LAM05080 - Apportionment rules: Example of a commercial allocation for a with-profits fund
This example is a simplified view of a commercial allocation. It is for illustrative purposes only and should not be regarded as specifying any particular method. In a with-profits fund an asset share or direct allocation method would be preferred methods for allocating income and gains. However, each life company바카라 사이트™s commercial allocation method will be different and will depend on a number of factors, including the internal accounting records maintained, materiality and the underlying legal and regulatory position.
| Description of business | Allocation method | BLAGAB FA12/S98 | Trade profits FA12/S114 |
|---|---|---|---|
| Mix of separate asset pots drawn from single pool. Overall bonuses for each policyholder determined by asset share. | Asset share | 28% | By reference to bonus allocation |
| Non-profit business in with-profits fund | Mean of all NP liabilities in fund | 55% | By reference to bonus allocation |
| Other non-profits business within with-profits fund: all non-BLAGAB | Direct allocation | 0% | By reference to bonus allocation |
| German branch with-profits business all non-BLAGAB | Direct allocation | 0% | By reference to bonus allocation |
| Non-profit policies | Â | Â | Â |
| Linked assets | Direct allocation from accounting records | 4% | Direct allocation from accounting records |
| Non-linked assets | Mean liabilities | 7% | Bonus allocation when direct allocation not possible |
| German branch NP business 바카라 사이트“ All non-BLAGAB | Direct allocation | 0% | Direct allocation from accounting records |
| Unit-linked BLAGAB | Direct allocation 바카라 사이트“ all BLAGAB | 100% | Direct allocation from accounting records |
NB. Trade profits: See LAM05110
Not all companies have with-profits funds and some companies will have multiple with-profits funds. Assessing whether a commercial allocation method is appropriate requires a basic understanding of the fund structure as well as the allocation systems and records in the company.
As mentioned in LAM05070 a with-profits fund may have an accumulated estate. An allocation method will also have to be agreed for estate assets.