Prudential Regulation Authority Rulebook

3.1

This Chapter:

1. (1) applies to a composite firm, other than a pure reinsurer; and
2. (2) does not apply to a managing agent which manages one or more syndicates, all of which carry on reinsurance exclusively.

3.2

A composite firm must maintain separate accounts for each of its long-term insurance business and its general insurance business to show the sources of the results for each activity separately.

3.3

For the purposes of 3.2, the firm must:

1. (1) break down, according to origin, all income (including premiums, recoverables from reinsurance contracts and investment income) and all expenditure (including insurance settlements, additions to technical provisions, reinsurance premiums and operating expenses) in respect of its general insurance business and its long-term insurance business, respectively; and
2. (2) if items are shared between the firm’s long-term insurance business and its general insurance business, apportion those items appropriately between the two activities and enter them into the accounts on the basis of that apportionment.

[Note: Art. 74(6) of the Solvency II Directive]

3.4

The firm must record the methods on the basis of which the apportionment referred to in 3.3(2) has been made and be able to demonstrate to the PRA the appropriateness of those methods of apportionment.