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SUP App 2.12 Content of a scheme of operations

SUP App 2.12.1R

A scheme of operations must:

  1. (1)

    describe the firm's business strategy;

  2. (2)

    include financial projections (including appropriate scenarios and stress-tests) as follows:

    1. (a)

      a forecast summary profit and loss account in accordance with SUP App 2.12.7 R;

    2. (b)

      a forecast summary balance sheet in accordance with SUP App 2.12.8 R; and

    3. (c)

      a forecast statement of capital resources in accordance with SUP App 2.12.9 R; and

  3. (3)

    as at the end of each financial year which falls (in whole or part) within the period to which the scheme of operations relates:

    1. (a)

      describe the assumptions which underlie those forecasts and the reasons for adopting those assumptions; and

    2. (b)

      identify any material transactions proposed to be effected or carried out with, or in respect of, any associate.

SUP App 2.12.2G

The business strategy referred to at SUP App 2.12.1R (1) should include a description of the nature of the risks which the firm is underwriting, or intends to underwrite. It should also give an explanation of the firm's strategy for managing the risks associated with carrying on insurance business (including, in particular, reinsurance).

SUP App 2.12.3G

The amount of detail to be given on the firm's business strategy required by SUP App 2.12.1R (1) should be appropriate to the scale and complexity of the firm's operations and the degree of risk involved.

SUP App 2.12.4R

The information required by SUP App 2.12.1R (1) must reflect the nature and content of the rules relating to capital resources applicable to a firm.

SUP App 2.12.5G

In relation to firms covered by SUP App 2.1 to 2.141, IPRU(FSOC) 4.1 sets out the rules relating to capital resources for non-directive friendly societies and GENPRU 2.1, GENPRU 2.2 and INSPRU 6.11 set out the rules relating to capital resources for every other firm. The capital resources which a firm is required to maintain vary according to whether the firm has its head office in the United Kingdom or overseas, and depending on the nature of the insurance business it carries on. The information which a firm is required to submit under SUP App 2.12.1 R should reflect the nature and content of the rules relating to capital resources identified above. For example, in order to satisfy SUP App 2.12.1 R, a firm with its head office outside the United Kingdom which is carrying on direct insurance business in the United Kingdom should submit separate information concerning its world-wide activities and its UK activities.

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SUP App 2.12.6G

To reflect its obligations under GENPRU 2.2.22 G1 or IPRU(FSOC) 4.1(2) (as applicable), in order to comply with SUP App 2.12.1 R, a firm which carries on both long-term insurance business and general insurance business should submit separate information for each type of insurance business.

1
SUP App 2.12.7R

Summary profit and loss account (see SUP App 2.12.1R (2)(a))

(1)

Premiums and claims (gross and net of reinsurance) analysed by accounting class of insurance business

(2)

Investment return

(3)

Expenses

(4)

Other charges and income

(5)

Taxation

(6)

Dividends paid and accrued

SUP App 2.12.8R

Summary balance sheet (see SUP App 2.12.1R (2)(b))

(1)

Investments analysed by type

(2)

Assets held to cover linked liabilities

(3)

Other assets and liabilities separately identifying cash at bank and in hand

(4)

Capital and reserves analysed into called up share capital or equivalent funds, share premium account, revaluation reserve, other reserves and profit and loss account

(5)

Subordinated liabilities

(6)

The fund for future appropriations

(7)

Technical provisions gross and net of reinsurance analysed by accounting class of insurance business and separately identifying the provision for linked liabilities, unearned premiums, unexpired risks and equalisation

(9)

Other liabilities and credits

SUP App 2.12.9R

A forecast statement of capital resources (under SUP App 2.12.1R (2)(c)) must include the forecast capital resources and the forecast required margin of solvency at the end of each financial year or part financial year.