Legalize / United Kingdom / Statutory-Instrument

The Insurance Companies (Accounts and Statements) Regulations 1996

Type Statutory-Instrument

Publication 1996-03-24

State In force

Department Queen's Printer of Acts of Parliament

Source legislation.gov.uk

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(8) In Part I of Schedule 6 to the 1983 Regulations (certificates by directors etc.), at the end of sub-paragraph (d) of paragraph 1 for the full stop there shall be substituted a semi-colon and there shall be inserted the following sub-paragraph—

and (e) whether the value of the company’s assets and the amount of its liabilities have been determined in accordance with paragraph (2)(a) or paragraph (2)(b) of regulation 4 above.

Revocations

35

The Regulations mentioned in Schedule 7 below are hereby revoked to the extent mentioned in the third column of that Schedule.

SCHEDULE 1 — BALANCE SHEET AND PROFIT AND LOSS ACCOUNT

(Forms 9 to 17)

1

(1) All the Forms included in the part of the return to which this Schedule relates (Forms 9 to 17) are to be laid out as shown in this Schedule, except that the instructions to Forms need not be reproduced.

(2) All amounts, descriptions or other text required to be shown as supplementary notes to a Form shall not be presented on the face of that Form, but shall be presented as a separate statement. The title of that statement shall identify the Form to which it relates.

Completion of Forms

2

Where “source” appears at the head of a column on a Form, the information to be included in the preceding columns of a particular line is to be taken from those items in the returns to which reference is made on that line in the column headed “source”. No entries are to be made in the column headed “source”.

3

(1) The company registration number to be entered in every Form shall be such number as may be agreed between the company and the Secretary of State.

(2) Boxes marked “GL/UK/CM” shall be completed by inserting—

(a) “UK” in the case of a Form which is—

(i) prepared by an EFTA company or an EEA deposit company in respect of long term or general business carried on through a branch in the United Kingdom; or

(ii) prepared by an external company (other than a pure reinsurer) in respect of long term or general business carried on through a branch in the United Kingdom; or

(iii) prepared by a Swiss general insurance company in respect of general business carried on through a branch in the United Kingdom; or

(b) “CM” in the case of a Form which is prepared by a United Kingdom deposit company in respect of a long term or general business carried on through branches in the EEA States concerned; or

(3) Boxes marked “Period ended” should be completed so as to show, in numerals, the date of the last day of the financial year in question.

(4) No entry should be made in a box which is shaded or is not labelled.

(5) In the Forms “this financial year” means the financial year in question.

Currency

4

The value of any asset or the amount of any liability denominated in a currency other than sterling shall be expressed in sterling as if conversion had taken place at the closing middle rate on the last day for which the appropriate rate is available in the financial year to which the asset or liability relates.

5

(1) The amount of any income or expenditure shall be expressed in sterling using such bases of conversion as are in accordance with generally accepted accounting practice.

(2) The bases of conversion adopted shall be stated by way of supplementary note to Form 16 or, if there is no Form 16, by way of supplementary note to Form 40.

Presentation of amounts

6

Negative amounts shall be shown between round brackets.

7

Where in any Form an amount which is shown as brought forward from a previous year differs from the corresponding amount shown as carried forward from that year and the difference is not due solely to the use of a different rate to express other currencies in sterling, an explanation of the reason for the difference shall be given by way of a supplementary note to that Form.

8

(1) Except to the extent permitted by sub-paragraph (2) of this paragraph, amounts due to or from the company shall be shown gross.

(2) In calculating amounts due to or from the company—

(a) amounts due from any person may, unless expressly provided otherwise, be included net of amounts which are due to that person, except that such amounts may be set off against each other under generally accepted accounting practice; and

(b) amounts due to any person may, unless expressly provided otherwise, be included net of amounts which are due from that person, except that such amounts may be set off against each other under generally accepted accounting practice.

(3) If amounts shown include amounts calculated on the basis set out in sub-paragraph (2) above, a supplementary note to Form 13 to that effect shall be provided.

(4) This paragraph does not apply to Form 17.

9

All amounts are to be shown to the nearer £1,000.

Premiums

10

(1) Notwithstanding the requirements of the shareholder accounts rules, amounts included in Forms 11 and 12 in respect of—

(a) gross premiums receivable;

(b) claims paid;

(d) reinsurance recoveries,

shall be determined in accordance with Schedules 3 to 5 to the Insurance Companies Regulations.

(2) Where any amount included in Form 11 or 12 pursuant to paragraph (1) above differs from the aggregate of the corresponding amounts included in Forms 21, 22, 24 and 25, there shall be stated by way of supplementary note to Form 11 or 12, as the case may be—

(a) the amount of such difference; and

(b) an explanation for such difference.

Counterparty exposure

11

(1) There shall be given by way of a supplementary note to Form 13—

(a) the maximum extent to which, in accordance with any investment guidelines operated by the company, it was permitted to be exposed to any one counterparty during the financial year in question;

(b) the maximum extent to which, in accordance with such guidelines, it was permitted to be exposed to any one counterparty, other than by way of exposure to an approved counterparty, during the financial year in question; and

(2) In each case where the exposure of the company to a counterparty at the end of the financial year in question exceeds 5 per cent. of its long term business amount or general business amount, as appropriate—

(a) the amount of that exposure; and

(b) the nature of the assets held which give rise to that exposure,

shall be stated by way of a supplementary note to Form 13.

(3) There shall be stated by way of supplementary note to Form 13 the aggregate value of any rights to which paragraph 14 of Part I of Schedule 12 to the Insurance Companies Regulations applies[^f00042].

Provision for adverse changes

12

There shall be stated by way of supplementary note to Form 14 or 15 the methods and assumptions used to determine the amount of any provision made pursuant to regulation 61 of the Insurance Companies Regulations or, if there is no such provision, the methods and assumptions used to determine that no provision is required.

Liabilities

13

(1) Subject to paragraph (3) below, the following information shall be given by way of a supplementary note to Form 14 or 15—

(a) in the case of any charge over assets of the company, the particulars specified in sub-paragraph (2) below or a statement that there are no such charges;

(b) the total potential liability, and the amount provided for that liability, to taxation on capital gains which might arise if the company disposed of its assets, or a statement that there is no such potential liability;

(c) a brief description of any other liabilities being contingent liabilities not included in Form 14 or 15 (other than liabilities arising under an inward contract of insurance or reinsurance) including, where practicable, the amounts or estimated amounts of those liabilities, or a statement that there are no such contingent liabilities;

(d) a brief description of any guarantee, indemnity or other contractual commitment, effected by the company other than in the ordinary course of its insurance business, in respect of the existing or future liabilities of any related companies, including—

(i) the maximum liability of the company specified in such guarantee, indemnity or contractual commitment or, where no such amount is specified, a statement to that effect;

(ii) the amount of any provision made in respect of such liability; and

(iii) the amount reported under sub-paragraph (c) above in respect of such liability,

or a statement that there are no such guarantees, indemnities or contractual commitments;

(e) a description of any other uncertainty where such a description is, in the opinion of the directors, necessary for a proper understanding of the financial position of the company.

