{
  "url": "https://openlegislation.uk/insurance-companies-amendment-regulations-1995/regulation-10",
  "json_url": "https://openlegislation.uk/insurance-companies-amendment-regulations-1995/regulation-10.json",
  "legislation": "uksi/1995/3248",
  "legislation_title": "The Insurance Companies (Amendment) Regulations 1995",
  "legislation_url": "https://openlegislation.uk/insurance-companies-amendment-regulations-1995",
  "path": "regulation/10",
  "kind": "regulation",
  "number": "10",
  "heading": "Derivative contracts",
  "text": "For regulation 55 of the 1994 Regulations, substitute—\n“Derivative contracts\n55 (1) The value of rights under a derivative contract to which this regulation applies shall be—\n(a) in the case of a listed derivative contract, the market value; and\n(b) in the case of an unlisted derivative contract, the amount which would reasonably be paid by way of consideration for closing out that contract\nin either case taking into account the market value of any assets which at the relevant date have been transferred to or for the benefit of the company in pursuance of a condition in that contract or a related contract.\n(2) This regulation applies to an approved derivative contract which is covered and—\n(a) which is held in connection with a contract or asset of the type described in paragraph (3) below for the purposes of reduction of investment risks or efficient portfolio management; or\n(b) which has the effect of an approved derivative contract held in connection with a contract or asset of the type mentioned in paragraph (3) below for such purposes.\n(3) The contact or asset described in this paragraph shall be either—\n(a) an approved derivative contract or a contract or asset having the effect of an approved derivative contract either of which, when taken together with the approved derivative contract the rights under which are being valued in accordance with this regulation, would have the effect that the company either holds an asset for the valuation of which provision is made in this Part of these Regulations or holds an approved derivative contract in connection with such an asset; or\n(b) an asset for the valuation of which provision is made in this Part of these Regulations, being neither a derivative contract nor a contract or asset having the effect of a derivative contract.\n(4) For the purposes of this regulation an approved derivative contract is covered if it does not require a significant provision to be made in respect of it pursuant to regulation 61 below.\n(5) For the purposes of determining in accordance with paragraph (4) above whether a required provision is significant, regard shall be had to the obligations of the company under the contract and the volatility of the assets identified by the company as being suitable to cover such obligations, and the required provision in respect of any one derivative contract shall be deemed to be significant if—\n(a) the aggregate provision required in respect of all contracts having a similar effect is significant; or\n(b) the aggregate provision required in respect of all contracts with which it is connected is significant.\n(6) In this regulation “approved derivative contract” means a derivative contract which—\n(a) either is listed or has been entered into with an approved counterparty; and\n(b) the insurance company reasonably believes may be readily closed out; and\n(c) is either a contract for differences to which paragraph (7) below applies or a futures contract or an option to either of which paragraph (8) below applies.\n(7) This paragraph applies to—\n(a) a contract for differences under which the amount payable by either party is calculated solely by reference to fluctuations in any of the following, namely—\n(i) the value of an asset for the valuation of which provision is made in this Part of these Regulations; or\n(ii) the amount of income from such an asset over a defined period; or\n(iii) an index of such assets, being an index in respect of which a derivative contract is listed; or\n(iv) a national index of retail prices published by or under the authority of a government of a state belonging to Zone A as defined in Council Directive 89/647/EEC of 18 December 1989 on a solvency ratio for credit institutions;\nor an arithmetic average thereof, and—\n(b) a contract under which the amount payable by either party is calculated by reference to the difference between the market value and the amortised value of any asset for the valuation of which provision is made in this Part of these Regulations.\n(8) This paragraph applies to a futures contract or an option which in either case provides for the acquisition or disposal of assets for the valuation of all of which provision is made in this Part of these Regulations at a price which is determined by one or more of the following methods—\n(a) for each date on which the contract may be completed or the option exercised, the price is a fixed amount under the terms of the contract or option;\n(b) it is determined by reference to the market value or the amortised value of an asset for the valuation of which provision is made in this Part of these Regulations or the amount of income over a defined period from such an asset;\n(c) it is determined by reference to an index of the kind mentioned in paragraph 7(iii) or (iv) above.”",
  "extent": null,
  "status": null,
  "version": "current",
  "annotations": [
    {
      "type": "footnote",
      "label": "f1",
      "text": "O.J. No. L386, 30.12.89, p.14."
    }
  ],
  "outstanding_effects": [],
  "provenance": {
    "source": "legislation.gov.uk",
    "source_url": "https://www.legislation.gov.uk/uksi/1995/3248/regulation/10",
    "retrieved_at": "2026-10-29T12:55:39.681974+00:00"
  },
  "licence": "Open Government Licence v3.0",
  "licence_url": "https://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/",
  "attribution": "Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives."
}