The Euro Sterling value for insurance regulatory purposes

Notes for editors

1. Under the provisions of the EC Directives on insurance and in IPRU (INS) and IPRU (FSOC) the value of the Euro is fixed annually for insurance regulatory purposes. These purposes include the calculation of the required solvency margin. Insurance companies and friendly societies therefore need to know the sterling value of the Euro to be used in these calculations, for example in completing the returns that they are required to deposit with the Financial Services Authority under the Financial Services and Markets Act 2000.

2. Rule 2.10(6) of IPRU (INS) provides that:

   For the purposes of the Margins of Solvency Rules and the definition of non-directive insurer, the exchange rate from the Euro to the pound sterling for each year beginning on 31 December is the rate applicable on the last day of the preceding October for which the exchange rates for the currencies of all the European Union member states were published in the Official Journal of the European Communities.

   A similar provision is contained in rule 4.7(4) of IPRU (FSOC).

3. This year the date in question was 31 October 2003, when the sterling value was 68.63 pence (published in the Official Journal of the European Communities, C 263, on 1 November 2003). It is important to note that this rate applies from 31 December 2003 (not from 1 January 2004) and is therefore the rate to be applied in calculations for the regulatory returns carried out in respect of the 2003 calendar year end.

4. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; the protection of consumers; and fighting financial crime.

5. The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.