(2) The particulars referred to in sub-paragraph (1)(a) above are—

(a) the nature of the charge, including a brief description of the terms which are relevant to securing the prior claim of any person to assets which are subject to the charge;

(b) for each line in Form 13, the amount included in respect of assets which are subject to the charge; and

(3) Sub-paragraph (1)(a) and (c) above may be disregarded by a company in the case of—

(a) one or more charges over assets which are attributable to either the long term or the general business assets and whose aggregate value (as shown on Form 13) does not exceed 2½ per cent. of the long term or general business amount, as the case may be; or

(b) one or more contingent liabilities whose aggregate value does not exceed 2½ per cent. of the long term or general business amount, as the case may be.

(4) Sub-paragraph (1)(d) above may be disregarded by a company in respect of one or more guarantees, indemnities or contractual commitments where the aggregate of the maximum liabilities specified in such guarantees, indemnities or contractual commitments does not exceed 2½ per cent. of the long term or general business amount, as the case may be.

(5) For the purposes of this paragraph, “charge” shall include any arrangement whatsoever, whether contractual or otherwise, which operates to secure the prior claim of any person over general creditors to any assets on a winding up of the company.

Reconciliation

14

(1) For a United Kingdom company an explanation shall be given by way of supplementary note to Form 10 reconciling—

(a) line 99 of Form 13 (category of assets “1”) less line 59 of Form 15; and

(b) the amount shown under balance sheet item A “capital and reserves” in the company’s accounts prepared pursuant to the shareholder accounts rules for the financial year in question.

(2) Where for a United Kingdom company there are no accounts pursuant to sub-paragraph 1(b) above (or the accounts have not yet been prepared), this shall be stated by way of supplementary note to Form 10.

Derivative contracts

15

Any derivative contract entered into by the company—

(a) the value of which is taken into account for the purposes of calculating benefits payable to policy holders under property linked contracts; or

(b) in order to match its liabilities in respect of the payment of index linked benefits, shall be excluded from Form 17.

16

Where, in respect of any derivative contract included in Form 17, assets have been transferred to or for the benefit of a company by way of variation margin there shall be stated by way of supplementary note to Form 17—

(a) the aggregate amount of any liability to repay such assets or equivalent assets;

(b) for each line in Form 13, the amount included in respect of such assets; and

(c) to what extent any amounts included in Form 13 have taken account of any requirement to repay such assets or equivalent assets.

17

If—

(a) the aggregate value of rights under contracts or in respect of assets, either of which have the effect of derivative contracts, exceeds 2½ per cent. of the aggregate value of assets shown at line 89 of Form 13; or

(b) the aggregate amount of liabilities under contracts or in respect of assets, either of which have the effect of derivative contracts, exceeds 2½ per cent. of the aggregate of the amounts shown in lines 21 to 47 of Form 14 or lines 31 to 51 of Form 15, as appropriate,

the corresponding value, if not zero, shall be stated (by way of supplementary note to Form 17) for each line in Form 13, 14 or 15 and paragraph 16 above shall apply to the company as if such contracts or assets had been included in Form 17.

SCHEDULE 2 — GENERAL BUSINESS: REVENUE ACCOUNT AND ADDITIONAL INFOR MATION

(Forms 20 to 39)

1

All the Forms included in the part of the return to which this Schedule relates (Forms 20 to 39) are to be laid out as shown in this Schedule, except that the instructions to Forms need not be reproduced.

2

The provisions of paragraph 1(2) and paragraphs 2 to 7 of Schedule 1 above shall, unless otherwise provided, also apply for the purposes of this Schedule.

Currency

3

(1) Notwithstanding the provisions of paragraph 2 above, amounts on Forms 26 to 29 submitted in accordance with regulation 11 above and on Forms 31, 32 and 34 submitted in accordance with regulation 13 above in respect of business carried on in any country other than the United Kingdom shall be shown in the currency of the country concerned, except that figures shall be shown in sterling in those columns and lines which the Forms indicate are always to contain figures expressed in sterling.

(2) For every currency other than sterling in which amounts are shown on the Forms referred to in sub-paragraph (1) above an entry shall be made on Form 36 to show the rate used to convert those amounts to sterling for inclusion elsewhere in the returns.

(3) Notwithstanding the provisions of paragraph 2 above, all amounts included in—

(a) columns 1, 2, 3 and 11 of all Forms 23, 26 and 27;

(b) columns 3 and 10 of any Form 31 or 32 prepared in respect of United Kindom or home foreign business,

shall be expressed in sterling as if conversion of every major currency had taken place at the closing middle rate on the last day for which the appropriate rate is available in the financial year in question.

(4) For the purposes of sub-paragraph (3) above, a major currency is—

(a) in the case of any business carried on in any overseas country, the currency of that country;

(b) in the case of any other business, United States dollars, Canadian dollars and any other currency which the company elects to treat as a major currency.

(5) A company need not apply sub-paragraph (3) above to amounts shown in any line of any of the Forms mentioned in that sub-paragraph representing an accident year or underwriting year ending before 23rd December 1996.

4

All amounts shown in sterling shall be shown to the nearer £1,000. Amounts in any other currency on Forms 26 to 29, 31, 32 and 34 shall be shown to the nearer 1,000 principal monetary units of that currency except that, where the rate of exchange of the currency in relation to sterling on the last day of the financial year in question exceeded 1,000 principal monetary units of that currency, the amounts shall be shown to the nearer 1,000,000 principal monetary units and the fact that this has been done shall be indicated by inserting “000,000” in the box labelled “Monetary units”. In other cases, this box shall be completed by inserting “000”.

5

(1) Where premiums are written by a company or claims are incurred by it under a reinsurance treaty—

(a) notwithstanding paragraphs 2 to 4 above, amounts shown on Forms 26 to 29 may be shown in sterling or in United States dollars or in Canadian dollars or in an appropriately weighted average of European currencies; and

(b) if in a financial year the proportion of gross premiums written, or of claims incurred by the company or outstanding from the company, in any one currency other than sterling, United States dollars or Canadian dollars exceeds 10 per cent. of such premiums or claims under all such treaties, Forms 26 to 29 may be prepared in that currency,

and where the provisions of this sub-paragraph have been applied in respect of a reinsurance treaty in relation to a financial year, those provisions shall be applied in the same manner in respect of that treaty in relation to any later financial year.

