GIM7170 - Equalisation reserves: regulatory return forms

Equalisation reserves are reported in the regulatory return on forms 37 to 39. Each form is accompanied by instructions for completion, and there is further detailed guidance on completion at IPRU(INS) Chapter 9. The entries in forms 37 to 39 are derived from other forms in the return, notably forms 21-24, but it will not usually be possible to reconcile the figures, principally because equalisation reserves are only maintained in respect of certain lines of business. More information about the regulatory return and forms can be found in GIM3180. The forms use the term ‘provision’ rather than ‘reserve’. They mean exactly the same thing in this context.

Form 37 presents the net written premiums, the maximum size of the reserve, the equalisation reserve brought and carried forward, and transfers to and from it, for both credit insurance business (column 7) and all other business groups (columns 1-6).

The form is used for business accounted for on the accident year basis and on the underwriting year basis, with figures derived from Forms 21 and 24/25 respectively. The transfer in or out for the financial year in Line 29 will be carried to Forms 15 and 16, and will be figures which appear in the tax computations. Note however that Forms 15 and 16 will include any non -UK statutory equalisation reserves which the insurer has been required to set up by overseas law in respect of its overseas operations.

Form 38 applies to business accounted for on an accident year basis, and presents the abnormal loss for business groups A to E, and the technical surplus/deficit for credit business. Form 39 records the same information for business accounted for on an underwriting year basis. The abnormal loss and technical surplus figures are carried forward to relevant lines on Form 37.