Prudential Regulation Authority Rulebook

8B.1

Where an own funds item has been issued by a related third country insurance undertaking or third country reinsurance undertaking, the participating undertaking shall classify the own funds item using the criteria for classification set out in Own Funds 3A – 3J provided that all of the following additional requirements are met:

1. (1) the third country insurance undertaking or third country reinsurance undertaking complies with the requirements set out in Own Funds 3B.1 – 3B.13, 3E.1 – 3E.5 and 3G.1 – 3G.5; and
2. (2) the own funds item is free from encumbrances and is not connected with any other transaction, which when considered with the own funds item, could result in that own funds item not satisfying the requirements set out in Own Funds 3.1 to 3.3 at group level.

8B.2

For the purposes of point (1) of 8B.1:

1. (1) references to ‘SCR’ in Own Funds 3B.1 – 3B.13, 3E.1 – 3E.5 and 3G.1 – 3G.5 shall mean the group SCR;
2. (2) references to ‘MCR’ in Own Funds 3B.1 – 3B.13, 3E.1 – 3E.5 and 3G.1 – 3G.5 shall mean both the capital requirement, as laid down by the third country supervisory authority concerned, of the undertaking which has issued the own funds item and one of the following minimums:
   1. (a) where method 1 is used, the minimum for the group SCR as calculated in accordance with 11.3(2); or
   2. (b) where a combination of method 1 and method 2 is used, the minimum determined in accordance with 10.7.