The Insurance Companies (Accounts and Statements) Regulations 1996

• (ii) that the deposit made in accordance with section 9(2) 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.

4

Subject to paragraph 7 below, if the company carries on long term business, the certificate required by regulation 28(a) above shall also state—

• (a) except in the case of a company which has no shareholders and carries on no business whatsoever other than long term business, that the requirements of sections 28 to 31 of the Act have been fully complied with and in particular that, subject to the provisions of section 29(2) to (4) and section 30 of the Act, assets attributable to long term business, the income arising therefrom, the proceeds of any realisation of such assets and any other income or proceeds allocated to the long term business fund or funds have not been applied otherwise than for the purpose of the long term business;

• (b) that any amount payable from or receivable by the long term business fund or funds in respect of services rendered by or to any other business carried on by the company or by a person who, for the purposes of section 31 of the Act, is connected with it or is a subordinate company of it has been determined and where appropriate apportioned on terms which are believed to be no less than fair to that fund or those funds, and any exchange of assets representing such fund or funds for other assets of the company has been made at fair market value;

• (c) that all guarantees given by the company of the performance by a related company which would fall to be met by any long term business fund have been disclosed in the return, and that the fund or funds on which each such guarantee would fall has been identified therein;

• (d) in respect of any internal linked fund or funds maintained by a company, that the investment policy and practice of the company was during the financial year in question consistent with any representations made to policy holders or potential policy holders of the company;

• (e) in the case of a company having its head office in the United Kingdom, a pure reinsurer, a United Kingdom deposit company or an external company, being a company which has financial, commercial or administrative links with any other company carrying on insurance business, that the return in respect of long term business is not distorted by agreements between the companies concerned or by any arrangements which could affect the apportionment of expenses and income; and

• (f) in the case of a company to which section 31A of the Act[^f00046] applies, that the company has fully complied with the requirements of that section.

5

Subject to paragraph 7 below, where the directors are satisfied that—

• (a) the systems of control established and maintained by the company in respect of its business complied, at the end of the financial year in question, with any published guidance and it is reasonable to believe that those systems continued to so comply subsequently and will continue to so comply in future; or

• (b) the return has been prepared in accordance with any published guidance,

it shall be so stated, by listing such guidance, in the certificate required by regulation 28(a) above.

6

Except in the case of a company whose head office is in a member State or a Swiss general insurance company, the certificate required by regulation 28(a) above shall also, subject to paragraph 7 below, state that proper accounting records have been maintained in the United Kingdom in respect of business carried on through a branch in the United Kingdom.

7

• (1) Where, in the opinion of those signing the certificate, the circumstances are such that any of the statements required by paragraphs 1 to 6 above cannot truthfully be made, the relevant statements shall be omitted.

• (2) Where, by virtue of sub-paragraph (1) of this paragraph, any statements have been omitted from the certificate, this fact shall be stated in a note.

PART II

Certificate by appointed actuary

8

The certificate required by regulation 28(b) above to be signed by the appointed actuary—

• (a) shall state—

• (i) if such be the case, that in the appointed actuary’s opinion proper records have been kept by the company adequate for the purpose of the valuation of the liabilities of its long term business;

• (ii) if such be the case, that the sum of the mathematical reserves and the deposits received from reinsurers as shown in Form 14, together, if the case so requires, with an amount specified in the certificate (being part of the excess of the value of the admissible assets representing the long term business funds over the amount of those funds shown in Form 14), constitute proper provision at the end of the financial year in question for the long term liabilities (including all liabilities arising from deposit back arrangements, but excluding other liabilities which had fallen due before the end of the financial year) including any increase in those liabilities arising from a distribution of surplus as a result of an investigation as at that date into the financial condition of the long term business; and

• (iii) if such be the case, that, for the purposes of sub-paragraph (ii) above, the liabilities have been assessed in accordance with Part IX of the Insurance Companies Regulations in the context of assets valued in accordance with Part VIII of those Regulations, as shown in Form 13;

• (iv) by way of a list, the professional guidance notes that have been complied with; and

• (v) if such be the case, that in the appointed actuary’s opinion premiums for contracts entered into during the financial year and the income earned thereon are sufficient, on reasonable actuarial assumptions, and taking into account the other financial resources of the company that are available for the purpose, to enable the company to meet its commitments in respect of those contracts and, in particular, to establish adequate mathematical reserves; and

• (b) shall state the amount of the required minimum margin, required EEA minimum margin or required United Kingdom minimum margin, as the case may be, applicable to the company’s long term business immediately following the end of the financial year in question (including any amounts resulting from any increase in liabilities arising from a distribution of surplus as a result of the investigation into the financial condition of the long term business).

