»Ê¹ÚÌåÓýapp

FA00/S107 applied to general insurers using funded accounting in the same way as it did for other general insurers. »Ê¹ÚÌåÓýapp technical provisions were compared with the discounted actual cost of settling those provisions. »Ê¹ÚÌåÓýapp only complication was in ensuring that claims were assigned to the correct period.

Under three-year funded accounting, for example, the profits shown when the fund closed at the end of year 3 were taxed in year 1. »Ê¹ÚÌåÓýapp correct figure for the technical provision at the end of year 1 was the figure shown as the ‘provision for unpaid claimsâ€� at the end of year 3, PLUS the claims actually paid in years 2 and 3. This is because at the end of year 1 those claims had not actually been paid. This figure was the starting point for the section 107 calculations.

»Ê¹ÚÌåÓýapp same principle applied in all later years until the liabilities were settled. Any profit crystallising in year 4 was assessed as a profit for year 2. For section 107 purposes, the provision at the end of year 4, PLUS the claims actually paid in years 3 and 4, formed the technical provision for year 2. This was the figure to be compared with the technical provision at the end of year 1. »Ê¹ÚÌåÓýapp section 107 calculation then proceeded with the comparison of the discounted provision for year 2 AND the discounted cost of claims paid in year 2. If this was less than the starting provision for year 1 (subject to the 5% margin), an interest charge was applied to the excess and the result added to the profits for year 2.