13.—(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.