9

If the appointed actuary considers it necessary, such qualification, amplification or explanation as may be appropriate shall be added to the certificate.

PART III

Auditors' report

10

The report required by regulation 29 above shall, in addition to any statement required by section 237(2) and (3) of the 1985 Act[^f00047] or article 245(2) and (3) of the 1986 Order[^f00048], as appropriate, as applied by the said regulation 29 state—

• (a) in the auditors' opinion, whether Forms 9 to 17, 20 to 45 and information furnished pursuant to regulations 19 to 21 and 23 above have been properly prepared in accordance with the provisions of these Regulations;

• (b) in the auditors' opinion, and according to the information and explanations they have received—

• (i) whether the certificate required to be signed in accordance with regulation 28(a) above, otherwise than in relation to statements required by regulations 24, 26 and 31 above, has been properly prepared in accordance with these Regulations; and

• (ii) subject to paragraph 11 below, whether it was or was not unreasonable for the persons giving the certificate to have made the statements therein (other than statements required by regulations 24, 26 and 31 above); and

• (c) the extent to which, in giving their opinion, the auditors have relied—

• (i) in the case of a company carrying on long term business, on the certificate of the actuary given in accordance with the requirements of Part II of this Schedule with respect to the mathematical reserves and required minimum margin, required EEA minimum margin or required United Kingdom minimum margin, as the case may be, of the company; and

• (ii) in the case of a company including implicit items on Form 9, on the identity and value of any implicit items as they have been admitted in accordance with regulation 23(5) of the Insurance Companies Regulations.

11

To the extent that the information and explanations they have received do not allow the auditors to express an opinion on whether it was or was not unreasonable for the persons giving the certificate required to be signed in accordance with regulation 28(a) above to have made the statement required by paragraph 5 above, the auditors shall add to their report such qualification, amplification or explanation as may be appropriate.

12

Where the auditors refer in their report or in any note attached thereto to any uncertainty, the report shall state whether, in the auditors' opinion, that uncertainty is material to determining whether the company has available assets in excess of its required minimum margin, required EEA minimum margin or required UK minimum margin, as the case may be.

SCHEDULE 7

Signed

Anthony Nelson — Minister for Trade, — Department of Trade and Industry — 24th March 1996

Explanatory note

(This Note is not art of the Regulations)

These Regulations prescribe the form and content of the annual returns which insurance companies to which Part II of the Insurance Companies Act 1982 applies are required to make to the Secretary of State. They consolidate, with modifications, the Insurance Companies (Accounts and Statements) Regulations 1983 as amended.

The principal changes from the 1983 Regulations are the following:

• a general re-organisation and updating of the forms relating to long term and other than long term business, to reflect current commercial practice;

• replacement of the previous form-based reporting of other than long term business reinsurance protections by a new free-form reporting (Schedule 5);

• new reporting of the assets used as the basis for discounting liabilities (Form 30);

• a reduction of the volume of reporting in some areas by the introduction of increased de minimis exemptions;

• transfer of several long term business forms from Schedule 3 to the Regulations to Schedule 4 with the consequence that such forms now become the responsibility of the appointed actuary of the company and will no longer be required to be audited;

• omission of the prescribed form of the quinquennial statement of long term business required by section 18(3) of the 1982 Act (Schedule 5 to the 1983 Regulations) in anticipation of an order to be made under section 1 of the Deregulation and Contracting Out Act 1994 abolishing the requirement for that statement.

Regulations 1 and 2 make provision for the citation, commencement and application of the Regulations, and regulation 3 and contains provision for their interpretation.

Regulation 4 prescribes how a company’s assets and liabilities are to be valued for the purposes of the Regulations, and regulation 5 provides generally for the form and content of the returns.

Regulation 6 prescribes the form of the balance sheet, which is to comply with the requirements of Schedule 1 and to appear in Forms 9 to 15 and 17 set out in that Schedule.

Regulation 7 prescribes the form of the profit and loss account, which is to comply with the requirements of Schedule 1 and to appear in Form 16.

Regulation 8 prescribes the form of the revenue account, which is to comply with the requirements of Schedule 1. In the case of a company carrying on general business it is to appear in Form 20; in the case of a company carrying on long term business, it must be in Form 40.

