XN000022-1989-02-10 — Page 9

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8

FRIDAY, FEBRAURY 10, 1989

'CONTROLLER' OF A COMPANY "THE EXISTING ORDINANCE DEFINES A APPLYING FOR AUTHORISATION TO CARRY ON INSURANCE BUSINESS AS, IN PART,

DIRECTLY OR EITHER CONTROL EXERCISE PERSON WHO

то IS ABLE INDIRECTLY OVER ONE-THIRD OR MORE OF THE VOTING POWER OF THE COMPANY.

A

PER

DEFINITION

"THE BILL PROPOSES THAT THE TRIGGER POINT BE REDUCED TO 15 CENT IN ORDER TO BRING SIGNIFICANT SHAREHOLDERS WITHIN THE OF 'CONTROLLER', HE SAID.

IN ALSO THE SPOKESMAN SAID THIS RELEVANT PROVISIONS IN THE UNITED KINGDOM LEGISLATION,

WAS CHANGE

LINE WITH THE

THE BILL

INCREASES ALSO REQUIREMENTS OF AN INSURER.

THE MINIMUM SOLVENCY MARGIN

INSURER'S MINIMUM NET

OF

IS CALCULATED

"SUCH REQUIREMENTS WHICH STIPULATE THE

OVER LIABILITIES: ASSETS

WORTH (1.E. EXCESS ACCORDING TO A FORMULA BASED ON THE LEVEL OF PREMIUM INCOME WRITTEN.

ARE

ΤΟ SUBJECT

A

OF MINIMUM "THE PRESENT REQUIREMENTS $2 MILLION, OR $4 MILLION WHERE AN INSURER IS CARRYING ON ANY CLASS OF UNDER THE MOTOR COMPULSORY INSURANCE BUSINESS SUCH AS THAT REQUIRED VEHICLES INSURANCE (THIRD PARTY RISKS) ORDINANCE."

AS

ABLE

THE SPOKESMAN SAID THAT THE INCREASES WERE TO ENSURE AS FAR POSSIBLE THAT AN INSURER HAD SUFFICIENT FINANCIAL STRENGTH TO BE

COMPANY'S NET WORTH TO COPE WITH ANY FACTORS WHICH COULD REDUCE THE AND THEREBY THE SECURITY PROVIDED TO POLICY HOLDERS.

THE PROPOSED INCREASES ARE ILLUSTRATED BY THE TABLE BELOW.

RELEVANT PREMIUM INCOME IN PREVIOUS FINANCIAL YEAR

MINIMUM SOLVENCY MARGIN

EXISTING

PROPOSED

EXISTING

PROPOSED

(A)

UP TO $10M

UP TO $25M

$2M*

(B)

$10M

-

$25M $50M

-

$100M

20 PER CENT

(C)

OVER $50M

OVER $100M

FOR

$10M + 10 PER

CENT OF

EXCESS OF

INCOME OVER $50M

$5M*

20 PER CENT

$20M + 10 PER CENT OF EXCESS OF

INCOME OVER $100M

AN INSURER WHO INTENDS TO $4M AND $10M RESPECTIVELY FOR CARRY ON COMPULSORY INSURANCE BUSINESS.

EXISTING INSURERS

MIGHT WHO

то COMPLY A GRACE PERIOD

BE UNABLE IMMEDIATELY WITH THE NEW SOLVENCY MARGIN PROVISIONS, OF UP TO JANUARY 1, 1991 IS PROVIDED.

TIME

10 THE

"HOWEVER, ANY INSURER SEEKING AUTHORISATION FOR THE FIRST REQUIREMENTS, NEW

WILL HAVE TO SPOKESMAN SAID.

COMPLY

IMMEDIATELY WITH THE

/THE BILL