Trends and Developments in Potential Financial Reporting Requirement in China（13页）.ppt

Agenda
A quick review of insurance financial reporting regulation in China
Recent discussion/updates of financial reporting
Projection of the development
Review of the history
1984 PICC accounting principle (PICC)
1993 Insurance Enterprises Accounting regulation (MOF)
1998 Insurance Company Accounting Regulation (MOF)
1999 First identify calculation method of life insurance liability (CIRC)
1999 First China Mortality table officially implemented
2002 Financial report on par and unit-liked business (CIRC)
2002 Specific detailed requirements on annual financial report (CIRC)
2003  Solvency requirement (CIRC)
2003 Valuation of non-traditional products (Par, unit-linked, & UL) (CIRC)
2004 Insurance Guaranteed fund regulation (CIRC)
2004 Solvency report detailed requirements (CIRC)
2004 Broker financial reporting (CIRC)
2005 Annual actuarial report--Comprehensive financial reporting for life insurance companies (CIRC)
2005 Non-life insurance reserve regulation implemented (CIRC)
2006 Life insurance Embedded Value principle (CIRC)
2006 Updated Enterprises Accounting Principle (MOF)
Current Implementation
Liability valuation – Life Insurance
Regulation
1999 (Jun) Notification of Actuarial regulation
2003 (May) Notification of Actuarial regulation on non-traditional products
2004 (Dec) Insurance Companies Non-life business reserve regulation
2005 (Jan) Notification of Actuarial Report Regulation
Implementation
Prospective method (1999)
Policy basis (1999)
Calculation method
A&H reserve  similar to P&C (2004)
Long-term life policy: FPT & revised net level premium (1999)
Deficiency reserve requirement (1999)
Valuation should not be less than CSV (1999)
Claim reserve (2004)
Assumption
Max valuation interest rate (1999)
mortality & morbidity requirements (2005)
Dividend booking and reserve (2003)
Assets valuation on unit-linked products (2003)
Current Implementation
Liability Valuation – P&C
Regulation
2004 (Dec) Insurance Companies Non-life business reserve regulation
Implementation
Un-earned premium: 1/24 method or 1/365 method
Deficiency reserve should be considered
Claim reserve:
Reported claims: case basis
IBNR, at least 2 form listed 4 methods
Claim expense reserve
Valuation report should be submitted regularly
Current Implementation
Specified non-traditional products
Regulation
2000 (Feb) par insurance provisional regulation
2000 (Feb) Unit-linked insurance provisional regulation
Implementation
Insurance companies should submit specific financial reporting to CIRC on par insurance, including balance sheet, income statement, allocation of revenues & expenses, etc. The report should be signed off by appointed actuary, and audited by registered auditor
Ins companies should submit annual par insurance financial report to CIRC before Apr 1, every year
Insurance companies should submit annual financial report on investment account of unit-linked products to CIRC before the end of each Mar
Current Implementation
Solvency requirement
Regulation
2003 (Mar) Insurance Companies’ solvency Margin and regulatory index regulation
2005 Solvency report guide principles (No 1-9)
2006 (Feb) Notification of Editing the solvency report on 2005
Implementation
P&C companies: max of the below 2:
18%*min (net prem after reins last year – prem tax, 100M) + 16%*max (net prem after reins last year-prem tax-100M, 0)
26%*min (average claim payment of recent 3 years, 70M) + 23%*max (average claim payment of recent 3 years – 70M, 0)
Life companies: