Prudential Regulation Authority Rulebook

23.1

The amounts recoverable from reinsurance contracts and special purpose vehicles must be calculated consistently with the boundaries of the contracts of insurance to which those amounts relate.

23.2

The amounts recoverable from special purpose vehicles, the amounts recoverable from finite reinsurance contracts as referred to in 8.1 of the Conditions Governing Business Part and the amounts recoverable from other reinsurance contracts must each be calculated separately. The amounts recoverable from a special purpose vehicles must not exceed the aggregate maximum risk exposure of that special purpose vehicles to the firm.

23.3

For the purpose of calculating the amounts recoverable from reinsurance contracts and special purpose vehicles, cash-flows shall only include payments in relation to compensation of insurance events and unsettled insurance claims. Payments in relation to other events or settled insurance claims are to be accounted for outside the amounts recoverable from reinsurance contracts and special purpose vehicles and other elements of the technical provisions. Where a deposit has been made for the cash-flows, the amounts recoverable are to be adjusted accordingly to avoid a double counting of the assets and liabilities relating to the deposit.

23.4

The amounts recoverable from reinsurance contracts and special purpose vehicles for general insurance business obligations must be calculated separately for premium provisions and provisions for claims outstanding in the following manner:

1. (1) the cash-flows relating to provisions for claims outstanding must include the compensation payments relating to the claims accounted for in the gross provisions for claims outstanding of the firm ceding risks;
2. (2) the cash-flows relating to premium provisions must include all other payments.

23.5

Where cash-flows from the special purpose vehicles to the firm do not directly depend on the claims against the firm ceding risks, the amounts recoverable from those special purpose vehicles for future claims shall only be taken into account to the extent that it can be verified in a prudent, reliable and objective manner that the structural mismatch between claims and amounts recoverable is not material.