ÀÏ˾»úÎçÒ¹¸£Àû

Insurance special purpose vehicles—general principles

Insurance special purpose vehicles ('ISPVs') were originally allowed under the terms of the EU Reinsurance Directive¹. Although the main thrust of the UK's approach is for a light touch regulatory regime for ISPVs to allow insurance groups to access the capital markets, an ISPV may also be used as a traditional or financial reinsurer. In the latter case an ISPV may be able to offer capital and solvency benefits.

For tax purposes an ISPV is an undertaking which:

1. Ìý

   •ÌýÌýÌýÌý assumes risks from insurance or reinsurance undertakings, and

2. Ìý

   •ÌýÌýÌýÌý fully funds its exposures to those risks through debt or other financing mechanisms which are fully subordinated to the ISPV's reinsurance exposure (thus protecting the interests of the ceding company's policyholders)²

This definition is the same as applied by the FCA.

An ISPV is removed from the statutory definition of an insurance company unless it is a BLAGAB group reinsurer³ so none of the rules in FA 2012, Pt 2 apply to such companies.