TITLE IU.K. [X1VALUATION AND RISK-BASED CAPITAL REQUIREMENTS (PILLAR I), ENHANCED GOVERNANCE (PILLAR II) AND INCREASED TRANSPARENCY (PILLAR III)]

CHAPTER IIU.K. VALUATION OF ASSETS AND LIABILITIES

Article 9U.K.Valuation methodology — general principles

1.Insurance and reinsurance undertakings shall recognise assets and liabilities in conformity with the [F1UK-adopted international accounting standards].

2.Insurance and reinsurance undertakings shall value assets and liabilities in accordance with [F2UK-adopted international accounting standards] provided that those standards include valuation methods that are consistent with the valuation approach set out in Article 75 of Directive 2009/138/EC. Where those standards allow for the use of more than one valuation method, insurance and reinsurance undertakings shall only use valuation methods that are consistent with Article 75 of Directive 2009/138/EC.

3.Where the valuation methods included in [F3UK-adopted international accounting standards] are not consistent either temporarily or permanently with the valuation approach set out in Article 75 of Directive 2009/138/EC, insurance and reinsurance undertakings shall use other valuation methods that are deemed to be consistent with Article 75 of Directive 2009/138/EC.

4.By way of derogation from paragraphs 1 and 2, and in particular by respecting the principle of proportionality laid down in paragraphs 3 and 4 of Article 29 of Directive 2009/138/EC, insurance and reinsurance undertakings may recognise and value an asset or a liability based on the valuation method it uses for preparing its annual or consolidated financial statements provided that:

(a)the valuation method is consistent with Article 75 of Directive 2009/138/EC;

(b)the valuation method is proportionate with respect to the nature, scale and complexity of the risks inherent in the business of the undertaking;

(c)the undertaking does not value that asset or liability using [F4UK-adopted international accounting standards] in its financial statements;

(d)valuing assets and liabilities using international accounting standards would impose costs on the undertaking that would be disproportionate with respect to the total administrative expenses.

5.Insurance and reinsurance undertakings shall value individual assets separately.

6.Insurance and reinsurance undertakings shall value individual liabilities separately.

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