BKM402550 | Banking surcharge: definition of banking company: excluded entities - insurance

Insurance companies, insurance special purpose vehicles and certain members of insurance groups are excluded entities in a chargeable accounting period if they meet certain criteria.

Insurance company

An entity who carries on the activity of effecting or carrying out contracts of insurance is an insurance company if:

• The company has permission under Part 4A of FSMA 2000 to carry on that activity

Insurance special purpose vehicle

Insurance special purpose vehicles are also excluded companies. An insurance special purpose vehicle is defined in section 139 of Finance Act 2012 as an undertaking that both:

• assumes risks from insurance or re-insurance undertakings

• fully funds its exposures to those risks through the proceeds of a debt issue or other financing mechanism where the repayment rights of the providers of the mechanism are subordinated to the re-insurance obligations of the undertaking.

Insurance group members

Certain companies in the same group as an insurance company or insurance special purpose vehicle are also excluded from being a banking company. A company is an excluded company if it meets all the following conditions:

• it is a member of a group

• its only line of business is to carry on relevant regulated activities on behalf of an insurance company or an insurance special purpose vehicle

• the insurance company or insurance special purpose vehicle is a member of the same group

A company is also excluded if in addition to carrying on the single line of business referred to above it undertakes a second line of business and the company’s activities in that line of business would not, on their own, result in it being an FCA investment firm that meets the conditions in CTA10/S269B(6B) if it only carried on this second line of business.