GIM7130 - Equalisation reserves: credit business: de minimis limits

There are de minimis limits for credit insurance business. An insurer does not have to maintain a reserve in the following circumstances:

• in the case of a UK company, where the net written premiums in any financial year in respect of its credit insurance business are less than 4 per cent of its total net written premiums in that financial year and less than €2,500,000
• in the case of a non-EC company, where net written premiums in any financial year in respect of its credit insurance business carried on through a branch in the UK are less than 4 per cent of the total net written premiums in that financial year in respect of business carried on through that branch and less than €2,500,000 in total.

Although reserves accumulated under the old supervisory rules are taken into account by the regulator in determining whether the regulatory requirement to maintain reserves has been met, tax relief is not available on such reserves and no account is taken of these accumulated reserves when making tax relief computations for subsequent years.