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BSOG 2.2 Preliminary matters

Rationale for a merger

BSOG 2.2.1G

It is a matter for the board to decide whether to recommend a merger to its members. The overriding duty of the board is to reach a view having regard to what is in the best interests of the society, and its members as a whole, both present and future, borrowing members and shareholding members. The board may also reasonably consider the interests of customers who are not members, of the staff, suppliers of goods and services, and of the wider community.

BSOG 2.2.2G

A well planned and well matched merger can benefit both the shareholding and borrowing members and the staffs of both societies by producing a combined society with the financial strength and management expertise and experience needed to compete successfully in the market place. It must be recognised, however, that in many instances it will take time for economies of scale to be achieved and a careful assessment of projected costs is essential to a realistic view of whether such economies are likely to be achievable. On the other hand, a merger between two weak and over-extended societies may produce an even weaker one. It is better to negotiate a merger from a reasonably secure position than to be obliged to seek a merger when the society has become too weak to carry on as an independent entity.

BSOG 2.2.3G

This chapter cannot deal exhaustively with all the factors to be taken into account by a board when deciding whether to recommend a merger to its members. Moreover, there will be factors peculiar to particular cases. However, the following paragraphs draw attention to those matters which the Authorityexpects boards to consider in all cases.

BSOG 2.2.4G

Consideration of a merger can normally be expected to emerge from the board's regular consideration of the strategic options available to the society. That is not to say that merger as a transferor society should always figure as an option in every society's corporate plan. On the other hand, every board should be alive to business trends which point to, or which, if not altered, will point to, the need to consider options for merger. In short, a merger should be foreseen and planned. Alternatively, of course, a board which wishes its society to remain independent must have a clear strategic view of how that can be achieved in a variety of realistic planning scenarios. Whether or not a board is considering a merger, it should as a matter of prudence, know how it would respond to a proposal or counterproposal to merge or to transfer its business to a commercial company.

BSOG 2.2.5G

If a board foresees the possibility of a merger, then it should plan for that eventuality. Societies which see themselves as transferees will need to consider the desired characteristics of potential partners, including, for example, geographical presence, mortgage book quality, and product market share. Societies contemplating the transfer of their engagements will need to consider whether the interests of their members would best be served by a local or regional alliance or access to a national network of branches and services. The board may also reasonably consider the interests of customers who are not members, of the staff, suppliers of goods and services, and of the wider community. It is also reasonable, particularly for local and regional societies, to consider the implications for the local economy, where, for example, a regional or head office may eventually be closed to achieve economies of scale.

BSOG 2.2.6G

The range of issues which both boards have to consider will vary from case to case and is for the board to decide. At one end of the scale there will be the case where a small society merges with a large one and, at the other end, where two or more societies of broadly comparable size join to form one significantly larger. Whatever the proposal under consideration the board will necessarily have regard to this primary duty to reach a view on what is in the best interests of the society, and its members as a whole. It will also be conscious of the need to give an account of the boards rationale in recommending the merger to members, in particular if a statutory merger statement is included in the Merger Document (see paragraph BSOG 2.3.23 G).

Terms of a merger

BSOG 2.2.7G

The terms negotiated between the parties in a merger will be set out in a formal agreement. In the case of a transfer of engagements, Section 94(6) of the 1986 Act requires the extent of the transfer, and in practice the other agreed terms, to be recorded in an Instrument of Transfer. For an amalgamation, Section 93(2) of the 1986 Act requires the parties to agree on a Memorandum and Rules for the successor society, and each to approve the terms of the amalgamation by Merger Resolutions, so that there must be agreement on the terms. The Authority will expect the Instrument of Transfer or amalgamation agreement to be signed before the Authority approves the Schedule 16 statement, although it will be conditional on, among other things, approval by members and confirmation by the Authority. In both cases the boards of the societies will have approved the Instrument or agreement and the Schedule 16 statement and, in the case of an amalgamation, the Memorandum and Rules of the successor society. Before such approval by the boards, drafts of the proposed Memorandum and Rules should have been cleared with the registration team. The Rules of transferee societies should provide that members of transferor societies are not disenfranchised for any period after the merger is effected (see paragraphBSOG 2.3.16 G and rule 4(9) of the BSA Model Rules 5th edition).

BSOG 2.2.8G

Although vesting of the property, rights and liabilities of the transferor society in the transferee society on completion of a transfer of engagements is a statutory process by virtue of Section 94(8) of the 1986 Act, the Instrument of Transfer performs an important function. Not only is it required by the 1986 Act, but it is required to identify the extent of the transfer (Section 94(6)), since a transfer can be of all or part of the engagements of the transferor society. Thus, on a transfer of all the engagements of a society, the Instrument of Transfer should include a specific statement that all are included. If the transfer is of part only, then the instrument should specify precisely what is being transferred. As explained, an amalgamation agreement is required in practice for all amalgamations, but again the actual process of transferring the assets of the societies to, and vesting them in, the new society is by operation of the 1986 Act. Section 93(4) of the 1986 Act, which does this, does not allow for exceptions to the vesting since the nature of an amalgamation is that all the assets of all the societies are vested in the successor society.

BSOG 2.2.9G

The Instrument of Transfer, or amalgamation agreement, will also allow matters of detail to be recorded. So it will contain, for example, provision for:

  1. (1)

    any changes to the terms and conditions of PIBS and share and deposit accounts, including the integration of the product lines of the transferor society(ies) into those of the transferee or successor society;

  2. (2)

    any changes to the terms and conditions of mortgage accounts and other loans;

  3. (3)

    any bonus to be paid to members;

  4. (4)

    the terms and conditions on which staff will be employed or made redundant;

  5. (5)

    pension scheme arrangements;

  6. (6)

    integration of operations;

  7. (7)

    the terms and conditions on which directors and other officers are to continue in office or cease to hold office, including the posts they will hold and any extra-contractual compensation to be paid for loss of office or reduction in emoluments;

  8. (8)

    the specified target date for completion of the merger, bearing in mind that the actual date is a product of the 1986 Act (Sections 93(3)(b) & (4) and 94(8)), and for action if that date is not achieved;

  9. (9)

    any conditions precedent, such as members votes and the Authoritysconfirmation, and for the circumstances in which the Instrument or amalgamation agreement might be terminated.

Bonus Payments to Members

BSOG 2.2.10G

Whether any bonus is to be paid to members and, if so, its amount and distribution, are matters to be agreed by the boards of the societies concerned and to be approved by their members, subject to the discretion described in paragraphs 4.41 and 4.42. However, the Authoritywill wish to be satisfied that the combined society will maintain a prudent level of capital resources after the bonus is paid. A bonus may, for example, be paid to the members of a transferor society with a higher capital ratio than the transferee society so as to equalise the reserves which both bring to the combined society. If it is thought desirable also to pay a bonus to the members of the transferee society, then the reserves of the combined society may be equalised at a level below the capital ratio of the transferee society, but only if it is prudent to do so. The statutory requirements for approval of bonus payments are described in paragraphBSOG 2.4.4 G.

BSOG 2.2.11G

A bonus is a distribution of the funds of either or both societies, and may be paid by a number of methods, or some combination of them, including, for example: a flat rate lump sum; a sum calculated as a percentage of balances; or an increase or (for mortgage accounts) a decrease in the interest rates paid or charged for a limited period. Maintenance of interest rate differentials existing before the date of completion of the merger between those offered by (say) the transferor society and the transferee society would not normally be characterised as a bonus. However, each society, and the Authority, will wish to be satisfied that any differential is consistent with its established pricing policy and is not the result of a change adopted, for example, when the society decided to seek a merger. Each case where interest rate differentials are to be maintained, for whatever period, will need to be considered to determine whether or not it constitutes a bonus, and societies may wish to take professional advice on the matter.

