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LLD 12.1 Application and purpose

Application

LLD 12.1.1 R

This chapter applies to the Society.

LLD 12.1.2 R

A contravention of the rules in this chapter does not give rise to a right of action by a private person under section 150 of the Act (Actions for damages) and each of those rules is specified under section 150(2) of the Act as a provision giving rise to no such right of action.

Purpose

LLD 12.1.3 G

These requirements provide safeguards against the risk that insurance liabilities will be underestimated (see also LLD 9.1.4 G).

LLD 12.1.4 G

Under LLD 9.4.1 R, subject to LLD 9 to LLD 15, the insurance accounts rules and generally accepted accounting practice apply to the valuation of assets and the determination of liabilities.

LLD 12.3 Members' liabilities

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LLD 12.3.1 R

At stage (e) of PRU 2.2.14 R the Society must deduct from a member'scapital resources a negative valuation difference being, for each member, (for opensyndicate years through which the member carries on general insurance business taken together), if A+B exceeds C, A+B-C, where:

  1. (1)

    A is the total of the member's proportionate shares for each syndicate year of the accumulated excess of income over outgoings;1

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  2. (2)

    B is the amount of any unpaid additional contributions the member is required to make to the funds maintained for the syndicate years by the managing agents; and1

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  3. (3)

    C is the total of the member's proportionate shares of the liabilities net of reinsurance recoveries.1

LLD 12.3.2 R

For the purpose of PRU 4.2.52 G to PRU 4.2.56 G1 (Currency matching of assets 1and liabilities) and PRU 7.2.30 R1 (Localisation (UK firms only)), the amounts in LLD 12.3.1 R, which are intended to prevent the premature release of profits, 1

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may be left out of account.

LLD 12.3.3 R

[deleted]1

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LLD 12.3.4 G

[deleted]1

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