Singapore legislation
Regulation 22
Regulation 22
Surplus account
Subregulation 1
For the purpose of section 17(6)(a) of the Act, a direct insurer licensed to carry on life business shall establish and maintain a surplus account —
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.
Subregulation 2
[Deleted by S 845/2018 wef 01/01/2019]
Subregulation 3
For any participating fund established on or after 1st January 2005, the insurer shall assign, as the balance in the surplus account, the value of zero at the establishment of the fund.
Subregulation 4
For the purposes of section 17(7) of the Act, the insurer may, in addition to an allocation made under section 17(6)(c) of the Act, make the following allocations to the surplus account:
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.
Subregulation 5
The amount of a participating fund allocated under section 17(6)(b) of the Act by way of bonus to participating policies is —
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.
Subregulation 6
The insurer may transfer any asset which is not part of the participating fund to the surplus account where such transfer is made —
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.
Subregulation 7
Where the liability (net of reinsurance) in respect of the policies of the participating fund of the insurer as calculated in the manner provided in regulation 20(6) is more than the policy assets of the fund, the insurer shall immediately transfer out of the surplus account an amount no less than the difference between the liability (net of reinsurance) in respect of the policies of the fund and the policy assets of the fund so as to meet any deficiency of policy assets in satisfying the liability (net of reinsurance) in respect of policies of the fund.
Subregulation 7A
In paragraph (7), a reference to the policy assets of a fund is a reference to the policy assets of the fund less the reinsurers’ share of policy liabilities determined in the manner provided in regulation 16A(8).
Subregulation 8
The insurer shall deduct from the surplus account —
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.
Subregulation 9
Where the balance in the surplus account is negative, the insurer shall immediately make payment into the surplus account so that the balance in the surplus account is at least zero.
Subregulation 10
In paragraph (5), “minimum condition liability”, in relation to a participating fund, means the sum of —
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.