Insurance (Valuation and Capital) Regulations 2004

any reference to a policy of a participating, non-participating or investment-linked fund shall be construed as a reference to a policy in respect of which the participating, non-participating or investment-linked fund, as the case may be, is established or maintained by an insurer under the Act; and

any reference to a licensed insurer incorporated in Singapore includes a licensed insurer which is a society registered under the Co-operative Societies Act (Cap. 62).

a liability of an insurance fund is to be recognised by a licensed insurer in accordance with the Accounting Standards; and

a liability of an insurance fund is to be valued by a licensed insurer in accordance with the Accounting Standards and sound actuarial principles.

premium liabilities (net of reinsurance), which is an amount not less than the higher of the following:

the unearned premiums reserves (net of reinsurance) of the fund, which is the aggregate of unearned premium reserves (net of reinsurance) for each policy of the fund determined in the manner provided in paragraph (8); (ii)the unexpired risk reserves (net of reinsurance), which is the sum of the value of the expected future payments arising from future events insured under policies in force as at the valuation date (including any expense expected to be incurred in administering the policies and settling claims against those policies) and —

in the case of a captive insurer, an SPRV or a marine mutual insurer, any provision for any adverse deviation from the expected experience; or

in any other case, any provision for any adverse deviation from the expected experience, calculated based on the 75 per cent level of sufficiency; and

claim liabilities (net of reinsurance), which is an amount not less than the value derived from the formula A + B, where —

A is the value of the expected future payments in relation to claims incurred prior to the valuation date (including any expense expected to be incurred in settling the claims) and that fall due for payment after the valuation date, whether or not the claims have been reported to the insurer; and

B is —

in the case of a captive insurer, an SPRV or a marine mutual insurer, any provision for any adverse deviation from the expected experience; or

in any other case, any provision for any adverse deviation from the expected experience, calculated based on the 75 per cent level of sufficiency.

make separate estimates of the gross incurred claims and recoveries from the reinsurance counterparty; and

take into account the likelihood of default by the reinsurance counterparty and any non-reinsurance recovery such as salvage and subrogation.

the manner in which liabilities are reinsured during the period to which the data used to determine the unexpired risk reserves (net of reinsurance) and claim liabilities (net of reinsurance) relates; and

the manner in which liabilities are reinsured at the valuation date.

in the case of a licensed insurer who is not a captive insurer, an SPRV or a marine mutual insurer — Form G1 in Appendix B to MAS Notice 129;

in the case of a captive insurer — Form G1 in Appendix B to MAS Notice 130;

in the case of an SPRV — Form G1 in Appendix B to MAS Notice 131;

in the case of a marine mutual insurer — Form G1 in Appendix B to MAS Notice 212.

the premium liabilities (net of reinsurance) is an amount not less than the unexpired risk reserves (net of reinsurance);

the unexpired risk reserves (net of reinsurance) is the value derived from the formula A + B, after allowing for the effect of diversification (if any) at the level of the relevant insurance fund mentioned in paragraph (1), where —

A is the value of the expected future payments arising from future events insured under policies in force as at the valuation date (including any expense expected to be incurred in administering the policies and settling claims against the policies); and

B is –—

in the case of a captive insurer, an SPRV or a marine mutual insurer, any provision for any adverse deviation from the expected experience; or

in any other case, any provision for any adverse deviation from the expected experience, calculated based on the 75 per cent level of sufficiency; (c)the claim liabilities (net of reinsurance) is an amount not less than the value derived from the formula A + B, after allowing for the effect of diversification (if any) at the level of the relevant insurance fund mentioned in paragraph (1), where —

A is the value of the expected future payments in relation to claims incurred prior to the valuation date (including any expense expected to be incurred in settling the claims) and that fall due for payment after the valuation date, whether or not they have been reported to the insurer; and

B is —

in the case of a captive insurer, an SPRV or a marine mutual insurer, any provision for any adverse deviation from the expected experience; or

in any other case, any provision for any adverse deviation from the expected experience, calculated based on the 75 per cent level of sufficiency.

