The Insurance Companies (Accounts and Statements) Regulations 1996

Explanatory Note

(This Note is not art of the Regulations)

These Regulations prescribe the form and content of the annual returns which insurance companies to which Part II of the Insurance Companies Act 1982 applies are required to make to the Secretary of State. They consolidate, with modifications, the Insurance Companies (Accounts and Statements) Regulations 1983 as amended.

The principal changes from the 1983 Regulations are the following:

• a general re-organisation and updating of the forms relating to long term and other than long term business, to reflect current commercial practice;

• replacement of the previous form-based reporting of other than long term business reinsurance protections by a new free-form reporting (Schedule 5);

• new reporting of the assets used as the basis for discounting liabilities (Form 30);

• a reduction of the volume of reporting in some areas by the introduction of increased de minimis exemptions;

• transfer of several long term business forms from Schedule 3 to the Regulations to Schedule 4 with the consequence that such forms now become the responsibility of the appointed actuary of the company and will no longer be required to be audited;

• omission of the prescribed form of the quinquennial statement of long term business required by section 18(3) of the 1982 Act (Schedule 5 to the 1983 Regulations) in anticipation of an order to be made under section 1 of the Deregulation and Contracting Out Act 1994 abolishing the requirement for that statement.

Regulations 1 and 2 make provision for the citation, commencement and application of the Regulations, and regulation 3 and contains provision for their interpretation.

Regulation 4 prescribes how a company’s assets and liabilities are to be valued for the purposes of the Regulations, and regulation 5 provides generally for the form and content of the returns.

Regulation 6 prescribes the form of the balance sheet, which is to comply with the requirements of Schedule 1 and to appear in Forms 9 to 15 and 17 set out in that Schedule.

Regulation 7 prescribes the form of the profit and loss account, which is to comply with the requirements of Schedule 1 and to appear in Form 16.

Regulation 8 prescribes the form of the revenue account, which is to comply with the requirements of Schedule 1. In the case of a company carrying on general business it is to appear in Form 20; in the case of a company carrying on long term business, it must be in Form 40.

Regulations 9 to 16 require additional information to be provided by companies carrying on general business, which is to be provided in accordance with Schedule 2 and is to appear in the specified forms.

Regulation 9 requires information in respect of each accounting class (Forms 21 to 25).

Regulations 10 to 11 require information in respect of reinsurance treaties accepted by a company according to specified business categories (Forms 26 to 29).

Regulations 12 and 13 require information in respect of direct insurance business and inwards facultative reinsurance business, by country and according to the risk groups specified in regulation 12 (Forms 31, 32 and 34).

Regulation 14 requires additional information on direct and facultative reconciliation business (Forms 33 and 34) and regulation 16 requires information on general business prescribed for the purposes of section 34A of the 1982 Act concerning equalisation reserves (Forms 37 to 39).

Regulation 15 requires the provision of Form 36 where Forms prepared under regulations 11 to 13 contain figures in a currency other than sterling.

Regulation 17 requires additional information to be provided by companies carrying on long term business. The information is to be prepared in accordance with Schedule 3 and to appear on Forms 21 to 45.

Regulations 19, 20 and 21 require companies carrying on general business to annex to their returns statements of their major treaty reinsurers, major facultative reinsurers and major general business reinsurance cedants.

Regulation 23 requires every company to annex a statement of its derivative contracts and regulation 24 requires every UK company to annex a statement of its shareholder controllers.

Regulation 25 provides that the abstract of the actuary’s report required by section 18 of the Act is to comply with Schedule 4 and include certain specified forms.

Regulation 26 provides that a company which carries on general business must annex to its return a statement of information on general business ceded as required by Schedule 5.

Regulation 27 defines who may sign the various documents. The certificates required to accompany the returns are defined in Parts I and II of Schedule 6 (regulation 28). The auditor’s report is to comply with the requirements of Part III of Schedule 6 (regulation 29).

Regulations 30 and 32 define respectively the minimum qualifications of the actuary and the auditor. Information about the actuary is required to be given (regulation 31).

Regulation 33 contains transitional provisions.

Regulation 34 makes minor amendments to the 1983 regulations until such time as they are revoked.

Regulation 35 provides for the revocation of those Regulations as amended to the extent specified in Schedule 7.

A Compliance Cost Assessment is available, copies of which have been placed in the libraries of both Houses of Parliament. Copies are also available from the Insurance Directorate of the Department of Trade and Industry, Room 5.C.53, 1 Victoria Street, London SW1H 0ET.