Regulations 9 to 16 require additional information to be provided by companies carrying on general business, which is to be provided in accordance with Schedule 2 and is to appear in the specified forms.

Regulation 9 requires information in respect of each accounting class (Forms 21 to 25).

Regulations 10 to 11 require information in respect of reinsurance treaties accepted by a company according to specified business categories (Forms 26 to 29).

Regulations 12 and 13 require information in respect of direct insurance business and inwards facultative reinsurance business, by country and according to the risk groups specified in regulation 12 (Forms 31, 32 and 34).

Regulation 14 requires additional information on direct and facultative reconciliation business (Forms 33 and 34) and regulation 16 requires information on general business prescribed for the purposes of section 34A of the 1982 Act concerning equalisation reserves (Forms 37 to 39).

Regulation 15 requires the provision of Form 36 where Forms prepared under regulations 11 to 13 contain figures in a currency other than sterling.

Regulation 17 requires additional information to be provided by companies carrying on long term business. The information is to be prepared in accordance with Schedule 3 and to appear on Forms 21 to 45.

Regulations 19, 20 and 21 require companies carrying on general business to annex to their returns statements of their major treaty reinsurers, major facultative reinsurers and major general business reinsurance cedants.

Regulation 23 requires every company to annex a statement of its derivative contracts and regulation 24 requires every UK company to annex a statement of its shareholder controllers.

Regulation 25 provides that the abstract of the actuary’s report required by section 18 of the Act is to comply with Schedule 4 and include certain specified forms.

Regulation 26 provides that a company which carries on general business must annex to its return a statement of information on general business ceded as required by Schedule 5.

Regulation 27 defines who may sign the various documents. The certificates required to accompany the returns are defined in Parts I and II of Schedule 6 (regulation 28). The auditor’s report is to comply with the requirements of Part III of Schedule 6 (regulation 29).

Regulations 30 and 32 define respectively the minimum qualifications of the actuary and the auditor. Information about the actuary is required to be given (regulation 31).

Regulation 33 contains transitional provisions.

Regulation 34 makes minor amendments to the 1983 regulations until such time as they are revoked.

Regulation 35 provides for the revocation of those Regulations as amended to the extent specified in Schedule 7.

A Compliance Cost Assessment is available, copies of which have been placed in the libraries of both Houses of Parliament. Copies are also available from the Insurance Directorate of the Department of Trade and Industry, Room 5.C.53, 1 Victoria Street, London SW1H 0ET.

Footnotes

[^f00001]: 1982 c. 50; section 21 was amended by the Companies Consolidation (Consequential Provisions) Act 1985 (1985 c. 9), section 30 and Schedule 2; and by S.I. 1991/1997, reg. 2 and Schedule, para. 47.

[^f00002]: Schedule 2F was inserted by S.I. 1994/1696, reg. 45(2) and Schedule 6.

[^f00003]: S.I. 1983/1811; amended by S.I. 1987/2130; S.I. 1988/672; S.I. 1989/1952; S.I. 1990/1181; S.I. 1990/1333; S.I. 1991/2736; S.I. 1992/2890; S.I. 1993/946; S.I. 1993/3127; S.I. 1994/1515; S.I. 1994/3133 and S.I. 1996/944; and by the European Economic Area Act 1993 (1993 c. 51).

[^f00004]: 1985 c. 6.

[^f00005]: S.I. 1986/1032 (N.I.6.).

[^f00006]: S.I. 1994/1516, as amended by S.I. 1994/3133, S.I. 1995/3248 and S.I. 1996/942.

[^f00007]: Section 258 was substituted by the Companies Act 1989 (1989 c. 40), section 21.

[^f00008]: Article 266 was substituted by the Companies (Northern Ireland) Order 1990 (S.I. 1990/593 (N.I.5)), article 23.

[^f00009]: Schedule 9A was substituted by S.I. 1993/3246, reg. 4.

[^f00010]: Schedule 9A was substituted by S.R. (N.I.) 1994 No. 428, reg. 4.

[^f00011]: Section 736 was substituted by the Companies Act 1989, section 144.

[^f00012]: Article 4 was substituted by the Companies (No.2) (Northern Ireland) Order 1990 (S.I. 1990/1504 (N.I.10)), article 62.

[^f00013]: Schedule 2C was inserted by S.I. 1994/1696, reg. 28 and amended by S.I. 1994/3123, reg. 7.

