Prudential Regulation Authority Rulebook

16.1

A cash-flow projection used to calculate best estimates must take into account all of the following expenses, which relate to recognised insurance and reinsurance obligations of the firm and which are referred to in 9.1(1) of the Technical Provisions Part:

1. (1) administrative expenses;
2. (2) investment management expenses;
3. (3) claims management expenses; and
4. (4) acquisition expenses.

The expenses referred to in (1) to (4) must take into account overhead expenses incurred in servicing insurance and reinsurance obligations.

16.2

Overhead expenses must be allocated in a realistic and objective manner and on a consistent basis over time to the parts of the best estimate to which they relate.

16.3

Expenses in respect of reinsurance contracts and special purpose vehicles must be taken into account in the gross calculation of the best estimate.

16.4

Expenses must be projected on the assumption that the firm will write new business in the future.