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Application provision

1.1 Unless otherwise stated, this Part applies to a non-directive insurer other than a non-directive friendly society.

19.1

01/01/2016

The adjusted mathematical reserves referred to in 17.2 and 18.1 is the aggregate of the amounts which result from the performance of the calculation in 19.3 for each category of insurance liability specified in 19.2.

19.2

01/01/2016

The categories of insurance liability referred to in 19.1 are:

  1. (1) for the purpose of 17.2:
    1. (a) liabilities of a kind which arise from contracts of insurance falling in long-term insurance business classes I, II or IX;
    2. (b) liabilities of a kind which arise from contracts of insurance falling in long-term insurance business classes III, VII or VIII to the extent that the firm bears an investment risk;
    3. (c) liabilities of a kind which arise from contracts of insurance falling in long-term insurance business classes  III, VII or VIII to the extent that the firm bears no investment risk and where the allocation to cover management expenses in the contract of insurance has a fixed upper limit which is effective as a limit for a period exceeding 5 years from the commencement of the contract;
    4. (d) liabilities of a kind which arise from contracts of insurance falling in long-term insurance business class IV; and
    5. (e) liabilities of a kind which arise from contracts of insurance falling in long-term insurance business class VI; and
  2. (2) for the purpose of 18.1, those categories described in (1)(a), (b), (d) and (e).

19.3

01/01/2016

The calculation referred to in 19.1 is the multiplication of the amount of the mathematical reserves (gross of reinsurance cessions) in respect of a category of insurance liability by the higher of:

  1. (1) 85% or, in the case of a pure reinsurer, 50%; and
  2. (2) the ratio as at the end of the financial year in question of:
    1. (a) the mathematical reserves in respect of that category of insurance liability net of reinsurance cessions; to
    2. (b) the mathematical reserves in respect of that category of insurance liability gross of reinsurance cessions.