Instructions for completion of Form 2

1. An insurer (other than an EEA-deposit insurer) carrying on long-term insurance business must complete Form 2 in respect of its entire long-term insurance business. An external insurer (other than a non-EEA insurer whose insurance business in the United Kingdom is restricted to reinsurance or an insurer whose head office is in any EEA State except the United Kingdom whose insurance business in the EEA is restricted to reinsurance) or EEA-deposit insurer that is carrying on long-term insurance business must complete Form 2 in respect of business carried on through a branch in the United Kingdom. An UK-deposit insurer that is carrying on long-term insurance business must complete Form 2 in respect of business carried on through its branches in EEA States taken together.

2. The entry at line 13 must be equal to the total capital resources after deductions at line 79, column 2 on Form 3. The entry at line 11 represents items relating to the long-term insurance fund, and that at line 12 represents amounts arising outside the long-term insurance fund. For a branch, line 11 is equal to the sum of any implicit items plus Form 10 line 11 less the sum of lines 11, 12 and 49 in Form 14: when there are implicit items an analysis of line 11 must be given in a supplementary note (code 0202); if the insurer is not carrying on general insurance business through the branch, line 12 will be equal to Form 10 line 23.

3. For financial years commencing on or before 31 December 2004 lines 11 to 42, column 2 must be blank.

4. For EEA-deposit insurers, lines 21 to 42 must be blank.

Instructions 5-14 only apply to firms that do not meet the conditions specified in GENPRU 2.1.13 R(2), i.e. that are not required to perform an adjusted solo calculation under INSPRU 6.1.

5. For an insurer other than a pure reinsurer writing both non-life and life business, the guarantee fund requirement at line 21 is calculated by reference to GENPRU 2.2.33R as the higher of line 33 and 1/3 of line 31. For a pure reinsurer writing both non-life and life business, the guarantee fund calculated by reference to GENPRU 2.2.34AR must be allocated between F1.21 and F2.21 in the ratio of the general insurance capital requirement to the sum of the long-term insurance capital requirement and the resilience capital requirement.

6. The excess (deficiency) of available capital resources to cover the guarantee fund requirement at line 22 is equal to line 81, column 2 on Form 3 less line 21, except for a branch. For a branch this is equal to line 13 less line 21 less an adjustment because assets held to cover the guarantee fund must be held in the United Kingdom (or for UK-deposit insurers, in the EEA States where the firm carries on insurance business) and cannot include implicit items; an analysis would be appropriate in a note (code 0203) to the Form.

7. The long-term insurance capital requirement at line 31 must be equal to the amount shown at line 51 of Form 60, which is calculated in accordance with GENPRU 2.1.36R.

8. The resilience capital requirement at line 32 is calculated in accordance with the rules in INSPRU 3.1.

9. The base capital resources requirement at line 33 must be taken from GENPRU 2.1.30R. For a branch, this figure should be halved. For a pure reinsurer writing both non-life and life business, the base capital resources requirement must be allocated between F1.33 and F2.33 in the ratio of the general insurance capital requirement to the sum of the long-term insurance capital requirement and the resilience capital requirement.

9A. The individual minimum capital requirement at line 34 is calculated in accordance with GENPRU 2.2.34AR or GENPRU 2.1.25R and is the greater of line 33 and the sum of lines 31 and 32.

9B. The capital requirements of regulated related undertakings at line 35 must be nil.

9C. The minimum capital requirement at line 36 is equal to the sum of lines 34 and 35.

10. The excess (deficiency) of available capital resources to cover 50% of the minimum capital requirement at line 37 is equal to line 82, column 2 on Form 3 less 50% of line 36. For a branch, line 37 must be blank.

11. The excess (deficiency) of available capital resources to cover 75% of the minimum capital requirement at line 38 is equal to line 83, column 2 on Form 3 less 75% of line 36. For a branch, line 38 must be blank.

12. The with-profits insurance capital component at line 39 must be the total of the amounts shown at line 66 on Forms 18, calculated in accordance with the rules in INSPRU 1.3.

13. The enhanced capital requirement at line 40 is calculated as the sum of lines 31, 32 and 39.

14. The capital resources requirement at line 41 is calculated in accordance with GENPRU 2.1.18R.

Instructions 15-23 only apply to firms that meet the conditions specified in GENPRU 2.1.13R(2), i.e. that perform the adjusted solo solvency calculation in accordance with INSPRU 6.1.

15. The guarantee fund requirement at line 21 is calculated as the share of the long-term insurance business of

⅓X + (R – S – U – X) by reference to INSPRU 6.1.45R.

16. The excess (deficiency) of available capital resources to cover the guarantee fund requirement at line 22 is equal to line 81, column 2 on Form 3 less line 21.

17. The long-term insurance capital requirement at line 31 is taken from the amount shown at line 51 of Form 60, which is calculated in accordance with GENPRU 2.1.36R.

17A. The resilience capital requirement at line 32 is calculated in accordance with the rules in INSPRU 3.1.

17B. The base capital resources requirement at line 33 must be taken from GENPRU 2.1.30R. For a branch, this figure should be halved. For a pure reinsurer writing both non-life and life business, the base capital resources requirement must be allocated between F1.33 and F2.33 in the ratio of the general insurance capital requirement to the sum of the long-term insurance capital requirement and the resilience capital requirement.

17C. The individual minimum capital requirement at line 34 is the greater of line 33 and the sum of lines 31 and 32.

17D. The capital requirements of regulated related undertakings at line 35 is the amount shown at line 36 less line 34.

18. The entry at line 36 must include the amount represented by (R-S) with reference to INSPRU 6.1.45R.

19. The excess (deficiency) of available capital resources to cover 50% of the minimum capital requirement at line 37 is equal to line 82, column 2 on Form 3 less 50% of line 36.

20. The excess (deficiency) of available capital resources to cover 75% of the minimum capital requirement at line 38 is equal to line 83, column 2 on Form 3 less 75% of line 36.

21. The with-profits insurance capital component at line 39 must be the total of 'S' with reference to INSPRU 6.1.45R.

22. The entry at line 40 must be the sum of lines 36 and 39.

23. The entry at line 41 must equal the amount represented by R with reference to INSPRU 6.1.45R.

Instructions 24 onwards apply to all firms

24. The entry at line 51 must not include provision for any liability to tax on capital gains referred to in paragraph 13(1)(b) of Appendix 9.1. Amounts in related undertakings must not be included.

25. Where a direction under section 148 of the Act has been issued disapplying or modifying any of the provisions of the Accounts and Statements Rules, a note to Form 2 explaining the effect of the direction is usually required. The requirement for such a note would be specified in the direction itself. (Code 0201).

FSA Form Instructions
List of Supplementary Notes

This is a list of all current supplementary notes which you may be required to supply with your return

FSA Resource Sources

GENPRU - the general prudential requirements for regulated firms.

INSPRU - the specialised sourcebook for insurers

IPRU(INS) - [Version 20130610] the residual prudential and notification requirement for insurers.

E&Y FSA Returns Guide

Ernst & Young's Insurance Returns guide - updated for 2012/3 - covers virtually everything you will need to know about completing your PRA return