(2) An explanation by way of supplementary note to the Forms shall be given of the method by which the said average has been determined and of any change from the manner in which Forms 26 to 29 were prepared in respect of the preceding financial year.

Accounting classes

6

(1) Direct insurance and facultative reinsurance business shall be included in the return in accordance with the accounting classes, save that—

(a) where a company only undertakes business in accounting class 4 in respect of risks relating to hovercraft, it may include such business in accounting class 3 if it also undertakes business in that class;

(b) a company may include in accounting class 5 business covering liability for loss of, or damage to, goods in transit which would otherwise be included in accounting class 2, provided that the policy does not cover damage to vehicles except as a related and subsidiary provision within the meaning of section 1(2) and (4) of the Act; and

(2) Non-proportional treaty reinsurance business shall be included in accounting class 9 and proportional treaty reinsurance shall be included in accounting class 10 save that—

(a) a company may include in accounting class 11 treaty business falling within general business classes 1(p), 5, 6, 7, 11 and 12; and

(b) a company shall include in accounting class 9 proportional retrocessions of non-pro portional treaty reinsurance business.

7

Where a company includes business in another accounting class under sub-paragraph (1) or (2)(a) of paragraph 6 above, the following information shall be stated by way of a supplementary note to Form 20—

(a) the nature of any business included in another accounting class pursuant to the sub-paragraph in question; and

(b) the reason for such inclusion.

8

Boxes marked “Accounting class” shall be completed so as to show the number of the accounting class. “99” shall be shown in the case of the summary account in Form 20.

Premiums

9

In Forms 23, 26, 27, 31 and 32—

(a) gross premiums earned in respect of an accident year shall be such proportion of gross premiums written as is attributable to risks borne by the company during that accident year; and

(b) the reinsurers' share of premiums earned shall be attributed to the same accident years as the corresponding gross premiums earned, so as to calculate the net earned premium for each accident year.

10

In Forms 24, 25, 28, 29 and 34—

(a) gross premiums written in an underwriting year shall be the amount of such premiums arising in respect of contracts of insurance incepting during that underwriting year, whether or not they are received during that underwriting year; and

(b) the reinsurers' share of premiums written shall be attributed to the same underwriting years as the corresponding gross premiums written.

11

For the purposes of paragraphs 10 and 14 of this Schedule, where a company has acquired policies under a transfer approved by the Secretary of State under Schedule 2C to the Act[^f00043], the policies transferred to the company shall be taken to have incepted on the date of such transfer.

12

In all Forms to which this Schedule relates, amounts required to be shown in respect of premiums shall be shown before deduction for commissions.

Claims

13

(1) In Forms 23, 26, 27, 31 and 32, where an amount or number is required to be shown for claims in respect of an accident year, that amount or number shall be determined on the basis of claims arising from incidents occurring during that accident year.

(2) For the purposes of sub-paragraph (1) above, an incident giving rise to a claim under a claims-made policy shall be deemed to occur on the earlier of—

(a) the date on which it is notified in accordance with the terms of that policy; or

(b) the date on which the period for which cover is provided under that policy expires.

(3) For the purposes of sub-paragraph (1) above, where a company has assumed, pursuant to a contract, responsibility (whether wholly or in part) for the payment or reimbursement of claims made under policies effected by another insurance company, all incidents occurring prior to the date of such contract and giving rise to claims under those policies shall be deemed have occurred on the date of such contract.

(4) In the application of sub-paragraph (3) above, the reference to responsibility assumed by a company shall include responsibility assumed as a reinsurer or under a transfer approved by the Secretary of State under Schedule 2C to the Act; and in the case of such a transfer the date of the contract shall be taken to be the date of the transfer.

14

In Forms 24, 25, 28, 29 and 34, where an amount is required to be shown for claims in respect of an underwriting year, that amount shall be determined on the basis of claims arising under contracts of insurance incepting during that underwriting year.

15

In all Forms to which this Schedule relates, amounts required to be shown for claims shall not include amounts in respect of claims management costs.

UK and overseas business

16

(1) For each accounting class there shall be stated separately for business accounted for on an accident year basis and on an underwriting year basis the following by way of supplementary note to Form 20—

(a) the total gross premium written and the amounts attributable to UK and to overseas business; and

(b) the reinsurers' amount in respect of each of the amounts required to be stated under sub-paragraph (a) above.

(2) For the purposes of this Schedule gross premiums written shall be shown or included as UK premiums if, in the case of direct insurance or inwards facultative reinsurance, the contract of insurance was made in the United Kingdom or if, in the case of a reinsurance treaty, the cedant was a company having its head office in the United Kingdom or was a member of Lloyd's; and “overseas premiums” shall be construed accordingly.

Transfers of general business

17

(1) If, during the financial year, policies already effected by another insurance company have been transferred to the company, it shall state, in respect of each accounting class, the following by way of supplementary note to Form 23 and 24—

(a) the date of the transfer;

(b) whether the transfer was approved by the Secretary of State under Part II of Schedule 2C to the Act or was effected by novation;

(d) amounts required to be stated under sub-paragraph (c) above analysed by risk group and business category;

(e) the earliest and latest dates upon which the relevant policies incept; and

(f) whether or not any of the policies has a duration of longer than 12 months and, if so, the date by which all policies will have expired.

(2) Sub-paragraph (1) above shall not apply in respect of any transfer by way of novation unless the amounts mentioned in sub-paragraph (1)(c) exceed in aggregate 2½ per cent. of the company’s gross premium income for the financial year in question.

Unearned premiums

18

In Forms 21 and 25, the basis on which unearned premiums are calculated and the reason for adopting this basis shall be stated by way of supplementary note.

Provision for unexpired risks

19

(1) The amount included for the provision for unexpired risks in any Form 22 or 25 prepared in respect of an accounting class or business category shall be determined without taking into account any surplus expected to arise on the unexpired risks falling within other accounting classes or business categories.

(2) Where in determining the amount of the overall provision for unexpired risks (line 13 in Form 15 less line 62 in Form 13) credit has been taken for any aggregate surplus expected to arise on the unexpired risks falling in any accounting class, the amount of that credit shall be included as a negative amount at line 19 of Form 22 for that accounting class.

20

(1) Where the amount included at column 3 line 19 (provision for unexpired risks) in any Form 22 has been determined after taking into account expected investment return, the following shall be stated by way of supplementary note—

(a) the provision for unexpired risks before taking such investment return into account;

(b) the rates of investment return assumed; and

(c) the average interval between the end of the financial year in question and the date at which claims are expected to be settled in cash.

