The Companies Act 1985 (Insurance Companies Accounts) Regulations 1993

• (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) below, the amounts required to be disclosed by sub-paragraphs (1) and (2) above 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 10 million ECUs.

• (4) The company shall in any event disclose the amounts relating to the three largest groups of classes in its business.

76

• (1) As regards long term business, the company shall disclose—

• (a) gross premiums written, and

• (b) the reinsurance balance.

• (2) Subject to sub-paragraph (3) below—

• (a) gross premiums written shall be broken down between those written by way of direct insurance and those written by way of reinsurance; and

• (b) gross premiums written by way of direct insurance shall be broken down —

• (i) between individual premiums and premiums under group contracts;

• (ii) between periodic premiums and single premiums; and

• (iii) between premiums from non-participating contracts, premiums from participating contracts and premiums from contracts where the investment risk is borne by policy holders.

• (3) Disclosure of any amount referred to in sub-paragraph (2)(a) or (2)(b)

• (i) ,

• (ii) or

• (iii) above shall not be required if it does not exceed 10 per cent. of the gross premiums written or (as the case may be) of the gross premiums written by way of direct insurance.

77

• (1) Subject to sub-paragraph (2) below, there shall be disclosed as regards both general and long term business the total gross direct insurance premiums resulting from contracts concluded by the company —

• (a) in the member State of its head office,

• (b) in the other member States, and

• (c) in other countries.

• (2) Disclosure of any amount referred to in sub-paragraph (1) above shall not be required if it does not exceed 5 per cent.of total gross premiums. Commissions 78. There shall be disclosed the total amount of commissions for direct insurance business accounted for in the financial year, including acquisition, renewal, collection and portfolio management commissions.

Particulars of staff

79

• (1) The following information shall be given with respect to the employees of the company—

• (a) the average number of persons employed by the company in the financial year; and

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

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

• (3) The relevant annual number shall be determined by ascertaining for each week in the financial year —

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

• (b) for the purposes 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 company during the financial year who are taken into account in determining the relevant annual number for the purposes 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 security costs incurred by the company 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 company 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 company’s activities are organised.

Miscellaneous matters

80

• (1) Where any amount relating to any preceding financial year is included in any item in the profit and loss account, the effect shall be stated.

• (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 company.

Chapter IV — Interpretation of Part I

General

81

• (1) The following definitions apply for the purposes of this Part of this Schedule and its interpretation—

• “the 1982 Act” means the Insurance Companies Act 1982;

• “fungible assets” means assets of any description which are substantially indistinguishable one from another;

• “general business” has the same meaning as in the 1982 Act;

• “lease” includes an agreement for a lease;

• “listed investment” means an investment listed on a recognised stock exchange, or on any stock exchange of repute outside Great Britain and the expression “unlisted investment” shall be construed accordingly;

• “long lease” means a lease in the case of which the portion of the term for which it was granted remaining unexpired at the end of the financial year is not less than 50 years;

• “long term business” has the same meaning as in the 1982 Act;

• “long term fund” means the fund or funds maintained by a company in respect of its long term business in accordance with the provisions of the 1982 Act;

• “policy holder” has the same meaning as in the 1982 Act;

• “provision for unexpired risks” means the amount set aside in addition to unearned premiums in respect of risks to be borne by the company after the end of the financial year, in order to provide for all claims and expenses in connection with insurance contracts in force in excess of the related unearned premiums and any premiums receivable on those contracts;

• “short lease” means a lease which is not a long lease.

• (2) In this Part of this Schedule the “ECU” means the unit of account of that name defined in Council Regulation (EEC) No.3180/78 as amended.

The exchange rates as between the ECU and the currencies of the member States to be applied for each financial year shall be the rates applicable on the last day of the preceding October for which rates for the currencies of all the member States were published in the Official Journal of the Communities.

Loans

82

For the purposes of this Part of this Schedule a loan or advance (including a liability comprising a loan or advance) is treated as falling due for repayment, and an instalment of a loan or advance is treated as falling due for payment, on the earliest date on which the lender could require repayment or (as the case may be) payment, if he exercised all options and rights available to him.

