Comparison View

Formal Consolidation |  Amended S 884/2005
Valuation of liabilities of life business
20.—(1)  Subject to paragraph (4), a registered insurer shall value the liability in respect of a non-participating policy as the value of expected future payments arising from the policy, including any expense that the insurer expects to incur in administering the policy and settling any relevant claims and any provision made for any adverse deviation from the expected experience, less expected future receipts arising from the policy.
(2)  Subject to paragraph (4), a registered insurer shall value the liability in respect of an investment-linked policy as the sum of —
(a)the unit reserves, calculated as the value of the underlying assets backing the units relating to the policy; and
(b)the non-unit reserves, calculated as the value of expected future payments arising from the policy (other than those relating to the unit reserves), including any expense that the insurer expects to incur in administering the policies and settling the relevant claims and any provision made for any adverse deviation from the expected experience, less expected future receipts arising from the policy (other than those relating to the unit reserves).
(3)  Subject to paragraphs (4) and (7), a registered insurer shall value the liability in respect of a participating policy as the sum of —
(a)the value of expected future payments arising from guaranteed benefits of the policy, including any expense that the insurer expects to incur in administering the policies and settling the relevant claims, less expected future receipts arising from guaranteed benefits of the policy;
(b)the value of expected payments arising from non-guaranteed benefits of the policy in respect of —
(i)future allocations by way of bonus under section 17(6)(b) of the Act; and
(ii)future allocations to the surplus account under section 17(6)(c) of the Act; and
[S 884/2005 wef 31/12/2005]
(c)any provision made for any adverse deviation from the expected experience.
[S 884/2005 wef 31/12/2005]
(4)  A registered insurer shall not value the liability in respect of any policy to be less than zero, unless there are moneys due to the insurer when the policy is terminated on valuation date, in which event the value of the liability in respect of that policy may be negative to the extent of the amount due to the insurer.
(5)  A registered insurer shall calculate the liability in respect of the policies of a non-participating fund or an investment-linked fund as the sum of the liability in respect of each policy of that fund determined in the manner provided in paragraph (1) or (2), respectively.
(6)  A registered insurer shall calculate the liability in respect of the policies of a participating fund as —
(a)the sum of the liability in respect of each policy of the fund determined in the manner provided in paragraphs (1) and (3);
(b)the minimum condition liability of the fund; or
(c)the value of policy assets of the fund, whichever is the highest.
(7)  Where the liability in respect of the policies of a participating fund determined in the manner provided in paragraph (6) is greater than the sum of the liability in respect of each policy of the fund as determined in the manner provided in paragraphs (1) and (3), the insurer shall make such adjustments as may be necessary to the components for the valuation of the liability in respect of a participating policy referred to in paragraph (3)(b), for all or part of the participating policies of the fund such that the sum of the liability in respect of each policy of the fund equals the value determined in paragraph (6).
Informal Consolidation | Amended S 137/2020
Valuation of liabilities of life business (net of reinsurance)
20.—(1)  Subject to paragraph (4), a licensed insurer shall value the liability (net of reinsurance) in respect of a non-participating policy as the value of expected future payments arising from the policy, including any expense that the insurer expects to incur in administering the policy and settling any relevant claims and any provision made for any adverse deviation from the expected experience, less expected future receipts arising from the policy.
[S 233/2013 wef 18/04/2013]
[S 845/2018 wef 01/01/2019]
(2)  Subject to paragraph (4), a licensed insurer shall value the liability (net of reinsurance) in respect of an investment-linked policy as the sum of —
(a)the unit reserves, calculated as the value of the underlying assets backing the units relating to the policy; and
(b)the non-unit reserves, calculated as the value of expected future payments arising from the policy (other than those relating to the unit reserves), including any expense that the insurer expects to incur in administering the policies and settling the relevant claims and any provision made for any adverse deviation from the expected experience, less expected future receipts arising from the policy (other than those relating to the unit reserves).
[S 233/2013 wef 18/04/2013]
[S 845/2018 wef 01/01/2019]
(3)  Subject to paragraphs (4) and (7), a licensed insurer shall value the liability (net of reinsurance) in respect of a participating policy as the sum of —
(a)the value of expected future payments arising from guaranteed benefits of the policy, including any expense that the insurer expects to incur in administering the policies and settling the relevant claims, less expected future receipts arising from guaranteed benefits of the policy;
(b)the value of expected payments arising from non-guaranteed benefits of the policy in respect of —
(i)future allocations by way of bonus under section 17(6)(b) of the Act; and
(ii)future allocations to the surplus account under section 17(6)(c) of the Act; and
[S 884/2005 wef 31/12/2005]
(c)any provision made for any adverse deviation from the expected experience.
[S 884/2005 wef 31/12/2005]
[S 233/2013 wef 18/04/2013]
[S 845/2018 wef 01/01/2019]
(4)  A licensed insurer shall not value the liability (net of reinsurance) in respect of any policy to be less than zero, unless there are moneys due to the insurer when the policy is terminated on valuation date, in which event the value of the liability (net of reinsurance) in respect of that policy may be negative to the extent of the amount due to the insurer.
[S 233/2013 wef 18/04/2013]
[S 845/2018 wef 01/01/2019]
(5)  A licensed insurer shall calculate the liability (net of reinsurance) in respect of the policies of a non-participating fund or an investment-linked fund as the sum of the liability (net of reinsurance) in respect of each policy of that fund determined in the manner provided in paragraph (1) or (2), respectively.
