Regulation 12 Assets to be taken into account only to a specified extent

For regulation 57 of the 1994 Regulations (assets to be taken into account only to a specified extent), substitute—

“Assets to be taken into account only to a specified extent

57

(1)

Subject to paragraphs (5) and (6) below the aggregate value of the assets of an insurance company as determined in accordance with this Part of these Regulations shall, for any of the purposes for which this Part of these Regulations apply, be reduced by an amount representing the aggregate of—

(a)

the amount by which the company is exposed to assets of any description in excess of the permitted asset exposure limit for assets of that description;

(b)

the amount by which the company is exposed to a counterparty in excess of the permitted counterparty exposure limit for such counterparty;

(c)

the amount by which the company has an excess concentration with a number of counterparties;

(d)

the value of any assets transferred to or for the benefit of the company in pursuance of a condition in a derivative contract to which regulation 55(2) above does not apply or a related contract; and

(e)

the value of any assets transferred to or for the benefit of the company in pursuance of a contract having the effect of a derivative contract to which regulation 55(2) above does not apply or a related contract,

as determined in accordance with Schedule 12 to these Regulations.

(2)

Where a company is exposed to assets of any description in excess of the permitted asset exposure limit for such assets, the reduction required to be made by paragraph (1)(a) above shall be made—

(a)

by deducting (as far as possible) the amount of the excess from the assets of that description held by the insurance company; and

(b)

where the company does not hold sufficient assets of that description to eliminate the excess (or does not hold any assets of that description) by making an appropriate deduction from the aggregate value of the assets which the company would otherwise be permitted to take into account for any of the purposes for which this Part of these Regulations applies.

(3)

Where an insurance company is required to make a reduction in accordance with paragraphs (1)(b), (c), (d) or (e) above, the reduction shall be made by making a deduction from the aggregate value of the assets which the company would otherwise be permitted to take into account for any of the purposes for which this Part of these Regulations applies.

(4)

Where an insurance company carrying on long term business has attributed assets partly to a long term business fund and partly to its other assets, any reduction required to be made by this regulation shall be made in the same proportion as the attribution.

(5)

Assets of an insurance company comprising—

(a)

approved securities or any interest accrued thereon;

(b)

debts to which regulation 48(3) applies;

(c)

rights to which regulation 48(5), (8) or (9) applies;

(d)

debts in respect of premiums;

(e)

moneys due from, or guaranteed by, the government of any state which belongs to Zone A as defined in Council Directive 89/647/EEC of 18 December 1989 on a solvency ratio for credit institutions;

(f)

shares in or debts due or to become due from a dependant falling within regulation 46 above;

(g)

holdings in a scheme falling within Council Directive 85/611/EEC of 20 December 1985 on the co-ordination of laws, regulations and administrative provisions relating to undertakings for collective investments in transferable securities; or

(h)

deferred acquisition costs

shall not be taken into account in any of the calculations described in paragraph (1) above.

(6)

Where a company has entered into any contracts providing for the payment of index linked benefits, the provisions of paragraph (1)(a) above shall not apply to assets of that company to the extent that they are held to match liabilities in respect of such benefits.”