Regulation 22A

Subject to paragraphs (2) and (3), a mortgage insurer and a trade credit insurer shall, in accordance with the requirements specified in the Third Schedule, establish and maintain contingency reserves in each insurance fund established and maintained under section 17(1) of the Act by the mortgage insurer or trade credit insurer.

Notwithstanding paragraph (1), where the mortgage insurer does not have any claim liabilities (net of reinsurance) and premium liabilities (net of reinsurance) in respect of all the mortgage insurance policies, the mortgage insurer may withdraw the contingency reserves held in respect of mortgage insurance policies.

A trade credit insurer who is a captive insurer may, for the purposes of establishing and maintaining contingency reserves in an insurance fund in accordance with the Third Schedule, disregard the net premiums written, underwriting profit earned, net claims incurred and net premiums earned in respect of any trade credit insurance policy comprised in the insurance fund if the trade credit insurance policy is written by the captive insurer to cover an in-house risk.

In paragraph (3), “in-house risk”, in relation to a trade credit insurance policy written by a captive insurer, means a risk of a related corporation of the captive insurer that may ultimately result in losses affecting only the related corporation (and no other party) if the related corporation had not insured the risk with the captive insurer, and includes any risk where the captive insurer is only responsible for insuring the related corporation’s share of the risk in an insured.