subject to sub-paragraphs (b) and (c) and paragraph (9), an amount calculated on a basis not less accurate than the 1/24th method;

in the case of a direct insurer that underwrites risks relating to cargo policies, an amount not less than 25% of the net premiums written in the accounting period for those policies or an amount calculated on a basis not less accurate than the 1/24th method; or

in the case of an insurer that carries on the business of reinsurance of liabilities under insurance policies —

an amount not less than 25% of the net premiums written in the accounting period in the case of marine and aviation policies and 40% of the net premiums written in the accounting period in other cases; or

an amount calculated on a basis not less accurate than the 1/24th method.

where the 1/24th method or some other more accurate method is used, using an amount of net premiums written that is reduced by the actual commissions payable; or

in any other case, using an amount of net premiums written without any deduction for commissions payable from the net premiums.

upon goods, merchandise or property of any description transported on board vessels, aircraft or other means of conveyance, including incidental transit before and after shipment;

upon the freight of, or any other interest in or relating to vessels, aircraft or other means of conveyance;

upon vessels or aircraft, or upon machinery, tackle furniture or equipment of vessels or aircraft;

against damage arising out of or in connection with the use of vessels or aircraft, including third-party risks; or

against risks incidental to the construction, repair or docking of vessels, including third-party risks.

premium liabilities (gross of reinsurance), which is an amount not less than the higher of the following:

the unearned premium reserves (gross of reinsurance) of the fund, which is the aggregate of unearned premium reserves (gross of reinsurance) for each policy of the fund determined in the manner provided in paragraph (7);

the unexpired risk reserves (gross of reinsurance), which is the sum of the value of the expected future payments arising from future events insured under policies in force as at the valuation date (including any expense expected to be incurred in administering the policies and settling claims against those policies) and —

in the case of a captive insurer, an SPRV or a marine mutual insurer, any provision for any adverse deviation from the expected experience; or (B)in any other case, any provision for any adverse deviation from the expected experience, calculated based on the 75 per cent level of sufficiency; and (b)claim liabilities (gross of reinsurance), which is an amount not less than the value derived from the formula A + B, where —

A is the value of the expected future payments in relation to claims incurred prior to the valuation date (including any expense expected to be incurred in settling the claims) and that fall due for payment after the valuation date, whether or not the claims have been reported to the insurer; and

B is —

in the case of a captive insurer, an SPRV or a marine mutual insurer, any provision for any adverse deviation from the expected experience; or

in any other case, any provision for any adverse deviation from the expected experience, calculated based on the 75 per cent level of sufficiency.

in the case of a licensed insurer who is not a captive insurer, an SPRV or a marine mutual insurer — Form G1 in Appendix B to MAS Notice 129;

in the case of a captive insurer — Form G1 in Appendix B to MAS Notice 130; (c)in the case of an SPRV — Form G1 in Appendix B to MAS Notice 131;

in the case of a marine mutual insurer — Form G1 in Appendix B to MAS Notice 212.

the premium liabilities (gross of reinsurance) must be an amount not less than the unexpired risk reserves (gross of reinsurance);

the unexpired risk reserves (gross of reinsurance) is the value derived from the formula A + B, after allowing for the effect of diversification (if any) at the level of the insurance fund mentioned in paragraph (1), where —

A is the value of the expected future payments arising from future events insured under policies in force as at the valuation date (including any expense expected to be incurred in administering the policies and settling claims against the policies); and (ii)B is —

in the case of a captive insurer, an SPRV or a marine mutual insurer, any provision for any adverse deviation from the expected experience; or

in any other case, any provision for any adverse deviation from the expected experience, calculated based on the 75 per cent level of sufficiency;

the claim liabilities (gross of reinsurance) must be an amount not less than the value derived from the formula A + B, after allowing for the effect of diversification (if any) at the level of the insurance fund mentioned in paragraph (1), where —

A is the value of the expected future payments in relation to claims incurred prior to the valuation date (including any expense expected to be incurred in settling the claims) and that fall due for payment after the valuation date, whether or not the claims have been reported to the insurer; and

B is —

in the case of a captive insurer, an SPRV or a marine mutual insurer, any provision for any adverse deviation from the expected experience; or

in any other case, any provision for any adverse deviation from the expected experience, calculated based on the 75 per cent level of sufficiency.

in the case of a direct insurer that underwrites risks relating to cargo policies —

an amount not less than 25% of the gross premiums written in the accounting period for those policies; or (ii)an amount calculated on a basis not less accurate than the 1/24th method;

in the case of an insurer that carries on the business of reinsurance of liabilities under insurance policies —

an amount not less than —

25% of the gross premiums written in the accounting period in the case of marine and aviation policies; or (B)40% of the gross premiums written in the accounting period in other cases; or

an amount calculated on a basis not less accurate than the 1/24th method; or

in any other case, subject to paragraph (8), an amount calculated on a basis not less accurate than the 1/24th method.

