PART 1

• 1.Abstracts must be so arranged that the numbers and letters of the items correspond with those of the items and Part 2 of this Form.
• 2.Specimen policy values must be given at the rate of interest employed in the valuation in respect of whole life insurance policies effected at the respective ages of 20, 30, 40 and 50 and having been in force respectively for 5 years, 10 years and upwards at intervals of 10 years; and similar policy values must be given in respect of endowment insurance policies effected at the respective ages of 20, 30, and 40 for endowment terms of 10, 20 and 30 years, and in the case of policies involving continuous disability benefits, specimens of the valuation factors must be given, provided that where the specimen policy values or valuation factors required by this direction to be given are the same as those given in any abstract previously prepared under Part 2 of the directions issued under section 62(1) previously submitted by the insurer to the Reserve Bank, it shall be sufficient in any abstract subsequently submitted to refer to the specimens so given in such manner as to enable the Reserve Bank to ascertain the required information.
• 3.In showing the proportion which that part of the annual premiums reserved as a provision for future expenses and profits bears to the total of the annual premiums, it shall be sufficient in any abstract subsequently submitted to refer to the specimens so given in such manner as to enable the Reserve Bank to ascertain the required information.
• 4.
  • (a)The average rate of interest earned in any year by the assets constituting a statutory fund must, for the purposes of paragraph (2)(e) of Part 2 of this Form, be calculated by dividing the interest of the year by the mean fund of the year; and for the purposes of any such calculation the interest of the year must be taken to be the whole of the interest, dividends and rents credited to the statutory fund during the year after deduction of rates and taxes (any refund of rates or taxes made during the year being taken into account) and the mean fund of the year shall be ascertained by adding a sum equal to one-half of the amount of the statutory fund at the beginning of the year to a sum equal to one-half of that fund at the end of the year and deducting from the aggregate of those 2 sums an amount equal to one-half of the interest of the year.
  • (b)The abstract must state in what manner the sums invested in reversions and the income and profits derived from those reversions have been treated in calculating the average rate of interest under paragraph (a).
• 5.Every abstract prepared in accordance with Part 2 of this Form must be signed by an actuary appointed under section 61(1) of the Act and must contain a certificate by the actuary as to the accuracy of the valuations made for the purposes of the abstract and of the valuation data.
• 6.For the purposes of this Form—
  • extra premium means a charge for any risk not provided for in the minimum contract premium;
  • inter-valuation period means, in relation to any valuation in respect of any class of business, the period to the valuation date of that valuation from the valuation date of the last preceding valuation under the Insurance Act 1998 or, if there is no preceding valuation under the Insurance Act 1998, from the valuation date of the last preceding valuation made in respect of that class of business, from the date on which the insurer began to carry on that class of business;
  • maturity date means the fixed date on which any benefit will become payable either absolutely or contingently;
  • net premiums means, in relation to any valuation, the premiums for which credit is taken in the valuation;
  • premium term means the period during which premiums are payable; and
  • valuation date means, in relation to any valuation, the date as at which the valuation is made.

PART 2

• 1.The following statements must be annexed to every abstract prepared in accordance with this Form —
  • (a)a Summary and Valuation, in accordance with Form 10B, of the policies included, at the valuation date, in the class of business to which the abstract relates; and
  • (b)a Valuation Balance Sheet, in accordance with Form 10C.
• 2.Every abstract prepared in accordance with this Form must show—
  • (a)the valuation date;
  • (b)the general principles and full details of the methods adopted in the valuation of each of the various classes of insurance and annuities shown in Form 10B, including statements on the following matters—
    • (i)whether the principles were determined by the instruments constituting the insurer or by its articles of association or other rules or, if not, how the principles were determined;
    • (ii)the method by which the net premiums have been arrived at and how the ages at entry, premium terms and maturity dates have been treated for the purposes of the valuation;
    • (iii)the methods by which the valuation age, period from the valuation date to the maturity date, and the future premium terms, have been treated for the purpose of the valuation;
    • (iv)the rate of bonus taken into account where, by the method of valuation, definite provision is made for the maintenance of a specific rate of bonus;
    • (v)the method of allowing for—
      • (1)the incidence of the premium income; and
      • (2)premiums payable otherwise than annually;
    • (vi)the methods by which provision has been made for the following matters—
      • (1)the immediate payment of claims;
      • (2)future expenses and profits in the case of limited payment policies and paid-up policies;
      • (3)liabilities which exist or may arise in respect of lapsed policies not included in the valuation; and
      • (4)payment of benefits or waiver of premiums during disability—
        • (A)in operation at the valuation date; and
        • (B)not in operation at that date,

      and whether any reserves have been made for those matters;