Cessation of business

21

(1) If the company has effected no new contracts of insurance of any one or more classes of general business during the financial year, the date on which the last new contract of each such class was effected shall be stated by way of supplementary note to Form 20.

(2) For the purposes of this paragraph and paragraph 22 below, a “new contract of insurance” is any contract of insurance effected by the company other than in fulfilment of its obligations under subsisting contracts of insurance.

Claims management costs

22

(1) In Forms 22 and 24, the basis used for the determination of amounts for claims management costs payable in the financial year in question and carried forward to the following financial year shall be stated by way of supplementary note.

(2) If, in respect of any accounting class—

(a) no amount for claims management costs is shown as being carried forward to the following financial year; and

(b) an amount for net claims is shown as being carried forward to that year,

the reason for anticipating that there will be no claims management costs incurred during the following financial years shall be included in the note required by sub-paragraph (1) above.

(3) If, within an accounting class, a company has ceased to effect new contracts of insurance during the financial year in question, the basis upon which any additional costs arising as a result of such cessation have been determined or the reason for anticipating that no such additional costs shall be incurred shall be included in the note required by sub-paragraph (1) above.

(4) Where the amount in respect of claims management costs carried forward included in any Form 22 or 24 has been determined after taking into account expected investment return, there shall be stated by way of supplementary note to that Form 22 or 24—

(a) the rates of investment return assumed; and

(b) the average interval between the end of the financial year in question and the date by which the claims management costs are expected to be expended.

Acquisition costs

23

The basis used for the determination of amounts for acquisition costs (other than commission) payable in the financial year in question and carried forward to the next financial year, as shown at line 22 of Form 22 and line 42 of Form 24, shall be stated by way of a supplementary note to those Forms.

Underwriting year accounting

24

(1) With reference to the financial year in question and in respect of each accounting class, the following information shall be stated by way of supplementary note to Form 24—

(a) the reason for accounting for such business on an underwriting year basis;

(b) the basis for distinguishing between such business and any other business falling within the same accounting class accounted for on an accident year basis;

(d) if the information provided in sub-paragraphs (a) to (c) above differs in respect of risks incepted in the financial year in question from risks of a similar description incepted in previous financial years, the reason for that difference.

(2) Where the provision for claims outstanding is set in respect of any business using the non-annual method, the note required by sub-paragraph (1)(a) above shall include the following information—

(a) the reason for using the non-annual method;

(b) the basis for distinguishing between such business and other business accounted for on an underwriting year basis falling within the same accounting class;

(c) the normal period for which an underwriting year is left open or, if that period differs for different types of business within an accounting class—

(i) the basis for distinguishing between the types of business; and

(ii) the normal period for each type; and

(d) where an underwriting year is left open for longer than the normal period, the reason for not closing the year.

(3) For the purposes of this Schedule—

(a) “non-annual method” refers to the method described by paragraph 52 of the shareholder accounts rules; and

(b) “closed year” refers to a year in respect of which the provision for claims outstanding previously set under the non-annual method has been replaced in accordance with the requirements of paragraph 52(4) of the shareholder accounts rules, and “year left open” and “closing a year” shall be construed accordingly.

Business managed together

25

(1) For the purposes of Forms 25 and 29, risks may be regarded as managed together if—

(a) they incept in the same financial year and are accounted for using the non-annual method; and

(b) they may be treated as managed together under generally accepted accounting practice.

(2) Where any amount is shown on Form 25 or 29 for the transfer of anticipated surplus, the following shall be stated by way of supplementary note to that Form—

(a) a description of the business in respect of which the anticipated surplus arises and of the business in respect of which the deficit to be offset arises (including in the case of Form 25 the risk groups or business categories into which such business falls); and

(b) the reason for treating the business as managed together.

Application of accounting practice

26

(1) Amounts in respect of inwards and outwards contracts of insurance shall be classified for inclusion in Forms 20 to 39 according to their economic substance in accordance with generally accepted accounting practice.

(2) Where amounts in respect of an inwards or outwards contract of insurance have been excluded from the revenue account, the following shall be shown by way of supplementary note to Form 20—

(a) a description of the terms of that contract;

(b) a description of the accounting treatment adopted and an explanation for adopting that treatment;

(d) a statement of the amounts in respect of that contract included in each Form prepared under this Schedule or Schedule 1 above.

(3) A company may elect to show the information required by sub-paragraph (1) above in respect of groups of contracts which were effected in the same financial year with substantially the same contract terms and in respect of which the same accounting treatment has been adopted.

Discounting

27

(1) Sheet 2 of Form 30 need only be completed if the provision for claims outstanding being discounted (before deduction for discounting) exceeds 25 per cent. of the total provision for claims outstanding (before deduction for discounting).

(2) Where in accordance with sub-paragraph (1) above no Sheet 2 is prepared—

(a) lines 21 and 29 of Sheet 1 need not be completed; and

(b) lines 11 to 20 need only be completed in respect of those currencies for which the provision for claims outstanding being discounted (before deduction for discounting) exceeds 25 per cent. of the total provision for that currency for claims outstanding (before deduction for discounting).

(3) For the purposes of Form 30 a major currency is a currency in respect of which the provision for claims outstanding (before deduction for discounting) is not less than 10 per cent. of the total provision for claims outstanding (before deduction for discounting).

(4) In Form 30 the value of an asset or liability which would be treated as an asset or liability in a particular currency for the purposes of regulation 27 of the Insurance Companies Regulations (disregarding regulation 32(1)) shall be shown in that currency.

(5) The following shall be stated by way of supplementary note to Form 30—

(a) the risk groups and business categories where adjustments for discounting have been made; and

(b) in respect of each such risk group or business category—

(i) the methods used in calculating the deduction for discounting;

(ii) the rate of interest used for the calculation of present values;

(iii) the expected average interval between the date for settlement of claims being discounted and the end of the financial year in question; and

(iv) the criteria adopted for estimating the period that will elapse before claims are settled.

Reinsurance

28

(1) Where the reinsurers' share of claims incurred (as stated in Form 22 or 25) includes amounts expected to be recovered from reinsurers more than twelve months after the payment of the underlying gross claims by the company, the following shall be stated by way of supplementary note to Form 22 or 25 (as appropriate)—

(a) the amount of such recoveries; and

(b) the accounting treatment which has been adopted in respect of discounting such recoveries.

Risk groups

29

(1) Subject to sub-paragraph (2) below, the name given in Forms 31, 32 and 34 to a risk group shall include a description of the risks within an accounting class included in that risk group.

(2) Where the name required by sub-paragraph (1) above is not sufficient to identify the nature of the objects exposed to such risks and the nature of the cover provided against such risks, such information shall be stated by way of supplementary note.

