LLD 17.5 Approved reinsurance to close
As defined in the Glossary, "approved reinsurance to close" excludes:
- (1)
reinsurance between parties other than members; and
- (2)
balance transfers between syndicate years of syndicates having only one member, which have no effect on the overall liabilities of that member.
The "approved" status of an approved reinsurance to close does not alter the legal status or effect of the original contract of insurance, or the liability of a reinsured member to the policyholder under or in respect of the original contract of insurance.
Notwithstanding that the liability of a reinsured member to a policyholder is unaffected by an approved reinsurance to close as described in LLD 17.5.2 G, for the purposes of PRU only:
- (1)
a contract of insurance reinsured under an approved reinsurance to close must be treated as if the reinsuring member and not the reinsured member had effected the original contract of insurance; and
- (2)
any payment received by a member as consideration for or in connection with an approved reinsurance to close must be treated as a Lloyd's member's contribution and not as premium or as a reinsurance recovery.