8.—(1) A re-insurance arrangement is prescribed where condition 1 or 2 is satisfied in relation to the arrangement.
(2) Condition 1 is satisfied where the business being re-insured is excluded business by virtue of regulation 5 and—
(a)in cases where the re-insurer is resident in the UK, where section 68 of the Act applies to the re-insurer in respect of the investment return; or
(b)in cases where the re-insurer is resident outside of the UK and the re-insurance arrangement is effected by the re-insurer through a permanent establishment situated in the UK, where section 68 of the Act applies to the permanent establishment in respect of the investment return.
(3) Condition 2 is satisfied where—
(a)section 68 of the Act applies to the cedant in respect of the investment return on the backing assets; and
(b)if an amount is due by the cedant to the re-insurer in return for the cedant having use of the backing assets, none of the amount reduces the I minus E profit of the cedant.