7.5.1. Application of assets

An Insurer must ensure that, except as provided in PINS 7.5.2 to 7.5.6, assets that are attributable to a Long-Term Insurance Fund are applied only for the purposes of the business attributed to the Long-Term Insurance Fund.

7.5.2. Transfers of assets out of Long-Term Insurance Funds

An Insurer must ensure that assets attributable to a Long-Term Insurance Fund are not transferred so as to be available for other purposes of the Insurer except:

• (a) where the transfer constitutes appropriation of a surplus determined in accordance with PINS 9.1.3(4)(g) (Requirements for Financial Condition Report) and the transfer is performed within four months of the reference date of the Financial Condition Report that this determination forms part of;
• (b) where the transfer constitutes a payment of dividend or return of capital, in accordancewith PINS 7.5.4 (Payment of dividends by Insurer constituting a single Long-Term Insurance Fund);
• (c) where the transfer is made in exchange for other assets at fair value;
• (d) where the transfer constitutes reimbursement of expenditure borne on behalf of the LongTerm Insurance Fund and in respect of expenses attributable to the Long-Term Insurance Fund; or
• (e) where the transfer constitutes reattribution of assets attributed to the Long-Term Insurance Fund in error.

7.5.3. Assets of Long-Term Insurance Funds not to be distributed

An Insurer must not make any distribution by way of dividend, or return of capital assets attributable to a Long-Term Insurance Fund, if by doing so that would result in a breach of its obligations under PINS 5 (Capital adequacy requirements).

7.5.4. Payment of dividends by Insurer constituting a single Long-Term Insurance Fund

An Insurer that is deemed to constitute a single Long-Term Insurance Fund may only make a dividend or return of capital where:

• (a) the dividend or return of capital constitutes appropriation of a surplus determined in accordance with PINS 9.1.3(4)(g) (Requirements for Financial Condition Report), and either
• (b) the payment is made within four months of the reference date of the Financial Condition Report determining that surplus and does not cause the total aggregate amount of the dividends or returns of capital made by the Insurer since that reference date to exceed the amount of that surplus; or
• (c) the payment is made more than four months after the reference date of Financial Condition Report determining that surplus and does not cause the total aggregate amount of the dividends or returns of capital made by the Insurer since that reference date to exceed 50% of the amount of that surplus.

7.5.5. Assets not to be lent

An Insurer must not lend or otherwise make available for use for any other purposes of the Insurer, or any purposes of any party related to the Insurer, assets attributable to a Long-Term Insurance Fund.

7.5.6. Certain reinsurance-like arrangements prohibited

An Insurer may not enter into any arrangement, whether or not described as a Contract of Reinsurance, whereby a Long-Term Insurance Fund of the Insurer stands in the same relation to the Insurer as though the Insurer were the reinsurer in a Contract of Reinsurance in which the Long-Term Insurance Fund is the cedant.