Materiality

83

For the purposes of this Part of this Schedule amounts which in the particular context of any provision of this Part are not material may be disregarded for the purposes of that provision.

Provisions

84

For the purposes of this Part of this Schedule and its interpretation —

• (a) references in this Part to provisions for depreciation or diminution in value of assets are to any amount written off by way of providing for depreciation or diminution in value of assets;

• (b) any reference in the profit and loss account format or the notes thereto set out in Section B of this Part to the depreciation of, or amounts written off, assets of any description is to any provision for depreciation or diminution in value of assets of that description; and

• (c) references in this Part to provisions for liabilities or charges (other than provisions referred to in paragraphs 43 to 53 above) are to any amount retained as reasonably necessary for the purpose of providing for any liability or loss which is either likely to be incurred, or certain to be incurred but uncertain as to amount or as to the date on which it will arise.

Scots land tenure

85

In the application of this Part of this Schedule to Scotland—

• “land of freehold tenure” means land in respect of which the company is the proprietor of the dominium utile or, in the case of land not held on feudal tenure, is the owner;

• “land of leasehold tenure” means land of which the company is the tenant under a lease;

and the reference to ground-rents, rates and other outgoings includes feu-duty and ground annual.

Staff costs

86

For the purposes of this Part of this Schedule and its interpretation —

• (a) “Social security costs” means any contributions by the company to any state social security or pension scheme, fund or arrangement;

• (b) “Pension costs” includes any other contributions by the company for the purposes of any pension scheme established for the purpose of providing pensions for persons employed by the company, any sums set aside for that purpose and any amounts paid by the company in respect of pensions without first being so set aside; and

• (c) any amount stated in respect of either of the above items or in respect of the item “wages and salaries” in the company’s profit and loss account shall be determined by reference to payments made or costs incurred in respect of all persons employed by the company during the financial year who are taken into account in determining the relevant annual number for the purposes of paragraph 79(1)(a) above.

Part II — Consolidated Accounts

Schedule 4A to apply Part I of this Schedule with modifications

1

• (1) In its application to insurance groups, Schedule 4A shall have effect with the following modifications.

• (2) In paragraph 1—

• (a) for the reference in sub-paragraph (1) to the provisions of Schedule 4 there shall be substituted a reference to the provisions of Part I of this Schedule modified as mentioned in paragraph 2 below;

• (b) for the reference in sub-paragraph (2) to paragraph 59 of Schedule 4 there shall be substituted a reference to paragraphs 70(6) and 71 of Part I of this Schedule; and

• (c) sub-paragraph (3) shall be omitted.

• (3) In paragraph 2(2)(a), for the words “three months” there shall be substituted the words “six months”.

• (4) In paragraph 3, after sub-paragraph (1) there shall be inserted the following sub-paragraphs—

(1A) Sub-paragraph (1) shall not apply to those liabilities items the valuation of which by the undertakings included in a consolidation is based on the application of provisions applying only to insurance undertakings, nor to those assets items changes in the values of which also affect or establish policy holders' rights. (1B) Where sub-paragraph (1A) applies, that fact shall be disclosed in the notes on the consolidated accounts.

• (5) For sub-paragraph (4) of paragraph 6 there shall be substituted the following sub-paragraph—

(4) Sub-paragraphs (1) and (2) need not be complied with— (a) where a transaction has been concluded according to normal market conditions and a policy holder has rights in respect of that transaction, or (b) if the amounts concerned are not material for the purpose of giving a true and fair view. (5) Where advantage is taken of sub-paragraph (4)(a) above that fact shall be disclosed in the notes to the accounts, and where the transaction in question has a material effect on the assets, liabilities, financial position and profit or loss of all the undertakings included in the consolidation that fact shall also be so disclosed.

• (6) In paragraph 17—

• (a) in sub-paragraph (1), for the reference to Schedule 4 there shall be substituted a reference to Part I of this Schedule;

• (b) in sub-paragraph (2), paragraph (a) and, in paragraph (b), the words “in Format 2” shall be omitted;

• (c) in sub-paragraph (3), for paragraphs (a) to (d) there shall be substituted the words “between items 10 and 11 in section III”;

• (d) in sub-paragraph (4), for paragraphs (a) to (d) there shall be substituted the words “between items 14 and 15 in section III”; and

• (e) for sub-paragraph (5) there shall be substituted the following sub-paragraph—

(5) Paragraph 2(3) of Part I of Schedule 9A (power to combine items) shall not apply in relation to the additional items required by the foregoing provisions of this paragraph.

