ANNEXSupplementary provisions
PROVISIONS RELATING TO LLOYD'S A. General For the purposes of this Directive, both Lloyd's and Lloyd's syndicates shall be deemed to be insurance undertakings. Subject to the necessary adaptations set out in section B: - Lloyd's syndicates shall prepare annual accounts ('syndicate accounts`), and - Lloyd's shall prepare aggregate accounts ('aggregate accounts`) in place of the consolidated accounts prescribed in Directive 83/349/EEC. In this Annex, 'Lloyd`s accounts' shall mean both types of accounts referred to above. B. Special provisions 1. Contents of syndicate accounts Subject to paragraph 9, syndicate accounts shall be prepared on a cumulative basis for three underwriting years of account at a time and shell comprise a separate underwriting years of account for each such year and a balance sheet for all such years taken together. Accounts prepared after 12 and 24 months respectively shall be known as open years. The underwriting account shall be prepared by analogy with the provisions governing the preparation of the profit and loss account; it shall show, in addition: (a) for each entry, the change in the figures since the preceding accounting date; (b) the allocated capacity of the syndicate for the relevant underwriting year of account. 2. Contents of aggregate accounts Aggregate accounts shall be prepared by cumulation of the accounts of all Lloyd's syndicates. They shall include a note giving details of: (a) inter-syndicate business including premiums written and claims paid; (b) the method by which run-off years of account, referred to in paragraph 9, are taken into account; (c) the method by which the premium income limit for individual members of Lloyd's syndicates is calculated. 3. Capital Lloyd's and Lloyd's syndicates shall not be required to disclose, in the aggregate accounts and dyndicate accounts respectively, figures for liabilities items A (I) (Subscribed capital or equivalent fund), A (II) (Share premium account) and A (IV) (Reserves). Instead, Lloyd's shall attach a note to the aggregate accounts disclosing the following: (a) Members' personal resources 1. Lloyd's deposits 2. The Personal Reserve Fund 3. The Special Reserve Fund 4. Other disclosed means (b) Central resources of Lloyd's 1. The net assets of the Central Fund 2. The net assets of the Corporation of Lloyd's. 4. Taxation (a) Lloyd's and Lloyd's syndicates shall not be required to disclose, in the aggregate accounts and syndicate accounts respectively, figures for liabilities items E (2) (Provisions for taxation) and G (V) (Other creditors, including tax and social security), as far as tax alone is concerned, and items III (9) (Tax on profit or loss on ordinary activities) and III (14) (Tax on extraordinary profit or loss) in the profit and loss account as with the exception of amounts deducted at source. (b) However, a note to all Lloyd's accounts shall state why a tax charge is not shown and the basic rate of tax applicable for the amounts deducted at source. 5. Accounting principles (a) Going concern The going concern principle set out in Article 31 (1) (a) of Directive 78/660/EEC shall not apply to Lloyd's accounts. (b) Accruals The accruals principle set out in Article 31 (1) (d) of Directive 78/660/EEC shall not apply to Lloyd's accounts. (c) Allocation of income Not more than three years after the date referred to in Article 70 (1), Lloyd's and Lloyd's syndicates shall allocate income which derives from insurance contracts to syndicate years of account on an inception date basis. (d) Other accounting principles In all Lloyd's accounts: - like items shall receive uniform treatment, - reinsurance recoveries shall be taken into account in respect of open years where a syndicate has paid a claim, - operating expenses shall be allocated to the underwriting year of account for which they are incurred. 6. Technical provisions Subject to paragraph 9 and by way of derogation from Articles 56 and 60, technical provisions shall not appear in Lloyd's accounts. However: (a) the underwriting accounts for open years shall show the excess of the premiums collected over the claims and expenses paid, by analogy with Article 61; (b) a provision for claims outstanding shall be calculated when the underwriting year of account is closed and shall be shown in accordance with paragraph 8. 7. Open years Syndicates shall prepare accounts for open years on a cash receipts and payments basis. 8. Reinsurance to close Subject to paragraph 9, syndicates shall close their accounts at the end of a three-year period by payment of a premium ('Reinsurance to close`) and shall disclose at least the following information: - Gross notified outstanding claims . - Reinsurance recoveries anticipated ( ) . - Net notified outstanding claims . - Provision for gross claims incurred but not reported . - Reinsurance recoveries anticipated ( ) . - Provision for net claims incurred but not reported . - Net premium for 'reinsurance to close` the year of account (net total) . 9. Run-off years of account (a) For the purposes of this paragraph a run-off year of account shall be one in respect of which, on the date on which it would normally be closed in accordance with paragraph 8, uncertainty prevents the determination of the 'reinsurance to close`, and which accordingly is left open until that uncertainty is resolved. (b) In respect of each run-off year of account, syndicate accounts shall include an underwriting account showing the amount retained to meet all known and unknown outstanding liabilities, which represents a provision for claims outstanding estimated in the usual manner. 10. Disclosure of deposits with cedants For up to three years after the date referred to in Article 70 (1) Lloyd's and Lloyd's syndicates shall not be required to disclose the figures for assets item C (IV) (Deposits with ceding untertakings). 11. Life business By way of derogation from Article 33 (3), Lloyd's life-assurance business (pure term life assurance for a period of not more than 10 years) may be shown in Lloyd's accounts in the format provided for in Article 34 (I) for non-life-insurance business. 12. Gross premiums By way of derogation from Article 35, gross premiums may be stated net of brokerage. By way of addition to the requirements of Article 35 in relation to profit and loss account items I (1) (a) and II (1) (a) (Gross premiums written, net of reinsurance) a note shall be included: - in each syndicate's accounts explaining the basis upon which commission and brokerage are charged and giving the estimated average rate of commission and brokerage for each of the main lines of business written by the syndicate, - in the aggregate accounts giving the estimated average rate of commission and brokerage across the market. 13. Contents of the notes on Lloyd's accounts In the notes on Lloyd's accounts the meaning of gross premiums shall be as set out in paragraph 12.