where the 1/24th method or a more accurate method is used, using an amount of gross premiums written which is reduced by the actual commissions payable; or

in any other case, using an amount of gross premiums written without any deduction for commissions payable from the gross premiums.

the unit reserves, calculated as the value of the underlying assets backing the units relating to the policy; and

the non-unit reserves, calculated as the value of expected future payments arising from the policy (other than those relating to the unit reserves), including any expense that the insurer expects to incur in administering the policies and settling the relevant claims and any provision made for any adverse deviation from the expected experience, less expected future receipts arising from the policy (other than those relating to the unit reserves).

the value of expected future payments arising from guaranteed benefits of the policy, including any expense that the insurer expects to incur in administering the policies and settling the relevant claims, less expected future receipts arising from guaranteed benefits of the policy; (b)the value of expected payments arising from non-guaranteed benefits of the policy in respect of —

future allocations by way of bonus under section 17(6)(b) of the Act; and

future allocations to the surplus account under section 17(6)(c) of the Act; and

any provision made for any adverse deviation from the expected experience.

the sum of the liability (net of reinsurance) in respect of each policy of the fund determined in the manner provided in paragraphs (1) and (3);

the minimum condition liability of the fund; (c)the value of policy assets of the fund less the reinsurers’ share of policy liabilities determined in the manner provided in regulation 16A(8).

the insurer has verified (in accordance with paragraph (9)) that using the simplified method results in a value that is not less than the value determined in the manner provided in paragraphs (1) to (7) (as applicable); and

the insurer has determined that using the simplified method is appropriate, taking into consideration the risks covered by each policy and any other factors that may be relevant.

in a case where the licensed insurer uses the simplified method for the purpose of preparing the “Annual Returns” mentioned in MAS Notice 129 for that year — as part of the actuarial investigation under section 37 of the Act; or

in a case where the licensed insurer uses the simplified method for the purpose of preparing any of the “Quarterly Returns” mentioned in MAS Notice 129 for that year — before the first time in that year it uses that method.

the premium liabilities (net of reinsurance) of the policies, being an amount that is not less than the higher of the following:

the unearned premiums reserves (net of reinsurance) of the policies, being an amount that is the aggregate of the unearned premium reserves (net of reinsurance) for each policy determined in the manner provided in paragraph (14);

the unexpired risk reserves (net of reinsurance) of the policies, being an amount that is the aggregate of the expected future payments arising from future events insured under each policy in force as at the valuation date (including any expense expected to be incurred in administering the policy and settling claims against the policy) and any provision for any adverse deviation from the expected experience, calculated based on 75 per cent level of sufficiency;

the claim liabilities (net of reinsurance) of the policies, being an amount that is not less than the value derived from the formula A + B, where —

A is the aggregate of the expected future payments in relation to claims under each policy incurred before the valuation date (including any expense expected to be incurred in settling the claims) and that fall due for payment after the valuation date, whether or not the claims have been reported to the insurer; and

B is any provision for any adverse deviation from the expected experience, calculated based on 75 per cent level of sufficiency.

make separate estimates of the gross incurred claims and recoveries from the reinsurance counterparty; and

take into account the likelihood of default by the reinsurance counterparty and any non-reinsurance recovery such as salvage and subrogation.

the manner in which liabilities are reinsured during the period to which the data used to determine the unexpired risk reserves (net of reinsurance) and claim liabilities (net of reinsurance) relates; and

the manner in which liabilities are reinsured at the valuation date.

subject to sub-paragraph (b) and paragraph (15), an amount calculated on a basis not less accurate than the 1/24th method; or

in the case of an insurer that carries on the business of reinsurance of liabilities under insurance policies —

an amount not less than 40% of the net premiums written in the accounting period for the policy; or

an amount calculated on a basis not less accurate than the 1/24th method.

in a case where the 1/24th method or some other more accurate method is used — using an amount of net premiums written for the policy that is reduced by the actual commissions payable for the policy; or

in any other case — using an amount of net premiums written for the policy without any deduction for commissions payable from the net premiums for the policy.

