PART IV VALUATION OF ASSETS

22 Valuation of assets and liabilities of dependants for the purposes of regulation 21
1 This regulation shall apply with respect to the determination of the value of the assets and the amount of the liabilities of a dependant for the purposes of regulation 21 above.
2 In the case of a dependant which is an insurance company, whether or not it is a company to which Part II of the 1982 Act applies—
(a) subject to paragraph (4) below and paragraph 3 of Schedule 4, the value of its assets shall be determined in accordance with Part VIII of the 1994 Regulations;
(b) subject to subparagraphs (c), (d), (e) and (f) below, the amount of its liabilities shall be determined in accordance with Part IX of the 1994 Regulations;
(c) where the dependant carries on general business, its general business liabilities shall be deemed to include an amount equal to whichever is the greater of 400,000 ECU or 20 per cent. of the general premium income;
(d) where the dependant carries on long term business, its long term business liabilities shall be deemed to include whichever is the greatest of the following three amounts—
(i) an amount (“the first amount”) which is one-sixth of the margin of solvency that would be arrived at by regarding the dependant as having its head office in the United Kingdom (whether it has or not) and applying regulations 18 to 21 of the 1994 Regulations;
(ii) an amount which is six times the first amount, reduced by the implicit figure within the meaning of subparagraph (e) below;
(iii) 800,000 ECU;
(e) for the purposes of subparagraph (d)(ii) above the implicit figure is—
(i) in the case of a dependant having its head office in the United Kingdom, the amount of any implicit items relating to future profits, zillmerising or hidden reserves which the dependant is permitted to count by virtue of an order under section 68 of the 1982 Act of the kind mentioned in regulation 23(5) of the 1994 Regulations and the application of regulations 23(5), 24, 25 and 26 of those Regulations; and
(ii) in the case of a dependant having its head office elsewhere than in the United Kingdom, the amount of any implicit items relating to future profits or zillmerising which would be arrived at by regarding the dependant as having its head office in the United Kingdom and as having received an order under section 68 of the 1982 Act of the kind mentioned in regulation 23(5) of the 1994 Regulations and the application of regulations 23(5), 24 and 25 of those Regulations accordingly;
(f) in any case where the dependant is required to establish a long term business fund or funds under section 28 of the 1982 Act, its long term business liabilities shall be deemed to be not less than the value of the assets representing that fund or funds.
3 In the case of a dependant which is not an insurance company—
(a) the value of its assets shall be determined in accordance with Part VIII of the 1994 Regulations, subject to the provisions of and the modifications provided for in paragraphs 3 and 4 of Schedule 4 to these Regulations;
(b) subject to paragraph (4) below, assets of the dependant which are of a relevant description shall be taken into account only to the extent that their value does not exceed the permitted limit applicable to the dependant in relation to those assets; and
(c) any equipment leased by the dependant exclusively to any person other than the society of which it is a dependant, or any other dependant of that society, shall be valued as a debt for the purposes of Part VIII of the 1994 Regulations.
4 Where—
(a) the dependant is an insurance company and has general business assets of a relevant description, or, is not an insurance company and has assets of a relevant description;
(b) the value of such assets exceeds the permitted limit applicable to the dependant in relation to those assets; and
(c) the society has no assets of the same description of the relevant class, or has assets of the same description of the relevant class and their value is less than the permitted limit applicable to the society in relation to those assets,
then, for the purpose of determining the value of the assets of the dependant, there shall be added to the permitted limit applicable to the dependant in relation to the assets referred to in subparagraph (a) above an amount equal to the supplementary amount determined in accordance with Part I of Schedule 4.
5 In this regulation and Schedule 4—
“assets of a relevant description” means assets of a description specified in Part I of Schedule 12 of the 1994 Regulations or, in the case of a dependant which is not an insurance company, assets which would be of such a description if it were an insurance company;
“permitted limit” means, in relation to assets of a relevant description—
(a) in the case of the society, an amount equal to the percentage of the general business amount or, as the case may be, the long term business amount applicable in relation to assets of that description in accordance with regulation 32 below;
(b) in the case of a dependant which is an insurance company, an amount equal to the percentage of the general business amount or, as the case may be, the long term business amount applicable in relation to assets of that description in accordance with regulation 57 of the 1994 Regulations as applied pursuant to paragraph (2) above; and
(c) in the case of a dependant which is not an insurance company, an amount equal to the percentage specified in Schedule 12 of the 1994 Regulations, with respect to assets of that description, of the liabilities of the dependant, other than liabilities to the society or to any other dependant of the society;
and references to assets held by any society being of the same description as assets held by a dependant mean—
(i) in relation to land of the dependant of a description specified in paragraph 1 of Schedule 12 of the 1994 Regulations, any interest of that society in that land,
(ii) in relation to assets of the dependant of a description specified in paragraphs 2 to 17 of Schedule 12 of the 1994 Regulations, assets of the society which, if held by the dependant, would be assets of that description.
6 Save as otherwise provided in paragraph 3(5) of Schedule 4, references in this regulation and in Schedule 4 to assets of the society being of a relevant class mean—
(a) where this regulation and Schedule 4 are being applied for the purpose of determining the value of a long term business asset of the society, assets of the society which are long term business assets, and
(b) in any other case, assets of the society which are general business assets.
7 Where the society cannot reasonably ascertain in accordance with the provisions of this regulation—
(a) the value of any asset of the dependant; or
(b) the amount of the permitted limit applicable in relation to any asset of the dependant,
that asset shall be left out of account in determining the value of the assets of the dependant under this regulation.