• (7) In paragraph 18, for the reference to paragraphs 17 to 19 and 21 of Schedule 4 there shall be substituted a reference to paragraphs 31 to 33 and 36 of Part I of this Schedule.

• (8) In paragraph 21—

• (a) in sub-paragraph (1), for the reference to Schedule 4 there shall be substituted a reference to Part I of this Schedule; and

• (b) for sub-paragraphs (2) and (3) there shall be substituted the following sub-paragraphs—

(2) In the Balance Sheet Format, Asset item C.II.3 (participating interests) shall be replaced by two items, “Interests in associated undertakings” and “Other participating interests”. (3) In the Profit and Loss Account Format, items II.2(a) and III.3(a) (income from participating interests, with a separate indication of that derived from group undertakings) shall each be replaced by the following items— (a) “Income from participating interests other than associated undertakings, with a separate indication of that derived from group undertakings”, which shall be shown as items II.2(a) and III.3(a), and (b) “Income from associated undertakings”, which shall be shown as items II.2(aa) and III.3(aa).

• (9) In paragraph 22(1), for the reference to paragraphs 17 to 19 and 21 of Schedule 4 there shall be substituted a reference to paragraphs 31 to 33 and 36 of Part I of this Schedule.

Modifications of Part I of this Schedule for purposes of paragraph 1

2

• (1) For the purposes of paragraph 1 above, Part I of this Schedule shall be modified as follows.

• (2) The information required by paragraph 10 need not be given.

• (3) In the case of general business, investment income, expenses and charges may be disclosed in the non-technical account rather than in the technical account.

• (4) In the case of subsidiary undertakings which are not authorised to carry on long term business in Great Britain, notes (8) and (9) to the profit and loss account format shall have effect as if references to investment income, expenses and charges arising in the long term fund or to investments attributed to the long term fund were references to investment income, expenses and charges or (as the case may be) investments relating to long term business.

• (5) In the case of subsidiary undertakings which do not have a head office in Great Britain, the computation required by paragraph 46 shall be made annually by an actuary or other specialist in the field on the basis of recognised actuarial methods.

• (6) The information required by paragraphs 75 to 78 need not be shown.

SCHEDULE 2 — Minor and Consequential Amendments of 1985 Act

1

In section 228(2)(b) of the 1985 Act[^f00008] (exemption for parent companies included in accounts of a larger group), after the words “the Bank Accounts Directive (86/635/EEC)” there shall be inserted the words “or the Insurance Accounts Directive (91/674/EEC)”.

2

In section 254(3) of the 1985 Act[^f00009] (exemption from requirements to deliver accounts and reports), after the word “banking”, in both places where it occurs, there shall be inserted the words “or insurance”.

3

Section 255C of the 1985 Act[^f00010] (directors' report where accounts prepared in accordance with special provisions) shall be omitted.

4

In section 260(6) of the 1985 Act[^f00011] (participating interests), for the words “and in Chapter I of Part I of Schedule 9” there shall be substituted the words “, Chapter I of Part I of Schedule 9 and Chapter I of Part I of Schedule 9A”.

5

In the index of defined expressions set out in section 262A of the 1985 Act[^f00012] —

• (a) there shall be inserted at the appropriate places the following entries—

“the 1982 Act” (in Schedule 9A)	paragraph 81 of Part I of that Schedule
“general business” (in Schedule 9A)	paragraph 81 of Part I of that Schedule
“long term business” (in Schedule 9A)	paragraph 81 of Part I of that Schedule
“long term fund” (in Schedule 9A)	paragraph 81 of Part I of that Schedule
“policy holder” (in Schedule 9A)paragraph 81 of Part I of that Schedule
“provision for unexpired risks” (in Schedule 9A)	paragraph 81 of Part I of that Schedule;

