Instructions for completion of Form ECR

1. The amounts entered in the cells in column 1 of sheet 2 and columns 1, 2 and 3 of sheets 3 and 4 must reconcile to the 'FSA return source' column, shown alongside that cell, except where:

(a) no FSA return source is shown e.g. sheet 3, lines 14 to 22, columns 1 and 3;

(b) in the case of sheets 3 and 4 column 1, the return for the financial year ended, shown on sheet 1, is for a non 12 month period; or

(c) in the case of a cell in sheet 3 or 4, the Form referred to in the 'FSA return source' column, was not prepared for the relevant combined category or risk category in that return.

Where the latter exception applies, the amount entered in that cell must be the amount that would have been reported in that return at the 'FSA return source' had the insurer prepared that Form for that combined category or risk category

ECR Calculation – Summary (Sheet 1)

2. The amount shown on the ICG line must be the most recent Individual Capital Guidance (ICG) amount given by the FSA. The ICG will usually be based on a percentage of the ECR gross of Equalisation Provisions. In this case the percentage should be applied to the current ECR gross of Equalisation Provisions to obtain the ICG amount. If no ICG has been given, enter "N/A".

2A. If ICG is based on a percentage of the ECR gross of Equalisation Provisions and that percentage is different to the ratio that appears on line 14, an explanation for the difference must be provided in a supplementary note.

Asset-related Capital Requirement Sheet (Sheet 2)

3. The amounts shown in column 1 must be the value, in accordance with GENPRU 1.3, of the listed asset items as at the financial year ended date shown on sheet 1.

4. In column 2, derivative adjustments, where a firm has entered into a derivative then, for the purposes of applying the appropriate capital charge factor as set out in INSPRU 2.2.16R, it must treat the value of the derivative and the value of the asset associated with the derivative as a single asset of a type and value which most closely reflects the economic risk to the firm of the combined rights and obligations associated with the derivative and the asset associated with the derivative (INSPRU 2.2.11R(4)).

5. Include money market funds as defined in INSPRU 2.2.14R in the line for the asset item "Money market funds".

6. The amount shown under the columns for "Assets" and "Derivative adjustment" for the asset item "Shares, other variable-yield securities, units in unit trusts and Participation in investment pools" should be after deductions of amounts held in money market funds included in Form 13 at column 1 lines 41, 42, 43 or 49 of the return or the financial year in question.

7. The sum of the amounts shown in the "Asset" column for the asset items "Shares, other variable-yield securities, units in unit trusts and Participation in investment pools" and "Money market funds" should be equal to the sum of lines 41, 42, 43 and 49 at column of Form 13 of the return for the financial year in question.

7A. To give effect to INSPRU 2.2.11R (2), the asset related capital charge shown in column 4 is the asset related capital charge factor in column 3 multiplied by the higher of:

(a) the sum of columns 1 and 2; and

(b) zero

Insurance-related Capital Requirement - Accident and Underwriting Year Accounted
Business (Sheets 3-4)

8. Amounts shown in the "Net Written Premium" column must be net written premiums before any deduction for commissions in the twelve months preceding the financial year ended date shown on sheet 1.

9. Amounts shown in the "Net claims outstanding carried forward" column must be net of reinsurance and comprise: outstanding claims, provisions for incurred but not reported (IBNR) claims, provisions for incurred but not enough reported (IBNER) claims and related claims management costs as at the financial year ended date shown on sheet 1.

10. Amounts shown in the "Net unearned premium and unexpired risks net of deferred acquisition costs" column must be net of reinsurance and comprise provision for unexpired risk and unearned premium less deferred acquisition costs as at the financial year ended date shown on sheet 1.

10A. To give effect to INSPRU 1.1.77R (2), the amount derived in the "Net Written Premium capital charge" column is the net-written premium capital charge factor in column 4 multiplied by the higher of:

(a) the net written premium in column 1; and

(b) zero

11. To give effect to INSPRU 1.1.77R (2), the amount derived in the "Net technical provision capital charge" column is the net technical provision capital charge factor in column 5 multiplied by the higher of:

(a) the sum of the net claims outstanding carried forward and the net unearned premium less deferred acquisition costs; and

(b) zero.

Publisher's Note: Please be aware that the ECR form needs to be downloaded from the FSA's web site and completed as necessary. The finished form must then be sent separately from the main return and e-mailed to: insurancereturns@fsa.gov.uk. The title of the email should be:              <firm name> Form ECR1 <dd/mm/yyyy>

Information taken from the FSA Publication IPRU(INS) - 1 October 2009 (reproduced with permission)
While every effort has been made to ensure the accuracy of the information published here - changes may have been made to the notes since these were published. FSAssist cannot accept any liability for any inaccuracies in the information published here. Note that it remains the responsibility of the individual insurer to ensure the rules and regulations have been correctly adhered to.
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