Prudential Regulation Authority Rulebook

1.1

Unless otherwise stated, this Part applies to:

1. (1) a non-directive insurer, other than a non-directive friendly society; and
2. (2) subject to 1.2, a Swiss general insurer.

1.2

This Part only applies to a Swiss general insurer in respect of the activities of the firm carried on from a branch in the UK.

1.3

This Part applies to a firm in relation to the whole of its business, except where a particular provision provides for a narrower scope.

1.4

Where a firm carries on both long-term insurance business and general insurance business, this Part applies separately to each type of business.

1.5

In this Part, the following definitions shall apply:

asset exposure

has the meaning in 3.

business amount

means the sum of:

1. (1) the firm's total gross technical provisions (that is, calculated gross of reinsurance);
2. (2) the amount of its other liabilities (except those included in the calculation of capital resources in accordance with the capital resources table); and
3. (3) such amount as the firm may select not exceeding the amount of the firm's total capital after deductions as calculated at stage M of the capital resources table or if higher:
1. (i) in the case of a firm carrying on general insurance business, the amount of its general insurance capital requirement; and
2. (ii) in the case of a firm carrying on long-term insurance business, the amount of its long-term insurance capital requirement.

and for the purposes of (1), a firm’s total gross technical provisions exclude technical provisions in respect of index-linked liabilities or property-linked liabilities, except that where the linked long-term contract of insurance in question includes a guarantee of investment performance or some other guaranteed benefit, the total gross technical provisions include the technical provisions in respect of that guaranteed element.

closely related

has the meaning in 10.1.

control

means the relationship between a parent undertaking and a subsidiary where that relationship falls within s1162(2), (4) and (5) of the Companies Act 2006, or a similar relationship between any person and an undertaking.

counterparty exposure

has the meaning in 4.

hybrid security

means a debt security, other than an approved security, the terms of which provide, or have the effect that, the holder does not, or would not, have an unconditional entitlement to payment of interest and repayment of capital in full within 75 years of the date on which the security is being valued.

reinsurance

includes retrocession and analogous non-reinsurance financing agreements.

reinsurer

includes an issuer of an analogous non-reinsurance financing agreement.

reinsurance exposure

has the meaning in 5.

total default

occurs where:

1. (a) the single counterparty or all of the counterparties within the group of closely related counterparties fail to meet its or their obligations and simultaneously any securities issued or guaranteed by it or any of them become worthless; or
2. (b) the asset becomes worthless or all of the assets within the identical class become worthless at the same time.

unsecured debt

means any debt in respect of which the conditions in 9.3 or 9.4 are not satisfied or, if satisfied only in relation to part of the debt, that part of the debt which is not covered by collateral or a guarantee, letter of credit or credit derivative in accordance with those rules.