[S 233/2013 wef 18/04/2013]
[S 845/2018 wef 01/01/2019]
(6)  A licensed insurer must calculate the liability (net of reinsurance) in respect of the policies of a participating fund as the highest of the following:
(a)the sum of the liability (net of reinsurance) in respect of each policy of the fund determined in the manner provided in paragraphs (1) and (3);
(b)the minimum condition liability of the fund;
(c)the value of policy assets of the fund less the reinsurers’ share of policy liabilities determined in the manner provided in regulation 16A(8).
[S 845/2018 wef 01/01/2019]
(7)  Where the liability (net of reinsurance) in respect of the policies of a participating fund determined in the manner provided in paragraph (6) is greater than the sum of the liability (net of reinsurance) in respect of each policy of the fund as determined in the manner provided in paragraphs (1) and (3), the insurer shall make such adjustments as may be necessary to the components for the valuation of the liability (net of reinsurance) in respect of a participating policy referred to in paragraph (3)(b), for all or part of the participating policies of the fund such that the sum of the liability (net of reinsurance) in respect of each policy of the fund equals the value determined in paragraph (6).
[S 845/2018 wef 01/01/2019]
(8)  Despite anything in this regulation, a licensed insurer may use the method mentioned in paragraph (11) (called in this regulation the simplified method) to determine the value of the liabilities (net of reinsurance) in respect of the short-term policies issued as part of the insurer’s life business, if —
(a)the insurer has verified (in accordance with paragraph (9)) that using the simplified method results in a value that is not less than the value determined in the manner provided in paragraphs (1) to (7) (as applicable); and
(b)the insurer has determined that using the simplified method is appropriate, taking into consideration the risks covered by each policy and any other factors that may be relevant.
[S 137/2020 wef 31/03/2020]
(9)  The verification mentioned in paragraph (8) must be carried out once in the year in which the valuation under paragraphs (1) to (7) is to be carried out, and —
(a)in a case where the licensed insurer uses the simplified method for the purpose of preparing the “Annual Returns” mentioned in MAS Notice 129 for that year — as part of the actuarial investigation under section 37 of the Act; or
(b)in a case where the licensed insurer uses the simplified method for the purpose of preparing any of the “Quarterly Returns” mentioned in MAS Notice 129 for that year — before the first time in that year it uses that method.
[S 137/2020 wef 31/03/2020]
(10)  The Authority may require the licensed insurer to provide documentary evidence in support of the insurer’s verification under paragraph (8).
[S 137/2020 wef 31/03/2020]
(11)  In this regulation, the simplified method to determine the value of the liabilities (net of reinsurance) in respect of the short-term policies mentioned in paragraph (8) is the totalling of the following:
(a)the premium liabilities (net of reinsurance) of the policies, being an amount that is not less than the higher of the following:
(i)the unearned premiums reserves (net of reinsurance) of the policies, being an amount that is the aggregate of the unearned premium reserves (net of reinsurance) for each policy determined in the manner provided in paragraph (14);
(ii)the unexpired risk reserves (net of reinsurance) of the policies, being an amount that is the aggregate of the expected future payments arising from future events insured under each policy in force as at the valuation date (including any expense expected to be incurred in administering the policy and settling claims against the policy) and any provision for any adverse deviation from the expected experience, calculated based on 75 per cent level of sufficiency;
(b)the claim liabilities (net of reinsurance) of the policies, being an amount that is not less than the value derived from the formula A + B, where —
(i)A is the aggregate of the expected future payments in relation to claims under each policy incurred before the valuation date (including any expense expected to be incurred in settling the claims) and that fall due for payment after the valuation date, whether or not the claims have been reported to the insurer; and
(ii)B is any provision for any adverse deviation from the expected experience, calculated based on 75 per cent level of sufficiency.
[S 137/2020 wef 31/03/2020]
(12)  In determining the unexpired risk reserves (net of reinsurance) of the policies mentioned in paragraph (11)(a)(ii) and claim liabilities (net of reinsurance) of the policies mentioned in paragraph (11)(b), the licensed insurer must —
(a)make separate estimates of the gross incurred claims and recoveries from the reinsurance counterparty; and
(b)take into account the likelihood of default by the reinsurance counterparty and any non-reinsurance recovery such as salvage and subrogation.
[S 137/2020 wef 31/03/2020]
(13)  A licensed insurer may, instead of determining the unexpired risk reserves (net of reinsurance) of the policies mentioned in paragraph (11)(a)(ii) and claim liabilities (net of reinsurance) of the policies mentioned in paragraph (11)(b) in the manner provided in paragraph (12), determine the same using claims data that is net of reinsurance if there is no material change in —
(a)the manner in which liabilities are reinsured during the period to which the data used to determine the unexpired risk reserves (net of reinsurance) and claim liabilities (net of reinsurance) relates; and
(b)the manner in which liabilities are reinsured at the valuation date.
[S 137/2020 wef 31/03/2020]
(14)  For the purposes of paragraph (11)(a)(i), the amount of unearned premium reserves (net of reinsurance) for a short-term policy must be —
(a)subject to sub-paragraph (b) and paragraph (15), an amount calculated on a basis not less accurate than the 1/24th method; or
(b)in the case of an insurer that carries on the business of reinsurance of liabilities under insurance policies —
(i)an amount not less than 40% of the net premiums written in the accounting period for the policy; or
(ii)an amount calculated on a basis not less accurate than the 1/24th method.
[S 137/2020 wef 31/03/2020]
(15)  Where the simplified method is used, the amount of unearned premium reserves (net of reinsurance) for a short-term policy must be calculated —
(a)in a case where the 1/24th method or some other more accurate method is used — using an amount of net premiums written for the policy that is reduced by the actual commissions payable for the policy; or
(b)in any other case — using an amount of net premiums written for the policy without any deduction for commissions payable from the net premiums for the policy.
[S 137/2020 wef 31/03/2020]
[S 845/2018 wef 01/01/2019]