Part A Determination of Required Solvency Margin

Solvency margin required for insurance undertakings

1.

(1) An insurance undertaking whose head office is located in the State shall maintain an adequate available solvency margin in respect of the whole of its business, which is at all times at least equal to that required by these Regulations.

(2) The undertaking's available solvency margin must correspond to its assets, free of all foreseeable liabilities, less any intangible items.

(3) In determining the amount of the available solvency margin for the undertaking, the following must be included:

(a) the paid up share capital or, in the case of a mutual insurance undertaking, the effective initial fund, together with any members' accounts that satisfy the requirements set out in subparagraph (4) of this paragraph;

(b) reserves (including both statutory reserves and free reserves) not corresponding to underwriting liabilities;

(c) profit or loss brought forward after deducting dividends to be paid;

(d) any profit reserves appearing in the balance sheet that are not available for distribution to policy holders but could be used to cover losses that the undertaking might incur.

(4) The requirements referred to in subparagraph (3) (a) of this paragraph are that -