Prudential Regulation Authority Rulebook

12.1

1. (1) The amount of any increase to the net premium for deferred acquisition costs must not exceed the equivalent of the recoverable acquisition expenses spread over the period of premium payments and calculated in accordance with the rates of interest, mortality and morbidity assumed in calculating the mathematical reserves.
2. (2) The recoverable acquisition expenses in (1) must not exceed the lower of:
1. (a) the value of the excess of actual premiums over net premiums; and
2. (b) 3.5% of the relevant capital sum.
3. (3) Recoverable acquisition expenses may be calculated as the average for a group of similar contracts weighted by the relevant capital sum for each contract.