Section 18 in Life Insurance Corporation General Rules, 1956
18. Allocation of paid-up capital of composite insurer. - For the purposes of the Explanation to sub-section (2) of section 7 and of clause (b) of sub-section (2) of section 10 of the Act, the part of the paid-up capital, as the case may be, allocated to the controlled business of an insurer shall be determined in the manner following, namely:--
(i)in respect of an insurer entitled to receive compensation under Part A of the First Schedule to the Act, the paid-up capital allocable to the controlled business shall be that proportion of the total paid-up capital of the insurer which the annual average of the profits from the controlled business during the period covered by the relevant actuarial investigation bears to the total of such annual average of profits plus two times the annual average of the profits from other business during that period:Provided that the paid-up capital allocable to the controlled business shall not in any case exceed a sum of rupees six lakhs;(ii)in respect of an insurer entitled to compensation under Part B of the First Schedule to the Act, the paid-up capital allocable to the controlled business shall be the excess, if any, of the amount of liabilities of the insurer appertaining to such business in existence on the 19th day of January, 1956, computed as at that date in accordance with the provisions of paragraph 4 of Part B of the First Schedule to the Act over the value of the assets of the insurer appertaining to his controlled business (excluding the paid-up capital allocable to controlled business) in existence on the 19th day of January, 1956, computed as at the date in accordance with the provisions of paragraph 3 of Part B of the First Schedule to the Act.Explanation 1. - "Profits from controlled business" means the share of the surplus allocated to the shareholder as disclosed in the abstracts prepared in accordance with Part II of the Fourth Schedule to the Insurance Act in respect of the relevant actuarial investigations.Explanation 2. - "Profits from other business" means the total of the profits less losses transferred to "Profit and Loss Account" from the fire, marine and miscellaneous insurance revenue accounts prepared in accordance with Form F of the Third Schedule of the Insurance Act.Explanation 3. - "Relevant Actuarial Investigations" means such minimum number of latest actuarial investigations as at dates earlier than the 1st day of January, 1956 (not being less than 2 in any case) would leave the period intervening between the date as at which the actuarial investigation immediately preceding the first of such investigations was made and the date at which the last of such investigations was made and to be not less than four years.Explanation 4. - Where an insurer has allocated to shareholders more than 5 per cent. of any such surplus as is referred to in Explanation 1, the insurer shall be deemed to have allocated only 5 per cent. of surplus and where an insurer has not allocated any such surplus to shareholders or has allocated to shareholders less than 5 per cent. of any such surplus, the insurer shall be deemed to have allocated 5 per cent. of the surplus.