(3) Subject to sub-paragraph (1) above, the name given to a risk group shall remain the same when that risk group is reported in subsequent financial years.

Continuation sheets

30

Continuation sheets to Forms 31 and 34 need only be prepared in respect of accounting class 7.

SCHEDULE 3 — LONG TERM BUSINESS: REVENUE ACCOUNT AND ADDITIONAL INFORMATION

(Forms 40 to 45)

1

All the Forms included in the part of the return to which this Schedule relates (Forms 40 to 45) are to be laid out as shown in this Schedule, except that the instructions to Forms need not be reproduced.

2

The provisions of paragraph 1(2) and paragraphs 3 to 7 of Schedule 1 above shall, unless otherwise provided, also apply for the purposes of this Schedule. All amounts shall be shown in sterling to the nearer £1,000. Percentages shall be shown to two decimal places.

3

For the purposes of this Schedule, a contract shall be regarded as a UK contract if, in the case of direct insurance or facultative reinsurance accepted, the contract was made in the United Kingdom or if, in the case of a reinsurance treaty, the cedant was a company having its head office in the United Kingdom or was a member of Lloyd's; and “overseas contracts” shall be construed accordingly.

4

(1) Where a company maintains more than one long term business fund, there shall be stated by way of a supplementary note to Form 40 the principles and methods applied to apportioning the investment income, increase or decrease in the value of assets brought into account, expenses and taxation between the different funds.

(2) Boxes marked “No. of Fund/Summary” shall be completed by the inclusion of a discrete number to identify each fund or, if the Form relates to a part of the fund, the fund of which it is part. Where there is only one fund for ordinary long-term insurance business or for industrial assurance business, as the case may be, the number “1” shall be shown in the box marked “No. of Fund/Summary”. Where the Form is a summary Form, the number “99” shall be inserted in that box. Boxes marked “No. of Part of Fund” shall show a discrete number for each part of a fund or the figure “0” if the Form is a statement of the whole fund.

5

Where arrangements have been made for the provision of management services to a company by another company (whether an insurance company or not)—

(a) the first mentioned company shall state, by way of a supplementary note to Form 40 relating to the financial year of the company during any part of which those arrangements are in force; and

(b) the other company (being an insurance company) shall state, by way of a supplementary note to Form 40 relating to the financial year of that insurance company during any part of which those arrangements are in force,

that the arrangements have been so in force in the financial year and naming the parties to them.

SCHEDULE 4 — ABSTRACT OF VALUATION REPORT PREPARED BY THE APPOINTED ACTUARY

(Forms 46 to 61)

All the Forms included in the part of the return to which this Schedule relates (Forms 46 to 49, 51 to 58, 60 and 61) are to be laid out as shown in the Schedule, except that the instructions to Forms need not be reproduced.

For the purposes of this Schedule—

(a) the “report period” means the period from the date to which the latest previous investigation under section 18 of the Act related to the valuation date (as defined in paragraph 1 below);

(b) the provisions of paragraph 1(2) and paragraphs 3 to 7 of Schedule 1 and paragraph 3 of Schedule 3 above shall, unless otherwise provided, apply; and

All amounts in the Forms shall be shown in sterling to the nearer £1,000 except valuation unit prices which shall be shown to the accuracy used in the valuation. Yields shall be shown as percentages to two decimal places.

The following information shall be given, the answers being numbered to accord with the numbers of corresponding paragraphs of this Schedule.

1

The date to which the investigation relates (the “valuation date”).

2

The date to which the latest previous investigation under section 18 of the Act related.

3

A statement that the valuation has been made in conformity with regulation 64 of the Insurance Companies Regulations or, where this was not the case, such qualification, amplification or explanation as necessary.

4

(1) Subject to sub-paragraph (2) below, for each category of non-linked contract which—

(a) comprises accumulating with-profits policies, a full description of the benefits, including—

(i) the circumstances in which, and the method by which, an adjustment to the identifiable current benefit attributable to a policy might be made on the payment of any claim, including by full or partial surrender, or in determining the amount of any charges deducted from the policy;

(ii) where the discounted value of the liability in respect of current benefits including vested bonuses shown in column 12 of Form 52 is less than the full amount of the current benefit shown in column 11 and the discounted value assumes the exercise of any discretionary adjustments of the type referred to in sub-paragraph (a)(i) above, a general description of such adjustments made during the report period;

(iii) any guaranteed investment returns or bonus rates;

(iv) any guaranteed surrender values; and

(v) any material options;

(b) comprises policies (other than those included in sub-paragraph (a) above) which provide for benefits to be determined on the basis of interest accrued (at a rate to be determined from time to time) in respect of premiums paid, a full description of the benefits, including—

(i) the method used to calculate surrender values;

(ii) any guaranteed investment returns;

(iii) rates of interest applied during the report period;

(iv) any guaranteed surrender values; and

(v) any material options;

(c) does not fall within sub-paragraph (a) or (b) above, and which is not sufficiently described by the entry in column 1 of Form 51, a full description of the benefits, including any premium rate guarantees and material options.

(2) Information required under sub-paragraph (1) above need not be provided for any category of contract—

(a) where no contracts were effected by the company during the report period; and

(b) which has been included in Form 51 or Form 52 under the miscellaneous headings specified in instruction 8 (vi) or 8 (x) to Forms 51, 52, 53 and 54.

5

(1) Subject to sub-paragraph (3) below, for each category of linked contract—

(a) the name given to that category;

(b) the type of contract, classified according to the categories set out in instructions 3 to 8 of the instructions for completion of Forms 51, 52, 53 and 54;

(d) a brief description of the benefits under the contract, including any eligibility to participate in profits, any guarantees and any material options;

(e) details of any guaranteed investment returns;

(f) a description of the way in which the company recovers out of policies its costs (including acquisition expenses and commission, renewal expenses and commission and the costs attributable to the provision of policy benefits). Where the policy provides for the allocation of units, the annual rate of any management charges shall be given. Where the amount of premiums deemed to be invested after allowing for the effect of any charges is greater than the amount of the premiums, an explanation shall be given;

(g) details of any restrictions on increases in charges;

(h) the method used to calculate surrender or transfer values;

(i) whether benefits are (or may be) determined (whether wholly or in part) by reference to the value of an internal linked fund, or to the value of assets or an index. Where the link is to the value of assets or an index, those assets or that index shall be specified and details of the relationship between their value and benefits payable to policyholders shall be given;

(j) a brief description of any other features of the contract not disclosed above which are material to the method and basis of valuation;

(k) whether the contract was open to new business in the year to the valuation date; and

(l) any increases in the rates of charges applied generally to contracts during the report period, including charges for the provision of policy benefits met by the cancellation of units notionally allocated to contracts.

