# The Friendly Societies (Long Term Insurance Business) Regulations 1987, Regulation 22: Implicit items: future surpluses


(1) The implicit item relating to future surpluses may be valued at not more than 50 per cent of the full amount of future surpluses.
(2) For the purposes of paragraph (1) above, the full amount of future surpluses shall be obtained by multiplying the estimated annual surplus by a factor which shall as nearly as may be represent the average number of years remaining to run on policies, but shall, if it exceeds 10, be reduced to 10.
(3) For the purposes of paragraph (2) above–
(a) the estimated annual surplus shall be taken to be one-fifth of the surplus made in long term business over a period of five years ("the relevant period') ending on the last day of the most recent year of account during which a valuation for the purposes of regulation 11 has been carried out, substantial items of an exceptional nature being excluded, and
(b) the average number of years remaining to run on policies shall be calculated–
(i) by multiplying the number of years to run on each policy by the actuarial value of the benefits payable under the policy, adding together the products so obtained and dividing the total by the aggregate of the actuarial values of the benefits payable under all the policies, or
(ii) by an approximation to this method of calculation suitable to the circumstances of the case, including, where appropriate, an approximation involving the grouping of contracts,
appropriate allowance being made in either case for premature termination of contracts.

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Source: https://www.legislation.gov.uk/uksi/1987/2132/regulation/22 (the official version)
Page: https://openlegislation.uk/friendly-societies-long-term-insurance-business-regulations-1987/regulation-22
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.