Prudential Regulation Authority Rulebook

6.1

This Chapter does not apply:

1. (1) to a pure reinsurer; or
2. (2) in respect of assets held to cover index-linked liabilities or property-linked liabilities, except that, where the linked long-term contract of insurance in question includes a guarantee of investment performance or some other guaranteed benefit, this Chapter will nevertheless apply to assets held to cover that guaranteed element.

6.2

Assets held by a firm to cover its technical provisions and other long-term insurance liabilities or general insurance liabilities must:

1. (1) have characteristics of safety, yield and marketability which are appropriate to the type of business carried on by the firm;
2. (2) be diversified and adequately spread; and
3. (3) in accordance with 6.3, be of a sufficient amount, and of an appropriate currency and term, to ensure that the cash inflows from those assets will meet the expected cash outflows from the firm's insurance liabilities as they become due.

6.3

For the purpose of 6.2(3), in determining expected cash outflows, a firm must take into consideration any options which exist in the firm's contracts of insurance.