6

(1) The general principles and methods adopted in the valuation, including specific reference to the following—

(a) the method by which account has been taken of derivative contracts or contracts or assets having the effect of derivative contracts in the determination of the amount of the long term liabilities;

(b) the method by which due regard has been given to the reasonable expectations of policyholders, as required by regulation 64 of the Insurance Companies Regulations, and by which account has been taken of the custom and practice of the company in the manner and timing of the distribution of profits or the grant of discretionary additions over the duration of each policy, as required by regulation 65(6) of the Insurance Companies Regulations;

(c) where the net premium method has been used, whether and to what extent it has been modified, for what purposes any such modification has been made and whether any modifications on account of zillmerising conform to regulation 68 of the Insurance Companies Regulations;

(d) whether any negative reserves arose and the steps taken to ensure that no contract of insurance was treated as an asset, as required by regulation 73 of the Insurance Companies Regulations;

(e) whether any specific reserve has been made for future bonuses and, if so, at what rate or rates;

(f) the basis of the provision made for any prospective liability to taxation on unrealised capital gains;

(g) in the case of linked contracts and contracts falling within sub-paragraphs (a) and (b) of paragraph 4(1) above, the basis of the reserve made for any investment performance guarantees; and

(h) the basis of the reserve made for any guarantees and options (other than investment performance guarantees included in sub-paragraph (g) above).

(2) For the purposes of this paragraph where, in determining the provisions referred to in sub-paragraph (f) above or the reserves referred to in sub-paragraph (7) or (8) of paragraph 7 below, account has been taken of the fact that the fund has been brought into Form 58 at book value in accordance with regulation 45(6) of the Insurance Companies Regulations, that fact should be stated.

7

(1) Unless shown in Form 51, 52, 53 or 54, the rates of interest and tables of mortality and morbidity assumed in the valuation of each category of contract.

(2) If the tables used have not been published, full details of the rates of mortality or morbidity used.

(3) A general description of how the tables of mortality and morbidity assumed in the valuation of the various categories of contract have regard to the State of the commitment.

(4) Details of any allowance made for future reductions in the rates of mortality in the tables of mortality assumed in the valuation of annuity contracts.

(5) Details of any allowance made, and the amount of any reserve held, for any possible detrimental impact of significant changes in the incidence of disease or developments in medical science on the mortality and morbidity experience of the company in the tables of mortality and morbidity assumed in the valuation of contracts.

(6) A description of all the scenarios of future changes in the value of assets which have been tested in order to take account of the nature (including currency) and terms of the assets held in determining the amount of the long term liabilities in accordance with regulation 75 of the Insurance Companies Regulations.

(7) The amount of any reserve made pursuant to regulation 75(a) of the Insurance Companies Regulations, together with a brief description of the method used and assumptions made to calculate any such reserve.

(8) In respect of that scenario described under sub-paragraph (6) above which produces the most onerous requirement (whether or not a reserve is thereby required), the amount of any reserve made pursuant to regulation 75(b) of the Insurance Companies Regulations, together with—

(a) a description of the changed assumptions made (other than the changed interest rate stated in Form 57) in calculating such requirement;

(b) a brief description of the method used to calculate such requirement; and

(i) the change in the aggregate amount of the long term liabilities; and

(ii) the aggregate amount by which the assets allocated to match such liabilities in the scenario have changed in value from the amount of those assets shown in Form 13.

(9) A general description of how the rates of interest assumed in the valuation of the various categories of contract with liabilities denominated in currencies other than sterling have taken into account the currency of the liabilities.

8

In respect of non-linked contracts—

(a) where appropriate, the proportion of the office premiums explicitly or implicitly reserved for expenses and profits for each type of insurance (as shown in column 8 of Form 51 or column 10 of Form 52);

(b) the method by which a reserve has been made for expenses after premiums have ceased or where no future premiums are payable or where the method of valuation does not take credit for future premiums as an asset;

(c) where a prospective method of valuation has not been used, details of the tests made of the adequacy of the method used;

(d) where, in valuing contracts falling within the circumstances described in regulation 67(1) of the Insurance Companies Regulations, future premiums brought into account are not in accordance with that regulation, such additional information as is necessary to demonstrate whether the mathematical reserves determined in the aggregate for each of the main categories of contract are greater than an amount for each such category calculated in accordance with regulations 66 to 75 of those Regulations.

9

For each category of linked contract—

(a) all assumptions made in calculating the valuation net liability in columns 12 and 13 of Forms 53 and 54; and

(b) where an explicit reserve has not been made for meeting the expenses likely to be incurred in future in fulfilling the existing contracts on the basis of specific assumptions in regard to the relevant factors, details of the basis used in testing the adequacy of the reserves to satisfy regulation 71(1) of the Insurance Companies Regulations.

10

(1) The assumed levels of inflation of expenses and the bases used in the valuation to allow for such future inflation.

(2) The aggregate amount, grossed up for taxation where appropriate, arising during the twelve months after the valuation date from implicit and explicit reserves made in the valuation to meet expenses in fulfilling contracts in force at the valuation date, and a general description of the sources of such amounts.

(3) The method and basis of calculation of the requirement (whether or not a reserve is thereby required) in respect of the expenses of continuing to transact new business during the twelve months following the valuation date and the amount of the reserve so calculated.

(4) The method and basis of calculation of the requirement (whether or not a reserve is thereby required) to provide for the costs of closure to new business, if the company were to cease to transact new business twelve months after the valuation date and the amount of the reserve so calculated.

11

(1) A schedule of the sum of the mathematical reserves (other than liabilities for property linked benefits) and the liabilities in respect of the deposits received from reinsurers as shown in Form 14, analysed by reference to the currencies in which the liabilities are expressed to be payable, together with the value of the assets, analysed by reference to currency, which match such liabilities.

(2) In the schedule required by sub-paragraph (1) above, liabilities totalling up to 2 per cent. of the total required to be analysed may be grouped together as “other currencies”, and the assets matching those liabilities need not be analysed provided that the proportion of such liabilities which are matched by assets in the same currency is stated.

12

(1) For long term business ceded on a facultative basis to a reinsurer who is not authorised to carry on insurance business in the United Kingdom at any time during the report period—

(a) the aggregate of premiums payable by the company to all such reinsurers (sub-divided according to financial years, if appropriate) and the aggregate amount deposited at the valuation date under any deposit back arrangement; and

(b) the amount of any such premiums payable by the company to reinsurer with whom the company is connected and the aggregate amount deposited at the valuation date under any deposit back arrangement.

