Assets: valuation and realisability risk

Part

LLD Lloyd's

Chapter

Assets: valuation and realisability risk

Printed on: 05/07/2024

Rulebook at: 31/12/2004

LLD 13

Assets: valuation and realisability risk

LLD 13.1

Application and purpose

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Application

LLD 13.1.1

This chapter applies to the Society.

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LLD 13.1.2

A contravention of the rules in this chapter does not give rise to a right of action by a private person under section 150 of the Act (Actions for damages) and each of those rules is specified under section 150(2) of the Act as a provision giving rise to no such right of action.

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Purpose

LLD 13.1.3

This chapter sets out the basis on which different assets are to be identified and valued (see also LLD 9.1.4 G).

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LLD 13.1.4

The risks which this chapter in part addresses arise because of:

(1) uncertainty about the time at which claims may fall due; and

(2) difficulties, costs and uncertainty in realising assets earlier than anticipated.

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LLD 13.1.5

LLD 9.2.5 R requires the Society to ensure it and its members maintain adequate assets to meet the liabilities which it assumes and which its members severally assume. LLD 11.2.1 R requires the Society to assess the financial position of each member and to maintain sufficient net central assets to cover at least the total of members' solvency deficits.

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LLD 13.2

Identification and valuation of assets

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LLD 13.2.1

The Society must identify its assets and value them in accordance with this chapter and LLD 14 (Assets: market and credit risk).

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LLD 13.2.2

The Society must take all reasonable steps to ensure the identification and valuation (in accordance with this chapter and LLD 14 (Assets: market and credit risk)) of each member's admissible assets which are available to meet his underwriting liabilities.

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LLD 13.2.3

For the purposes of LLD 13.2.2 R a member's admissible assets which are available to meet his underwriting liabilities include his funds at Lloyd's and his share of premium trust funds, but exclude funds held outside Lloyd's (other personal wealth).

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LLD 13.2.4

For the purposes of LLD 13.2.1 R and LLD 13.2.2 R, assets in respect of long-term insurance business and general insurance business must be separately identified.

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LLD 13.2.5

LLD 9.4.1 R sets out the basic rule under which assets are to be valued for the purpose of calculating solvency, including:

(1) whether, and when, to recognise or ignore an asset; and

(2) which description to place on an asset;

but the application of the basic rule in LLD 9.4.1 R is subject both to this chapter and LLD 14 (Assets: market and credit risk).

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LLD 13.2.6

A lower value than that required by this chapter and LLD 14 (Assets: market and credit risk) (or a nil value) may be attributed to any asset identified under this chapter.

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LLD 13.3

Maturity and marketability of assets

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LLD 13.3.1

LLD 9.2.6 R requires the Society to ensure that its admissible assets, and to take reasonable steps to ensure that members' admissible assets, are of appropriate maturity and marketability. In doing so, the Society should have regard to the expected timing of liabilities (especially policyholder claims) and the need to make a prudent allowance for the risk that liabilities may fall due earlier than expected.

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LLD 13.3.2

In considering whether an allowance should be made for the risk that claims may fall due earlier than expected, the following should be taken into account:

(1) the type of insurance business;

(2) the past history of volatility;

(3) options available to policyholders and the circumstances in which they are likely to exercise them;

(4) options available to the syndicate and any incentive for the syndicate to exercise them;

(5) the other cashflow needs of the syndicate, including the need to fund overseas regulatory requirements; and

(6) the extent to which technical provisions for long-term insurance business are discounted (technical provisions for general insurance business cannot be discounted, under LLD 12.4.8 R).

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LLD 13.3.3

In determining whether assets are of appropriate maturity, marketability and realisability, the following should be taken into account:

(1) the expected date of maturity, redemption, repayment or disposal;

(2) foreseeable potential delays in the date of maturity, redemption, repayment or disposal;

(3) the arrangements necessary to ensure that assets are located in, or transferred to, the appropriate trust fund;

(4) any uncertainty about the value of the asset at its expected date of realisation;

(5) the speed with which assets may be realised earlier if needed;

(6) the loss in value which might occur if assets were realised quickly; and

(7) the amount of any surplus of assets over liabilities.

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LLD 13.3.4

Reliance should not be placed upon expected cash flows from future new insurance business as a means of avoiding the need to hold assets that are appropriately marketable or otherwise realisable.

