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Application provision

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

1

Application

1.1

01/01/2016

Unless otherwise stated, this Part applies to a non-directive friendly society.

2

Adequacy of Assets

2.1

01/01/2016

This Chapter only applies to an incorporated friendly society.

2.2

01/01/2016

A firm must ensure that:

  1. (1) its liabilities under contracts of insurance, other than linked long-term liabilities, are covered by assets of appropriate safety, yield and marketability having regard to the classes of business it carries on; and
  2. (2) its investments, other than those in respect of linked long-term liabilities, are appropriately diversified and adequately spread and excessive reliance is not placed on investments of any particular category or description.

2.3

01/01/2016

A firm must cover its insurance liabilities in respect of its linked long-term liabilities as closely as possible with:

  1. (1) where the linked benefits are linked to the value of units, those units;
  2. (2) where the linked benefits are linked to the value of assets contained in an internal fund of the firm:
    1. (a) in a case where the internal fund is divided into notional units, the assets represented by those notional units; or
    2. (b) in a case where notional units are not established, those assets; and
  3. (3) where the linked benefits are linked to a share index or other reference value not mentioned in (1) or (2), assets of appropriate security and marketability which correspond as closely as possible to the assets on which the reference value is based.

3

Separation Between Long-Term Insurance Business Assets and Other Assets

3.1

01/01/2016

This Chapter only applies to an incorporated friendly society.

3.2

01/01/2016

A firm must, in relation to any long-term insurance business, ensure that:

  1. (1) the assets representing the funds maintained by the firm in respect of its long-term insurance business are only applied for the purposes of that business; and
  2. (2) adequate arrangements are in place for ensuring that transactions affecting the assets of the firm do not operate unfairly between the assets representing the funds maintained by the firm in respect of its long-term insurance business and the other assets of the firm.

4

Liquidity

4.1

01/01/2016

A firm must maintain liquid assets sufficient to meet its liabilities as they become due.