Compensation to Directors and Other Officers

BSOG 2.2.12G

Any compensation proposed to be paid to directors or other officers must be disclosed in the Schedule 16 Statement and approved by a separate special resolution of the members (see paragraphsBSOG 2.3.11 G and BSOG 2.4.3 G). Compensation is not defined in the 1986 Act, except to the extent that section 96(8) says that it includes benefits in kind. In the Authoritysopinion, compensation does not include statutory redundancy payments, damages for breach of contract or other payments, for example, falling due under the terms of a pre-existing contract of employment, or a pre-existing arrangement giving rise to a reasonable expectation. However, it does include any proposed ex-gratia payments in money or moneys worth. Societies should consider very carefully the extent to which any proposed payment may exceed the amount provided for by statute or contract. In view of the requirement in Section 96(3) of the 1986 Act that unauthorised payments must be repaid by the recipient, societies are advised to take legal advice on any payments which are not specifically authorised by the terms of a resolution passed by the members in accordance with Section 96(1) of the 1986 Act. All proposed payments requiring approval by such special resolution should be disclosed in the Schedule 16 Statement under the power in paragraph 1(4)(f) of that Schedule. In addition, the Schedule 16 Statement should disclose any other payments to directors or other officers arising directly from the merger. So that members are aware of the direct interest of the directors or other officers in a merger, societies should consider whether the amount, as distinct from the fact, of statutory or contractual payments should be disclosed where these arise directly from the merger.

More generally, societies need to consider whether any facts relevant to any director or other officer, or to any person(s) connected with them, should be disclosed where these are material to the interests of the members who are to be asked to vote on the proposed merger. In determining the amount of compensation which might be justified, the board must strike a balance between fairness to the individuals who will suffer a loss of income and the interests of the members, bearing in mind that the compensation will be at a cost either to any bonus to the members or to the reserves to be transferred to the combined society

Public announcement

BSOG 2.2.13G

Boards of both societies may wish to announce a merger proposal as soon as agreement in principle has been reached between them and, in particular, to inform their members and staff of the proposed terms. However, boards will often wish to delay an announcement for as long as possible, perhaps for prudential or commercial reasons, or because they first wish to settle all the details of the proposed terms. Societies with listed PIBS will need to have regard to the Authority'srequirement concerning early disclosure of information affecting the price of securities. Subject to this, there is no objection to delay, in principle, and there may be good reasons for it. Unfortunately, experience shows that every days delay after agreement in principle has been reached carries an increasing risk of premature leak. Indeed, the very reasons for delay may make the merger a subject for intense speculation and increase the risks of a leak. In these circumstances then, boards must have contingency plans to make an early announcement to deal with any potentially damaging rumours and to avoid members being misled or left in a state of uncertainty.

BSOG 2.2.14G

The announcement, particularly information provided directly to members and staff, should make it clear that the merger proposal is subject to approval by the members and completion of the statutory procedures. Boards should be careful to avoid giving even the impression that the outcome is a foregone conclusion, and should indicate any matters of substance on which the proposed terms of the merger remain to be settled. Briefing of staff who will be responsible for responding to enquiries from members and the press should be considered carefully and prepared in advance of the announcement to avoid any risk of members being unintentionally misled.

BSOG 2.2.15G

The Authorityis not required to approve the content or wording of announcements or preliminary information sent to members. However, it will be happy to comment on drafts shown to it at an early stage, and may be able to help societies to avoid unintentionally misleading statements.

Prudential issues

BSOG 2.2.16G

Before a firm proposal is agreed, the participating societies should consult with the Authoritysstaff to discover whether there is any prudential objection to the proposal. The Authoritywill need to be satisfied that the combined society will be managed prudently from the date of completion of the merger and comply with the Principles for Businesses and with all the relevant rules made by the Authority. The Authoritywill also wish to know that post-merger arrangements and agreements provide for the proper integration or rationalisation of the operations of the combined society, and of its connected undertakings, joint ventures or arrangements with third parties (for example, for the provision of unsecured loans, insurance and investment services) and that any commercial conflicts of interest have been resolved.

BSOG 2.2.17G

In all cases, prudential information should be provided, but the amount of information will depend upon the circumstances of each case. For example, if a merger involves societies of much the same total asset size, or where the merger will result in a significant increase in the transferee society's assets, or involves a change of strategy, new kinds of business or carrying on business in a new geographical area, the Authoritywill expect substantial prudential information and societies should also expect this to form the basis of more detailed discussions with the Authoritys staff. On the other hand, in a merger where a small society is transferring its engagements to a very much larger one, the prudential information to be provided is likely to be that much less. In all cases the Authoritywill ask for the prudential information at an early stage so that there is adequate time for discussion before it is asked formally to approve the Schedule 16 Statement.

BSOG 2.2.18G

Boards should note, however, that while the Authoritywill expect the kinds of information described here, it is for the boards themselves to exercise due diligence and to be satisfied that the merger and its terms are prudent and in the interests of their members.

BSOG 2.2.19G

As is noted, the Authoritysneed for prudential information can be expected generally to relate to prudential issues, but societies may find it helpful to note the following paragraphs which describe some of the particular issues which the Authoritywill expect to be addressed.

Direction and management

BSOG 2.2.20G

Current and future board composition and succession plans for, say, the three years immediately following the merger.

BSOG 2.2.21G

Current and future senior management and structure, indicating spans of responsibility (which may most easily be presented in chart form) and any areas where there may be a need for additional expertise or experience to be acquired by the combined society with plans and timescale for acquiring such expertise.

Accounting and control systems

BSOG 2.2.22G

Generally, outline plans and timetables for the integration of accounting, control and inspection systems, including the linking or harmonisation of computer systems. This may usefully be divided between initial or short term arrangements and foreseen longer term developments. More particularly, the information should include arrangements to ensure continuity and the integration of:

  1. (1)

    accounting records;

  2. (2)

    systems of internal control, including management information systems and IT systems; and

  3. (3)

    systems of inspection (internal audit)

For all significant mergers the Authoritywill wish to receive, prior to the effective date of the merger, a letter from the transferee society's external auditors stating whether, in their opinion, the accounting records and systems of control and of inspection established for the merged society will be effective from the effective date.

Business plan

BSOG 2.2.23G

The rationale for the merger will need to be explained and justified in full, including existing and potential future business and marketing opportunities, the benefits of geographical concentration or diversification of business, economies of scale (particularly administrative), and future funding and lending strategies. Proposals for rationalisation or integration of administrative offices and branches will need to be set out in full, including the implications of the proposed merger for the terms and conditions of staff employment and their future job prospects with the combined society.

Financial prospects

BSOG 2.2.24G

Information on the financial prospects for the combined society will need to include:

  1. (1)

    estimates, broken down to an appropriate level of detail, of short term additional costs and long term savings (if any) anticipated from the merger; and

  2. (2)

    revenue account, balance sheet and solvency ratio projections for the first three to five years of operation.

This information must be supported by statements of the assumptions on which it has been based. In addition, the effect of changes on those assumptions should be illustrated, from a best case to a worst case scenario.

Connected undertakings and agencies

BSOG 2.2.25G

The integration and future operation, management and control of connected undertakings, together with arrangements with other parties for the continuing provision of services under agency agreements, should be described in full.


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INSPRU 7.1 Application

1INSPRU 7.1 applies to an insurer unless it is:

  1. (1)

    a non-directive friendly society; or

  2. (2)

    a Swiss general insurer; or

  3. (3)

    an EEA-deposit insurer ; or

  4. (4)

    an incoming EEA firm ; or

  5. (5)

    an incoming Treaty firm.