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LLD 13.4

Admissible assets

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LLD 13.4.1

Assets are admissible for the purposes of LLD 13.2.1 R only if they fall within the description of admissible assets in LLD 13.4.3 R, or are a derivative contract or quasi-derivative contract falling within LLD 13.6.1 R.

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LLD 13.4.2

The list of admissible assets has been drawn up with the aim of excluding assets:

(1) for which there is no sufficiently objective and verifiable basis of valuation; or

(2) whose realisability cannot be relied upon with sufficient confidence; or

(3) whose nature presents an unacceptable custody risk; or

(4) the holding of which may give rise to significant liabilities or onerous duties; or

(5) which give rise to excessive market or counterparty risk (for which see LLD 14 (Assets: market and credit risk)).

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LLD 13.4.3

Description of admissible assets (see LLD 13.4.1 R)

(1) Investments in, and amounts due from disposal of:

(a) debt securities, bonds and other money and capital market instruments; or
(b) loans; or
(c) shares and other variable yield participations; or
(d) units in schemes falling within the UCITS directive and in other collective investment schemes; or
(e) land, buildings and immovable property rights.

(2) Debts and claims that are:

(a) debts owed by reinsurers, including reinsurers' shares of technical provisions; or
(b) deposits with and debts owed by ceding undertakings; or
(c) debts owed by policyholders and intermediaries arising out of direct insurance and reinsurance operations (except where LLD 13.8.7 R applies); or
(d) debts owed by a member to another member of the Society where the debt is a liability arising out of the insurance business he carries on at Lloyd's; or
(e) in respect of general insurance business only, claims arising out of salvage and subrogation; or
(f) tax recoveries; or
(g) claims against guarantee funds.

(3) Other assets which are:

(a) tangible fixed assets, other than land and buildings; or
(b) cash at bank and in hand, deposits with credit institutions and any other bodies permitted to receive deposits; or
(c) deferred acquisition costs; or
(d) accrued interest and rent, other accrued income and prepayments.

(4) In relation to members' funds at Lloyd's, other assets which are:

(a) guarantees and letters of credit issued by credit institutions or by insurance undertakings; or
(b) verifiable sums arising out of life insurance policies.

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LLD 13.5

Restriction of value to realisable amounts

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LLD 13.5.1

The value of assets must be reduced by:

(1) the expenses of realisation, if they were not already deducted in arriving at that value; and

(2) any reduction in value which would occur if the asset needed to be realised at short notice to meet liabilities falling due earlier than expected.

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LLD 13.5.2

Short notice in this context should not normally be taken to be more than 12 months.

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LLD 13.6

Derivatives

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LLD 13.6.1

An asset which is a derivative contract or a quasi-derivative contract is not admissible unless it has a prescribed pricing basis and it is:

(1) held to reduce investment risk or for the purpose of efficient portfolio management;

(2) held in connection with assets falling within the description of an admissible asset in LLD 13.4.3 R;

(3) covered;

(4) capable of being readily closed out; and

(5) based on underlying assets falling within the description of an admissible asset in LLD 13.4.3 R, an index of those assets or an official index of retail prices.

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LLD 13.6.2

Under LLD 13.4.1 R, and for the purposes of LLD 9 to LLD 15, a value may not be attributed to an asset that is not an admissible asset. The list of admissible assets in LLD 13.4.3 R excludes assets that give rise to unacceptable valuation, realisability, liability, market or counterparty risks. LLD 13.6.1 R applies equivalent restrictions to derivative contracts and quasi-derivative contracts. The aim is to reduce the assumption of those risks, especially market risk.

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LLD 13.6.3

A derivative contract or quasi-derivative contract that does not comply with LLD 13.6.1 R is an inadmissible asset. As with other inadmissible assets the Society and its members are not prohibited from holding it provided that no value is attributed to it. In some circumstances a provision may need to be established to protect against the risk of liability from a derivative contract or quasi-derivative contract whether or not it is admissible.

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LLD 13.6.4

Due regard should be paid to guidance note 4.2 (Use of derivative contracts in insurance funds) set out in IPRU(INS).

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LLD 13.7

Stock lending agreements

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LLD 13.7.1

Provided the conditions specified in LLD 13.7.2 R, and either LLD 13.7.5 R or LLD 13.7.6 R (as appropriate), are satisfied, value may be attributed to:

(1) securities sold under a stock lending agreement as if those securities had been retained; and

(2) assets provided for the purchase of securities under that agreement as if consideration had not been provided.

