LLM3080 - Reinsurance to close (RITC) and technical provisions: section 107 FA2000: adaptations for Lloyd's members (page 1 of 3): regulation 7(1) to (3) of the GI reserves tax Regulations

The GI reserves Regulations SI2001/1957, as amended by SI2003/2862 and SI2005/3289, reflect the adaptations for Lloyd바카라 사이트™s underwriters at regulation 7.

Regulation 7(1)

Regulation 7(1) defines 바카라 사이트™technical provisions바카라 사이트™ as meaning the reinsurance to close (RITC) premium of a continuing member who participated on both the 바카라 사이트™reinsured바카라 사이트™ (that is, the paying) syndicate and the 바카라 사이트™reinsurer바카라 사이트™ (that is, the receiving) syndicate.

The RITC treated as a technical provision in the calculations is the lesser of the amount paid and the amount received. The importance of this becomes clear when a member바카라 사이트™s share of a syndicate바카라 사이트™s business increased or decreased and the amount of the RITC paid and received differed. See the examples at LLM3050.

The rules did not apply if the member had less than 4% of the participation on either the reinsured or the reinsurer syndicate, that is, Lloyd바카라 사이트™s members would only be affected by FA00/S107 if they held 4% or more of the capacity on any one syndicate. This test was applied separately to each syndicate of which a Name is a member, so that a Name might be affected by the legislation on some syndicates, and not on others. For those where a Name held less than 4% on either the paying or the receiving syndicate, no adjustment in respect of RITC was made.

Regulation 7(2)

Regulation 7(2) defines which parts of the GI reserves Regulations were adapted to apply to Lloyd바카라 사이트™s. Regulations 3 to 5 were specifically adapted in relation to

  • normal syndicates (those that close by RITC), in accordance with regulations 7(3) to 7(5); and
  • run-off syndicates (those that make a estimate of future liabilities - EFL), in accordance with regulations 7(3), 7(4), 7(5)(c) and 7(7).

Regulation 7(3)

Regulation 7(3) amends the terminology of regulation 3 (3)(a) so that the provisions for claims outstanding for an earlier period of account (which must be recalculated in each later period of account), were the Lloyd바카라 사이트™s 바카라 사이트˜technical provisions바카라 사이트™. These were the amount of the RITC, or the estimate for future liabilities in the case of a run-off syndicate. In Lloyd바카라 사이트™s terminology 바카라 사이트˜outstandings바카라 사이트™, the 바카라 사이트˜IBNR바카라 사이트™ and the claims handing reserves are separately identified components of the RITC. This is different from the usage in general insurance companies, where the term 바카라 사이트˜outstanding claims바카라 사이트™ includes both outstandings and IBNR.