Subject to INSPRU 7.1.3 R, INSPRU 7.1 applies to managing agents and to the Society in accordance with:

  1. (1)

    for managing agents, INSPRU 8.1.4 R; and

  2. (2)

    for the Society, INSPRU 8.1.2 R.

Managing agents must carry out assessments of capital adequacy for each syndicate they manage by reference to all open syndicate years taken together.

Principle 4 requires a firm to maintain adequate financial resources. GENPRU 2 deals specifically with the adequacy of the capital resources element of a firm's financial resources.

The adequacy of a firm's capital resources needs to be assessed both by the firm and the FSA. In GENPRU 2.1, the FSA sets minimum capital resources requirements for firms.

The FSA also assesses whether the minimum capital resources requirements are appropriate by reviewing:

  1. (1)

    a firm's own assessment of its capital needs; and

  2. (2)

    the processes and systems by which that assessment is made.

In assessing whether the minimum capital resources requirements are appropriate, the FSA is principally concerned with capital resources as calculated in accordance with GENPRU 2.2.17 R. However, in carrying out its own assessment of its capital needs, a firm may take into account other capital available to it (see GENPRU 1.2.30 R and GENPRU 1.2.36 R), although it should be able to explain and justify its reliance on these other forms of capital.

There are two main aims in this section:

  1. (1)

    to enable firms to understand the issues which the FSA would expect to see assessed and the systems and processes which the FSA would expect to see in operation for ICAs by firms to be regarded as thorough, objective and prudent; and

  2. (2)

    to enable firms to understand the FSA's approach to assessing whether the minimum capital resources requirements of GENPRU 2.1 are appropriate and what action may be taken if the FSA concludes that those requirements are not appropriate to a firm's circumstances.

General approach

The rules in GENPRU 1.2 require a firm to identify and assess risks to its being able to meet its liabilities as they fall due, to assess how it intends to deal with those risks and to quantify the financial resources it considers necessary to mitigate those risks. To meet these requirements, a firm should consider:

  1. (1)

    the extent to which capital is an appropriate mitigant for the risks identified; and

  2. (2)

    assess the amount and quality of capital required.

2This section sets out in greater detail the approach to be taken by a firm when carrying out the assessment of capital described in the preceding paragraph. This is the assessment referred to as an individual capital assessment. 3GENPRU 1.2.42 R is a general requirement for a firm to carry out stress tests and scenario analyses taking into account an appropriate range of adverse circumstances and events relevant to the firm's business and risk profile and to estimate the financial resources it would need to continue to meet the overall financial adequacy rule in the stress scenarios considered. As part of its obligations under GENPRU 1.2.42 R, the firm must carry out stress tests and scenario analyses to estimate the financial resources it would need to support its business plans and continue adequately to cover its CRR and meet the overall financial adequacy rule over a time horizon of 3 to 5 years. 3This is a separate requirement from that to carry out an ICA, and guidance on this requirement is provided in GENPRU 1.2.73A G3 In particular, firms should note that there is no requirement that the level of capital required as identified by the ICA should be equal to, or exceed, the CRR.

The requirements and guidance in this section are drafted so as to apply to a firm on a solo basis. As noted in GENPRU 1.2.17 G, however, in some cases the requirements in GENPRU 1.2 apply on a consolidated basis. In these cases, a firm should read and apply this section making appropriate adjustments to reflect the application of the GENPRU 1.2 requirements on a consolidated basis.

A firm may choose to carry out its ICA in another way than through the use of stress tests and scenario analyses. 3The method should be proportionate to the size and nature of its business.

In accordance with GENPRU 1.2.60 R, these assessments must be documented so that they can be easily reviewed by the FSA as part of the FSA's assessment of the adequacy of the firm's capital resources.

The FSA may ask for the results of these assessments to be provided to it together with a description of the processes by which the assessments have been made, the range of results from each stress test or scenario analysis performed and the main assumptions made. The FSA may also carry out a more detailed examination of the details of the firm's processes and calculations.

Based upon this information and other information available to it, the FSA will consider whether the capital resources requirement applicable to the firm is appropriate. Where relevant, the firm's ECR will be a key input to the FSA's assessment of the adequacy of the firm's capital resources. For firms carrying on general insurance business, the ECR is calculated in accordance with INSPRU 1.1.72C R. For realistic basis life firms, the ECR forms part of the CRR and is calculated in accordance with GENPRU 2.1.38 R.

Firms that are required to calculate an ECR may wish to note that the ECR as calculated is based upon the assumptions that a firm's business is well diversified, well managed with assets matching its liabilities and good controls, and stable with no large, unusual, or high risk transactions. Firms may find it helpful to assess the extent to which their actual business differs from these assumptions and therefore what adjustments it might be reasonable to make to the CRR or ECR to arrive at an adequate level of capital resources.

Methodology of capital resources assessment

Where a firm is carrying out an assessment in accordance with GENPRU 1.22 of the adequacy of its overall financial resources to cover the risk in the overall financial adequacy rule, that is, the risk of its being unable to meet its liabilities as they fall due2, the assessment of the adequacy of the firm's capital resources must:

  1. (1)

    reflect the firm's assets, liabilities, intra-group arrangements and future plans;

  2. (2)

    be consistent with the firm's management practice, systems and controls;

  3. (3)

    consider all material risks that may have an impact on the firm's ability to meet its liabilities to policyholders; and

  4. (4)

    use a valuation basis that is consistent throughout the assessment.

Representative of the firm's characteristics

The ICA should reflect both the firm's desire to fulfil its business objectives and its responsibility to meet liabilities to policyholders. This means that the ICA should demonstrate that the firm holds sufficient capital to be able to make planned investments and take on new business (within an appropriate planning horizon). It should also ensure that if the firm had to close to new business (if it has not already done so), it would be able to meet its existing commitments. The costs of writing new business, the expenses incurred in servicing all liabilities, including liabilities to non-policyholders, and the nature of intra-group arrangements and reinsurance arrangements should be considered as part of the assessment as well as the costs that would be incurred in the event of closure to new business.

Where a firm has not already closed to new business, the ICA should be made on the basis that the firm closes to new business after an appropriate period. This period should allow for the time it would take for the firm to identify the need for closure and to implement the necessary action.

Where including new business would increase the capital resources by more than any increase in the capital required, or reduce the capital required by more than any reduction in available capital, new business should be excluded. To the extent that including new business increases the required capital, a firm should consider whether it is appropriate to include the additional amount within the ICA.

Any contract that the firm is legally obliged to renew should be considered part of the firm's existing liabilities and not treated as new business. Such contractual obligations include multi-year general insurance contracts and the exercise of options by long-term policyholders.

For a firm to discharge its financial obligations to policyholders, it will incur certain expenses, including payments to the firm's own staff, contributions to any pension scheme and fees to outsourcing suppliers or service companies. All of these expenses, and risks associated with these payments, should be considered when carrying out the ICA. When considering the appropriate level of expenses in a projection, the firm should consider the acceptability of the service provided to policyholders and the resources required by the senior management to manage the firm.

Where a firm's liabilities include payments which are subordinated to liabilities to policyholders, these payments do not need to be included within the ICA. However, the ICA should include all payments that must be made to avoid putting policyholders' interests at risk, including any payment on which a default might trigger the winding up of the firm. For example, if the principal of a loan could be recalled on default of a coupon payment, coupon payments over the lifetime of policyholder liabilities should be included in the ICA. As a further example, declared dividends should be treated as a liability. However, planned dividends that have not been declared need not be included in the ICA.

Intra-group capital considerations

INSPRU 7.1.22G

It is common for firms whose corporate group consists of a number of separate legal entities to have intra-group transactions in place. Capital and risk may originate within the firm and be passed to another company or may originate in another company and be passed to the firm. The ICA should consider the underlying effect of intra-group arrangements.

