Cessation of underwriting can take place as the result of
entering into a quota share contract (
LLM5180). As for other cessations, the
final year for terminal loss relief (TLR) purposes is determined by
the final year in which profits or losses arising directly from
membership of syndicates, or from premium trust find (PTF) assets,
fall to be assessed on the member.
For example, a Name takes out a quota share contract in June
2005, to come into effect straight away. Syndicate results declared
in 2005 are the last which will be assessed on the Name, so his
final year for TLR will be 2005-06.
Where a Name enters a quota share contract, all the results
of syndicate accounts taken over by the reinsurer under the
contract are treated as profits for TLR purposes (regulation 14(6)
SI1995/351). Any losses covered by the contract are therefore not
available to create or augment a final year’s loss.
If there is any doubt about which year’s profits or
losses are taken over by the reinsurer under the quota share
contract, it may be necessary to examine a copy of the contract
before deciding which is the final year for TLR purposes.
