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HMRC internal manual

General Insurance Manual

Taxation of general insurance: composite insurance companies

A composite insurance company carries on both long-term and general business.

Life assurance and post-1937 capital redemption business is treated as a trade separate from any other insurance business by reason of ICTA88/S431H (formerly by reason of ICTA88/S432 and ICTA88/S458A). This over-rides the principle that insurance is a single trade (see for instance Last v London Assurance Corporation 2TC100).

Companies may prepare separate computations for, say, permanent health insurance, and general insurance business. But the results of these separate computations must then be combined to determine the overall figure of profit or loss.

Section 6 Insurance Companies Act 1982 prohibited the authorisation of new composite insurers, unless they were reinsurers or ‘healthcare composites’ conducting general insurance business falling within Classes 1 and 2 (Accident and Sickness Insurance) together with any class of long term business. This is now reflected in the rules in the FSA Handbook (see GIM3070 onwards). Where a company does have the two categories of business, the Handbook requires composites to follow the separate solvency requirements for each.