INSPRU 7.1.23G

Risks may exist within the individual legal entity from these intra-group transactions. Intra-group transactions should not be treated differently from external transactions just because they are intra-group. However, some intra-group transactions may carry less credit risk than the equivalent external transactions if the firm has access to more information regarding the financial position of an internal reinsurer. In assessing intra-group risks, consideration should be given, but should not be limited, to:

  1. (1)

    future defaults on intra-group reinsurance arrangements: Firms should consider, for example, a test akin to the credit risk assessment undertaken on external reinsurance assets held or future anticipated recoveries; in other cases it may be more appropriate to perform a more explicit assessment of the group counterparty's own capital position, to inform the firm's exposure to default;

  2. (2)

    non-recoverability on intra-group loans: Even though these transactions occur within the same group, there is a risk that an entity may default on such intra-group payments; and

  3. (3)

    non-payment of future internal dividends or transfers: Many entities or funds within a group rely on these payments as a means to maintaining their solvency position. There is a risk that the entity paying the dividend or making the transfer may not be able to do so, and ICAs performed for separate regulated legal entities or funds within a group should consider these risks as appropriate.

INSPRU 7.1.24G

A firm's capital should normally be restricted to resources within the firm. Where the firm is relying on resources outside the direct control of the firm, these should only be included to the extent that the firm has a right to call on those resources and the provider has the ability to provide those resources without recourse to the assets of the firm itself, in the circumstances considered as part of the ICA.

Consistency with a firm's practice, systems and controls

The ICA should reflect the firm's ability to react to events as they occur. When relying on prospective management actions, firms should understand the implications of taking such actions, including the financial effect, and taking into consideration any preconditions that might affect the value of management actions as risk mitigants.

The ICA should assume that a firm will continue to manage its business having regard to the FSA's Principles for Businesses. In particular, a firm should take into account how the FSA's Principles for Businesses may constrain its prospective management actions, for example, Principle 6 (Treating Customers Fairly).

Firms should also consider whether their systems and controls provide sufficient information to permit senior management to identify the crystallisation of risks in a timely manner so as to provide them with the opportunity to respond and allow the firm to obtain the full value of the modelled management action. Firms should also analyse the wider implications of the management actions, particularly where they represent significant divergence from the business plan and use this information to consider the appropriateness of taking this action.

INSPRU 7.1.28G

Where the ICA assumes that the firm may move capital from one part of its business to another across legal or geographical boundaries, the firm should explain the mechanisms that it would apply and satisfy itself that it could achieve the necessary capital movements in times of distress (see GENPRU 1.2.51 R). The firm should also consider any associated costs or restrictions in the amount of capital that would be able to be relocated.

Considering all material risks

The ICA should give the required level of confidence that the firm's liabilities to policyholders will be paid. The ICA should consider all material risks which may arise before the policyholder liabilities are paid (including those risks set out in GENPRU 1.2.30 R).

Firms should not ignore risks simply because they relate to events that occur with an expected likelihood beyond the confidence level. However, the capital required in the face of these tail events may be reduced for the purpose of carrying out the ICA. For example, while an A-rated bond may be assumed not to default within the required confidence level, allowance should be made for the devaluation of that bond through a more likely downgrade or change in credit spreads or other method which reflects that this investment includes a default risk to the firm.

Notwithstanding INSPRU 7.1.30 G, risks which have an immaterial effect on the firm's financial position or only occur with an extreme probability may be excluded from the ICA.

The number of claims, the amount paid and the timing of a firm's liabilities may be uncertain. The ICA should consider risks which result in a change in the cost of those liabilities.

The assets that a firm holds will include assets to back both the liabilities and any capital requirement. These assets carry risk, both in their own right and to the extent that they do not match the liabilities that they are backing. The risk associated with these assets should be considered over the full term for which the firm expects to carry the liabilities.

Where the firm is relying on systems and controls in order to mitigate risks, the firm should consider the risk of those systems and controls failing at the confidence level at which the ICA is being carried out.

If a firm summarises cash flows over part of the lifetime of the portfolio using a balance sheet but is exposed to risks which emerge after the balance sheet date, then these longer-dated risks may be captured by adjusting the assumptions used in the closing balance sheet.

Valuation basis

The valuation of the assets and of the liabilities should reflect their economic substance. A realistic valuation basis should be used for assets and liabilities taking into account the actual amounts and timings of cash flows under any projections used in the assessment.

In carrying out the ICA, wherever possible the value of assets should be marked to market. Where marking to market is not possible, the ICA should use a method suitable for assessing the underlying economic benefit of holding each asset.

The methods and assumptions used in valuing the liabilities should contain no explicit margins for risk, nor should the approach be optimistic. The valuation of liabilities should be consistent with the valuation of assets. To the extent the market price includes an implicit allowance for risk, this should be included within the valuation.

The methodology used to place a value on an asset or a liability following a risk event should be consistent with the methodology used prior to the risk event.

Approximate valuation methods may be used by the firm for minor lines of business or to capture less material types of risk. However, the firm should avoid methods which under-estimate the risk in aggregate.

The firm should carry out a broad reconciliation of key parts of any balance sheet used in the ICA with the corresponding entry from audited results.

ICA submitted to FSA: confidence level

Where the FSA requests a firm to submit to it a written record of the firm's assessments of the adequacy of its capital resources carried out in accordance with INSPRU 7.1.15 R, those assessments must include an assessment comparable to a 99.5% confidence level over a one year timeframe that the value of assets exceeds the value of liabilities, whether or not this is the confidence level otherwise used in the firm's own assessments.

INSPRU 7.1.43G

In considering the value of liabilities for the purpose of INSPRU 7.1.42 R, firms should have regard to the guidance in INSPRU 7.1.21 G, INSPRU 7.1.26 G and GENPRU 1.2.27 G to GENPRU 1.2.29 G.

The FSA requires firms to submit a capital assessment calibrated to a common confidence level, as set out in INSPRU 7.1.42 R, to enable the FSA to assess whether the minimum capital resources requirements in GENPRU 2.1 are appropriate. This then allows the FSA to give a consistent level of individual capital guidance across the industry.

If a firm selects a longer time horizon than one year it may choose to use a lower confidence level than 99.5%. In such a case, the firm should be prepared to justify its choice and explain why this confidence interval is appropriate and how it is comparable to a 99.5% confidence level over a one year timeframe. An assessment based on a longer timeframe should also demonstrate that there are sufficient assets to cover liabilities at all future dates. This may be illustrated by future annual balance sheets.

In determining the strength of the ICA, a firm should consider all risks in aggregate making appropriate allowance for diversification such that the assessment meets the required confidence level overall. The firm should be able to describe and explain each of the main diversification benefits allowed for.

For risks that can be observed to crystallise over a short period of the order of a year, the confidence level may be measured with reference to the probability distribution for the impact of the risks over one year. For example, catastrophic events such as hurricanes can be measured in this way by estimating the ultimate capital cost.

For risks that are not observable over a short period (such as long-tailed liability business or annuitant mortality), the confidence level may be measured with reference to the probability distribution for the emergence of that risk over the lifetime of the liabilities.

Documenting ICAs submitted to the FSA

The written record of a firm's individual capital assessments carried out in accordance with INSPRU 7.1.15 R submitted by the firm to the FSA must:

  1. (1)

    in relation to the assessment comparable to a 99.5% confidence level over a one year timeframe that the value of assets exceeds the value of liabilities, document the reasoning and judgements underlying that assessment and, in particular, justify:

    1. (a)

      the assumptions used;

    2. (b)

      the appropriateness of the methodology used; and

    3. (c)

      the results of the assessment; and

  2. (2)

    identify the major differences between that assessment and any other assessments carried out by the firm using a different confidence level.

