198/98
23 November 1998
EUROPEAN CURRENCY UNIT (ECU) AND THE EURO - STERLING VALUE FOR INSURANCE SUPERVISION PURPOSES
The sterling value of the European Currency Unit (ECU) and the euro, for insurance supervision purposes for the 12 month period beginning 31 December 1998, will be 70.5591 pence.
This value should be used for calculations relevant to this period in connection with the application of the insurance companies legislation . The corresponding value of the ECU for the period to 30 December 1998 is 68.2455 pence.
NOTES TO EDITORS
1. The ECU will be replaced by the euro at the rate of 1 euro to 1 ECU with effect from 1 January 1999. There are a number of instances in the Insurance Companies Act 1982 and in regulations made under it, of monetary amounts quoted in ECUs. These will become references to the euro on that date. They include the calculation of the required solvency margin for general insurance business and, for all insurance business, the size of the minimum guarantee fund.
2. Under the provisions of the EC Directives on Insurance the value of the ECU (and from 1 January 1999 the value of the euro) is fixed annually for insurance supervision purposes. Insurance companies therefore need to know the appropriate sterling value of the ECU (and from 1 January 1999, of the euro) to be used in these calculations, e.g. in completing the returns which they are required to deposit with HM Treasury.
3. Section 96A (4) of the Insurance Companies Act 1982 provides that the rate of conversion of the ECU to apply from 31 December each year is to be its value on the latest day in the preceding October for which at the same time the value of all Community currencies is published in the Official Journal of the European Communities. This year, the date in question was 30 October 1998 when the value published was 70.5591 pence. This rate will apply to the ECU on 31 December 1998 and to the euro from 1 January 1999 for insurance supervision purposes. It is important to note that this rate is the rate to be applied in calculations carried out as at the end of 1998.
4. In the future the rate of conversion of the euro for insurance supervision purposes to apply from 31 December each year will be its value on the latest day in the preceding October for which at the same time the value of the currencies of EU member States not participating in Economic and Monetary Union is published in the Official Journal of the European Communities.
# = pounds sterling