20.—(1) Subject to this Part, the amount of liabilities of an insurer shall be determined in accordance with generally accepted accounting concepts, bases and policies or other generally accepted methods appropriate for insurers.
(2) In determining the amount of liabilities under paragraph (1), all contingent and prospective liabilities shall be taken into account but not liabilities in respect of share capital.
(3) The amount of reserves for unexpired risks in respect of general business shall be —
(a)
subject to sub-paragraphs (b) and (c), an amount calculated on a basis not less accurate than the 1/24th method;
(b)
in the case of direct insurance business relating to cargo policies, at the election of the insurer, an amount not less than 25% of the premiums for those policies or an amount calculated on a basis not less accurate than the 1/24th method; and
(c)
in the case of reinsurance business, at the election of the insurer, an amount not less than 25% of the premiums in the case of marine and aviation policies or 40% of the premiums in other cases or an amount calculated on a basis not less accurate than the 1/24th method.
(4) For the purposes of paragraph (3) —
“marine and aviation policy” means a policy of insurance —
(a)
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;
(b)
upon the freight of, or any other interest in or relating to vessels, aircraft or other means of conveyance;
(c)
upon vessels or aircraft, or upon machinery, tackle furniture or equipment of vessels or aircraft;
(d)
against damage arising out of or in connection with the use of vessel or aircraft, including third-party risks; or
(e)
against risks incidental to the construction, repair or docking of vessels, including thirdparty risks;
“premiums” means the net amount of the premiums receivable in the accounting period after deduction of return premiums and payments in respect of reinsurances or retrocessions, except that no deduction shall be made in respect of reinsurances other than reinsurances with a registered insurer or insurer authorised under the Act and reinsurances of special risks, unless the deduction is made against a reinsurer’s deposit equivalent to the reserve calculated in accordance with paragraph (3).
(5) In the valuation of the life policies of an insurer, no deduction shall be made for reinsurances other than reinsurances with a registered insurer, except against reinsurer’s deposits, and a deduction against a reinsurer’s deposit shall be limited so that the value of the liabilities deducted does not exceed the amount of the deposit.
(6) For the purposes of this regulation —
(a)
a deduction may be made against a reinsurer’s deposit only where the following conditions are satisfied:
(i)
the deposit is held by the insurer as security for the whole of the reinsurer’s liabilities under the reinsurances to which it relates;
(ii)
the reinsurer may not withdraw the deposit while any such liabilities is secured thereon, nor reduce it otherwise than in the event of and in proportion to a reduction in those liabilities; and
(iii)
the deposit relates only to the insurer’s life business and the deduction is of liabilities secured thereon or, as the case may be, the deposit relates only to the insurer’s general business and the deduction is of premiums paid in respect of liabilities which are or were secured thereon;
(b)
any arrangement made by an insurer whereby the insurer treats liabilities of a branch in Singapore in respect of any policy as liabilities in whole or in part of a branch outside Singapore shall be regarded as a reinsurance of those liabilities as if the branches were separate insurers and the arrangement were a contract between them, and no reinsurer’s deposit retained by the branch in Singapore under any such arrangement shall be released by that branch except in accordance with the arrangement and for the purpose of this paragraph, an insurer’s head office is to be treated as included in the expression “branch”; and
(c)
reinsurances of special risks shall comprise only —
(i)
reinsurances of liabilities under a marine and aviation policy, being liabilities which consist of or include those arising from the insurance of a marine hull or aircraft hull; and
(ii)
reinsurances of any other risk which by reason of its exceptional nature and amount the Authority permits to be treated as a special risk,
and notwithstanding that the reinsurer’s liabilities in respect of such reinsurance are or were secured in whole or in part by a reinsurer’s deposit, no deduction made with reference to the reinsurance shall be treated as a deduction against the deposit.
(7) The determination of the amount of liabilities in respect of life policies of an insurer (other than liabilities which have fallen due for payment before the valuation date) shall be made on actuarial principles and shall make proper provision for all liabilities on prudent assumptions in regard to the relevant factors; in any case the amount shall not in the aggregate be less than the amount calculated on the minimum basis; and in the case of the life business of the insurer in a country outside Singapore the amount shall not be less than is required by the law of the country.