Insurance Companies Act 1982 (repealed)

32 Margins of solvency.U.K.

(1)Every insurance company to which this Part of this Act applies—

(a)whose head office is in the United Kingdom, or

(b)whose business in the United Kingdom is restricted to reinsurance,

shall maintain a margin of solvency of such amount as may be prescribed by or determined in accordance with regulations made for the purposes of this section.

(2)Subject to subsection (3) below, every insurance company to which this Part of this Act applies whose head office is not in a member State shall maintain—

(a)a margin of solvency, and

(b)a United Kingdom margin of solvency,

of such amounts as may be prescribed by or determined in accordance with regulations made for the purposes of this section.

(3)Subsection (2) above shall not apply to an insurance company if its business in the United Kingdom is restricted to re-insurance or if section 9(2) above applies to it; but an insurance company that has made a deposit in the United Kingdom in accordance with section 9(2)(b) above shall maintain—

(a)a margin of solvency, and

(b)a Community margin of solvency,

of such amounts as may be prescribed by or determined in accordance with regulations made for the purposes of this section.

(4)An insurance company that fails to comply with subsection (1), (2) or (3) above—

(a)shall at the request of the Secretary of State submit to him a plan for the restoration of a sound financial position;

(b)shall propose modifications to the plan (or the plan as previously modified) if the Secretary of State considers it inadequate;

(c)shall give effect to any plan accepted by the Secretary of State as adequate.

(5)For the purposes of this Act—

(a)the margin of solvency of an insurance company is the excess of the value of its assets over the amount of its liabilities, that value and amount being determined in accordance with any applicable valuation regulations;

(b)the United Kingdom margin of solvency of an insurance company is its margin of solvency computed by reference to the assets and liabilities of the business carried on by the company in the United Kingdom;

(c)the Community margin of solvency of an insurance company is its margin of solvency computed by reference to the assets and liabilities of the business carried on by the company in member States (taken together).

(6)In the case of an insurance company that carries on both long term and general business, subsections (1), (2) and (3) above shall have effect as if—

(a)the requirements to maintain a margin of solvency, and

(b)where the company carries on both kinds of business in the United Kingdom, the requirement to maintain a United Kingdom margin of solvency, and

(c)where the company carries on both kinds of business in member States (taken together), the requirement to maintain a Community margin of solvency,

were requirements to maintain separate margins in respect of the two kinds of business (and accordingly as if the references in subsection (5) to assets and liabilities were references to assets and liabilities relating to the kind of business in question).