TaxTMI 
TaxTMI 
International Financial Services Centres Authority (Assets, Liabilities, Solvency Margin and Abstract of Actuarial Report for Life Insurance Business) Regulations, 2023
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....Solvency Margin and Abstract of Actuarial Report for Life Insurance Business) Regulations, 2023. (2) They shall come into force on the date of their publication in the Official Gazette. CHAPTER - I INTRODUCTION 2. Applicability These regulations shall be applicable to International Financial Service Centre Insurance Offices (IIOs), undertaking life insurance business. Provided that for an IIO set up in an unincorporated form, solvency margin and related requirements under these regulations shall not be applicable and such IIO shall comply with related requirement as stipulated under sub-regulation (4) of regulation 17 of the IFSCA (Registration of Insurance Business) Regulations, 2021 Provided however that the reporting formats specified under these regulations shall continue to be applicable for such IIOs. 3. Objective - These regulations aim to specify the requirements related to capital, solvency and submission of abstract of actuarial report by an IIO for undertaking Life Insurance Business. 4. Definitions (1) In these regulations, unless the context otherwise requires- (a) 'Act' means the International Financial Services Ce....
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....may become payable either absolutely or contingently; (m) 'non-par policies' or 'policies without participation in profits' means policies which are not entitled for any share in surplus (profits) during the term of the policy; (n) 'options' means the rights available to a policyholder under a policy; (o) 'par policies' or 'policies with participation in profits' means polices which are not non-par policies; (p) 'policies with deferred participation in profits' means polices entitled for participation in profits after a certain period from the date of commencement of the policy; (q) 'premium term' means the period during which premiums are payable; (r) 'riders' or 'rider benefits' means add-on benefits which are in addition to basic benefits under a policy; (s) 'sum at risk', in relation to a life insurance policy, means: (i) the amount payable, in any case in which an amount is payable on death or any other contingencies covered, in a manner other than as in clause (ii) below, (ii) the present value of the benefit, where the benefit under the policy in question consists of making payment of annuity, i....
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....ication or interpretations of the provisions of these regulations, the Authority may issue clarifications through guidance notes or circulars. (2) On an application received along with the specified non-refundable processing fees, the Authority may, for the reasons to be recorded in writing, relax the strict enforcement of any of the provisions of these regulations. 9. Non-applicability of certain regulations and savings- (1) On and from the commencement of these regulations, the Insurance Regulatory and Development Authority of India (Assets, Liabilities, and Solvency Margin of Life Insurance Business) Regulations 2016, Insurance Regulatory and Development Authority of India (Actuarial Report and Abstract for Life Insurance Business) Regulations, 2016 and the circulars or guidelines issued thereunder, shall cease to apply in International Financial Services Centres. (2) Notwithstanding anything contained in sub-regulation (1), anything done or any action taken or purported to have been done or taken under the regulations, circulars or guidelines mentioned in sub-regulation (1), before the commencement of these regulations, shall be deemed to have been....
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....** D Total Investments as per audited BS (A+B+C) E Inadmissible investment assets identified under clause (1) of Schedule- I Fixed assets F Fixed assets as per audited BS G Inadmissible Fixed assets identified under clause (1) of Schedule- I Current Assets H Cash & Bank Balances as per audited BS I Advances and Other assets as per audited BS J Total Current Assets as per audited BS = (H) + (I) K Inadmissible Current assets identified under clause (1) of Schedule- I L Policy Loans as per audited BS M Fair Value Change Account subject to minimum of zero N Total Assets as per audited BS (N) = (D) + (F) + (J) + (L) O Total Inadmissible assets (O) = (E) + (G) + (K) + (M) &nbs....
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.... contingencies under which any premiums or benefits may be payable under the policy, as determined by the policy conditions. The level of benefits, which may be payable under the policy, shall take into account various factors including but not limited to the reasonable expectations of policyholders (with regard to bonuses, including terminal bonuses, if any) and any established practices of an insurer for payment of benefits. (c) The valuation method shall take into account the cost of any options and guarantees that may be available to the policyholder under the terms of the insurance policy. (d) The determination of the amount of liability under each policy shall be based on prudent assumptions of all relevant parameters. The value of each such parameter shall be based on the insurer's expected experience and shall include an appropriate margin for adverse deviations (hereinafter referred to as 'MAD') that may result in an increase in the amount of mathematical reserves. (e) The amount of mathematical reserve in respect of a policy, determined in accordance with clause 2(1)(d) hereinabove, may be negative (called 'negative reserves') or less than the s....