INSPRU 7.1.50G

A firm's management should determine their own risk appetite or confidence level and a risk measure that they believe is suitable for the management of the business. The FSA expects that the firm's capital resources assessment under GENPRU 1.2 which it uses in the management of its business may well be at a different confidence level than the 99.5% one required by INSPRU 7.1.42 R for a number of reasons, for example, because its view of capital adequacy is different, or to satisfy the demands of rating agencies, or to meet the proposition to policyholders as to the strength of the firm. A firm will maintain its own written assessment of the adequacy of its financial resources, as required by GENPRU 1.2, through the written record requirement of GENPRU 1.2.60 R.

INSPRU 7.1.51G

INSPRU 7.1.49R (2) recognises that a firm may carry out a number of different assessments of the adequacy of its capital resources, using different confidence levels, in reaching its overall assessment of the adequacy of its financial resources under GENPRU 1.2. The purpose of asking the firm to identify the major differences between those assessments and the assessment documented under INSPRU 7.1.49R (1) is to enable the FSA better to understand the firm's approach to capital adequacy and risk management in running its business. Understanding the written record made under GENPRU 1.2.60 R is therefore key to the FSA's understanding of the firm's risk and capital management processes.

INSPRU 7.1.52G

The written record of any other assessment by the firm required by GENPRU 1.2.60 R is not itself part of the submission to the FSA, but the FSA is interested in the connection between that other assessment, as documented in the written record required by GENPRU 1.2.60 R, and the assessment documented under INSPRU 7.1.49R (1) in terms of the firm's compliance with GENPRU 1.2, and the use of capital measures within the firm.

INSPRU 7.1.53G

For the purpose of the written record submitted to the FSA, the submitted comparison should include:

  1. (1)

    A description of any direct difference in the strength of the firm's own assessment compared to the assessment submitted to theFSA. This is likely to be expressed as a different confidence level to the assessment undertaken to a 99.5% confidence level or the targeting of a defined margin about the 99.5% assessment.

  2. (2)

    A description of any major differences in the definition of the assets or liabilities, the management actions used, the risks considered or the valuation methodology and assumptions included within the assessment.

INSPRU 7.1.54G

Some firms may not undertake an assessment at a separate confidence level because they consider that a 99.5% confidence level is appropriate to manage their business and meets the requirements of GENPRU 1.2. In the case of these firms, no analysis of the major differences is required to be submitted.

Justifying assumptions used

INSPRU 7.1.55G

Firms should provide evidence to support the choice of assumptions used within the ICA.

INSPRU 7.1.56G

Where the choice of assumptions is supported by data, the firm should consider the relevance of that data to the firm's current and future circumstances and the robustness of any estimates derived.

INSPRU 7.1.57G

Where the choice of assumptions is supported by expert judgement, the firm should consider the nature and value of the expertise being used to support this judgement and any biases that may exist. Where possible, the firm should use data to test and support these expert judgements.

Approach taken for significant assumptions

INSPRU 7.1.58G

Firms should be able to demonstrate how they have identified the most financially significant assumptions and calculate the sensitivity of the ICA to changes in these assumptions. The choice of assumption may be decided using the results of sensitivity testing.

INSPRU 7.1.59G

Firms may seek to justify their assumptions by considering the process used to determine those assumptions from relevant data. Alternatively, where historical data is either limited or not considered to be indicative of likely future experience, firms may justify their assumptions by reference to the suitability of the calibration for the purpose of the ICA. However, relatively more attention should be given to the justification where the choice of assumption has a more significant effect on the ICA.

INSPRU 7.1.60G

Where there is a concentration of business from a single source (for example, a single sales channel or cedant), consideration should be given to the greater impact of a risk crystallising, compared to that for a well-diversified portfolio.

Justification of prospective management actions

INSPRU 7.1.61G

Where projection of the value of assets and liabilities reflects the firm's prospective management actions, the firm should justify the choice of prospective management actions and the assumptions used.

INSPRU 7.1.62G

Where the prospective management action is identical to those used in another regulatory assessment of solvency (e.g. calculation of the WPICC for realistic basis life firms), no further justification is required.

INSPRU 7.1.63G

Where the prospective management action is not similar to those used in another regulatory assessment of solvency, or uses different assumptions, the firm should show the financial impact of the management action.

Regular review of assumptions

INSPRU 7.1.64G

Firms should regularly review key parameters, both to ensure their continued applicability and to reduce uncertainty over the current level of capital required. Firms using assumptions that are very different from past experience should present robust arguments in support of the differences.

INSPRU 7.1.65G

The methodology used within the ICA should allow the firm to quantify the financial effect of material risks at the required confidence level. The methodology used should also reflect the nature of the firm's business and be consistent with the way in which the firm identifies and manages risk.

INSPRU 7.1.66G

Firms should be able to explain their rationale for choosing their approach to risk and assessment of capital required. There are no simple classifications of approach to risk and capital assessment, so the rationale should be considered in the context of a number of defining characteristics in the structure of the capital model.

INSPRU 7.1.67G

Generally, larger firms would be expected to take a more sophisticated approach to capital modelling than smaller ones.

Stress tests and scenario analyses

INSPRU 7.1.68G

Where a 3 firm chooses 3to carry out its ICA 3through the use of stress testing and scenario analysis , such testing should reflect the potential range of outcomes for the risks being quantified, consistent with the prescribed confidence level for the ICA.

INSPRU 7.1.69G

The overall assessment of capital required may require the aggregation of results from the stress and scenario testing. The firm should explain its choice of aggregation approach and its understanding of the implications of combining the individual risks. The firm should be satisfied that the resultant capital provides the required degree of confidence, given the variability of the underlying risks and the uncertainty associated with modelling those risks. A useful component of this process is the characterisation and explanation of a range of possible circumstances that could give rise to a loss of this magnitude.

Documenting the results

INSPRU 7.1.70G

The conclusion of the ICA should consider whether the firm has adequate capital to meet its assessment of the required capital. Furthermore, the firm should consider any implications for its approach to risk management arising from the work carried out. The ICA should be supported by an explanation of the material sources of risk and financial impact of the management actions that the firm may take to manage those risks. Where possible, the reasonableness of the results should be supported by considering other evidence of the capital needed.

INSPRU 7.1.71G

The objective of capital modelling is to consider all possible outcomes, however unlikely any one outcome might be, and set capital as protection against all but the most extreme losses. It is therefore important to focus not only on the assumptions and methodology used to quantify individual risks, but also on the approach to aggregating the capital required for each risk.

INSPRU 7.1.72G

However the risks have been aggregated to give the firm's capital requirement, checks should be made as to the reasonableness of the outcome. It should be possible to characterise scenarios, or combinations of loss events, that would result in a loss of similar magnitude to that indicated by the ICA. Firms should consider a range of scenarios that could give rise to such a loss.

INSPRU 7.1.73G

The results of the ICA should be supplemented by analysis of the sources of the risks to which the firm is exposed, discussion of the events which are most likely to threaten the financial stability of the firm and the potential mitigating actions which are available to senior management.

Additional guidance for Lloyd's

INSPRU 7.1.74G

Responsibility for:

  1. (1)

    managing the risks associated with the insurance business; and

  2. (2)

    holding the capital resources that support those risks;

is divided between managing agents and the Society. To clarify the respective responsibilities of managing agents and the Society for ensuring the adequacy of financial resources, the FSA distinguishes between the managing agents' responsibility to carry out capital adequacy assessments of the capital resources held at syndicate level for each syndicate that they manage, and the Society's responsibility to carry out an assessment for each member.