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LLD 13.7.2

Subject to LLD 13.7.3 R and LLD 13.7.4 R, for the purposes of LLD 13.7.1 R the conditions are that:

(1) the securities have been sold to or purchased from an approved credit institution or an approved investment firm; and

(2) that sale or purchase was made subject to an agreement that the approved credit institution or approved investment firm would subsequently, either on demand or within six months of that sale or purchase, sell back or purchase back equivalent securities.

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LLD 13.7.3

Value must not, however, be attributed to:

(1) any consideration received for the sale of securities under a stock lending agreement (or any assets purchased with such consideration) up to the limit of the value of the securities sold; or

(2) any securities purchased under a stock lending agreement (or any assets purchased with the proceeds of the sale of those securities) up to the limit of the consideration provided.

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LLD 13.7.4

Where, at any time after the sale or purchase of securities under a stock lending agreement either:

(1) the amount of the consideration received for sale of the securities falls below the value of the securities sold by more than 2.5%; or

(2) the value of the securities purchased falls below the value of the consideration provided by more than 2.5%;

additional consideration equal to the shortfall must be obtained before the end of the working day following the day when the shortfall occurred.

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LLD 13.7.5

For the purposes of LLD 13.7.1 R, where securities are purchased from an approved credit institution or approved investment firm and the consideration provided is other than by way of sale of the securities, the conditions are that the securities purchased:

(1) are issued by an approved credit institution; and

(2) do not include:

(a) securities (other than approved securities) issued by the same counterparty whose aggregate value amounts to more than 15% of the value of the securities purchased; or

(b) if (a) is not satisfied, securities whose value when aggregated with existing exposure to assets of the same description, or to the same counterparty, would exceed the appropriate permitted asset exposure limit or permitted counterparty exposure limit, as determined under LLD 14 (Assets: market and credit risk).

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LLD 13.7.6

For the purposes of LLD 13.7.1 R, where securities are sold to an approved credit institution or an approved investment firm, the conditions are that:

(1) the consideration provided by the approved credit institution or approved investment firm is:

(a) cash; or

(b) approved securities; or

(d) securities issued by an approved credit institution; or

(e) a charge over the assets set out in (a) to (d); or

(f) a letter of credit established with an approved credit institution; or

(g) a guarantee provided by an approved credit institution; and

(2) the consideration does not include:

(a) except to the extent that LLD 13.7.6 R (2)(b) is satisfied, an amount which, when aggregated with existing exposure to assets of the appropriate description or to the relevant counterparty, would exceed the appropriate permitted asset exposure limit or permitted counterparty exposure limit, as determined under LLD 14 (Assets: market and credit risk); or

(b) an amount, more than 15% of which takes the form of securities (other than approved securities) issued by, letters of credit established with, guarantees provided by, cash deposited with, a charge over cash deposited with or a charge over securities issued by, the same counterparty; and

(3) the consideration to be provided for the subsequent purchase back of equivalent securities is:

(a) cash denominated in the same currency where the consideration for the original purchase by the approved credit institution or approved investment firm was (wholly or in part) cash; and

(b) equivalent to the securities provided as consideration where the consideration was (wholly or in part) securities.

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LLD 13.7.7

Where a number of stock lending agreements have been entered into, for the purposes of LLD 13.7.5 R and LLD 13.7.6 R:

(1) any or all agreements under which the subsequent sale or purchase has not taken place at the valuation date may be treated as one agreement; and

(2) in such case, the 15% limits in LLD 13.7.5 R (2)(a) and LLD 13.7.6 R (2)(b) must be calculated by reference to the aggregate of the value of the securities purchased under LLD 13.7.5 R or the amount of any consideration in LLD 13.7.6 R.

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LLD 13.7.8

Where consideration has been received for any other sale of the kind described in LLD 13.7.1 R, in addition to any other exposure to assets or to a counterparty:

(1) if the consideration takes the form of a letter of credit established with, or a guarantee provided by, an approved credit institution, then it must be treated as giving rise to exposure to that institution by the amount of the consideration;

(2) if the consideration takes the form of a charge over securities, then it must be considered to give rise to exposure to securities of the same description and to the issuer of those securities by the amount of the consideration; and

(3) if the consideration takes the form of cash deposited with another party for the benefit of the Society or a member, or a charge over cash deposited with another party, then it must be considered to give rise to exposure to that party by the amount of the consideration.

