PART 5 Reducing the I minus E profit

13 Reducing the I minus E profit
1 Subject to paragraph (3), paragraph (2) applies where the main purpose, or one of the main purposes of the cedant or re-insurer—
(a) in entering into a re-insurance arrangement; or
(b) in allowing any change in the composition of the backing assets relating to a re-insurance arrangement,
is to reduce the amount of the I minus E profit, or where the re-insurance arrangement is prescribed by virtue of regulation 9, the equivalent of the I minus E profit, of the BLAGAB carried on by the cedant or re-insurer.
2 If this paragraph applies—
(a) Parts 2 to 4 do not apply in relation to the arrangement; and
(b) the amount of the investment return that is treated as accruing to the cedant is the amount determined under the Schedule.
3 Paragraph (2) does not apply to business being re-insured which is excluded business by virtue of regulation 5 where the re-insurer—
(a) is resident in the UK; or
(b) is resident outside of the UK and—
(i) the re-insurance is effected through a permanent establishment of the re-insurer situated in the UK; and
(ii) that permanent establishment is within the charge to corporation tax by virtue of section 5(2) of the Corporation Tax Act 2009 in respect of the business being re-insured.