INSPRU 7.1.75R

In carrying out ICAs in respect of the insurance business carried on through each syndicate (the syndicate ICA), managing agent must consider the risks, controls and the financial resources relevant to each syndicate.

INSPRU 7.1.76R

When carrying out the syndicate ICA, managing agents must not take into account risks to which a member may be exposed or controls from which a member may benefit:

  1. (1)

    because that member carries on insurance business through another syndicate or more than one syndicate year (whether or not managed by the same managing agent); or

  2. (2)

    because that member's financial resources include funds at Lloyd's or central assets.

INSPRU 7.1.77R

The Society must have regard to syndicate ICAs in arriving at its own capital assessment for each member.

INSPRU 7.1.78G

In assessing the adequacy of the capital resources supporting the insurance business of each member, the Society should consider the risks, controls and financial resources relevant to the totality of the member's insurance business, including:

  1. (1)

    the adequacy of syndicate ICAs;

  2. (2)

    the member's share of syndicate ICAs;

  3. (3)

    adjustments in respect of risks and controls relating to funds at Lloyd's, central assets and the interaction of risks underwritten by the member through different syndicates and in respect of different syndicate years; and

  4. (4)

    the ongoing validity of any relevant assumptions it makes.

INSPRU 7.1.79G

In taking account of a syndicate ICA under INSPRU 7.1.77 R:

  1. (1)

    if the Society considers a syndicate ICA to be adequate, it should use the managing agent's risk and capital assessments in carrying out its ICA in relation to any member of that syndicate, or it should be able to justify why it will not; and

  2. (2)

    if the Society considers a syndicate ICA to be less than adequate, the Society should increase the syndicate ICA so that it is adequate for the purpose of carrying out its ICA in relation to the members of that syndicate.

INSPRU 7.1.80G

The assessment of capital adequacy for a member will rarely equal the proportionate share of a syndicate ICA (or sum of those shares, where the member participates on more than one syndicate) as attributed to that member, because, in determining the capital assessments for each member, the Society may make adjustments to take account of:

  1. (1)

    risks and controls associated with funds at Lloyd's and central assets, which can increase the assessment for that member;

  2. (2)

    diversification effects, including as a result of members' participations on more than one syndicate year, which can reduce the assessment for that member; and

  3. (3)

    its own assessment of syndicate risks, which can be higher than the managing agent's and so increase the assessment for that member.

INSPRU 7.1.81G

Capital resources to meet each syndicate ICA could be:

  1. (1)

    held within a syndicate and managed by the managing agent; or

  2. (2)

    held and managed by the Society; or

  3. (3)

    not needed in full, because of effects such as diversification that the Society takes into account.

INSPRU 7.1.82G

The balancing amount is a function of the relationship between the syndicate ICA and the amount of assets held within the syndicate. As illustrations:

  1. (1)

    if the syndicate holds no capital resources (but its liabilities are fully covered by relevant assets), the balancing amount equals the syndicate ICA (as there are no capital resources at syndicate level, all the capital resources must be held as funds at Lloyd's or central assets);

  2. (2)

    if capital resources held at syndicate level are negative (i.e. if relevant assets do not fully cover liabilities for the syndicate), the balancing amount should be higher than the syndicate ICA by an amount corresponding to the negative capital resources held by managing agents on behalf of the syndicate; and

  3. (3)

    conversely, if a syndicate holds positive capital resources for the syndicate, the balancing amount should be lower than the syndicate ICA by a corresponding amount.

INSPRU 7.1.83R

Managing agents must periodically notify the Society of the syndicate ICA and the balancing amount in respect of each syndicate.

INSPRU 7.1.84R

For the purpose of assessing the adequacy of capital resources held as funds at Lloyd's and central assets, the Society must have regard to balancing amounts notified to it by managing agents.

INSPRU 7.1.85R

After notification of a balancing amount by a managing agent, the Society must:

  1. (1)

    confirm to the managing agent that capital resources held as funds at Lloyd's and central assets are adequate to support the balancing amount; or

  2. (2)

    notify the managing agent that it cannot give that confirmation.

INSPRU 7.1.86G

Managing agents should submit syndicate ICAs and notify balancing amounts to the Society as part of the annual capital-setting process at Lloyd's. The submission of the syndicate ICA and the notification of the balancing amount should be made in good time for the Society to review them and place appropriate reliance on them when it determines the capital assessments for each member.

INSPRU 7.1.87G

When communicating the syndicate ICA and balancing amount for each syndicate to the Society, managing agents should agree with the Society an allocation of the syndicate ICA between syndicate years. The purpose of the allocation is to ensure that there is an appropriate matching of assets to risk and liabilities and an equitable treatment between the members reflecting the provision of capital in each syndicate year.

INSPRU 7.1.88G

For the purposes of complying with their obligations under INSPRU, managing agents may assume that any balancing amount confirmed by the Society under INSPRU 7.1.85 R is supported by capital resources held as funds at Lloyd's and central assets.

INSPRU 7.1.89R

If a managing agent has, at any time, a significant doubt about the adequacy of a syndicate ICA or balancing amount with respect to syndicate risks and controls, it must notify the Society immediately.

INSPRU 7.1.90R

If the Society has, at any time, a significant doubt about the adequacy of any member's capital resources held by it in support of any balancing amount, it must notify the relevant managing agent immediately.

FSA assessment process - all firms

In assessing the adequacy of a firm's capital resources, the FSA draws on more than just a review of the submitted ICA. Use is made of wider supervisory knowledge of a firm and of wider market developments and practices. When forming a view of any individual capital guidance to be given to a firm, the review of the firm's ICA along with the ARROW risk assessment and any other issues arising from day-to-day supervision will be considered.

The FSA will take a risk-based and proportionate approach to the review of a firm's ICA, focusing on the firm's approach to dealing with the key risks it faces. Any individual capital guidance given will reflect the judgements reached through the ARROW review process as well as the review of the firm's ICA.

A firm should not expect the FSA to accept as adequate any particular model that the firm develops or that the results from the model are automatically reflected in any individual capital guidance given to the firm for the purpose of determining adequate capital resources. However, the FSA will take into account the results of any sound and prudent model when giving individual capital guidance or considering applications for a waiver under section 148 of the Act of the capital resources requirement in GENPRU 2.1.

Where the FSA considers that a firm will not comply with GENPRU 1.2.26 R (adequate financial resources, including capital resources) by holding the capital resources required by GENPRU 2.1, the FSA may give the firm individual capital guidance advising it of the amount and quality of capital resources which the FSA considers it needs to hold in order to meet that rule.

In giving individual capital guidance, the FSA seeks a balance between delivering consistent outcomes across the individual capital guidance it gives to all firms and recognising that such guidance should reflect the individual features of the firm. Comparison with the assumptions used by other firms will be used to trigger further enquiry. Debate will be sought where good arguments are made for a particular result that differs markedly from those of a firm's peers. The FSA also takes account of the quality of the wider risk management around the development of the numbers used in the ICA. The aim is to deliver individual capital guidance that comes closest to ensuring that there is no significant risk that a firm is unable to pay its liabilities as they fall due.

Following an internal validation process, the FSA will write to the Board of the firm being assessed providing both quantitative and qualitative feedback on the results of the FSA's assessment. This letter will notify the firm of the individual capital guidance considered appropriate. The letter will include reasons for any capital add-ons identified, where applicable.

If a firm considers that the individual capital guidance is inappropriate to its circumstances, then the firm should inform the FSA that it does not intend to follow that guidance. Informing the FSA of such an intention would be expected if a firm is to comply with Principle 11 (Relations with regulators).

