Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Lloyd's Manual

From
HM Revenue & Customs
Updated
, see all updates

Reinsurance to close (RITC) and technical provisions: section 107 FA2000: example: member reduces their share of the syndicate’s business (page 4 of 4)

Based on the information at LLM3170, the figures to use in FA00/S107 calculations are set out below.

This table also brings out the ’one-year later’ rule described and explained at LLM3070. For example, the RITC premium paid for 1997 would be shown in the accounts at 31 December 1999 (when the 1997 underwriting year closed). It is deemed for the purposes of FA00/S107 to arise one-year later, that is, in the year in which the profits are declared (year ending 31 December 2000 for a corporate member or year ending 5 April 2001 for an individual member).

Claims paid in the year following payment of the RITC premium were also deemed to arise one year later. For example, the year following the year in which the RITC premium was paid for 1997 would be year ending 31 December 2000. Claims paid in year ending 31 December 2000 are deemed for the purposes of FA00/S107 to have been paid one-year later (year ending 31 December 2001 for a corporate member or year ending 5 April 2002 for an individual member).

Underwriting year
  | Original provision | Claims paid | Closing provision |

|| | 1997 | In 2000 | £12.5M |   |   | |   | In 2001 |   | £7M | £8M | |   | In 2002 |   | £2M

(cumulative: £9M) £6M        
           
  1998 In 2001 £12M - -
    In 2002   £4M £12M
           
  1999 In 2002 £12M - -

The calculations are then carried out in the same way as explained in the General Insurance Manual (GIM6000+) - see LLM10000.