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LLD 13.7.9

In these rules the amount of any consideration must:

(1) in the case of a letter of credit established with an approved credit institution, be the lower of the amount made available under the letter of credit and the value of the assets sold; or

(2) in the case of a guarantee provided by an approved credit institution, be the lower of the amount of the guarantee and the value of the assets sold; or

(3) in the case of assets of the types in LLD 13.7.6 R (1)(a) to LLD 13.7.6 R (1)(d), or a charge over those assets, be the value of the assets as determined under this chapter and LLD 14 (Assets: market and credit risk).

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LLD 13.8

Debts and other rights

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LLD 13.8.1

Subject to LLD 13.8.12 R, the value of an asset that is a secured debt due, or to become due, other than a debt to which LLD 13.8.3 R or LLD 13.8.8 R applies, must:

(1) for a debt which is, or will become, due within 12 months of the valuation date (including any debt which would become due within that period if any right to require payment were to be exercised), be the amount which can reasonably be expected to be recovered for that debt; and

(2) for any other debt, be the amount which would reasonably be paid as consideration for an immediate assignment of the debt.

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LLD 13.8.2

In assessing the value of an asset under LLD 13.8.1 R and LLD 13.8.5 R, due account should be taken of the nature and quality of the security and the terms and conditions for payment.

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LLD 13.8.3

For long-term insurance business, the value of an asset that is a debt due, or to become due, and is secured on a policy of insurance written at Lloyd's and which (together with any other debt secured on that policy) does not exceed the amount payable on a surrender of that policy at the valuation date, must be the amount of that debt.

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LLD 13.8.4

Subject to LLD 13.8.12 R, the value of an asset that is an unsecured debt due, or to become due, other than a debt to which LLD 13.6.1 R, LLD 13.8.5 R, LLD 13.8.7 R or LLD 13.13.1 R applies, must:

(1) in the case of a debt which is, or will become, due within 12 months of the valuation date (including any debt which would become due within that period if any right to require payment were to be exercised), be the amount which can reasonably be expected to be recovered for that debt; and

(2) in the case of any other debt, be the amount which could reasonably be expected to be paid as consideration for an immediate assignment of the debt.

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LLD 13.8.5

Subject to LLD 13.8.6 R, the value of any assets that are rights under a contract of reinsurance must be the amount which can reasonably be expected to be recovered by exercising those rights.

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LLD 13.8.6

LLD 13.8.5 R does not apply to rights under a contract of reinsurance for long-term insurance business except to the extent that debts are due under that contract.

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LLD 13.8.7

Value must not be attributed to any asset that is a debt due, or to become due:

(1) from an intermediary for money advanced on account of commission to which that intermediary is not absolutely entitled at the valuation date; or

(2) in respect of premiums (account having been taken of rebates, refunds and commissions payable) which are recorded in the relevant accounting records as due and payable and has been outstanding for more than three months.

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LLD 13.8.8

For general insurance business, the value of any assets that are subrogation rights must be the amount that can reasonably be expected to be recovered by exercising those rights.

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LLD 13.8.9

For general insurance business, the value of any assets that are salvage rights must be the amount that can reasonably be expected to be recovered by exercising those rights.

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LLD 13.8.10

The value of any asset that is a right to recover assets transferred by way of initial margin must be determined:

(1) where the initial margin was a cash payment, as if a debt were owed for that amount; and

(2) where the initial margin took the form of a transfer of securities, as if a debt were owed of an amount equal to the value of such securities as determined under this chapter and LLD 14 (Assets: market and credit risk).

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LLD 13.8.11

The value of any rights arising from an asset that is a derivative contract to which LLD 13.6.1 R does not apply, or under a quasi-derivative contract to which LLD 13.6.1 R does not apply, must be the value of any right to recover assets transferred as initial margin together with the value of any other unconditional right to receive a specified amount.

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LLD 13.8.12

LLD 13.8.1 R and LLD 13.8.4 R do not apply to any rights (other than debts due) in respect of:

(1) securities or beneficial interests in a limited liability partnership; or

(2) units or other beneficial interests in a collective investment scheme; or

(3) a derivative contract, except to the extent provided under LLD 13.8.10 R or LLD 13.8.11 R; or

(4) a contract or asset which is a quasi-derivative contract except to the extent provided under LLD 13.8.10 R or LLD 13.8.11 R or where a derivative contract asset includes an element of debt.