The FSA expects most disagreements about the adequacy of capital will be resolved through further analysis and discussion. The FSA may consider the use of its powers under section 166 of the Act (Reports by skilled persons) to assist in such circumstances. If the FSA and the firm still do not agree on an adequate level of capital, then the FSA may consider using its powers under section 45 of the Act to, on its own initiative, vary a firm's Part IV permission so as to require it to hold capital in accordance with the FSA's view of the capital necessary to comply with GENPRU 1.2.26 R. SUP 7 provides further information about the FSA's powers under section 45.

Where a firm considers that the capital resources requirements of GENPRU 2.1 require the holding of more capital than is needed for the firm to comply with GENPRU 1.2.26 R then the firm may apply to the FSA for a waiver of the requirements in GENPRU 2.1 under section 148 of the Act. In addition to the statutory tests under section 148, in deciding whether to grant a waiver and, if granted, its terms, the FSA will consider the thoroughness, objectivity and prudence of a firm's ICA and the extent to which the guidance in this section has been followed. TheFSA will not grant a waiver that would cause a breach of the minimum capital requirements under the Insurance Directives or Reinsurance Directive.1

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text:
A Guide to Letting Your Child Rule…

…Or What’s So Special About Special Time?

Doesn’t it seem like children these days are just itching to gain power over you, all the time? If “Give me milk,” and “I want it now!” are fairly common in your home, you’ll know just what we mean.

Well at Hand in Hand, we say, “Hand it over grown up! Give the kids a chance at running the show.”

Have we lost all sense of reality? Not at all.

Ready to let her rule?

Let Your Children Rule!

We talk a lot about the concept of Special Time – that time set aside with a child, where a timer is set, all attention is focused on them and they get to choose exactly what the two of you will do. In fact, Special Time is a cornerstone strategy outlined in founder Patty Wipfler’s upcoming book Listen: Five Simple Tools to Meet Your Everyday Parenting Challenges.

Special Time doesn’t exist to ‘let kids loose’ or wreak havoc in your life. Quite the opposite. Patty says that Special Time is a simple way to let your child absorb your love and attention and that the sense of safety it gives fosters co-operation. This eases the stresses they feel and allows them the safety to explore their fears and uncertainties.

Who could argue with these enthusiastic responses from parents that already love Special Time and the closeness it brings.

“I am absolutely amazed at the powerful effects that Special Time has on my relationship with my daughter, and also in helping her address things that are bothering her,” says one happy mom.

“I cannot praise the genius of Special Time enough! It’s clear that it makes a difference in my child’s life but what makes it equally rewarding is noticing it makes my life as a parent so much lighter and more fun,” says another, Lisa Orr.

Special Time is the moment where children, finally, can make the rules. You set a timer. You tell them its Special Time (or whatever you choose to call it – for more on this, read on.) You outline any safety rules. Then they are off.

Special Time timerThey lead Special Time and are totally in charge – which can take you anywhere from sparkly manicures to playing spray hose, right up until the timer you set goes “ping.”

Do not be tempted to make suggestions on what to do, and if they are slow to have ideas, just be with them while they chat and ponder or wander around.

Some children get imaginative. Each of Hand in Hand Instructor Abigail Wald’s children had her climb into a tub of ice water – with her clothes on – over two sessions of Special Time. “I shrieked in true horror as I did it, but when I got out they each sweetly wrapped me in a towel. Thank goodness for small favors,” she says.

Yet Special Time hardly ever looks so zany. Many children happily opt to have ten minutes to sit and color with their adult. Bike rides and ball games are requested. Card games, snuggles, and play in the ‘den’ under the table can all be Special Time. Sometimes it feels best to have mom sit and block build or dad braid a favorite doll’s hair, other times its bouncing for ten minutes on the trampoline.

Honor what he or she decides and the time. When Special Time is on phone calls, emails, the front door, the washing machine, or any other usual household distraction is set on hold while you two enjoy this golden moment.

Benefits of Letting your Children Take Charge

Children are rarely really listened to. Normally, it's them begging for our attention or their turn. All day long they are told what to do, by parents, caregivers, teachers, and family members. After they have been listened to they tend be more cooperative when you do make requests and days run more smoothly. This is why the concept of Special Time can be so impactful for the whole family.

Benefits aren't just for the children. Try Special Time for a week and see if you don’t feel some of these transformative effects:

  • A closer bond between you and your children.
  • A sense of relief and contentment
  • A greater sense of fun and playfulness
  • Greater ability to deal with any tantrums that do come up
  • Less guilt about the time you spend on other tasks

When to Try Special Time

Parents have said that five minutes of Special Time when children wake up can make getting up, eating breakfast, and getting out the door all run smoother with less arguments and resistance. After school squabbles can be fixed with a few moments of Special Time, and a Special Time session before homework or nerve-inducing new experiences, from a class to meeting relatives, can help ease stress and upset.

How Long is Long Enough?

We hear you! Special Time can sound daunting. It can be hard to let go of your agenda, it can be hard to follow your little one, and yes, it can be hard to play. But even five minutes of Special Time, once or twice a week will be enough for you to feel the difference. From there, you’ll feel confident setting your timer for longer and longer sessions.

Set up Special Time

Ready to jump in and let your children have their moment? Here’s how to set up Special Time in 4 quick steps.

Name it: It can be “Paul’s Special Time,” “Paul’s Power Moment,” or simply “Special Time,” but do make the distinction so that they can take ownership.

Plan it: Announce that you’d like to spend some Special Time. Say when it will be – whether it’s later that day or coming up this weekend – and for how long it will run.

Enjoy it: Choose a time frame that isn’t stressful to you, set a timer and then let your sole focus be on your child and how he or she sees the world right now.

End it: When the timer rings, tell your child how much you enjoyed the time and set the limit to stop. It’s quite possible your child will demand more, but promise more soon and stick to the limit. As they become accustomed to Special Time, they’ll trust in it and look forward to the moment that they take charge.

And so will you – we promise!

Give Special Time a go and let us know how you like it. This site is filled with information on Special Time, including this free video series and cheat sheet to  get started with Special Time at your house.

You can also read our booklet on Special Time.

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text:
When Crying Just Needs to Stop

from the hand in hand blog(1)

Most of us are taught to hush children when they cry, but parents using Hand in Hand's approach learn how valuable crying can be for a child's emotional health. When crying is supported with a parent's warm support and attention, crying can be a unique way for children to unblock fears and uncertainties, but there are times when emotional release gets too much and occasions when the crying just needs to stop, as mom of three Raluca Dobre recently found out.

“For the last two weeks, my almost 3-year-old daughter had been off school with a cough and occasional fever.

During that time, my husband was away a lot on various business trips and my daughter was visibly more tired than usually, not only from the sickness, but because I had to wake her up early to drive my 6 and 4-year-old sons to school every morning.

Understandably, she was cranky a lot and cried for the tiniest reason.

One morning, it was 7:45 when I arrived with my three kids and parked the car in front of their school. My sons had gotten out of the car and were waiting for me to accompany them to class.

My daughter refused to get out of the car. I talked to her for a while trying to convince her to come out of the car, but she was in a rigid physical position and refused eye contact. I glanced back at my sons. It was chilly outside and cars were coming and going. I decided that my sons’ safety was my first priority and that I needed to get them away from the busy street.

Taking Hold of A Toddler Mid-Tantrum

I gently but firmly took my daughter in my arms, closed the car and walked inside the school. My daughter was screaming and fighting to get down from my arms, but I held her while focusing on saying my good-byes to my sons. I also focussed on walking slowly, because I know that I tend to lose my cool and enter a state of emergency when I move my body quickly. I felt that my kids, especially my daughter, needed me to keep calm to make constructive decisions.

