue delay, or

• (c) the interest of the parent undertaking is held exclusively with a view to subsequent resale and the undertaking has not previously been included in consolidated group accounts prepared by the parent undertaking.

• (4) Subject to sub-paragraph (6), where the activities of one or more subsidiary undertakings are so different from those of other undertakings to be included in the consolidation that their inclusion would be incompatible with the obligation to give a true and fair view, those undertakings shall be excluded from consolidation.

• (5) Any application of sub-paragraph (4) and the reasons therefor shall be disclosed in the notes on the group accounts.