HM Treasury News Release

198/98                                  23 November 1998
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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.

5.   If you have access to the Internet, you can find this news
     release and other Treasury information at http://www.hm-
     treasury.gov.uk

# = pounds sterling