(2) For each treaty of reinsurance where the company is the cedant and under which business is in force at the valuation date—

(a) the name of the reinsurer;

(b) whether the reinsurer is authorised to carry on insurance business in the United Kingdom;

(d) an indication of the nature and extent of the cover give under the treaty;

(e) the premiums payable by the company under the treaty during the report period;

(f) the amount deposited at the valuation date in respect of the treaty under any deposit back arrangements;

(g) the extent to which provision has been made for any liability of the company to refund any amounts of reinsurance commission in the event of lapses or surrender of the contract; and

(h) whether the treaty is closed to new business.

(3) For each financing arrangement—

(a) the amount of any undischarged obligation of the company and a brief description of the conditions for the discharge of such obligation; and

(b) a description of how, if at all, all such undischarged obligations have been taken into account in the valuation.

(4) In this paragraph—

(a) “deposit back arrangement”, in relation to any contract of reinsurance, means an arrangement whereby an amount is deposited by the reinsurer with the cedant;

(b) “financing arrangement” means any contract entered into by the company, in respect of contracts of insurance effected by the company, which has the effect of increasing the amount of assets included at line 34 of Form 9 above, representing assets of the company which are available to meet its required minimum margin for long term business, and which includes terms for—

(i) the transfer of assets to the company or the creation of a debt to the company (or both); and

(ii) either an obligation for the company to return (with or without interest) some or all of such assets or a provision for the diminution of such debt, in each case, in specified circumstances; and

(c) paragraphs (1), (2) and (3)(a) of regulation 22 above (which relate to connected persons) shall have effect for the purposes of this paragraph as they have effect for the purposes of the regulations therein mentioned.

13

Where any rights of any policy holders to participate in profits relate to profits from particular parts of a long term business fund—

(a) a revenue account in the format of Form 40 for each such part except where such information is provided elsewhere; and

(b) the principles and methods applied in apportioning the investment income, increase or decrease in the value of assets brought into account, expenses and taxation between each part, where these particulars are not provided elsewhere.

14

(1) The principles on which the distribution of profits among policy holders and shareholders is based as described in any of the following documents—

(a) the constitution of the company;

(b) board resolutions of the company;

(d) any advertisement issued by or on behalf of the company;

(e) any document required to be issued by any regulatory body authorised under the Financial Services Act 1986[^f00045]; and

(f) any other relevant document.

(2) A broad statement of the company’s aims in relation to the distribution of profits among policy holders, including its aims in relation to—

(a) policies which mature or are surrendered and claims arising by death;

(b) the appropriate and equitable treatment of groups of participating policies; and

(3) A description of the methods used in order to ensure that the aims described in sub-paragraph (2) above are achieved.

(4) Subject to sub-paragraph (5) below, if different principles or bonus policies apply to different categories of with-profits policies issued by the company, the information in sub-paragraphs (1) to (3) above shall be given in respect of each category.

(5) Categories of with-profits policies which, apart from this sub-paragraph, would require separate information in accordance with sub-paragraph (4) above need only be listed under this sub-paragraph, and the information in sub-paragraphs (1) to (3) need not be supplied, provided that—

(a) the aggregate amount of established surplus allocated to policy holders in all such categories is less than 10 per cent. of the aggregate amount of established surplus allocated to all policy holders (as reported at line 46 of Form 58);

(b) the amount of established surplus allocated to policy holders in any one such category is less than 5 per cent. of the aggregate amount of established surplus allocated to all policy holders (as reported at line 46 of Form 58); and

15

Particulars of the bonus allocated to each category of contract, including the basis of calculation and the circumstances and the form in which the bonus is payable, together with—

(a) where the rates of bonus allocated depend on the original term of the contract or on the period of years a contract has been in force, specimen rates at 5-year intervals of original term or duration, as the case may be;

(b) where the rates of bonus allocated depend on the age of the life assured, specimen rates at 10-year intervals of age;

(c) where the rates of bonus allocated depend on the date of each previous premium payment, specimen rates at 5-year intervals of time since the premium was paid, and for premiums paid in each of the 5 years ending with the report period; and

(d) in all other cases, full details of the rates of bonus allocated.

16

A statement of the practice regarding any bonus payments (in addition to those for which the company has become contractually liable) to be made on claims arising in the period up to the next investigation, including the basis of calculation and the form in which the bonus is payable, together with—

(a) where the rates of bonus depend on the original term of the contract or on the period of years a contract has been in force, specimen rates at 5-year intervals of original term or duration, as the case may be;

(b) where the rates of bonus depend on the age of the life assured, specimen rates at 10-year intervals of age;

(c) where the rates of bonus depend on the date of each previous premium payment, specimen rates at 5-year intervals of time since the premium was paid, and for premiums paid in each of the 5 years ending with the report period; and

(d) in all other cases, full details of the rates of bonus.

17

Separate statements in the form set out in Forms 46 and 46A summarising changes in ordinary long-term and industrial assurance business for all non-group contracts. For group contracts only the number of contracts in force at the end of the report period is to be given in a supplementary note to the appropriate statement.

18

Separate statements in the form set out in Forms 47 and 47A showing an analysis of new ordinary long-term and industrial assurance business.

19

(1) Separate statements of assets covering long term liabilities (other than assets held to match property linked or index linked liabilities) in the form set out in Forms 48 and 49 in respect of each fund or group of funds for which separate assets are appropriated.

(2) A brief description of the extent to which any of the amounts recorded in Form 48 would be changed if assets which the company had a right or obligation to acquire or dispose of under derivative contracts outstanding at the end of the financial year (being, in the case of options, only those options which it would have been prudent to assume would be exercised) had been so acquired or disposed of.

(3) A brief description of how different the information provided pursuant to sub-paragraph (2) above would have been if such options as were outstanding at the end of the year had been exercised in such a way as to change the amounts referred to in that paragraph to the maximum extent.

(4) A brief description of how different the information provided pursuant to sub-paragraphs (2) and (3) above would have been if, instead of applying to contracts outstanding at the end of the financial year, those sub-paragraphs had applied to derivative contracts outstanding at such other time during the financial year as would have changed the amounts referred to in those sub-paragraphs to the maximum extent.

20

Separate statements in the form set out in Forms 51, 52, 53 and 54 and separate analyses of unit liabilities in the form set out in Forms 55 and 56 in respect of each separate fund or part of a fund for which a surplus is determined under section 18 of the Act.

21

(1) Separate statements in the form set out in Form 57 for each fund or group of funds for which separate assets are appropriated in respect of all long term liabilities except—

(a) the unit liabilities in respect of property linked benefits as shown in column 12 of Form 53;

(b) the investment liabilities in respect of index linked benefits as shown in column 12 of Form 54; and

(c) any reserve in respect of provisions made for tax on unrealised capital gains in arriving at the valuation price of internal linked funds.