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LLD 13.9

Land

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LLD 13.9.1

The value of an asset that is land must not be greater than the amount which would be realised (after deduction of reasonable sale expenses) if the land were sold at a price equal to the most recent valuation made by a qualified valuer, which valuation must have been made not more than three years before the end of the relevant syndicate year.

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LLD 13.10

Equipment

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LLD 13.10.1

The value of an asset that is office machinery (other than computer equipment), furniture, motor vehicles and other equipment must, in the syndicate year in which it is purchased, be not greater than one-half of its cost and must be left out of account in any subsequent year.

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LLD 13.10.2

The value of an asset that is computer equipment, including software must:

(1) in the syndicate year in which it is purchased, not be greater than three-quarters of the cost;

(2) in the next syndicate year, not be greater than one-half of the cost;

(3) in the syndicate year after that, not be greater than one-quarter of the cost; and

(4) in any following year, be nil.

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LLD 13.11

Securities and beneficial interests in limited liability partnerships

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LLD 13.11.1

Subject to LLD 13.11.2 R, the value of an asset that is an investment to which this rule applies, must:

(1) where the investment is transferable and LLD 13.11.3 R does not apply, be the market value;

(2) where the investment is transferable and LLD 13.11.3 R applies, be the lower of:

(a) the market value; and

(b) the amount which could reasonably be expected as consideration for an assignment or transfer of the investment at a date not later than 12 months after the valuation date; or

(3) where the investment is not transferable:

(a) be the amount payable on redemption on the valuation date, or on the most recent date before the valuation date when the issuer of the investment could have been required to redeem it; or

(b) where the investment cannot be redeemed, be the amount which would reasonably be paid as consideration for surrendering the interest in the investment.

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LLD 13.11.2

LLD 13.11.1 R applies to the valuation of investments comprising securities (but not those which are derivative contracts, units or other beneficial interests in collective investment schemes or quasi-derivative contracts) and beneficial interests in limited liability partnerships, and, for the purposes of LLD 13.11.5 G, investments includes loans.

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LLD 13.11.3

Subject to LLD 13.11.4 R, for the purposes of LLD 13.11.1 R (1) and LLD 13.11.1 R (2), this rule applies where it is not reasonable to assume that, had negotiations for assigning or transferring the investment started seven working days or less before the valuation date, the investment could have been assigned for an amount not less than 97.5% of the market value, other than to the issuer or to an associate of the issuer.

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LLD 13.11.4

LLD 13.11.3 R does not apply if it would otherwise apply by reason only that:

(1) the listing of the investment has been temporarily suspended after the stock exchange on which the investment is listed or the regulated market on which facilities for dealing have been granted received price sensitive information; or

(2) the extent of the holding would prevent an orderly disposal of the investment for at least 97.5% of the market value.

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LLD 13.11.5

Where more than one unlisted investment is made (other than investments exclusively comprising loans) and their total value is greater than the aggregate of the values of each investment valued separately, then the higher value may be attributed to the investments, if it is reasonable to assume that none of the investments would be assigned or transferred separately.

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LLD 13.12

Collective investment schemes

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LLD 13.12.1

The value of assets that are units or other beneficial interests in a collective investment scheme to which LLD 13.12.2 R applies must:

(1) where the issuer can be required to purchase the units or other beneficial interests from the holder upon the holder giving notice of one month or less, be the price at which the issuer would have purchased the units or other beneficial interests on the valuation date or the most recent date before the valuation date on which it could have been required to make that purchase; or

(2) where the issuer cannot be required to purchase the units or other beneficial interests as set out in LLD 13.12.1 R (1), be a value determined under LLD 13.11.1 R.

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LLD 13.12.2

LLD 13.12.1 R applies to units or other beneficial interests in:

(1) a scheme falling within the UCITS directive; or

(2) an authorised unit trust scheme or a recognised scheme; or

(3) any other collective investment scheme where:

(a) the scheme does not include derivative contracts unless they are contracts to which LLD 13.6.1 R applies;

(b) the scheme does not include quasi-derivative contracts unless they are contracts to which LLD 13.6.1 R applies; and

(c) the scheme does not include assets except those for the valuation of which provision is made in this chapter or LLD 14 (Assets: market and credit risk).

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LLD 13.13

Deferred acquisition costs

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LLD 13.13.1

In the case of general insurance business, the value of an asset that comprises deferred acquisition costs must be the value as determined under LLD 9.4.1 R.

