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<p>The total value of the Pool Re fund was £5.504 billion as at 30 September 2014.</p><p>
</p><p> </p><p> </p><p>The government has provided a guarantee to Pool Re since it
was established in 1993. Last year Pool Re and HM Treasury agreed a package of reforms
that provides for fair and proportionate compensation for taxpayers for the continued
provision of the guarantee. These reforms will see HM Treasury’s fee increased from
10% of Pool Re’s annual premium income to 50% - an increase that we estimate will
raise an additional £120m per annum. In addition, the reforms will see Pool Re make
a distribution to its members and the government based on any annual surplus that
it makes. Whilst the occurrence and level of that surplus are subject to inherent
uncertainty, based on Pool Re’s recent results we estimate that this will see insurers
who reinsure terrorism insurance risk with Pool Re and the government each receive
an additional payment of approximately £55 million per annum.</p><p> </p><p> </p><p>
</p><p>The changes took effect from 1 January 2015. In total, we estimate that these
changes will raise an additional £50m for the Exchequer in 2014/15, and £175m per
year thereafter, compared to the previous agreement.</p><p> </p><p> </p><p> </p>
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