Part IIU.K. Regulation of Insurance Companies
Modifications etc. (not altering text)
C1Pt. II (ss. 15-71) restricted (1.1.1993) by S.I. 1992/3218, reg65
Pt. II (ss. 15-71) extended (24.12.1996) by S.I. 1996/3011, reg. 3(1)(b), 10(1)
Assets and liabilities attributable to long term businessU.K.
30 Allocations to policy holders.U.K.
(1)Where in the case of an insurance company to which this Part of this Act applies—
(a)there is an established surplus in which long term policy holders of any category are eligible to participate, and
(b)an amount has been allocated to policy holders of that category in respect of a previously established surplus in which policy holders of that category were eligible to participate,
the company shall not by virtue of section 29(2) above transfer or otherwise apply assets representing any part of the surplus mentioned in paragraph (a) above unless the company has either allocated to policy holders of that category in respect of that surplus an amount not less than the relevant minimum, or complied with the requirements of subsection (3) below and made to those policy holders any allocation of which notice is given under paragraph (a) of that subsection.
(2)Subject to subsections (6) and (7) below, the relevant minimum is the amount represented by the formula
where—
a is the last previously established surplus in respect of which an amount was allocated to policy holders of the category in question;
b is the amount so allocated; and
c is the surplus referred to in subsection (1)(a).
(3)The requirements of this subsection are that the company—
(a)has served on the Secretary of State a written notice stating that it proposes to make no allocation or an allocation of an amount (specifying it) which is smaller than the relevant minimum; and
(b)has published a statement approved by the Secretary of State in the London, Edinburgh and Belfast Gazettes and in such other ways as he may have directed,
and that a period of not less than fifty-six days has elapsed since the date, or the last date, on which the company has published the statement mentioned in paragraph (b) above as required by or under that paragraph.
(4)In this section
“established surplus” means an excess of assets representing the whole or a particular part of the fund or funds maintained by the company in respect of its long term business over the liabilities, or a particular part of the liabilities, of the company attributable to that business as shown by an investigation to which section 18 above applies or which is made in pursuance of a requirement imposed under section 42 below.
(5)For the purposes of this section an amount is allocated to policy holders if, and only if—
(a)bonus payments are made to them; or
(b)reversionary bonuses are declared in their favour or a reduction is made in the premiums payable by them;
and the amount of the allocation is, in a case within paragraph (a) above, the amount of the payments and, in a case within paragraph (b) above, the amount of the liabilities assumed by the company in consequence of the declaration or reduction.
(6)For the purposes of this section the amount of any bonus payments made in anticipation of an established surplus shall be treated as an amount allocated in respect of the next established surplus in respect of which an amount is allocated to eligible policy holders generally; and for the purposes of sub-section (2) above the amount of any surplus in respect of which such an allocation is made shall be treated as increased by the amount of any such payments.
(7)Subsection (1) above shall not authorise the application for purposes other than those mentioned in section 29(1) above of assets representing any part of the surplus mentioned in sub-section (1)(a) above which the company has decided to carry forward unappropriated; and for the purposes of subsection (2) above the amount of any surplus shall be treated as reduced by any part thereof which the company has decided to carry forward as aforesaid.
(8)For the purposes of subsection (1) above policy holders shall be taken to be eligible to participate in an established surplus in any case where they would be eligible to participate in a later established surplus representing it if it were carried forward unappropriated.