PART IV
RECOGNITION AND VALUATION OF ASSETS
[S 845/2018 wef 01/01/2019]
Application of this Part
7.  This Part applies to the recognition and valuation of the assets of an insurance fund established and maintained under section 17 of the Act.
[S 845/2018 wef 01/01/2019]
Recognition and valuation of assets generally
8.  Unless otherwise specified in this Part or any direction issued by the Authority, an asset of an insurance fund is to be recognised and valued by a licensed insurer in accordance with the Accounting Standards.
[S 845/2018 wef 01/01/2019]
Equity securities
9.—(1)  A licensed insurer shall value an equity security as follows:
(a)where it is listed on a securities exchange, at its market value; or
(b)where it is not listed on any securities exchange, at its net realisable value.
[S 233/2013 wef 18/04/2013]
(2)  In determining the net realisable value of an equity security which is not listed on a securities exchange, the insurer shall take into account —
(a)the amount of consideration it would receive by selling the equity security; and
(b)the net tangible asset value of the equity security.
Debt securities
10.—(1)  A licensed insurer shall value a debt security as follows:
(a)where it is listed on any securities exchange, at its market value; or
(b)where it is not listed on any securities exchange, at its net realisable value.
[S 233/2013 wef 18/04/2013]
(2)  In determining the net realisable value of a debt security that is not listed on a securities exchange, the insurer shall take into account —
(a)the prevailing interest rate;
(b)the likelihood of default by the issuer; and
(c)the cash flows that are expected to arise from the debt security.
Land and buildings
11.—(1)  A licensed insurer shall value any land or building at its estimated market value.
[S 233/2013 wef 18/04/2013]
(2)  In estimating the market value of any land or building, the insurer shall take into account —
(a)the last available valuation report made by a qualified property valuer;
(b)the prevailing market for the land or building; and
(c)any damage or improvement affecting the land or building from the date of the last available valuation report.
(3)  An insurer shall obtain a new valuation from a qualified property valuer —
(a)when the value of the land or building has been substantially impaired by any event; and
(b)in any event, at least once every 3 years.
(4)  For the purposes of paragraph (3), the qualified property valuer shall conduct a physical inspection of the land or building in providing the valuation.
[S 112/2012 wef 28/03/2012]
Loans
12.  A licensed insurer shall value loans made to other persons by aggregating the principal amounts outstanding under all loans less any allowance for impairment losses.
[S 233/2013 wef 18/04/2013]
[S 845/2018 wef 01/01/2019]
Cash and deposits
13.—(1)  A licensed insurer shall value any cash or deposit with a financial institution, other than a negotiable certificate of deposit, at the nominal amount of such cash or deposit after deducting any amount deemed uncollectible from the financial institution.
[S 233/2013 wef 18/04/2013]
(2)  A licensed insurer shall value a negotiable certificate of deposit at its market value.
[S 233/2013 wef 18/04/2013]
Outstanding premiums and agents’ balances
14.  A licensed insurer shall value the outstanding premiums and agents’ balances by aggregating the principal amounts outstanding after deducting any allowance for impairment losses.
[S 233/2013 wef 18/04/2013]
[S 845/2018 wef 01/01/2019]
Deposits withheld by cedants
15.  A licensed insurer shall value deposits withheld by cedants by aggregating the amounts of deposits outstanding after deducting any amount deemed uncollectible from the cedant.
[S 233/2013 wef 18/04/2013]
Reinsurance recoverables
16.  A licensed insurer shall value reinsurance recoverables by aggregating the amounts of reinsurance recoverables outstanding after deducting any allowance for impairment losses.
[S 233/2013 wef 18/04/2013]
[S 845/2018 wef 01/01/2019]
Reinsurers’ share of policy liabilities
16A.—(1)  A licensed insurer must recognise, as assets of an insurance fund established and maintained under section 17 of the Act for the general business of the insurer, the reinsurers’ share of premium liabilities, and the reinsurers’ share of claim liabilities, in respect of the policies of the insurance fund.
(2)  A licensed insurer must calculate the reinsurers’ share of premium liabilities mentioned in paragraph (1) as the amount of premium liabilities (gross of reinsurance) less the amount of premium liabilities (net of reinsurance).
(3)  A licensed insurer must determine the amount of premium liabilities (gross of reinsurance) and the amount of premium liabilities (net of reinsurance) mentioned in paragraph (2) in the manner provided in regulations 19A(2)(a) and 19(1)(a), respectively.
(4)  A licensed insurer must calculate the reinsurers’ share of claim liabilities mentioned in paragraph (1) as the amount of claim liabilities (gross of reinsurance) less the amount of claim liabilities (net of reinsurance).
(5)  A licensed insurer must determine the amount of claim liabilities (gross of reinsurance) and the amount of claim liabilities (net of reinsurance) mentioned in paragraph (4) in the manner provided in regulations 19A(2)(b) and 19(1)(b), respectively.
(6)  A licensed insurer must make separate calculations of the reinsurers’ share of premium liabilities and the reinsurers’ share of claim liabilities for each line of business that is carried on by the insurer and that is described in the following Form (whichever is applicable):
(a)in the case of a licensed insurer who is not a captive insurer, an SPRV or a marine mutual insurer — Form G1 in Appendix B to MAS Notice 129;
(b)in the case of a captive insurer — Form G1 in Appendix B to MAS Notice 130;
(c)in the case of an SPRV — Form G1 in Appendix B to MAS Notice 131;
(d)in the case of a marine mutual insurer — Form G1 in Appendix B to MAS Notice 212.
(7)  A licensed insurer carrying on life business must recognise, as an asset of a participating fund, non-participating fund or investment-linked fund, the reinsurers’ share of policy liabilities in respect of the following, respectively:
(a)the policies of the participating fund;
(b)the policies of the non-participating fund;
(c)the policies of the investment-linked fund.
(8)  A licensed insurer carrying on life business must calculate the reinsurers’ share of policy liabilities in respect of the policies of a participating fund mentioned in paragraph (7)(a) as the value derived from the formula A − B, where —
(a)A is the sum of —
(i)the liability (gross of reinsurance) in respect of each non-participating policy of the participating fund, determined in the manner provided in regulation 20A(3); and
(ii)the liability (gross of reinsurance) in respect of each participating policy of the participating fund, which is the value derived from the formula (W + X) − Y, where —
(A)W is the value of the expected future payments arising from the guaranteed benefits of the policy (including any expense that the insurer expects to incur in administering the policy and settling any claim against the policy);
(B)X is any provision for any adverse deviation from the expected experience; and
(C)Y is the value of future receipts arising from the policy; and
(b)B is the minimum condition liability of the participating fund.
(9)  A licensed insurer carrying on life business must calculate the reinsurers’ share of policy liabilities in respect of the policies of a non-participating fund mentioned in paragraph (7)(b), which is the value determined in the manner provided in regulation 20A(8) less the value determined in the manner provided in regulation 20(5).
(10)  A licensed insurer carrying on life business must calculate the reinsurers’ share of policy liabilities in respect of the policies of an investment-linked fund mentioned in paragraph (7)(c), which is the value determined in the manner provided in regulation 20A(8) less the value determined in the manner provided in regulation 20(5).
[S 845/2018 wef 01/01/2019]