{
  "url": "https://openlegislation.uk/insurance-lloyds-regulations-1997/regulation-3",
  "json_url": "https://openlegislation.uk/insurance-lloyds-regulations-1997/regulation-3.json",
  "legislation": "uksi/1997/686",
  "legislation_title": "The Insurance (Lloyd's) Regulations 1997",
  "legislation_url": "https://openlegislation.uk/insurance-lloyds-regulations-1997",
  "path": "regulation/3",
  "kind": "regulation",
  "number": "3",
  "heading": "Financial Resources",
  "text": "(1) For regulation 3 of the 1983 Regulations (financial resources) substitute—\n“3 (1) In their application to the members of Lloyd’s taken together, section 32 of the Act (margins of solvency) and regulations made for the purposes of that section shall have effect subject to the following modifications.\n(2) No valuation regulations shall be applicable.\n(3) The following items shall have no value except in pursuance of a determination made by the Secretary of State pursuant to section 84(1) of the Act, that is to say—\n(a) those relating to future profits;\n(b) those relating to zillmerising, that is to say the method known by that name for modifying the net premium reserve method of valuing a long term policy by increasing the part of the future premiums for which credit is taken so as to allow for initial expenses; and\n(c) those relating to hidden reserves resulting from the under-estimation of assets and the over-estimation of liabilities (other than mathematical reserves).\n(4) Subject to paragraph (3) above, the value of the assets and the amount of the liabilities of the members of Lloyd’s taken together shall be determined on a basis approved by the Secretary of State.\n(5) The members of Lloyd’s taken together shall maintain both a global margin of solvency and a combined margin of solvency, calculated as follows—\n(a) the global margin of solvency shall be the sum arrived at by applying regulation 17(1) of the Insurance Companies Regulations 1994 (margins of solvency: determination) to the members of Lloyd’s taken together, subject to the modifications made to Schedules 3 and 4 to those Regulations (relating to general business margins of solvency) which are set out in Schedule 1 below; and\n(b) the combined margin of solvency shall be the sum arrived at by aggregating the prescribed surpluses of all such members calculated in accordance with Schedule 1A below.\n(6) In determining whether at any time the global margin of solvency is maintained by the members of Lloyd’s taken together, account shall be taken of the assets and liabilities of Lloyd’s in addition to the assets and liabilities of the members.\n(7) In determining whether at any time the combined margin of solvency is maintained by the members of Lloyd’s taken together—\n(a) the assets and liabilities of members shall be aggregated except that no account shall be taken of the assets of any member to the extent that they exceed the prescribed surplus of that member; and\n(b) the assets of Lloyd’s shall be taken into account to the extent that they are available to meet the liabilities of any member.\n3A In the application to the members of Lloyd’s taken together of section 33 of the Act (failure to maintain minimum margin) and of regulations made for the purposes of that section, whether in relation to the global or the combined margin of solvency, those regulations shall have effect as if such members taken together were authorised for all classes of general business carried on at Lloyd's.\n3B In the application to the members of Lloyd’s taken together of section 35 of the Act (form and situation of assets) and of regulations made for the purposes of that section, all insurance business carried on by members of Lloyd’s as such members shall be treated as carried on in the United Kingdom except business carried on in accordance with an authority or permission under the laws of another country and included in a return to a supervisory authority in that country.”\n(2) After Schedule 1 to the 1983 Regulations (modifications of Schedules 3 and 4 to the Insurance Companies Regulations 1994), insert Schedule 1A (calculation of prescribed surplus), as set out in Schedule 1 to these Regulations.",
  "extent": null,
  "status": null,
  "version": "current",
  "annotations": [
    {
      "type": "footnote",
      "label": "f1",
      "text": "Regulation 3 was amended by S.I. 1994/1516, reg. 85 (2)(c) to (f)."
    },
    {
      "type": "footnote",
      "label": "f2",
      "text": "S.I. 1994/1516."
    }
  ],
  "outstanding_effects": [],
  "provenance": {
    "source": "legislation.gov.uk",
    "source_url": "https://www.legislation.gov.uk/uksi/1997/686/regulation/3",
    "retrieved_at": "2026-10-29T12:22:25.804486+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."
}