Prudential Regulation Authority Rulebook

6.1

In accordance with 6.2, a scheme of operations must:

1. (1) describe the firm's run-off strategy;
2. (2) include a description of the business underwritten by the firm;
3. (3) include the following financial projections (including appropriate scenarios and stress-tests) as applicable:
1. (a) a forecast summary profit and loss account in accordance with 6.3;
2. (b) a forecast summary balance sheet in accordance with 6.4;
3. (c) in the case of a non-directive friendly society only, a forecast statement of its margin of solvency and required margin of solvency at the end of each financial year or part financial year;
4. (d) in the case of an incorporated friendly society only, a forecast statement of its margin of solvency and guarantee fund at the end of each financial year or part financial year; and
5. (e) in the case of a non-directive insurer (other than a non-directive friendly society), a forecast statement of capital resources and the CR Requirement at the end of each financial year or part financial year;
4. (4) as at the end of each financial year which falls (in whole or part) within the period to which the scheme of operations relates:
1. (a) describe the assumptions which underlie those forecasts and the reasons for adopting those assumptions; and
2. (b) identify any material transactions proposed to be entered into or carried out with, or in respect of, any associate or any other person with whom the firm has close links;
5. (5) cover the run-off period until all liabilities to policyholders are met.

6.2

The information required by 6.1 must:

1. (1) in the case of a non-directive friendly society (other than a flat rate benefits business friendly society), reflect the nature and content of the rules relating to the margin of solvency and the required margin of solvency;
2. (2) in the case of an incorporated friendly society, reflect the nature and content of the rules relating to the margin of solvency and the guarantee fund;
3. (3) in the case of a non-directive insurer (other than a non-directive friendly society), reflect the nature and content of the rules relating to capital resources applicable to a firm; and
4. (4) where a firm carries on both long-term insurance business and general insurance business, be separated for long-term insurance business and general insurance business.

6.3

The forecast summary profit and loss account referred to in 6.1(3) (a) must contain the following information:

1. (1) premiums and claims (gross and net of reinsurance) analysed by accounting class of insurance business;
2. (2) investment return;
3. (3) expenses;
4. (4) other charges and income;
5. (5) taxation; and
6. (6) dividends paid and accrued.

6.4

The forecast summary balance sheet referred to in 6.1(3) (b) must contain the following information:

1. (1) investments analysed by type;
2. (2) assets held to cover linked long-term liabilities;
3. (3) other assets and liabilities separately identifying cash at bank and in hand;
4. (4) capital and reserves analysed into called up share capital or equivalent funds, share premium account, revaluation reserve, other reserves and profit and loss account;
5. (5) subordinated liabilities;
6. (6) the fund for future appropriations;
7. (7) technical provisions gross and net of reinsurance analysed by accounting class of insurance business and separately identifying the provision for linked long-term liabilities, unearned premiums, unexpired risks and equalisation; and
8. (8) other liabilities and credits.