PART 2

Insurance companies carrying on long-term business
CHAPTER 3

The I - E basis

Special rules applying to I - E basis

Regulations under section 90(4): supplementary provision
91
1
This section applies to regulations under section 90(4).
2
The regulations may provide for the calculation of the investment return treated as accruing to a company in respect of a policy or contract in an accounting period to be made by reference to—
a
the total amount of sums paid (by way of premium or otherwise) by the company to the re-insurer during the accounting period and any earlier accounting periods,
b
the total amount of sums paid (by way of commission or otherwise) by the re-insurer to the company during the accounting period and any earlier accounting periods,
c
the total amount of the net investment return treated as accruing to the company in any earlier accounting periods, that is to say, net of tax at such rate as may be prescribed by the regulations, and
d
such percentage rate of return as may be prescribed by the regulations.
3
The regulations may make provision dealing with the transfer of the re-insurance arrangement from one insurance company to another.
4
The regulations must provide that the amount of investment return treated as accruing in respect of a policy or contract in the final accounting period during which the policy or contract is in force is the amount, ascertained in accordance with the regulations, by which the overall profit exceeds the total amount treated as accruing in earlier accounting periods.
5
“The overall profit” means the profit over the whole period during which the policy or contract, and the re-insurance arrangement, were in force.
6
If the overall profit is less than the total amount treated as accruing in earlier accounting periods, the difference—
a
must be set off against amounts treated as a result of section 90 as accruing in the final accounting period from other policies or contracts, and
b
if not fully set off as mentioned in paragraph (a), may be carried forward for set-off against amounts treated as a result of that section as accruing in subsequent accounting periods.
7
The regulations may—
a
make different provision for different cases or circumstances, and
b
contain incidental, supplementary, consequential, transitional, transitory or saving provision.
8
An example of the kind of supplementary provision within subsection (7)(b) is provision requiring payments made during an accounting period to be treated as made on such date or dates as may be prescribed by the regulations.