Insurance Business (Solvency Margin) (Jersey) Order 1996

Summary

This Jersey Order, made under the Insurance Business (Jersey) Law 1996, sets out the solvency margin and approved asset requirements that category B insurance permit holders must maintain on an ongoing basis. It defines what counts as an approved asset, the minimum proportion of assets that must be approved assets, and the minimum margin of solvency required depending on whether the permit holder carries on general business or long term business.

• Approved assets: Defines approved assets as cash, bank certificates of deposit, approved eurobonds, listed government securities, related investment income, premiums and reinsurance balances receivable, accounts receivable net of bad debt provisions, and irrevocable letters of credit from a Jersey-registered bank; amounts due from associated persons are excluded unless the Commission agrees in writing.
• Minimum proportion of approved assets: A category B permit holder carrying on general business must hold at least 75% of its assets as approved assets at all times; one carrying on long term business must hold at least 25%.
• Margin of solvency - general business: The margin of solvency (excess of approved assets over liabilities) for general business must be at least 17.5% of net premium income.
• Margin of solvency - long term business: For long term business, the margin of solvency must be the greater of GBP 50,000 or 2.5% of the value of the long term business fund required under Article 26(2)(b) of the Insurance Business (Jersey) Law 1996.

The Order has been amended several times since 1996 (including in 1998, 2003, 2014 and 2019) and remains in force in its consolidated form; it does not impose any periodic filing deadline but establishes a continuing solvency and asset-composition standard that permit holders must satisfy at all times.

Key obligations

• A category B permit holder carrying on general business must maintain at least 75% of its assets as approved assets at all times
• A category B permit holder carrying on long term business must maintain at least 25% of its assets as approved assets at all times
• A category B permit holder carrying on general business must maintain a margin of solvency of at least 17.5% of net premium income
• A category B permit holder carrying on long term business must maintain a margin of solvency equal to the greater of GBP 50,000 or 2.5% of the value of its required long term business fund
• Amounts receivable or balances due from an associated person are not treated as approved assets unless the Commission agrees in writing in advance

Applies to

category B permit holders (insurers licensed under the Insurance Business (Jersey) Law 1996)

Related documents

• This document is made under Insurance Business (Jersey) Law 1996