A is the value of the expected future payments arising from the guaranteed benefits of the policy (including any expense that the insurer expects to incur in administering the policy and settling any claim against the policy);

B is the value of the expected future payments arising from the non-guaranteed benefits of the policy in respect of —

future allocations by way of bonus under section 17(6)(b) of the Act; and

future allocations to the surplus account under section 17(6)(c) of the Act; (c)C is any provision made for any adverse deviation from the expected experience; and

D is the value of the expected future receipts arising from the guaranteed benefits of the policy.

A is the value of expected future payments arising from the policy (including any expense that the insurer expects to incur in administering the policy and settling any claim against the policy);

B is any provision made for any adverse deviation from the expected experience; and

C is the value of the expected future receipts arising from the policy.

the unit reserves, which is the value of the underlying assets backing the units relating to the policy; and

the non-unit reserves, which is the value derived by the formula (A + B) − C, where —

A is the value of the expected future payments arising from the policy (including any expense expected to be incurred in administering the policy and settling any claim against the policy), other than payments relating to the unit reserves;

B is any provision made for any adverse deviation from the expected experience; and

C is the value of the expected future receipts arising from the policy, other than receipts relating to the unit reserves.

the liability (net of reinsurance) in respect of those policies determined in the manner provided in regulation 20(6);

the reinsurers’ share of policy liabilities in respect of those policies determined in the manner provided in regulation 16A(8).

the insurer has verified (in accordance with paragraph (10)) that using the simplified method results in a value that is not less than the value determined in the manner provided in paragraphs (1) to (8) (as applicable); and

the insurer has determined that using the simplified method is appropriate, taking into consideration the risks covered by each policy and any other factors that may be relevant.

in a case where the licensed insurer uses the simplified method for the purpose of preparing the “Annual Returns” mentioned in MAS Notice 129 for that year — as part of the actuarial investigation under section 37 of the Act; or

in a case where the licensed insurer uses the simplified method for the purpose of preparing the “Quarterly Returns” mentioned in MAS Notice 129 for that year — before the first time in that year it uses that method.

the premium liabilities (gross of reinsurance) of the policies, being an amount that is not less than the higher of the following:

the unearned premiums reserves (gross of reinsurance) of the policies, being an amount that is the aggregate of the unearned premium reserves (gross of reinsurance) for each policy determined in the manner provided in paragraph (14);

the unexpired risk reserves (gross of reinsurance) of the policies, being an amount that is the aggregate of the expected future payments arising from future events insured under each policy in force as at the valuation date (including any expense expected to be incurred in administering the policy and settling claims against the policy) and any provision for any adverse deviation from the expected experience, calculated based on 75 per cent level of sufficiency;

the claim liabilities (gross of reinsurance) of the policies, being an amount that is not less than the value derived from the formula A + B, where —

A is the aggregate of the expected future payments in relation to claims under each policy incurred before the valuation date (including any expense expected to be incurred in settling the claims) and that fall due for payment after the valuation date, whether or not the claims have been reported to the insurer; and

B is any provision for any adverse deviation from the expected experience, calculated based on 75 per cent level of sufficiency.

in the case of an insurer that carries on the business of reinsurance of liabilities under insurance policies —

an amount not less than 40% of the gross premiums written in the accounting period for the policy; or

an amount calculated on a basis not less accurate than the 1/24th method; or

in any other case — subject to paragraph (15), an amount calculated on a basis not less accurate than the 1/24th method.

where the 1/24th method or some other more accurate method is used — using an amount of gross premiums written for the policy that is reduced by the actual commissions payable for the policy; or

in any other case — using an amount of gross premiums written for the policy without any deduction for commissions payable from the gross premiums for the policy.

there is a written arrangement between the head office or branch outside Singapore and the branch in Singapore, stating that the insurer treats the liabilities of the insurance business of the branch in Singapore as liabilities of, or part of the liabilities of, the head office or branch outside Singapore of the insurer; and

any release of reinsurance deposit retained by the branch in Singapore under any such arrangement is to be released only in accordance with the written arrangement.

regard the written arrangement between the branch in Singapore and the head office or branch outside of Singapore as a contract of reinsurance of those liabilities; and

the head office or branch outside Singapore shall be treated as if it were a separate insurer.