• (b) in the entry relating to “historical cost accounting rules”, there shall be inserted at the appropriate place the words—

—in Schedule 9A	paragraph 20(1) of Part I of that Schedule

• (c) for so much of the entry relating to “land of freehold tenure and land of leasehold tenure” as relates to Schedule 9A there shall be substituted the words—

—in Schedule 9A	paragraph 85 of Part I of that Schedule

• (d) for so much of the entry relating to “lease, long lease and short lease” as relates to Schedule 9A there shall be substituted the words—

—in Schedule 9A	paragraph 81 of Part I of that Schedule

• (e) for so much of the entry relating to “listed investment” as relates to Schedule 9A there shall be substituted the words—

—in Schedule 9A	paragraph 81 of Part I of that Schedule

• (f) in the entry relating to “pension costs”, there shall be inserted at the appropriate place the words—

—in Schedule 9A	paragraph 86(b) and (c)of Part I of that Schedule

• (g) for so much of the entry relating to “provision” as relates to Schedule 9A there shall be substituted the words—

—in Schedule 9A	paragraph 84 of Part I of that Schedule

• (h) in the entry relating to “social security costs”, there shall be inserted at the appropriate place the words—

—in Schedule 9A	paragraph 86(a) and (c) of Part I of that Schedule

6

In section 268(1) of the 1985 Act (realised profits of insurance company with long term business), for paragraph (a) there shall be substituted the following paragraph—

(a) any amount included in the profit and loss account of the company which represents a surplus in the fund or funds maintained by it in respect of that business and which has not been allocated to policy holders under section 30 of that Act, and

7

Schedule 10 to the 1985 Act[^f00013] (directors' report where accounts prepared in accordance with special provisions for insurance companies or groups) shall be omitted.

8

In Schedule 11 to the 1985 Act[^f00014] (modifications of Part VIII where company’s accounts prepared in accordance with special provisions for banking or insurance companies), for paragraphs 7 to 13[^f00015] there shall be substituted the following paragraphs—

(7) Section 264(2) shall apply as if the reference to paragraph 89 of Schedule 4 were a reference to paragraph 84(c) of Part I of Schedule 9A. (8) Section 269 shall apply as if the reference to paragraph 20 of Schedule 4 in subsection (2)(b) were a reference to paragraph 35 of Part I of Schedule 9A. (9) Sections 270(2) and 275 shall apply as if the references to paragraphs 88 and 89 of Schedule 4 were references to paragraph 84 of Part I of Schedule 9A. (10) Sections 272 and 273 shall apply as if the references in section 272(3) to section 226 and Schedule 4 were references to section 255 and Part I of Schedule 9A. (11) Section 276 shall apply as if the references to paragraphs 12(a) and 34(3)(a) of Schedule 4[^f00016] were references to paragraphs 16(a) and 29(3)(a) of Part I of Schedule 9A.

9

In Schedule 22 to the 1985 Act (provisions applying to unregistered companies), in the entry relating to Part VII[^f00017], in column 1, the words from “(except sub-paragraphs (a) to (d)” to “paragraph 10)” shall be omitted.

Signed

Neil Hamilton — Parliamentary Under-Secretary of State for Corporate Affairs, — 18th December 1993

Explanatory note

(This note is not part of the Regulations)

1 These Regulations implement Council Directive 91/674/EEC Official Journal No. L374 of 31.12.91, pages 7 to 31, on the annual accounts and consolidated accounts of insurance undertakings, in so far as that Directive is applicable to bodies corporate to which Part VII of the Companies Act 1985 (“the 1985 Act”) applies.

2 Regulations 2 and 3 amend sections 255 and 255A of the 1985 Act which make special provisions for the accounts of banking and insurance companies and groups. They introduce a requirement for insurance companies to prepare accounts in accordance with the new Schedule 9A, and define which companies are to prepare group accounts under the special provisions with respect to insurance groups.

3 Regulation 4 substitutes as new Schedule 9A to the 1985 Act, Schedule 1 to the Regulations. The new Schedule 9A sets out the form and content of accounts of insurance companies and groups. Part I lays down rules governing the content of the individual accounts of insurance companies, including prescribed formats to be followed, the valuation rules to be applied, the rules for determining provisions and the disclosures to be made in the notes to the accounts. Part II of new Schedule 9A adapts the general rules of Part VII of the 1985 Act with respect to the consolidated accounts of a company to the special circumstances of insurance groups.

