The Friendly Societies (Insurance Business) (Amendment) Regulations 1996

Debts and other rights

9.  For regulation 23 of the 1994 Regulations (debts and other rights) substitute—

“Debts and other rights

23.— (1) The value of any debt due, or to become due, to a society, other than a debt to which regulation 21(3) above or regulation 26 below applies or to which paragraphs (2) to (6) of this regulation apply, shall be—

(a) in the case of a debt which is due, or will become due, within twelve months of the relevant date (including any debt which would become due within that period if the society were to exercise any right to which it is entitled to require payment of the same), the amount which can reasonably be expected to be recovered in respect of that debt; and

(b) in the case of any other debt, the amount which would reasonably be paid by way of consideration for an immediate assignment of the debt;

in either case due account being taken of the terms and conditions for payment of the debt and, where the debt is secured, the nature and quality of the security.

(2) Any debt due, or to become due, to a society under a letter of credit shall be left out of account for the purposes of this Part of these Regulations.

(3) In the case of long term business carried on by a society, the value of any debt due, or to become due, to the society which is secured on a policy of insurance issued by the society and which (together with any other debt secured on that policy) does not exceed the amount payable on a surrender of that policy at the relevant date shall be the amount of that debt.

(4) Subject to paragraph (5) below, the value of any rights of the society under a contract of reinsurance to which it is a party shall be the amount which can reasonably be expected to be recovered in respect of those rights.

(5) Paragraph (4) above shall not apply to—

(a) rights under a contract of reinsurance in respect of long term business except to the extent that debts are due under such contracts; or

(b) debts to which regulation 21(3) applies which are due or are to become due.

(6) Any debt due, or to become due, to a society—

(a) from an intermediary in respect of money advanced on account of commission to which that intermediary is not absolutely entitled at the relevant date; or

(b) which is a debt owed in respect of premiums (due account being taken of rebates, refunds and commissions payable) which is recorded in the society’s accounting records as due and payable and has been outstanding for more than three months,

shall be left out of account for the purposes for which this Part of these Regulations applies.

(7) The value of any right to recover assets transferred by way of initial margin in respect of a derivative contract or a contract or asset having the effect of a derivative contract shall be determined—

(a) where the initial margin was a payment in cash, as if there were a debt owed to the society for that amount, and

(b) where the initial margin took the form of a transfer of securities, as if there were a debt owed to the society of an amount equal to the value of such securities as determined in accordance with this Part of these Regulations.

(8) The value of any rights arising under a derivative contract to which regulation 30 below does not apply, or under a contract or asset having the effect of such a contract, shall be the value of any right to recover assets transferred by way of initial margin together with the value of any other unconditional right to receive a specified amount.

(9) This regulation shall not apply to any rights (other than debts due) in respect of—

(a) investments in dependants;

(b) securities or beneficial interests in a limited partnership;

(c) units or other beneficial interests in a collective investment scheme;

(d) a derivative contract, except as provided under paragraphs (7) or (8) above; or

(e) a contract or asset which has the effect of a derivative contract except as provided under paragraphs (7) or (8) above or under regulation 31(4) or (5) below.”.