GIM2125 - Accounting framework: annual accounting: provision for costs of running-off business

FRS 3 (Reporting financial performance) applies where a decision has been taken to cease underwriting a discrete segment of an insurer’s business.

The 2005 SORP requires provision to be made for the full amount of costs of running-off this business in the year in which the decision to cease writing new business is made. The costs should not be charged in future accounting periods against the results from other new business.

The expected investment return not already recognised in calculating technical provisions should be taken into account.