(2) A general description of the method by which the yield on assets other than equity shares and land was adjusted in accordance with regulation 69(7) of the Insurance Companies Regulations.

(3) For assets which are equity shares or land, a description of the categories into which such assets were divided for the purposes of regulation 69(7) of the Insurance Companies Regulations, together with the method and basis by which the yield on such assets was adjusted in accordance with that regulation.

22

Separate statements of the results of the valuation in the form set out in Form 58 in respect of each separate fund or part of a fund for which a surplus is determined under section 18 of the Act.

23

A statement of the required minimum margin for long term business in the form set out in Form 60 and of the required margin of solvency for Supplementary Accident and Sickness Insurance in the form set out in Form 61.

SCHEDULE 5 — GENERAL BUSINESS: ADDITIONAL INFORMATION ON BUSINESS CEDED

For the purposes of regulation 26 above, a company which carries on general business shall, in respect of the financial year in question, prepare a statement of the following information.

1

Subject to paragraph 2 below, for each contract entered into or modified during the financial year in question under which general business has been ceded by the company on a non-facultative basis, the company shall prepare a statement of—

(a) the type of business covered by reference to risk groups or business categories, as appropriate. If only part of a risk group or business category is covered, a description of that part shall be given;

(b) the type of cover, including such details of the terms and conditions of the contract as are necessary for a proper understanding of the nature of the cover;

(c) details of any limits on cover as are necessary for a proper understanding of the contract, including any event limits, limits on the amount of business ceded, limits on the number of reinstatements and aggregate limits; and

(d) the period of cover.

2

(1) Where a contract of reinsurance has been modified during the financial year in question—

(a) no information need be supplied pursuant to paragraph 1 above in respect of a contract of reinsurance which was entered into before the beginning of the financial year of the company to which these Regulations first apply; and

(b) in any other case, the information to be supplied pursuant to paragraph 1 above shall be limited to any changes to the information previously supplied pursuant to that paragraph in respect of that contract.

3

For every contract reported pursuant to paragraph 1 above, whether in the return for the financial year in question or any previous return, the company shall also prepare, if relevant, a statement of—

(a) in the case of contracts which are subject to no or a limited number of reinstatements, any contract not previously reported pursuant to this sub-paragraph under which it is anticipated that such limit will be exhausted by claims (including claims incurred, but not reported, in respect of any specific occurrence for which provisions have been allocated);

(b) the percentage of cover, if in excess of 10 per cent. and if such information has not already been included in the accounts and statements of the company for any previous financial year, which has been ceded to reinsurers which have ceased to pay claims to their reinsureds in full, whether because of insolvency or for any other reason; and

(c) if the percentage specified in sub-paragraph (b) above has increased by more than 10 percentage points since the previous financial year in which it was included in the company’s return, a statement of that percentage unless, in the opinion of the directors, the likelihood of any claim being incurred under that policy is minimal.

4

(1) For each business category or risk group, or part thereof, in respect of which separate non-facultative reinsurance cover has been obtained, the company shall prepare a statement of the maximum net probable loss to the company from any one contract of insurance effected by it and from all such contracts taken together.

(2) For the purposes of sub-paragraph (1) above, the maximum net probable loss is the maximum loss (net of reinsurance) arising from any one incident, or any one series of incidents from the same originating cause, which—

(a) the directors, at the time they decided upon the reinsurance cover to be obtained in respect of the financial year in question, reasonably contemplated to be of a type which might take place during that financial year; or

(b) has actually occurred during the financial year in question.

5

For each accounting class and separately for contracts of facultative and non-facultative reinsurance ceded in respect of the financial year in question (as shown on Forms 21 and 24), the amount of the reinsurers' share of gross premiums shall be stated.

SCHEDULE 6 — CERTIFICATES BY DIRECTORS AND ACTUARY AND REPORT OF THE AUDITORS

PART I

Certificate by directors etc.

1

Subject to paragraph 7 below, the certificate required by regulation 28(a) above shall state—

(a) in relation to the part of the return comprising Forms 9 to 17, 20 to 45 and the statements required by regulations 19 to 21, 23, 24 and 26 above that—

(i) the return has been prepared in accordance with the Regulations;

(ii) proper accounting records have been maintained and adequate information has been obtained by the company; and

(iii) an appropriate system of control has been established and maintained by the company over its transactions and records;

(b) that reasonable enquiries have been made by the company for the purpose of determining whether any person and any body corporate are connected for the purposes of regulations 19, 20 and 21 above;

(c) that in respect of the company’s business which is not excluded by regulation 32 of the Insurance Companies Regulations, the assets held throughout the financial year in question enabled the company to comply with regulations 27 to 31 (matching and localisation) of those Regulations; and

(d) in relation to the statement required by regulation 31 above—

(i) that for the purpose of preparing the statement, proper accounts and records have been maintained; and

(ii) that the information given has been ascertained in conformity with that regulation.

2

Subject to paragraph 7 below, the certificate required by regulation 28(a) above shall also, in the case of a company which is required by section 32 of the Act to maintain a margin of solvency, EEA margin of solvency or UK margin of solvency, state that the required margin has been so maintained throughout the financial year in question.

3

Subject to paragraph 7 below, the certificate required by regulation 28(a) above shall also state, separately in respect of long term business and of general business—

(a) in the case of—

(i) an EFTA company or an EEA deposit company, that the value of the admissible assets of the long term business or of the general business carried on by the company through a branch in the United Kingdom was maintained throughout the financial year in question at not less than the amount of the liabilities of that business; and

(ii) a Swiss general insurance company, that the value of the admissible assets of the general business carried on by the company through a branch in the United Kingdom was maintained throughout the financial year in question at not less than the amount of the liabilities of that business;

(b) in the case of an external company (other than a pure reinsurer)—

(i) that the company has kept throughout the financial year in question admissible assets representing the required United Kingdom minimum margin of an amount at least equal to the appropriate guarantee fund or minimum guarantee fund, whichever was the greater, within the United Kingdom and has kept throughout that year admissible assets representing the remainder of that minimum margin within the United Kingdom and the other EEA States; and

(ii) that the deposit made in accordance with section 9(1)(c) of the Act has been maintained throughout that year at a level equal to at least the minimum as defined in regulation 7 of the Insurance Companies Regulations; and

(i) that the company has kept throughout the financial year in question admissible assets representing the required EEA minimum margin of an amount at least equal to the appropriate guarantee fund or minimum guarantee fund, whichever was the greater, within the EEA States concerned and has kept throughout that year admissible assets representing the remainder of that minimum margin within the EEA States concerned and the other EEA States; and

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