[^f00014]: Section 34A was inserted by the Insurance Companies (Reserves) Act 1995 (1995 c. 29), section 1(1). The Insurance Companies (Reserves) Regulations 1996 (S.I. 1996/946), reg. 3(2) and (3) and prescribes for the purposes of section 34A business to which Parts II and III of those Regulations apply.

[^f00015]: Section 96C was inserted by S.I. 1994/1696, reg. 52.

[^f00016]: Regulation 55 and Schedule 10 were substituted by S.I. 1995/3248, reg. 10 and reg. 19.

[^f00017]: Section 8(1) was amended by S.I. 1994/1696, reg. 8(1).

[^f00018]: Section 9(4) was amended by S.I. 1994/1696, reg. 9(1).

[^f00019]: Section 10(5) was amended by the Companies Consolidation (Consequential Provisions) Act 1985 (1985 c. 9), section 30 and Schedule 2 and by the Companies Consolidation (Consequential Provisions) (Northern Ireland) Order 1986 (S.I. 1986/1035), article 23 and Schedule 1, Part II.

[^f00020]: Section 8(4) was amended by S.I. 1994/1696, reg. 8(3).

[^f00021]: Section 237 was substituted by the Companies Act 1989 (1989 c. 40), section 9.

[^f00022]: Section 389A was inserted by the Companies Act 1989, sections 118 and 120(1).

[^f00023]: Article 245 was substituted by the Companies (Northern Ireland) Order 1990 (S.I. 1990/593) (N.I.5), article 11.

[^f00024]: Article 397A was inserted by the Companies (No.2) (Northern Ireland) Order 1990 (S.I. 1990/1504) (N.I.10), articles 53 and 55(1).

[^f00025]: Section 226 was substituted by the Companies Act 1989, section 4(1).

[^f00026]: Article 234 was substituted by the Companies (Northern Ireland) Order 1990, article 6(1).

[^f00027]: S.I. 1980/6.

[^f00028]: S.I. 1968/1408.

[^f00029]: Part I of Schedule 6 was inserted by the Companies Act 1989, section 6(4) and Schedule 4.

[^f00030]: Part I of Schedule 6 was inserted by the Companies (Northern Ireland) Order 1990, article 8(4) and Schedule 4.

[^f00031]: Section 232 was substituted by the Companies Act 1989, section 6(3).

[^f00032]: Article 239 was substituted by the Companies (Northern Ireland) Order 1990, article 8(1).

[^f00033]: Part I of Schedule 13 has been amended by the Financial Services Act 1986 (1986 c. 60), section 212(2) and Schedule 16, para. 25; the Charities Act 1992 (1992 c. 41), section 78(1) and Schedule 6, para. 11(b) and the Charities Act 1993 (1993 c. 10), section 98(1) and Schedule 6, para. 20(1) and (3).

[^f00034]: 1964 c. 33 (N.I.).

[^f00035]: Section 21 was amended by the Companies Consolidation (Consequential Provisions) Act 1985 (1985 c. 9), section 30 and Schedule 2; and by S.I. 1991/1997, reg. 2 and Schedule, paragraph 47.

[^f00036]: S.I. 1994/1515.

[^f00037]: Regulation 22B was inserted by S.I. 1994/1515, reg. 9.

[^f00038]: 1986 c. 60; this entry was substituted by S.I. 1994/1515, reg. 15(5)(a).

[^f00039]: This instruction was inserted by S.I. 1994/1515, reg. 15(5)(g) and amended by S.I. 1994/3133, reg. 19.

[^f00040]: This instruction was inserted by S.I. 1994/1515, reg. 15(5)(g).

[^f00041]: Form 13A was inserted by S.I. 1994/1515, reg. 15(6).

[^f00042]: Schedule 12 was substituted by S.I. 1995/3248, reg. 20.

[^f00043]: Schedule 2C was inserted by S.I. 1994/1696, reg. 28 and amended by S.I. 1994/3132, reg. 7.

[^f00044]: S.I. 1994/1516.

[^f00045]: 1986 c. 60.

[^f00046]: Section 31A was inserted by section 136 of the Financial Services Act 1986 (1986 c. 60).

[^f00047]: Section 237 was substituted by the Companies Act 1989 (1989 c. 40), section 9.

[^f00048]: Article 245 was substituted by the Companies (Northern Ireland) Order 1990 (S.I. 1990/593) (N.I.5), article 11.