there is a written arrangement between the head office or branch outside Singapore and the branch in Singapore, stating that the insurer treats the liabilities of the insurance business of the branch in Singapore as liabilities of, or part of the liabilities of, the head office or branch outside Singapore of the insurer;

any release of reinsurance deposit retained by the branch in Singapore under any such arrangement is to be released only in accordance with the written arrangement;

any other condition specified in MAS Notice 133.

in the case of an applicant applying to be a direct insurer carrying on only one of the types of insurance business listed in the Second Schedule, $5 million;

in the case of an applicant applying to be a direct insurer other than a direct insurer referred to in sub-paragraph (a), $10 million; and

in the case of an applicant applying to be a reinsurer, $25 million.

an applicant applying to be licensed under section 8 of the Act as a direct insurer to carry on marine mutual insurance business only; or

an applicant —

created for the sole purpose of entering into contracts of reinsurance with one or more insurers; and

applying to be licensed under section 8 of the Act as a reinsurer, where its obligations under the contracts of reinsurance mentioned in sub-paragraph (i) entered into by the applicant as a licensed reinsurer are to be at all times fully funded through insurance securitisation.

where it is listed on a securities exchange, at its market value; or

where it is not listed on any securities exchange, at its net realisable value.

the amount of consideration it would receive by selling the equity security; and

the net tangible asset value of the equity security.

where it is listed on any securities exchange, at its market value; or

where it is not listed on any securities exchange, at its net realisable value.

the prevailing interest rate;

the likelihood of default by the issuer; and

the cash flows that are expected to arise from the debt security.

the last available valuation report made by a qualified property valuer;

the prevailing market for the land or building; and

any damage or improvement affecting the land or building from the date of the last available valuation report.

when the value of the land or building has been substantially impaired by any event; and

in any event, at least once every 3 years.

in the case of a captive insurer — Form G1 in Appendix B to MAS Notice 130; (c)in the case of an SPRV — Form G1 in Appendix B to MAS Notice 131;

in the case of a marine mutual insurer — Form G1 in Appendix B to MAS Notice 212.

the policies of the participating fund;

the policies of the non-participating fund;

the policies of the investment-linked fund.

A is the sum of —

the liability (gross of reinsurance) in respect of each non-participating policy of the participating fund, determined in the manner provided in regulation 20A(3); and

the liability (gross of reinsurance) in respect of each participating policy of the participating fund, which is the value derived from the formula (W + X) − Y, where —

W is the value of the expected future payments arising from the guaranteed benefits of the policy (including any expense that the insurer expects to incur in administering the policy and settling any claim against the policy);

X is any provision for any adverse deviation from the expected experience; and

Y is the value of future receipts arising from the policy; and

B is the minimum condition liability of the participating fund.

by keeping the assets of the surplus account for a participating fund separate from other assets of the fund; and

by identifying the particular assets that form part of the surplus account in its books, accounts and records.

an amount relating to investment income earned on assets representing the balance in the surplus account;

a recovery of any amount transferred out of the surplus account on or after 1st January 2005 under paragraph (7) if it has not been transferred back into the surplus account previously;

an amount that does not exceed 1/9th of the amount of tax payable (under section 43(9) of the Income Tax Act (Cap. 134)) on the amount allocated under section 17(6)(b) of the Act.

where the allocation is not immediately paid out but is accrued as additional future obligations under the policies — the increase in the minimum condition liability of the participating fund as a result of the allocation; or

where the allocation is immediately paid out when the allocation is made — the actual amount paid out to policyholders.

to comply with paragraph (9);

to satisfy the fund solvency requirement of the participating fund; or

to reduce the likelihood that the fund solvency requirement of the participating fund is breached.

any amount withdrawn from the fund in accordance with section 17(9) of the Act;

any expense or loss relating to the investment of assets in the surplus account; and

where the balance in the surplus account is negative, the interest that would have been earned on such negative balance calculated, on a monthly basis, using the average rate of investment return on the policy assets of the fund, subject to a minimum rate of zero.

the liability (net of reinsurance) in respect of each non-participating policy of the fund determined in the manner provided in regulation 20(1) but does not include the application of regulation 20(4); and (b)the liability (net of reinsurance) in respect of each participating policy of the fund determined in accordance with the manner provided in regulation 20(1) for determining the liability (net of reinsurance) in respect of a non-participating policy, but does not include the application of regulation 20(4) and any provision for non-guaranteed benefits.