Prudential Regulation Authority Rulebook

20.1

Subject to 27, a firm must make cash-flow projections used in the calculation of best estimates for long-term insurance business obligations: 

1. (1) separately for each policy, or 
2. (2) a firm may carry out the projection for groups of policies, provided that the grouping complies with all of the following requirements:
   1. (a) there are no significant differences in the nature and complexity of the risks underlying the policies that belong to the same group;
   2. (b) the grouping of policies does not misrepresent the risk underlying the policies and does not misstate their expenses; and
   3. (c) the grouping of policies is likely to give approximately the same results for the best estimate calculation as a calculation on a per policy basis, in particular in relation to financial guarantees and contractual options included in the policies.