# The Friendly Societies (Insurance Business) (Amendment) Regulations 1996, Regulation 17: Provision for adverse changes


For regulation 36 of the 1994 Regulations (provision for adverse changes) substitute—
“36 (1) A society which has or may have (following the exercise of any right by the society or any other party) an obligation to which this regulation applies to deliver assets or make a payment shall—
(a) at all times identify the assets held by it which it considers to be the most suitable to cover such obligation; and
(b) make prudent provision for the effect on the amount of its excess assets of adverse variations between the value of the assets identified and the value of the assets which it is or may be obliged to deliver or the amount of the payment which it is or may be obliged to make.
(2) For the purposes of paragraph (1) above the society shall take into account all reasonably foreseeable adverse variations and shall have particular regard to past volatility in the value of the assets concerned (or assets of a similar nature) and the possibility of adverse changes in such volatility in the future.
(3) For the purposes of this regulation—
“linked assets” has the meaning given in regulation 19(1) above;
“property linked liabilities” has the meaning given in paragraph 2 of Schedule 5 to these Regulations; and
“the amount of its excess assets” means the difference between the aggregate value of its assets (other than linked assets to the extent that they are held to match property linked liabilities) determined in accordance with Part IV of these Regulations and the amount of its liabilities (other than property linked liabilities or liabilities for which provision is made in accordance with this regulation).
(4) Subject to paragraph (5) below, this regulation applies to an obligation—
(a) under a contract relating to investments of the kinds mentioned in item B under the heading “Assets” in Part I of Schedule 2 to the Friendly Societies (Accounts and Related Provisions) Regulations 1994 (whether such contract constitutes an asset or liability of the society);
(b) undertaken for the purposes of, or in connection with the making of, investments of the kind mentioned in sub-paragraph (a) above; or
(c) under a contract providing for the purchase, sale or exchange of currency.
(5) This regulation shall not apply to a contract to the extent that it relates to, or is for the purposes of the making of an investment in, or is in connection with the making of an investment in, a building which is to be occupied by the society and used by the society for the conduct of its business.”.

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Source: https://www.legislation.gov.uk/uksi/1996/3008/regulation/17 (the official version)
Page: https://openlegislation.uk/friendly-societies-insurance-business-amendment-regulations-1996/regulation-17
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.