The Friendly Societies (Insurance Business No. 2) Regulations 1993

Valuation of solvency margins

8.—(1) Where a society to which this Part of these Regulations applies has assets in excess of its liabilities, then, in addition to any other applicable valuation regulations in Part IV of these Regulations, paragraphs (2) and (3) below shall have effect for determining the extent to which the value of the assets exceeds the amount of liabilities in connection with the required margin of solvency, the guarantee fund and the minimum guarantee fund.

(2) In the case of a society carrying on general business, any claim which the society has against its members by way of a call for supplementary contributions for a financial year shall have its full value for that financial year, subject to the limitation that the value shall not exceed–

(a) 50 per cent of the difference between the maximum contributions and the contributions called in, or

(b) 50 per cent of the required margin of solvency.

(3) The items mentioned in regulations 9 to 11 below (which relate to future surpluses, zillmerising and hidden reserves and shall be known as “implicit items”) shall have no value, except with the consent of the Commission given upon the application of a society. Where the Commission so consents–

(a) any of the implict items may be valued in accordance with the provisions of regulations 9 to 11 with respect to long term business, and

(b) the implicit item relating to hidden reserves may be valued in accordance with regulation 11 with respect to general business.