After my sons went into class, I started thinking of where I could sit with my daughter to listen to her troubles. The possibilities were limited. Initially, I wanted to stay with her 2-3 more minutes in the school, but she was in rage and I felt that further lingering would do more harm than good to her. Classes were also starting. Outside it was cold, and not helpful for her sickness. I considered our car, but it's crammed with stuff and so I didn’t feel ready to staylisten to her there.

I decided to drive home.

I went to the car, sat her in her car seat and started driving, telling her in as few words as possible that I was listening to her, and that we were going home so I could listen to her some more.

At some point, she found her toy phone, threw it towards me, and immediately cried even harder for me to give her the toy back. Luckily, she missed and I was not hurt. The day before this incident, I had had a big listening time with a friend, so I had felt that I had huge amounts of emotional resources for my family. I kept calm and supportive.

I did want to avoid her throwing toys at me while I was driving, so I didn’t give her the toy back. When she cried about that, I told her that I heard she wanted the toy and that'd I would give it back to her later.

She cried hard all the way home. I told her every now and then that I was listening to her and when I stopped the car at the red lights, I turned and made eye contact with her, holding out my hand to her. When the light turned green and I turned back and started driving again. She cried even harder and I told her again that I could hear her and was listening.

Why Speaking Helps When You Are Driving

When one of my kids is releasing emotions while I am driving, I have learned to speak more than I usually do during regular staylistening. Because the kids are in their car seats and I’m in the driver’s seat, i’m not able to make much eye contact or be physically supportive, so my only way of letting them know that I care is to tell them that I’m listening to what they are “telling” me.

When we arrived home, I took her in my arms, entered the house and gently lay her on the ground because she was screaming for me to put her down.

All of a sudden, she started pulling her sweatshirt and screaming in panic for me to take it off of her.

That same instant, she started coughing hard, gasping for air and she looked like she could not breathe. I didn’t hesitate. It was clear for me that emotional release was secondary then to her safety, so I decided that my priority was to help her stop from crying so she could breathe properly.

I knew that is she needed to release something more then she would find a way to let me know later. I quickly removed her sweatshirt, took her in my arms, looked for her gave the toy phone back to her.

She quieted down and leaned her head on my shoulder. In that moment, I felt I had been helpful to her. I had remained calm throughout the entire episode, and I believed that I had made wise decisions given the limitations of the situation, that when her emotional release had become overwhelming for her frail health, I had helped her to calm down.

I felt joyful and grateful that I had had the inner balance and knowledge to be there for her.

I lay on a couch with her on my chest and pulled a blanket over us. She soon fell into a deep sleep and when she woke, she was her friendly, cooperative self again.

In the following days, she was less cranky and didn't become as upset so often. It seemed that she too had rediscovered her inner center.

From the Hand in Hand Toolbox

Do you let your child cry? Find out why it can be helpful for them to release in Staylistening: How Does Crying Help You and Your Child?

Get Secrets to Transforming Tantrums here, and learn how to hear beyond the tears.

Our book Listen: Five Simple Tools to Meet Your Everyday Parenting Challenges gives you five listening tools and 100s of real-life anecdotes about using them.

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• Targeted nutrition reduces the cost of production

    18 Feb 2019

    With the growing pressures inherent within today’s pig industry, never has it been more important to optimise efficiencies on farm, as we attempt to improve production at the same time as promoting the health and well-being of our livestock. In order to improve efficiency, we first of all need to have a clear understanding of current performance; and the pig industry already has a good history...

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Hard Rock Cafe Seattle

Est. February 10, 2010

Located in the heart of downtown Seattle, the Hard Rock Cafe Seattle strikes the perfect balance in a city that boasts one of the most diverse and influential music scenes in the world, a city where Jimi Hendrix performed his first headlining gig, where upscale coffee was perfected, and where countless visitors flock each year to see the sights. Designated a LEED certified building, our Hard Rock Cafe mixes in as much of authentic Seattle as possible, from the existing timbers of our Pike Street building to our city-specific memorabilia.

Experience Seattle’s Vibrant Music Scene

Our 14,000-square-foot cafe in Seattle includes seating for 425, a vibrant bar, and a Rock Shop® featuring a wide array of Hard Rock’s limited-edition, highly collectible merchandise. The aesthetic of Hard Rock Cafe Seattle follows a “Rustic Refined” design vision, which articulates the energy and vibe of the brand. The cafe also offers a unique memorabilia experience, with hundreds of iconic items commemorating Seattle’s vibrant music history on display, such as Eddie Vedder’s acoustic guitar and the doorway from Robert Lang Studios signed by many iconic Seattle bands.

Seattle’s Music Destination

Hard Rock Cafe Seattle’s best-kept secret is the second-floor music venue dubbed Cavern Club, an homage to the iconic Liverpool basement rock club where The Beatles forged their musical identity in the early 60s. Cavern Club is a destination for local original acts and national touring acts, with room for 450, top-of-the-line audio systems, and a prime downtown location with adjacent rooftop terrace overlooking Pike Place Market.

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 Geography - Subjects - Harris Academy Morden
Harris Academies
All Academies in our Federation aim to transform the lives of the students they serve by bringing about rapid improvement in examination results, personal development and aspiration.

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Introduction to Geography at Harris Academy Morden

“Geography is the subject which holds the key to our future” (Michael Palin)

Geography is a broad, multidisciplinary subject that allows students to understand the complexity of planet Earth whilst stimulating an interest and sense of wonder about the diversity of places that exist. It simultaneously explores our planet’s physical and human phenomena, equipping students with a plethora of knowledge about diverse landscapes, built environments, flora and fauna, resources, people and cultures and political territories. Whilst other subjects may explore these topics, Geography is the only discipline that studies the interactions between these physical and human processes, thus allowing students to develop a deep understanding and appreciation of the interconnectivity of humans and nature. Students will be able to think about the world in new ways and will gain an appreciation of the delicacy of our planet and the diversity of cultures that exists across continents. Geography frees students from the limitations of their experiences and learning powerful geographical knowledge can help them to grow into global citizens. Students can determine their values and responsibilities to other people and the environment, which is of ever-growing importance to ensure the sustainability of the planet.

General overview of Geography

In Geography at Harris Academy Morden, geographical enquiry is at the heart of the curriculum and plays a central role in the teaching of geography as it encourages ‘thinking geographically’. Therefore, the topics studied are focused around enquiry and students are encouraged to explore concepts through reasoning, data and source interpretation, debate and questioning. Students are empowered to become active, confident and independent learners. Key Stage 3 topics are carefully selected to allow students to access a range of physical and human geography. Five ‘key concepts’ have been identified as being the ideas which all geography students should have a sound understanding of by the end of Key Stage 3. These are recurring themes which are embedded through the different topics in the course: Sustainability, Climate, Human/Physical Interactions, Earth Processes, Development.

At Key Stage 4, GCSE units of work are sequenced to ensure clear progression in knowledge towards the mastery of the OCR B: Geography for Enquiring Minds specification, including regular opportunities to develop skills in geographical enquiry through bespoke enquiry lessons. The aim of the GCSE course is to encourage students to ‘think like geographers’ and take an enquiry approach to contemporary topics of study. Students will be given opportunities to apply geographical knowledge and skills in real world contexts. Students locational knowledge will be stretched further to understand different environments, processes and scales in a mixture of social, political and cultural contexts. There is ample opportunity to apply their knowledge through fieldwork, both in a physical and human geography context. This allows students to further engage in the topics studied and understand how the content is relevant to them and their personal geographies.  Study within the OCR B specification consists of 3 major strands which will be assessed separately:

  • Our Natural World (01) âÂ¨
  • People and Society (02) âÂ¨
  • Geographical Exploration (03)

Please see the document below for details of the Intent, Implemetation and Impact forGeography at Harris Academy Morden

Geography 2021 13th Sep 2021 Download