4 Regulation 5 of, and Schedule 2 to, the Regulations make minor and consequential amendments to the 1985 Act and to the Companies Act 1989 (Commencement No. 4 and Transitional and Saving Provisions) Order 1990 (S. I. 1990/355).

5 Regulation 6 specifies certain companies which, under the terms of the Directive, may continue to prepare accounts under Part VII of the 1985 Act, as it applies to insurance companies and groups, without the amendments effected by these Regulations.

6 Regulation 7 sets out a transitional provision whereby a company may prepare accounts in accordance with the unamended Part VII, as that Part applies to insurance companies and groups, rather than under the amended provisions for a financial year commencing before 23rd December 1994.

Footnotes

[^f00001]: 1985 c. 6; section 257 was inserted into the 1985 Act by section 20 of the Companies Act 1989 (1989 c. 40).

[^f00002]: Section 255 was inserted into the 1985 Act (in place of that inserted by section 18 of the Companies Act 1989) by regulation 3 of the Companies Act 1985 (Bank Accounts) Regulations 1991 (S.I. 1991/2705) (“the Bank Accounts Regulations”).

[^f00003]: Section 255A was inserted into the 1985 Act (in place of that inserted by section 18 of the Companies Act 1989) by regulation 3 of the Bank Accounts Regulations. Section 255A was amended by regulation 5 of the Companies Act 1985 (Disclosure of Branches and Bank Accounts) Regulations 1992 (S.I. 1992/3178).

[^f00004]: Parts I and II of Schedule 9 to the 1985 Act were formed into a new Schedule numbered 9A by regulation 5(1) of the Bank Accounts Regulations.

[^f00005]: S.I. 1990/355.

[^f00006]: Official Journal No. L228 of 16.8.1973, page 3.

[^f00007]: Official Journal No. L63 of 13.3.1979, page 1.

[^f00008]: Section 228 was inserted into the 1985 Act by section 5 of the Companies Act 1989, and amended by regulation 4 of the Companies Act 1985 (Disclosure of Branches and Bank Accounts) Regulations 1992 (S.I.1992/3178).

[^f00009]: Section 254(3) was inserted into the 1985 Act by section 17 of the Companies Act 1989, and was amended by paragraph 1 of Schedule 2 to the Bank Accounts Regulations and by regulation 10 of the Partnerships and Unlimited Companies (Accounts) Regulations 1993 (S.I.1993/1820).

[^f00010]: Section 255C was inserted into the 1985 Act by section 18 of the Companies Act 1989, and amended by regulation 4 of the Bank Accounts Regulations.

[^f00011]: Section 260 was inserted into the 1985 Act by section 22 of the Companies Act 1989, and was amended by paragraph 2 of Schedule 2 to the Bank Accounts Regulations.

[^f00012]: Section 262A was inserted into the 1985 Act by section 22 of the Companies Act 1989, and was amended by paragraph 3 of Schedule 2 to the Bank Accounts Regulations.

[^f00013]: Schedule 10 was substituted by section 18 of the Companies Act 1989, and amended by regulation 6 of, and paragraph 5 of Schedule 2 to, the Bank Accounts Regulations.

[^f00014]: Schedule 11 has been amended by section 23 of, and paragraph 21 of Schedule 10 to, the Companies Act 1989, and by regulation 7 of, and Schedule 3 to, the Bank Accounts Regulations.

[^f00015]: Paragraphs 1 to 7 of Schedule 11 were numbered 7 to 13 and amended by regulation 7 of, and paragraph 1(3) of Schedule 3 to, the Bank Accounts Regulations.

[^f00016]: The references to paragraphs 12(a) and 34(3)(a) were inserted by section 23 of, and paragraph 7 of Schedule 10 to, the Companies Act 1989.

[^f00017]: The entry in Schedule 22 relating to Part VII was amended by regulation 7 of, and paragraph 2 of Schedule 3 to, the Bank Accounts Regulations.