GENPRU 2 Annex 7 Admissible assets in insurance

(1)1

(A)1

Investments that are, or amounts owed arising from the disposal of:

(a)

debt securities, bonds and other money and capital market instruments;

(b)

loans;

(c)

shares and other variable yield participations;

(d)

units in:1

(i)1

collective investment schemes falling within the UCITS Directive;4

(ii)1

non-UCITS retail schemes;1

(iii)1

recognised schemes;1 and

(iv)1

any other collective investment scheme where the insurer's investment in the scheme is sufficiently small to be consistent with a prudent overall investment strategy, having regard to the investment policy of the scheme and the information available to the insurer to enable it to monitor the investment risk being taken by the scheme1

(e)

land, buildings and immovable property rights;

(f)

an approved derivative or quasi-derivative transaction that satisfies the conditions in INSPRU 3.2.5 R or an approved stock lending transaction2 that satisfies the conditions in INSPRU 3.2.36 R.

(B)1

Debts and claims

(a)

debts owed by reinsurers, including reinsurers' shares of technical provisions (but excluding amounts recoverable from an ISPV*);

(b)

deposits with and debts owed by ceding undertakings;

(c)

debts owed by policyholders and intermediaries2 arising out of direct and reinsurance operations (except where overdue for more than 3 months and other than commission prepaid to agents or intermediaries2);

(d)

for general insurance business only, claims arising out of salvage and subrogation;

(e)

for long-term insurance business only, advances secured on, and not exceeding the surrender value of, long-term insurance contracts issued by the insurer;

(f)

tax recoveries;

(g)

claims against compensation funds.

(C)1

Other assets

(a)

tangible fixed assets, other than land and buildings;

(b)

cash at bank and in hand, deposits with credit institutions and any other bodies authorised to receive deposits;

(c)

for general insurance business only, deferred acquisition costs;

(d)

accrued interest and rent, other accrued income and prepayments;

(e)

for long-term insurance business only, reversionary interests.

*

An insurer1 may treat amounts recoverable from an ISPV as an admissible asset if it obtains a waiver under section 148 of the Act. The conditions that will need to be met, in addition to the statutory tests under section 148(4) of the Act, before the FSA will consider granting such a waiver are set out in INSPRU 1.6.13 G to INSPRU 1.6.18 G.

(2)1

Subject to paragraph3 (3) below3a unit in a collective investment scheme is only admissible for the purposes of paragraph (1) above if it falls within paragraph (1)(A)(d), notwithstanding that it may also fall into one or more other categories in paragraph (1).3

(3)1

A derivative, quasi-derivative or stock lending transaction is only admissible for the purposes of paragraph (1) above if it falls within paragraph (1)(A)(f), notwithstanding that it may also fall into one or more other categories in paragraph (1).3