Prudential Regulation Authority Rulebook

1. (1) effecting contracts of insurance; and/or
2. (2) carrying out contracts of insurance;

Insurance Class B1: Relevant net premium income and eligible liabilities. The levy is split into two in the ratio 75:25. The tariff base for the first portion (75%) is calculated by reference to relevant net premium income. The tariff base for the second portion (25%) is based on eligible liabilities.

Relevant net premium income is calculated in accordance with the method applicable to the firm for calculating ‘gross written premium for fees purposes’ in Fees 1.2 and Fees 3.4 (2) (b) with the following adjustments:

1. (1) Relevant net premium income is calculated by reference to either (at the election of the firm):
1. (a) the premium income in respect of protected contracts of insurance of a firm; or
2. (b) the premium income in respect of protected contracts of insurance with eligible claimants of a firm;
2. in the year preceding that in which the date for submission of the information under 21.42A falls, net of any relevant rebates or refunds.
3. (2) If an incoming EEA firm does not report relevant net premium income in the way contemplated in this table, the participant firm’s relevant net premium income is calculated in the same way as they would be for a UK firm.

Eligible liabilities are calculated in accordance with the method applicable to the firm for calculating ‘best estimate liabilities for fees purposes’ in Fees 1.2 and Fees 3.4 (2) (b) with the following adjustments:

1. (1) Eligible liabilities are calculated by reference to protected contracts of insurance with eligible claimants.
2. (2) A participant firm may choose not to apply paragraph (1) and instead include all liabilities that it would be obliged to take into account for fee block A3 as long as the amount that it would include under (1) is lower.
3. (3) If an incoming EEA firm does not report liabilities in the way contemplated by this table, the participant firm’s liabilities are calculated in the same way as they would be for a UK firm.
4. (4) [deleted]
5. (5) A directive friendly society must also calculate eligible liabilities in accordance with this table.
6. (6) A non-directive friendly society must calculate liabilities as the amount that it is required to show in FSC 2 - Form 9 line 11 in Friendly Society – Reporting 4.1 (Other than long term insurance business assets allocated towards the general insurance business required minimum margin) in relation to the most recent financial year of the participant firm (as at the applicable reporting date under 21.42A) for which the participant firm is required to have reported that information to the PRA under Friendly Society – Reporting. A non-directive friendly society must disregard for this purpose such amounts as are not required to be included by reason of a waiver.

Insurance Class C1: Relevant net premium income and eligible liabilities. The levy is split into two in the ratio 75:25. The tariff base for the first portion (75%) is calculated by reference to relevant net premium income. The tariff base for the second portion (25%) is based on eligible liabilities.

Relevant net premium income is calculated in accordance with the method applicable to the firm for calculating ‘gross written premium for fees purposes’ in Fees 1.2 and Fees 3.4 (3) (c) with the following adjustments:

1. (1) in relation to business which is not occupational pension fund management business, relevant premium income is calculated by reference to either (at the election of the firm):
1. (a) the premium income in respect of protected contracts of insurance of a firm; or
2. (b) the premium income in respect of protected contracts of insurance with eligible claimants of a firm; or
2. (2) in relation to occupational pension fund management business the remuneration retained by a firm in relation to its carrying on occupational pension fund management business;
3. in the year preceding that in which the date for submission of the information under 21.42A falls, net of any relevant rebates or refunds.
4. (3) A participant firm which is a non-directive insurer, excluding a non-directive friendly society must calculate relevant net premium income as the amount it is required to show in Form 41, line 19, column 4 in Insurance Company – Reporting 13.1 in relation to the most recent financial year of the firm (as at the applicable reporting date under 21.42A) for which the firm is required to have reported that information to the PRA under Insurance Company – Reporting 5.7.
5. (4) A participant firm which is a non-directive friendly society must calculate relevant net premium income as the income and expenditure account entry for gross premium written or contributions as income receivable, as appropriate under the Friendly Society (Accounts and Related Provisions) Regulation 1994.
6. (5) If an incoming EEA firm does not report relevant net premium income in the way contemplated in this table, the participant firm’s relevant premium income is calculated in the same way as they would be for a UK firm.

Eligible liabilities are calculated in accordance with the method applicable to the firm for calculating 'best estimate liabilities for fee purposes' as defined in Fees 1.2 and Fees 3.4 (3) (c)with the following adjustments.

1. (1) Eligible liabilities are calculated by reference to protected contracts of insurance with eligible claimants.
2. (2) A participant firm may choose not to apply paragraph (1) and instead include all liabilities that it would be obliged to take into account for fee block A4 as long as the amount that it would include under (1) is lower.
3. (3) If an incoming EEA firm does not report liabilities in the way contemplated by this table, the participant firm’s liabilities are calculated in the same way as they would be for a UK firm.
4. (4) [deleted]
5. (5) A directive friendly society must also calculate eligible liabilities in accordance with this table.
6. (5A) A participant firm which is a non-directive insurer, excluding a non-directive friendly society must calculate liabilities as the amount it is required to show in Form 14, line 11, column 1 (mathematical reserves after distribution of surplus) in Insurance Company – Reporting 13.1 in relation to the most recent financial year of the firm (as at the applicable reporting date under 21.42A) for which the firm is required to have reported that information to the PRA under Insurance Company – Reporting 5.5.
7. (6) A non-directive friendly society must calculate liabilities as the amount that it is required to show in FSC 2 - Form 9 line 23 in Friendly Society – Reporting 4.1 (total mathematical reserves after distribution of surplus) in relation to the most recent financial year of the firm (as at the applicable reporting date under 21.42A) for which the firm is required to have reported that information to the PRA under Friendly Society – Reporting. A non-directive friendly society must disregard for this purpose such amounts as are not required to be included by reason of a waiver.
8. (7) The references to corporate pension business in the definition of 'best estimate liabilities for fees purposes' in Fees 1.2 do not apply. The split in the levy between relevant net premium income and eligible liabilities does not apply to a participant firm undertaking occupational pension fund management business that does not carry out any other activities within insurance class C1 (ignoring any activities that would have a wholly insignificant effect on the calculation of its tariff base for insurance class C1). Instead the levy is only calculated by reference to relevant net premium income.
9. (8) The split in the levy between relevant net premium income and eligible liabilities does not apply to a flat rate benefits business friendly society or a partnership pension society (as defined in Friendly Society – Reporting). Instead the levy is only calculated by reference to relevant net premium income.