SCHEDULE 1METHODS OF CALCULATING THE EQUALISATION RESERVE

PART III

Method of calculating business group maximum

11.  The maximum reserve applicable to a business group (the“business group maximum”) at the end of a financial year shall be calculated in accordance with paragraph 12 below.

12.—(1) The business group maximum at the end of a financial year shall be the percentage specified in the following table of average net premiums written in respect of that business group —

(2) For the purposes of sub-paragraph (1) above, the “average net premiums written” in respect of a business group means —

(a)in the case of a company which has carried on business falling within that business group for no less than five financial years, the average amount of net premiums written in respect of that business in a financial year, calculated on the basis of the last financial year and the previous four financial years;

(b)in the case of a company which has carried on business falling within that business group for less than five financial years, the average amount of net premiums written in respect of that business in a financial year, calculated on the basis of the last financial year and any previous financial years ending on or after 23rd December 1996.

(3) For the purposes of sub-paragraph (2) above, if any of the financial years which the company is required to take into account for the calculation of average net premiums written has been extended or shortened, pursuant to section 69 of the Act, the value of net premiums written in that financial year shall be the amount represented by the formula—

Method of calculating the maximum reserve

13.  The maximum reserve at the end of a financial year shall be the aggregate value of the business group maxima as calculated in accordance with paragraph 12 above.