LLD 24.3 Capital resources requirements and technical provisions for insurance business
Application of PRU 7.2
PRU 7.2 applies to the Society in accordance with LLD 16.3.1 R.
The following rules and guidance apply to managing agents in accordance with LLD 16.3.3 R:
- (1)
PRU 7.2.13 G to PRU 7.2.20 R (except PRU 7.2.13 R (1));
- (2)
PRU 7.2.42 G to PRU 7.2.43 G; and
- (3)
Establishing technical provisions
Managing agents are advised by the syndicate actuary in relation to the long-term insurance business carried on through long-term insurance business syndicates. The standards and guidance issued by the Faculty and Institute of Actuaries to assist syndicate actuaries are important sources of evidence as to generally accepted actuarial best practice, as referred to in PRU 7.2.16 R (1).
General insurance capital requirement
PRU 2.1.30 R and LLD 19.3.10 R to LLD 19.3.12 R set out the calculation of the general insurance capital requirement for Lloyd's.
The Society must calculate the brought forward amount for the members in aggregate in accordance with PRU 7.2.51, using the result of LLD 19.2.6 R for the prior financial year and the aggregate of all members' technical provisions for the relevant periods.
Accounting for premiums and claims
For the purposes of PRU 7.2.66 R and further to that rule, in the case of Lloyd's members, amounts of premiums and claims must be adjusted for approved reinsurance to close to exclude any amount included in, or adjustment made to, premiums and claims to reflect the consideration for an approved reinsurance to close.
Members of Lloyd's can effect contracts of approved reinsurance to close with other members in accordance with LLD 17.5. For the purposes of PRU as it applies to Lloyd's, the capital requirement relating to business transacted through an approved reinsurance to close is calculated for the reinsuring and not the reinsured member under the contract.