APN 108-Transfer of long-term business of licenced insurer -Role of independent actuary Flashcards Preview

F202 Life Insurance Fellowship > APN 108-Transfer of long-term business of licenced insurer -Role of independent actuary > Flashcards

Flashcards in APN 108-Transfer of long-term business of licenced insurer -Role of independent actuary Deck (5)
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1

Describe the consideration of the independent actuary before accepting appointment? (4)

• Consider where he/she has relevant practical knowledge and experience (including knowledge of roles and responsibilities of the actuarial function)

• In the case of a composite insurer writing both life and non-life business the independent actuary will need to understand the relevance of non-life business to security of life insurance policyholders

• Disclose to all parties direct or indirect interest he/she may have with either insurer.

• Independent actuary needs to ensure appropriate safeguards to ensure independence where he/she has done work for either party previously

2

Describe the contents that would ussually be required to be included in the independents actuaries brief regarding appoint through the PA vs. parties involved in the transaction? (8)

If appointed by the prudential authority the independent actuary should request for a brief which should include the terms and reference of the appointment. In this case:
• View of desirability of the transaction e.g. financial soundness and implications on policyholders
• Address at least specific issues contained in the brief
• Termination of duties prior completion would require reasons

If appointed by one or more parties to the proposed scheme (and not PA) a brief should be requested from the appointing parties:
• Primary accountabilities must be clearly stated in the brief
• Address at least specific issues contained in the brief
• Establish if PA want to draw attention to any specific issues
• Ensure brief include provisions ensuring not denied access to material information
• Termination should be reported to the PA

3

Outline the involvement of the independent actuary in transaction? (7)

• Actively seek terms and provisions of the proposed scheme to determine if there are any reservations

• The independent actuary should communicate with the HAFs of all insurers involved and consider their reports regarding financial soundness of the proposed scheme

• Attend a meeting with policyholders arranged by management

• Independent specialist advice needs to be evaluated for completeness and the independent actuary needs to understand the implications of his/her view and report

• Consultation with the previous HAF may be required

• Operational plans of the insurer should be considered

• Consider whether the tax position impact has been considered

4

List various sources of information that may be considered in evaluation of the proposed scheme? (12)

o Memorandum and articles of association, latest annual financial statements and regulatory returns
o Reports submitted by the HAF to board of directors
o Latest ORSA report
o Polices for managing risk ALM, credit, investment, underwriting and reinsurance
o Reports on policyholder reasonable expectations
o Bases used as illustration for future benefits
o Composition of a portfolio of assets to be transferred and appropriateness relative to liabilities
o Reports evaluating alternative schemes
o Proposed schemes involving transfer of business, any reports regarding the transferee to absorb the business transferred
o Correspondence with an regulatory authority
o Reinsurance, sale or amalgamation agreements
o Proposed communication with the policyholders

5

List the contents of the independent actuaries report? (15)

o Name of independent actuary and who is bearing costs
o Qualifications
o Direct or indirect interest with any parties
o Scope of the report
o Purpose of the proposed scheme
o Summary of terms of the proposed scheme
o Information documents and reports considered (any info not provided)
o Effect on financial soundness
o Tax consequences and effect on policyholder benefits
o Security of policyholder benefits
o Effect on rights of policyholders to participate in profits and compensation provided
o Safeguards preventing adverse impact from determination of bonuses, surrender values and discretionary charges after proposed scheme
o Impact on investment management, new business strategy, administration, expense levels and valuation bases
o Impact on proprietary rights of policyholder of mutual and compensation provided
o Impact on reasonable benefit expectations and whether it is equitable to all policyholder generations

Decks in F202 Life Insurance Fellowship Class (34):