Insurance Business
(Solvency Margin) (Jersey) Order 1996
1 Interpretation
(1) In
this Order –
“Law” means the Insurance Business
(Jersey) Law 1996;
“net premium income”
in respect of general business shall be taken to be –
(a) during the financial period in which the
permit holder first carries on general business in Jersey, the amount stated in
the permit holder’s application for a permit in respect of that business
as the maximum gross premium income which the permit holder proposes to earn in
respect of general business during that financial period reduced by the amount
stated in that application as the total estimated rebates, refunds and
reinsurance commissions which will, on the basis of that proposed maximum gross
premium income, be payable by the permit holder, and, subject to paragraph (2),
by the gross amount of the premiums for any reinsurance which will, on that
basis, be ceded by the permit holder in respect of general business during that
financial period;
(b) at any other time, the gross premium income
earned in respect of general business during the last preceding financial
period of the permit holder reduced by any rebates, refunds and reinsurance
commissions payable by the permit holder, and, subject to paragraph (2), by
the gross amount of the premiums for any reinsurance ceded by the insurer,
during that preceding financial period;
(c) if a permit holder’s first or
preceding financial period, as the case may be, is not a period of 12 calendar
months, an amount calculated in accordance with sub-paragraph (a) or (b)
divided by the number of days in that first or preceding financial period, as
the case may be, and the resultant figure multiplied by 365;
“recognized stock
exchange” means any market for the buying and selling of securities which
is situate in, and recognized as, a stock exchange within the meaning of the law
relating to stock exchanges of –
any member state of the European
Union;
(aa) the United
Kingdom;
(b) Australia, Canada, Hong Kong, Japan, Norway,
Singapore, South Africa, Switzerland, or the United States of America; and
(c) any other exchange approved in writing by
the Commission.[1]
(2) Reinsurance
ceded by the permit holder to a person with whom the permit holder is associated
shall not be taken into account for the purposes of the definition of
“net premium income” in paragraph (1) unless it is so ceded to
a permit holder or the Commission, in any particular case, consents in writing
to its being so taken into account.[2]
2 Description of approved assets
(1) For
the purposes of this Order approved assets are –
(a) Cash in hand and at bank;
(b) Bank Certificates of Deposit;
(c) Eurobonds approved by the Commission;
(d) Government securities quoted on a recognized
stock exchange;
(e) Net investment income receivable in relation
to assets described in sub-paragraphs (a) to (d);
(f) Premiums receivable;
(g) Reinsurance balances receivable;
(h) Accounts receivable, net of provisions for
bad debts;
(i) Irrevocable Letters of Credit provided
by a bank registered under the Banking Business
(Jersey) Law 1991.[3]
(2) Unless
agreed to in advance in writing by the Commission, an amount receivable or
balance due from a person with whom the permit holder is associated is not an
approved asset.[4]
3 Proportion of assets required to be approved assets
In order to maintain the margin of solvency required by Article 4,
a category B permit holder carrying on –
(a) general
business, shall have at any time at least 75% of assets as approved assets;
(b) long
term business, shall have at least 25% of assets as approved assets.
4 Margin of solvency
The margin of solvency of a category B permit holder (being the
excess of the value of its approved assets over the amount of its liabilities)
shall be –
(a) in
the case of general business, 17.5% of net premium income; and
(b) in
the case of long term business, whichever is the greater of –
(i) £50,000,
or
(ii) 2.5%
of the value of the long term business fund required to be maintained by the
permit holder by Article 26(2)(b) of the Law.
5 Citation
This Order may be cited as the Insurance Business (Solvency Margin)
(Jersey) Order 1996.