268 Realised profits of insurance company with long term business.E+W+S
(1)Where [F1an authorised insurance company] carries on long term business—
[F2(a)any amount included in the relevant part of the balance sheet of the company which represents a surplus in the fund or funds maintained by it in respect of that business and which has not been allocated to policy holders [F3or, as the case may be, carried forward unappropriated, in accordance with asset identification rules made under section 142(2) of the Financial Services and Markets Act 2000], and]
(b)any deficit in that fund or those funds,
are to be (respectively) treated, for purposes of this Part, as a realised profit and a realised loss; and, subject to this, any profit or loss arising in that business is to be left out of account for those purposes.
(2)In subsection (1)—
[F4(aa)the reference to the relevant part of the balance sheet is
[F5(i)in the case of Companies Act individual accounts,] to that part of the balance sheet which represents Liabilities item A.V (profit and loss account) in the balance sheet format set out in section B of Chapter I of Part I of Schedule 9A, [F6and
(ii)in the case of IAS individual accounts, to that part of the balance sheet which represents accumulated profit or loss,]]
(a)the reference to a surplus in any fund or funds of an insurance company is to an excess of the assets representing that fund or those funds over the liabilities of the company attributable to its long term business, as shown by an actuarial investigation, and
(b)the reference to a deficit in any such fund or funds is to the excess of those liabilities over those assets, as so shown.
(3)In this section—
[F7(a)“actuarial investigation” means—
(i)an investigation made into the financial condition of an authorised insurance company in respect of its long term business, carried out once in every period of twelve months in accordance with rules made under Part 10 of the Financial Services and Markets Act 2000 by an actuary appointed as actuary to that company; or
(ii)an investigation made into the financial condition of an authorised insurance company in respect of its long term business carried out in accordance with a requirement imposed by the Financial Services Authority under section 166 of that Act by an actuary appointed as actuary to that company;]
[F8(b)“long term business” means business which consists of effecting or carrying out contracts of long term insurance.]
[F9(4)The definition of “long term business” in paragraph (3) must be read with—
(a)section 22 of the Financial Services and Markets Act 2000;
(b)any relevant order under that section; and
(c)Schedule 2 to that Act.]
Textual Amendments
F1Words in s. 268(1) substituted (1.12.2001) by S.I. 2001/3649, arts. 1, 18(1)(2)(a)
F2S. 268(1)(a) substituted (2.2.1996) by S.I. 1996/189, reg. 13(2)
F3Words in s. 268(1)(a) substituted (1.12.2001) by S.I. 2001/3649, arts. 1, 18(1)(2)(b)
F4S. 268(2)(aa) inserted (2.2.1996) by S.I. 1996/189, reg. 13(3)
F5Words in s. 268(2)(aa) inserted (12.11.2004 with effect as mentioned in reg. 1(2) of the amending S.I.) by The Companies Act 1985 (International Accounting Standards and Other Accounting Amendments) Regulations 2004 (S.I. 2004/2947), reg. 3, Sch. 1 para. 24(a)
F6S. 268(2)(aa)(ii) and preceding word inserted (12.11.2004 with effect as mentioned in reg. 1(2) of the amending S.I.) by The Companies Act 1985 (International Accounting Standards and Other Accounting Amendments) Regulations 2004 (S.I. 2004/2947), reg. 3, Sch. 1 para. 24(b)
F7S. 268(3)(a) substitued (1.12.2001) by S.I. 2001/3649, arts. 1, 18(1)(3)(a)
F8S. 268(3)(b) substituted (1.12.2001) by S.I. 2001/3649, arts. 1, 18(1)(3)(b)
F9S. 268(4) inserted (1.12.2001) by S.I. 2001/3649, arts. 1, 18(1)(4)
Modifications etc. (not altering text)
C1S. 268 modified (temp.) (10.12.2007) by The Reinsurance Directive Regulations 2007 (S.I. 2007/3253), reg. 2(3), Sch. 3 para. 2(2)