Prudential Regulation Authority Rulebook

10.1

This Chapter applies only to firms that are a marine mutual.

10.2

A firm may complete an abbreviated return which comprises:

1. (1) Forms 1, 3, 11 and 12; and
2. (2) Forms M1 to M5

and, all rules other than Chapter 1, 2.5 to 2.7, 3.10, 3.11, 6.3, 6.4, 6.18, Chapter 9 and Chapter 10 do not apply.

10.3

A firm must annex to the documents provided under 10.2:

1. (1) a description of the significant reinsurance arrangements which will be in operation in the financial year following the financial year in question;
2. (2) in respect of insurance business ceded by way of non-facultative reinsurance in respect of the financial year in question or any previous financial year ended on or after 20 February 1998, a statement of:
1. (a) in the case of contracts which are subject to no or a limited number of reinstatements, any contract not previously reported to the PRA under which it is anticipated that any such limit will be exhausted by such claims (including claims incurred but not reported, in respect of any specific occurrence for which provisions have been allocated);
2. (b) the percentage of cover, if in excess of 10% and if such information was not included in the return of the marine mutual for the previous financial year which has been ceded to reinsurers which have ceased to pay claims to their reinsureds in full, whether because of insolvency or for any other reason; and
3. (c) if the percentage specified in (b) has increased by more than 10% since the previous financial year in which it was included in the firm’s return, that percentage unless, in the opinion of the directors, the likelihood of any claim being incurred under that policy is minimal;
3. (3) a statement concerning:
1. (a) the default rates of members (or adjusted default rates, as the case may be), on the supplementary calls collectable during the financial year in question and the two previous financial years respectively; and
2. (b) the total amount of each such call, the financial year to which it relates, the amount paid and the amount remaining outstanding; and
4. (4) a copy of the rules of association of the firm in force on the date of deposit of the return, unless there has been no change in a copy of the rules deposited with the return for a previous financial year

10.4

A firm must, with effect from the date of its deposit of returns with the PRA until the date of deposit of the return for the following financial year, provide the PRA with written notice of:

1. (1) any change which is proposed in the rules of association of the firm, not less than 14 days before the change is put to a meeting;
2. (2) any change which has been made in the rules of association, within 7 days of the change;
3. (3) any significant change in the reinsurance arrangements, a description of which has been annexed to the return in accordance with 10.3(2)(a), within 7 days of the change;
4. (4) a fall in tonnage entered by its members of 10% net or more since the end of the financial year in question, within 7 days of the firm becoming aware of this; and
5. (5) whether tonnage entered by its members who have withdrawn from membership or who have defaulted on their obligations has increased so as to exceed 10% or more of total tonnage entered, whether before, on or after the date of deposit of the return, within 7 days of the date of deposit or of the firm becoming aware of this, whichever is earlier.

10.5

A firm must annex to the return provided under 10.2, a directors’ certificate to:

1. (1) confirm that:
1. (a) the return has been prepared in accordance with the rules in the Non-Solvency II Firms sector of the PRA Rulebook;
2. (b) the directors are satisfied that throughout the financial year in question, the marine mutual has complied in all material respects with the requirements in Non-Solvency II Firms sector of the PRA Rulebook and that it is reasonable to believe that the marine mutual has continued so to comply subsequently, and will continue so to comply in future;
3. (c) each member of the marine mutual has accepted those parts of the marine mutual’s rules which oblige that member to pay its share of any supplementary calls for the year and of calls to meet the CR Requirement (including any sum needed to make good failure by other members to pay calls made on them); and
4. (d) the marine mutual is empowered to make supplementary calls on its members which, if met, would produce sufficient assets to meet the CR Requirement; and
2. (2) give information about the number of:
1. (a) members of the marine mutual which are not reinsured members;
2. (b) fixed premium members (on which supplementary calls may not be made);
3. (c) reinsured members (being members whose contract of insurance with the marine mutual is a contract of reinsurance); and
4. (d) the tonnage of shipping attributable to each of the above classes of members, taken separately, and covered by the marine mutual at the end of the financial year in question.

10.6

Where, in the opinion of the directors, the circumstances are such that any of the matters specified in 10.5(1) or (2) cannot be confirmed or provided, the relevant statements or information must be omitted and the reasons for omission must be explained in a note to the certificate.

10.7

A firm must annex to the return provided under 10.2, an auditors’ report which confirms the documents and Forms have been properly prepared and where there is any uncertainty, the uncertainty is material to determining whether the marine mutual has available assets in excess of its CR Requirement.

10.8

In completing the Forms required under rule 10.2, a firm must disregard reinsurance arrangements with any relevant company and must treat income and expenditure and assets and liabilities of any relevant company as, respectively, income and expenditure and assets and liabilities of the firm.

10.9

Where ‘source’ appears at the head of a column on a form, the information to be included in the preceding columns of a particular line is to be taken from those items in the return to which reference is made on that line in the column headed ‘source’. No entries are to be made in the column headed ‘source’.