Insurance Company - Internal Contagion Risk

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


This Part applies to the whole of the firm's business carried on world-wide.


Restriction of Business


A firm other than a pure reinsurer must not carry on any commercial business other than insurance business and activities directly arising from that business.


A pure reinsurer must not carry on any business other than the business of reinsurance and related operations.


Financial Limitation of Non-Insurance Activities


A firm must limit, manage and control its non-insurance activities so that there is no significant risk arising from those activities such that it may be unable to meet its liabilities as they fall due.


Separately Identify and Maintain Long-Term Insurance Assets


A firm carrying on long-term insurance business must identify the assets relating to its long-term insurance business which it is required to hold by virtue of:

  1. (1) in the case of a pure reinsurer:
    1. (a) Insurance Company - Technical Provisions 4.1 or 4.2; and
    2. (b) Insurance Company - Risk Management 5.1; and
  2. (2) in any other case:
    1. (a) Insurance Company - Technical Provisions 4.1 or 4.2; and
    2. (b) Insurance Company - Risk Management 4.2 and 4.3.


  1. (1) A firm's long-term insurance assets are the items in (2), adjusted to take account of:
    1. (a) outgoings in respect of the firm's long-term insurance business; and
    2. (b) any transfers made in accordance with 4.5.
  2. (2) The items referred to in (1) are:
    1. (a) the assets identified under 4.1 (including assets into which those assets have been converted) but excluding any assets identified as being held to cover liabilities in respect of subordinated debt;
    2. (b) any other assets identified by the firm as being available to cover its long-term insurance liabilities (including assets into which those assets have been converted) including, if the firm so elects, assets which are excluded under (a);
    3. (c) premiums and other receivables in respect of contracts of long-term insurance;
    4. (d) other receipts of the long-term insurance business; and
    5. (e) all income and capital receipts in respect of the items in (a) to (d).


  1. (1) Unless (2) applies, all the long-term insurance assets of the firm constitute its long-term insurance fund.
  2. (2) Where a firm identifies particular long-term insurance assets in connection with different parts of its long-term insurance business, the assets identified in relation to each such part constitute separate long-term insurance funds of the firm.


A firm must maintain a separate accounting record in respect of each of its long-term insurance funds.


A firm may not transfer assets out of a long-term insurance fund unless:

  1. (1) the assets represent an established surplus; and
  2. (2) no more than three months have passed since the determination of that surplus.


Exclusive Use of Long-Term Insurance Assets


  1. (1) A firm must apply a long-term insurance asset only for the purposes of its long-term insurance business.
  2. (2) For the purposes of (1), applying an asset includes coming under any obligation (even if only contingently) to apply that asset.


A firm must not agree to, or allow, any mortgage or charge on its long-term insurance assets other than in respect of a long-term insurance liability.