    • (vii)whether under the valuation method adopted any policy would be treated as an asset, and what steps have been taken to eliminate any such asset from the valuation;
    • (viii)a statement of the manner in which policies on under average lives and policies subject to premiums which include a charge for climatic, military or other extra risks have been dealt with; and
    • (ix)the currency in which the valuation is made and the basis of conversion into that currency of the value of liabilities in other currencies;
  • (c)the tables of mortality, sickness and accident used, and the rate of interest assumed, in the valuation;
  • (d)the proportion of the annual amount of premiums that is reserved as a provision for future expenses and bonuses (the proportion to be separately identified in respect of insurances with immediate profits, with deferred profits and without profits);
  • (e)the average rates of interest earned by the assets constituting the relevant statutory fund for each of the 5 years preceding the valuation date;
  • (f)the basis adopted in the distribution of surplus as between the insurer and policy owners and whether that basis was determined by the instruments constituting the insurer or by its articles of association or other rules or, if not, how the basis was determined;
  • (g)the general principles adopted in the distribution of surplus among policy owners, including statements on the following matters—
    • (i)whether the principles were determined by the instruments constituting the insurer, or by its articles of association or other rules or, if not, how the principles were determined;
    • (ii)the number of years’ premiums to be paid, period to elapse, and other conditions to be fulfilled, before a bonus is allotted;
    • (iii)whether the bonus is allotted in respect of each year’s premiums paid, or in respect of each completed calendar year or year of insurance or if not, how the bonus is allotted; and
    • (iv)whether the bonus vests immediately on allocation or, if not, the conditions of vesting;
  • (h)the total amount of surplus arising during the inter-valuation period including surplus paid away and sums transferred to reserve funds or other accounts during that period, and the amount brought forward from the preceding valuation (to be stated separately) and the allocation of that surplus—
    • (i)to interim bonus paid;
    • (ii)among policy owners with immediate participation, giving the number of the policies which participated and the sums insured under the policies (excluding bonuses);
    • (iii)among policy owners with deferred participation, giving the number of policies which participated and the sums insured under the policies (excluding bonus);
    • (iv)among shareholders or to shareholders’ accounts (any such sums passed through the accounts during the inter-valuation period to be separately stated);
    • (v)to every reserve fund, or other fund or account (any such sums passed through the accounts during the inter-valuation period to be separately stated); and
    • (vi)as carried forward unappropriated;
  • (i)specimens, as at the valuation date, of the bonuses attaching to policies of $1,000—
    • (i)for the whole term of life effected at the respective ages of 20, 30 and 40, and having been in force respectively for 5 years, 10 years and upwards at intervals of 10 years (where different rates of bonus are allotted to policies under which the premiums are payable for a limited term only, similar specimen bonuses must be shown for policies having premium terms of 10 and 20 years respectively); and
    • (ii)for endowment insurances effected at the respective ages of 20, 30 and 40, for endowment terms of 15, 20 and 30 years and effected at age 20 for an endowment term of 40 years, and having been in force respectively for 5 years, 10 years and upwards at intervals of 10 years, together with the amounts apportioned under the various ways in which the bonus is receivable;
  • (j)where bonuses are allotted as reversionary additions to the sums insured under policies, a statement of the basis and conditions under which those bonuses may be surrendered for cash;
  • (k)a statement of the value allowed for surrender of policies for $1,000—
    • (i)for the whole term of life effected at the respective ages of 20, 30 and 40, having been respectively in force for 5 years, 10 years and upwards at intervals of 10 years; and
    • (ii)for endowment insurances effected at the respective ages 20, 30 and 40 for endowment terms of 15, 20 and 30 years, and at age 20 for an endowment term of 40 years, and having been in force for 5 years, 10 years and upwards at intervals of 10 years; and
  • (l)a statement showing how the liability under any disability clause in a policy has been determined in the valuation with full information of the tables of sickness or accident rates used for the purpose.