Regulation 23 Valuation

(1)

Where an insurance company has assets equal to or in excess of its liabilities, then, in addition to any other applicable valuation regulations, paragraphs (2) to (5) below shall have effect for determining the extent to which the value of the assets exceeds the amount of liabilities in connection with the required margin of solvency, the guarantee fund and the minimum guarantee fund.

(2)

Where—

(a)

a company has issued shares some or all of which are not fully paid and the total paid-up value of all the shares is equal to or greater than one quarter of their nominal value or, in the case of shares issued at a premium, of the aggregate of their nominal value and the premium, or

(b)

at least one quarter of the fund of a mutual is paid up,

an amount not greater than half the total value of the amounts unpaid may be taken into account as an asset; and for the purposes of this paragraph a share shall not be regarded as fully paid if there are any amounts due but unpaid thereon.

(3)

Where a company has issued cumulative preference shares, liabilities in respect of such shares shall (notwithstanding regulation 60(2) below) only be left out of account—

(a)

in the case of such shares which are redeemable shares for the purposes of section 159 of the Companies Act 1985^f1, up to 25 per cent. of the required margin of solvency; and

(b)

in the case of such shares which are not so redeemable, up to 50 per cent. of the required margin of solvency.

(4)

In the case of a mutual carrying on general business, any claim which the mutual has against its members by way of a call for supplementary contributions for a financial year shall have its full value for that financial year, subject to the limitation that the value shall not exceed the lesser of—

(a)

50 per cent. of the difference between the maximum contributions and the contributions called in, or

(b)

50 per cent. of the required margin of solvency.

(5)

The items mentioned in regulations 24 to 26 below (which relate to future profits, zillmerising and hidden reserves and shall be known as “implicit items”) shall have no value except in pursuance of an order under section 68 of the Act; but in pursuance of such an order—

(a)

any of the implicit items may be valued in accordance with the said regulations 24 to 26 as respects long term business, and

(b)

the implicit item relating to hidden reserves may be valued in accordance with regulation 26 below as respects general business.

Annotations

Footnotes

f1: 1985 c. 6.