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....onuses (one year after valuation date) including terminal bonuses (consistent with the valuation rate of interest); (b) commission and remuneration payable, if any, in respect of a policy (this shall be based on current practice of the insurer). No allowance shall be made for non-payment of commission in respect of orphaned policies. (c) policy maintenance expenses, if any, in respect of a policy, as provided under clause 2(4)(c) herein; (d) allocation of profit to shareholders, if any, where there is a specified relationship between profits attributable to shareholders and the bonus rates declared for policyholders Provided that allowance must be made for tax, if any. (3) Policy Options and Guarantees: Where a policy provides built-in options that may be exercised by the policyholder, such as conversion or addition of coverage at future date(s) without any evidence of good health, or guarantees, such as annuity rate guarantees at maturity of insurance policy, investment guarantees etc., the costs of such options or guarantees shall be estimated and treated as special cash flows in calculating the mathematical reserves. ....
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....the yields from existing assets attributable to blocks of life insurance business, and the yields which the insurer is expected to obtain from the sums to be invested in the future, and such assessment shall take into account- a. the composition of assets supporting the liabilities, expected cash flows from the investments on hand, the cash flows from the block of policies to be valued, the likely future investment conditions and the reinvestment and disinvestment strategy to be employed in dealing with the future net cash flows; b. the risks associated with investment in regard to receipt of income on such investment or repayment of principal; c. the expenses associated with the investment functions of the insurer; (ii) shall not be higher than, for the calculation of present value of policy cash flows in respect of a particular category of insurance policies, the yields on assets maintained for the purpose of such category of contacts; (iii) in respect of non-participating business, shall recognize the risk of decline in the future interest rates; (iv) in respect of participating business, shall be based on the assumption (wit....
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....ve residual additions, if any, Explanation: the computation methodology to be adopted for computation of non-negative residual additions shall be as specified by the Authority from time to time. (vii) Any future negative cash flow shall be appropriately provided for by setting up reserves; and negative reserves, if any, shall be set to zero. Explanation: General (non-unit) fund reserve under unit linked policies shall be considered as reserve for non-linked non-participating business for the purpose of investment norms, distribution of surplus etc. (6) Additional Requirements for Variable Linked Business: (a) Reserve in respect of variable linked business shall consist of two components, namely, policy account reserves and general fund reserves. (b) Policy account reserves shall be the balance in Policy Account on the date of valuation. (c) General fund reserves shall be determined using discounted cash flow method, which shall take into account of the following, namely:- (i) Premiums, if any, payable in future; (ii) Death benefits, if any, provided by the general fund (over and above the value of poli....
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.... policyholders. Explanation: General Fund Reserves under Variable Non-linked Participating and Non- Participating Business shall be considered as reserve for the purpose of investment norms, distribution of surplus etc. for the respective businesses. (8) Additional Requirements for Provisions : The Appointed Actuary shall make aggregate provisions in following cases, where it is not possible to calculate mathematical reserves for each policy, in the determination of mathematical reserves:- (a) Policies in respect of which extra premiums have been charged on account of underwriting of substandard lives that are subject to extra risks such as occupation hazard, over-weight, underweight, smoking history, health, climatic or geographical conditions; (b) Lapsed policies not included in the valuation but under which a liability exists or may arise; (c) Options available under individual and group insurance policies; (d) Guarantees available to individual and group insurance policies; (e) The rates of exchange at which benefits in respect of policies issued in foreign currencies have been converted into Indian Rupees and what ....
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....; 2 3 4 5 Total Note: 1. Factor A and B for classes of business are as follows: Category Division Factor A Factor B* (other than annuity) Non Linked Individual 3.00% 0.30% Non Linked Group 1.00% 0.10% Linked With Guarantees 1.50% 0.20% Linked Without Guarantees 0.50% 0.20% *Factor B shall be at 0% for all annuity business 2. The Authority shall revise the Factors A and B through the issuance of circulars as and when required. 3. RSM 1 = ((Higher of Mathematical Reserves after Reinsurance or Mathematical Reserves before Reinsurance)*0.85)*Factor A + ((Higher of Sum at Risk after Reinsurance or Sum at Risk before Reinsurance)*0.5) * Factor B ....
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.... otherwise specified by the Authority * This total shall be equal to the Total Assets excluding Total Inadmissible assets as reflected at (P) in statement ALSM-L-A Certification We certify that the statement has been prepared in accordance with Schedule-III of the International Financial Services Centres Authority (Assets, Liabilities, Solvency Margin and Abstract of Actuarial Report for Life Insurance Business) Regulations, 2023. Name: Place: Chief Financial Officer Appointed Actuary Statutory Auditor Principal Officer FORM ALSM-L-SM3 SOLVENCY RATIO As on 31stMarch 20XX (All amounts in USD mn) Name of IIO: Registration Number: Item Description Notes No. Value 01 Available Assets in Policyholders' Fund: 1 Deduct: ....