THIRD SCHEDULE
Paragraph 1 of Second Schedule and paragraph 4 of Fourth Schedule
Component 1 (C1) Requirement — Insurance Risks
C1 requirement
1.  Subject to paragraph 5, a registered insurer shall determine the C1 requirement of an insurance fund established and maintained under section 17 of the Act in the following manner:
(a)where the insurance fund is established and maintained in respect of the general business of an insurer, the C1 requirement shall be determined in the manner as provided in paragraph 3; and
(b)where the insurance fund is established and maintained in respect of the life business of an insurer, the C1 requirement shall be determined in the manner as provided in paragraph 4.
2.  Subject to paragraph 5, a registered insurer incorporated in Singapore shall determine the C1 requirement arising from any insurance business of the insurer that does not belong to any insurance fund established and maintained under the Act in the same manner as its insurance business relating to an insurance fund established and maintained under the Act.
C1 requirement for general business
3.—(1)  The C1 requirement of an insurance fund established and maintained in respect of general business is calculated as the sum of —
(a)premium liability risk requirement calculated in accordance with sub-paragraphs (2) and (3); and
(b)claim liability risk requirement calculated in accordance with sub-paragraphs (4) and (5).
(2)  For each volatility category, there shall be calculated a premium liability risk requirement for that category as —
(a)the product of —
(i)the premium liability risk factor for that volatility category set out in Table 4 of the Sixth Schedule; and
(ii)the unexpired risk reserves determined in the manner provided in regulation 19(1)(a)(ii) relating to that volatility category,
less the premium liability relating to that volatility category; or
(b)zero,
whichever is the higher.
(3)  The premium liability risk requirement of the insurance fund shall be the aggregate of the premium liability risk requirements for each volatility category.
(4)  For each volatility category, there shall be calculated a claim liability risk requirement for that category as —
(a)the product of —
(i)the claim liability risk factor for that volatility category set out in Table 4 of the Sixth Schedule; and
(ii)the claim liabilities determined in the manner provided in regulation 19(1)(b) relating to that volatility category, excluding such claim liabilities arising from any policy which the maximum loss that may be incurred under the policy is already provided for, less the claim liabilities relating to that volatility category (excluding such claim liabilities arising from any policy which the maximum loss that may be incurred under the policy is already provided for); or
(b)zero,
whichever is the higher.
(5)  The claim liability risk requirement of the insurance fund shall be the aggregate of the claim liability risk requirements for each volatility category.
(6)  In this paragraph, “volatility category” refers to the grouping of business lines in accordance with Table 5 of the Sixth Schedule, or any other grouping that the Authority may allow in respect of any particular insurer.
C1 requirement for life business
4.—(1)  The C1 requirement of an insurance fund established and maintained in respect of life business is calculated as the sum of —
(a)the policy liability risk requirement calculated in accordance with sub-paragraphs (2) and (3); and
(b)the surrender value condition requirement calculated in accordance with sub-paragraphs (4) and (5).
(2)  The policy liability risk requirement of a non-participating fund or an investment-linked fund shall be —
(a)the difference between —
(i)a modified liability in respect of policies of the fund where the value is determined by adjusting assumptions used in the valuation or by making such other adjustments as are set out in Table 6 of the Sixth Schedule; and
(ii)the liability in respect of policies of the fund determined in the manner provided in regulation 20(5); or
(b)zero,
whichever is the higher.
(3)  The policy liability risk requirement of a participating fund shall be —
(a)the difference between —
(i)a modified minimum condition liability of the fund where the value is determined by adjusting assumptions used in the valuation or by making such other adjustments as are set out in Table 6 of the Sixth Schedule; and
(ii)the minimum condition liability of the fund; or
(b)zero,
whichever is the higher.
(4)  The surrender value condition requirement of a non-participating fund or an investment-linked fund shall be —
(a)the aggregate of the surrender values of the policies of the fund less the sum of —
(i)the total risk requirement of the fund; and
(ii)the liability in respect of policies of the fund determined in the manner provided in regulation 20(5); or
(b)zero,
whichever is the higher.
(5)  The surrender value condition requirement of a participating fund shall be —
(a)the aggregate of the surrender values of the policies of the fund, less —
(i)the total risk requirement of the fund and the minimum condition liability of the fund; or
(ii)the liability in respect of policies of the participating fund determined in the manner provided in regulation 20(6), whichever is the higher; or
(b)zero,
whichever is the higher.
Alternative method of calculating C1
5.  A registered insurer may use any alternative method to calculate the C1 requirement if the method results in a C1 requirement which is no less than that determined in the manner provided in this Schedule and in such a case, the Authority may require the insurer to provide documentary evidence of that fact.