22.—(1) For the purpose of section 17(6)(a) of the Act, a direct insurer registered to carry on life business shall establish and maintain a surplus account —
(a)
by keeping the assets of the surplus account for a participating fund separate from other assets of the fund; and
(b)
by identifying the particular assets that form part of the surplus account in its books, accounts and records.
(2) For any participating fund established before 1st January 2005, the insurer shall assign, as the balance in the surplus account as at 1st January 2005, the value of —
(a)
the higher of —
(i)
the amount of surplus of assets over liabilities allocated to the shareholders for the accounting period beginning from 1st January 2004 and ending on 31st December 2004 but which has yet to be transferred from the participating fund to the shareholders funds; or
(ii)
zero; or
(b)
the total assets of the fund less the sum of —
(i)
the minimum condition liability of the fund; and
(ii)
other liabilities as calculated in the manner provided in Form 1 in the First Schedule to the Insurance (Accounts and Statements) Regulations 2004 (G.N. No. S 494/2004), immediately before 1st January 2005, whichever is the lower.
(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.
(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:
(a)
an amount relating to investment income earned on assets representing the balance in the surplus account;
(b)
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.
(5) The amount of a participating fund allocated by way of bonus to participating policies under section 17(6)(b) of the Act by the insurer shall be —
(a)
where the allocation is not immediately paid out but is accrued as additional future obligations under the policies, the increase in minimum condition liability as a result of such allocation; or
(b)
where the allocation is immediately paid out when the allocation is made, the actual amount paid out.
(6) The insurer may transfer any asset which is not part of the participating fund to the surplus account where such transfer is made —
(a)
to comply with paragraph (9);
(b)
to satisfy the fund solvency requirement of the participating fund; or
(c)
to reduce the likelihood that the fund solvency requirement of the participating fund is breached.
(7) Where the liability 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 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 liabilities in respect of policies of the fund.
(8) The insurer shall deduct from the surplus account —
(a)
any amount withdrawn from the fund in accordance with section 17(9) of the Act;
(b)
any expense or loss relating to the investment of assets in the surplus account; and
(c)
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.
(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.
(10) In paragraph (5), “minimum condition liability”, in relation to a participating fund, means the sum of —
(a)
the liability 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 in respect of each participating policy of the fund determined in accordance with the manner provided in regulation 20(1) for determining the liability in respect of a non-participating policy, but does not include the application of regulation 20(4) and any provision for non-guaranteed benefits.