APN 109-Company Takeovers Flashcards Preview

F202 Life Insurance Fellowship > APN 109-Company Takeovers > Flashcards

Flashcards in APN 109-Company Takeovers Deck (4)
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Describe the conflicts of interest involved in takeovers? (4)

• Takeover regulations make it clear the board of directors and advisers have to act in the best interest of shareholders

• In this context the statutory actuary who is also a director must consider carefully conflict bearing in mind their duties to the policyholder

• The financial advisory needs to be mindful of the conflicts of interests. This may require a independent actuary to provide a formal independent valuation of the company.

• Should there be a conflict of interest the actuary should seek advice from a professional body


Describe Requirements if an actuary involved in a takeover lacks experience? (3)

• If an actuary has a lack of experience with takeovers thy should seek co-operation and guidance of actuaries that do have

• Firms that wish to provide advice regarding takeovers needs to ensure that there is at least one person with good takeover regulation knowledge

• A takeover may involve policyholder reasonable expectations which are of an unusual nature. In this case an external actuarial advisor would be required to assist the HAF


Outline the discloure requirement of a takeover? (7)

• In accordance with takeover regulation actuaries can be identified as a source of advice

• Report on information in terms of methods and data such that shareholders can see the extent to which value can be sensitive to various assumptions

• Legal advisors are asked to verify sources of information to ensure quality

• Disclose of profit forecast requirements in accordance with takeover regulation

• The impact on SCR will also be an important consideration

• Shareholder needs to be given enough information such that they are aware of the vulnerabilities to which the valuation is subject

• In dealing with an agreed merger it may be necessary to produce actuarial valuation which is disclosed to shareholders (using assumptions which should be consistent)


List the information required in a formal opinion regarding the takeover? (9)

• Name of party instructing the actuary

• Terms of reference

• Statement of data used

• Statement that valuation has been made assuming the continuation of current management

• Statement of principle bases assumptions

• Statement indicating that actuary believes that assumptions are reasonable

• Statement describing allowance for tax and solvency capital

• A statement of resulting value i.e. three components of appraisal value

• A statement concerning key assumptions, variations in which would result in a significant change in value

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