The Insurance Companies Regulations 1994

PART III DEPOSITS

Interpretation: Part III

7.  In this Part of these Regulations—

“Accountant General” means the Accountant General of the Supreme Court;

“deposit” means the deposit mentioned in section 9(1)(c) of the Act and “depositor” means an insurance company making (or intending to make) such a deposit;

“the minimum”, in relation to a deposit, means one-half of the minimum guarantee fund appropriate to the margin of solvency which the depositor is required to maintain under section 32(2)(b) or (3)(b) of the Act;

“permitted securities” means securities in which cash under the control of or subject to the order of the Supreme Court may be invested pursuant to Order 22, rule 13, of the Rules of the Supreme Court 1965(1).

Making and amount of deposit

8.  Every deposit made pursuant to section 9(1)(c) of the Act shall (subject to section 9(2)(b) of the Act) be made with the Accountant General and shall be maintained by the depositor at a level equal to at least the minimum.

Direction etc. by the Secretary of State

9.—(1) The Secretary of State, where he is satisfied that a deposit is required to be made with the Accountant General pursuant to regulation 8 above or under an agreement of the kind mentioned in section 9(2)(b) of the Act, may (and on the application of the depositor shall)—

(a) certify the fact of the requirement,

(b) specify the minimum in pounds sterling, and

(c) direct the Accountant General to receive the deposit.

(2) Where the minimum changes, the Secretary of State may (and on the application of the depositor shall)—

(a) certify the fact of the change,

(b) specify the changed minimum in pounds sterling, and

(c) direct the Accountant General to receive any additional sum required to ensure that the deposit is maintained in accordance with regulation 8 above.

Permitted securities

10.—(1) Subject to paragraph (2) below, any payment to be made by the depositor to the Accountant General in respect of the deposit may be partly or wholly effected by the lodgement of permitted securities instead of cash.

(2) Paragraph (1) above shall not apply unless the depositor gives to the Accountant General—

(a) a valuation of the securities as on a day not more than two days before that on which the Accountant General receives the request for such a lodgement to be effected, and

(b) a report by a duly authorised person stating that in his opinion the valuation has been made in accordance with Part VIII of these Regulations.

(3) In paragraph (2) above “duly authorised person” means a member of the Stock Exchange or a person who is eligible for appointment as a company auditor under section 25 of the Companies Act 1989(2).

Investment

11.—(1) Subject to paragraph (2) below, the Accountant General may on the application of a depositor—

(a) invest in permitted securities (to be specified by the applicant) any cash which constitutes or forms part of the deposit or will do so on the maturity of any security, or

(b) realise any securities (to be specified by the applicant) constituting or forming part of the deposit and either reinvest the net proceeds in permitted securities (to be specified by the applicant) or retain the net proceeds as cash.

(2) No application may be made under paragraph (1) above unless at least twenty-eight days have elapsed since any previous application under that paragraph.

Disposal of surplus

12.—(1) Subject to paragraphs (2) and (3) below, the Secretary of State on the application of a depositor may direct the Accountant General—

(a) to transfer to the depositor any of the securities constituting or forming part of the deposit, or

(b) to realise any of the securities constituting or forming part of the deposit and to pay the net proceeds to the depositor, or

(c) to pay to the depositor any cash which constitutes or forms part of the deposit (or will do so on the maturity of any security).

(2) The Secretary of State shall not give a direction under paragraph (1) above unless it appears to him that the remaining cash and securities constituting the deposit after the dealing specified in the direction has been carried out will, if valued in accordance with Part VIII of these Regulations as on the day before the direction is given, be equal in value to at least the minimum.

(3) Nothing in paragraph (1) or (2) above shall relieve the depositor of the obligation imposed on him by regulation 8 above to maintain the deposit at a level equal to at least the minimum.

Cessation of business etc.

13.—(1) Where the depositor has ceased to carry on in the United Kingdom the business in respect of which the deposit was made or has ceased to be a company to which section 9 of the Act applies, then, except in a case where paragraph (2) below applies, the depositor or any other person who is entitled to give a good discharge for the funds representing the deposit may apply to the Secretary of State for those funds to be released to the depositor or to that other person, as the case may be.

(2) In the event of the depositor becoming bankrupt, the amount of the deposit shall be paid to the trustee or assignees in bankruptcy; and if, in a case where the depositor is a corporation, the corporation is ordered to be wound up by or under the supervision of the court, the amount of the deposit shall be repaid to the corporation.

(3) The Secretary of State, on receipt of an application under paragraph (1) above accompanied by the appropriate declaration, may in relation to any cash or securities constituting the deposit or part of the deposit direct the Accountant General that—

(a) the cash shall be paid to the applicant, or

(b) the securities shall be realised and the net proceeds shall be paid to the applicant, or

(c) the securities shall be transferred to the applicant.

(4) In paragraph (3) above “the appropriate declaration” means a statutory declaration by the applicant—

(a) declaring that the applicant knows of no other person who has made or is entitled to make any claim to or on the relevant funds, and

(b) if the applicant is not the depositor—

(i) declaring that the applicant is entitled to give a good discharge for the relevant funds, and

(ii) stating the circumstances in which the applicant is so entitled.

Effect of direction etc.

14.—(1) A direction given by the Secretary of State pursuant to this Part of these Regulations shall be sufficient authority for the Accountant General to comply with it; and it shall be the duty of the Accountant General to act accordingly.

(2) A direction given under regulation 9(1) or (2) above shall be construed as authorising the Accountant General to receive any amount necessary to ensure the maintenance of the deposit at a level equal to at least the minimum or the changed minimum, as the case may be.

(3) The Secretary of State (without prejudice to his power to give a direction under regulation 9(1) or (2) above) may give a direction authorising the Accountant General to receive an amount which, either alone or when aggregated with sums already deposited, is less than the minimum or the changed minimum, as the case may be.

Application of rules under s.38(7) of the Administration of Justice Act 1982

15.—(1) The funds rules (except in so far as they may be inconsistent with this Part of these Regulations) shall apply for the purposes of this Part of these Regulations, subject to the modification in paragraph (2) below.

(2) Any reference in the funds rules to cash, securities or funds lodged in court shall be taken to include any cash or securities deposited with the Accountant General pursuant to the Act and this Part of these Regulations.

(3) In paragraphs (1) and (2) above “the funds rules” means any rules for the time being in force under section 38(7) of the Administration of Justice Act 1982(3).

(1)

S.I. 1965/1776 amended by S.I. 1969/1894, rule 4 and by S.I. 1982/1111, rule 113.

(2)

1989 c. 40.

(3)

1982 c. 53.