»Ê¹ÚÌåÓýapp

As outlined at LLM3050, where a member increased their share of a syndicate’s business, the amount of the RITC premium received would exceed the amount of the premium paid by that member. »Ê¹ÚÌåÓýapp excess received by a member over that paid by the same member represented new liabilities taken over. For the purposes of the calculation required by FA00/S107, those liabilities taken over are not referable to their year of origin, but to the year in which they become a liability for that member.

So if a member’s share goes up from 20% to 25% from 1997 to 1998, the additional 5% of the business taken on is new to that member.

»Ê¹ÚÌåÓýappre is an added complexity when the RITC is paid in subsequent years. »Ê¹ÚÌåÓýapp RITC paid for 1997’s liabilities in 1998 would normally be part of the cost of settlement of those liabilities. But for the additional 5% of ‘new businessâ€�, it forms part of the original provision for 1998.

Example

Year of account	Liabilities for	RITC paid	-	Claims paid
1997	1997	£50²Ñ	-	Ìý
Y has 20% share	£10²Ñ	-	Ìý	Ìý
Ìý	Ìý	Ìý	Ìý	Ìý
1998	1997	£40²Ñ	£20²Ñ	Ìý
Ìý	1998	£60²Ñ	£60²Ñ	Ìý
Ìý	total	£100²Ñ	£80²Ñ	Ìý
Y has 25% share	£25²Ñ	£20²Ñ	Ìý	Ìý
Ìý	Ìý	Ìý	Ìý	Ìý
1999	1997	£30²Ñ	£10²Ñ	Ìý
Ìý	1998	£60²Ñ	£20²Ñ	Ìý
Ìý	1999	£60²Ñ	£80²Ñ	Ìý
Ìý	total	£150²Ñ	£110²Ñ	Ìý
Y has 40% share	£60²Ñ	£44²Ñ	Ìý	Ìý

»Ê¹ÚÌåÓýapp RITC premium for 1997 would actually be paid at 31 December 1999 and claims against it would be paid in year ended 31 December 2000.

»Ê¹ÚÌåÓýapp figures for the FA00/S107 calculations are at LLM3140 to LLM3160.