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LLD 13.14

Reversionary interests

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LLD 13.14.1

The value of an asset that is a long-term insurance business asset consisting of an interest in land which is a remainder, reversionary interest, right of fee subject to a life rent or other future interest, whether vested or contingent, must be the amount that can reasonably be expected to be paid as consideration for an immediate transfer or assignment of that intent.

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LLD 13.15

Related and subsidiary undertakings

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LLD 13.15.1

The value of any shares held by the Society in a related undertaking of the Society must not exceed the value, determined in accordance with IPRU(INS) (other than IPRU(INS) 4.14(1)(a) to (c)), of its surplus assets.

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LLD 13.15.2

The surplus assets of a related undertaking are its total assets excluding:

(1) subject to LLD 13.15.4 R, the assets that are selected to cover its liabilities and, in the case of a related undertaking which is an insurance undertaking, to cover the notional required minimum margin;

(2) assets that are interests directly or indirectly held in the related undertaking's own capital (including shares and subordinated debt) or in liabilities of the Society that are subordinated to the interests of policyholders;

(3) where the related undertaking carries on long-term insurance business, profit reserves and future profits;

(4) assets which represent either a long-term insurance business fund or a fund the allocation of which as between policyholders and other purposes has yet to be determined;

(5) amounts due, or to become due, in respect of share capital, or other contributions from members of the related undertaking, subscribed or called for but not fully paid up; and

(6) assets that cannot effectively be made available or realised to meet liabilities of the Society or members, including assets that represent capital not owned, directly or indirectly, by the Society.

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LLD 13.15.3

Examples of assets that may not be effectively available include blocked currency and minority interests which cannot be readily realised.

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LLD 13.15.4

The assets identified in LLD 13.15.2 R (1) to be deducted from the total assets:

(1) where the related undertaking is an insurance undertaking, must be identified and valued in accordance with relevant regulatory requirements as to the value, admissibility, nature, location or matching that apply to the assets available to cover its liabilities and the notional required minimum margin;

(2) where the related undertaking is not an insurance undertaking, must be of a value at least equal to the amount of its liabilities, determining that value and that amount in accordance with IPRU(INS) (other than 4.14(1)(a) to (c)); and

(3) in both cases, must not include:

(a) assets falling within LLD 13.15.2 R (2); or

(b) assets falling within LLD 13.15.2 R (5) where the amount is due, or to become due, from a member, the Society or a related undertaking.

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LLD 13.15.5

Where the relevant regulatory requirements merely identify the categories of assets that are eligible to cover liabilities or represent the notional required minimum margin, the Society may select which assets it actually identifies for these purposes. That selection may take the form of a selection of a pro rata proportion of all eligible assets.

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LLD 13.15.6

Even where the relevant regulatory requirements would allow assets excluded by LLD 13.15.4 R (3) to cover liabilities and represent the notional required minimum margin, those assets should be ignored. Without using assets excluded by LLD 13.15.4 R (3), the assets identified should be sufficient to satisfy the relevant regulatory requirements.

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LLD 13.15.7

Other types of asset, including those excluded from the definition of surplus assets, may be used to cover liabilities and the notional required minimum margin where permitted by the relevant regulatory requirements. Similarly for a non-insurance undertaking a value may be attributed, using the IPRU(INS) rules relating to the valuation of assets, to other types of asset, even where excluded from the definition of surplus assets.

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LLD 13.15.8

For the purposes of LLD 13.15.4 R the relevant regulatory requirements are:

(1) in the case of an insurance undertaking established in a designated State or territory, the regulatory requirements of that State or territory applicable to an undertaking carrying on direct insurance business (even if it is a pure reinsurer); and

(2) in the case of any other insurance undertaking, subject to LLD 13.15.9 R, the rules in IPRU(INS) applicable to an insurer with its head office in the United Kingdom (whether or not it is such an insurer).

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LLD 13.15.9

For the purposes of LLD 13.15.8 R (2):

(1) LLD 2.10 to LLD 2.13 are to be applied as if the insurance undertaking satisfied the condition in LLD 2.10; and

(2) LLD 4.14 (1)(a) to (c) are ignored.

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LLD 13.16

Debts due or to become due from a related undertaking

01/12/2004

LLD 13.16.1

The value of any debt due, or to become due, from a related undertaking must not exceed the amount reasonably expected to be recovered in respect of the debt, taking into account only the value of:

(1) the assets identified under LLD 13.15.2 R (1); and

(2) any security held in respect of the debt.

01/12/2004