Prudential Regulation Authority Rulebook

3.1

A firm, other than a Swiss general insurer, must complete Form 3.

3.2

A Swiss general insurer must complete Form 10.

3.3

Subject to 3.4, a firm, other than a Swiss general insurer, must complete Forms 11 and 12 as follows:

1. (1) if a composite firm, Forms 11 and 12 must be completed separately for:
1. (a) the total general insurance business; and
2. (b) the total long-term insurance business which is class IV or supplementary accident and sickness insurance business or life protection reinsurance business written by a pure reinsurer or a mixed insurer; or
2. (2) for other firms, Forms 11 and 12 must be completed for:
1. (a) the total general insurance business; or
2. (b) the total long-term insurance business which is class IV, or supplementary accident and sickness insurance business or life protection reinsurance business written by a pure reinsurer or a mixed insurer as appropriate.

3.4

A firm does not need to complete Forms 11 and 12 in relation to long-term insurance business where:

1. (1) the gross annual premiums for:
1. (a) class IV business;
2. (b) life protection reinsurance business written by a pure reinsurer or a mixed insurer; and
3. (c) supplementary accident and sickness insurance,
2. in force on the valuation date do not exceed 1% of the gross annual premiums in force on that date for all long-term insurance business; and
3. (2) the amount of insurance health risk and life protection reinsurance capital component shown in Form 60 exceeds the amount that would be obtained if Forms 11 and 12 were to be completed for long-term insurance business.

3.5

Form 13 must be completed by every firm in respect of its total assets other than long-term insurance assets.

3.6

Subject to 3.9, for each Form 13 which a firm is required to complete under 3.5, the firm must complete Form 17 in respect of the same insurance business.

3.7

Form 15 must be completed by every firm except a firm not trading for profit which carried on only long-term insurance business during the relevant financial year.

3.8

A firm must complete Form 16.

3.9

A firm is not required to complete Form 17 where the sum of the total notional amounts for derivative contracts bought/long and sold/short would not exceed the lesser of:

1. (1) £100m; or
2. (2) 5% of assets not held to match linked liabilities for the total long-term insurance business assets or the total assets other than long-term insurance business assets.

3.10

Every firm must, in respect of the financial year in question, provide to the PRA when depositing documents under 2.4 a statement comprising a brief description of:

1. (1) any investment guidelines operated by the firm for the use of derivative or quasi-derivative contracts;
2. (2) any provision made by such guidelines for the use of contracts under which the firm had a right or obligation to acquire or dispose of assets which was not at the time when the contract was entered into, reasonably likely to be exercised and, if so, the circumstances in which, pursuant to that provision, such contracts would be used;
3. (3) the extent to which the firm was during the financial year a party to any contracts of the kind described in (2);
4. (4) the circumstances surrounding the use of any derivative or quasi-derivative held at any time during the financial year which required a significant provision to be made for it under Insurance Company – Risk Management 7.5, or (where appropriate) was not a permitted derivatives contract; and
5. (5) the total value of any fixed consideration received by the firm (whether in cash or otherwise) during the financial year in return for granting rights under derivative and quasi-derivatives and a summary of contracts under which such rights have been granted.

3.11

In respect of 3.10(4), when determining whether a required provision is ‘significant’, a firm must have regard to its obligations under the contract and the volatility of the assets identified by the firm as being suitable to cover such obligations, and the required provisions in respect of any one derivative contract must be treated as significant if:

1. (1) the aggregate provision required in respect of all contracts having a similar effect is significant; or
2. (2) the aggregate provision required in respect of all contracts with which it is connected is significant.