PART 2

Insurance companies carrying on long-term business
CHAPTER 3

The I - E basis

Special rules applying to I - E basis

Investment return where risk in respect of policy or contract re-insured
90
1
This section applies if an insurance company re-insures any risk in respect of a policy or contract attributable to its basic life assurance and general annuity business.
2
For the purposes of the I - E rules the investment return on the policy or contract is treated as accruing to the company while the risk remains re-insured by the company under the re-insurance arrangement.
3
The investment return that is treated as accruing to the company—
a
is treated for the purposes of those rules as income that is referable, in accordance with Chapter 4, to the company's basic life assurance and general annuity business, and
b
is, accordingly, brought into account for the purposes of those rules at step 1 in section 73.
4
HMRC Commissioners may make provision by regulations as to the amount of investment return that is treated as accruing in each accounting period during which the re-insurance arrangement is in force.
5
HMRC Commissioners may by regulations exclude from the operation of this section—
a
such descriptions of insurance company,
b
such descriptions of policies or contracts, and
c
such descriptions of re-insurance arrangement,
as may be prescribed by the regulations.
6
Nothing in this section applies in relation to the re-insurance of a policy or contract where the policy or contract was made, and the re-insurance arrangement effected, before 29 November 1994.