| (Cap 41, section 59) [27 October 1995] L.N. 485 of 1995 (L.N. 328 of 1995) Cap 41F s 1 (Omitted as spent) (Omitted as spent) (Enacted 1995) Cap 41F s 2 Interpretation In this Regulation, unless the context otherwise requires- "deposit back arrangement" (回存安排), in relation to any contract of reinsurance, means an arrangement whereby an amount is deposited by the reinsurer with the cedant; "first calculation" (第一计算法) and "second calculation" (第二计算法) have the meaning given in section 4(1) to (3); "margin of solvency" (偿付准备金) means the excess of the value of an insurer's assets over the amount of its liabilities; "mathematical reserves" (数理储备金) means the provision made by an insurer to cover liabilities (excluding liabilities which have fallen due and liabilities arising from deposit back arrangements) arising under or in connection with contracts for long term business; "pure reinsurer" (纯再保险人) means an insurer whose insurance business is restricted to reinsurance; "required margin of solvency" (规定偿付准备金) means a margin of solvency the amount of which shall constitute the amount to be prescribed or determined for the purposes of section 8(3)(a)(ii)(B) and (iii)(B) of the Ordinance. (Enacted 1995) Cap 41F s 3 Determination of margins of solvency (1) Where an insurer carries on long term business and owing to the nature of that business more than one margin of solvency is produced in respect of that business by the operation of this Regulation, the margins in question shall be aggregated as regards the insurer in order to arrive at the insurer's required margin of solvency for long term business. (2) The amount of liabilities of an insurer arising under or in connection with contracts for long term business for the purpose of calculating the required margin of solvency shall be determined in accordance with the Insurance Companies (Determination of Long Term Liabilities) Regulation (Cap 41 sub. leg.). (Enacted 1995) Cap 41F s 4 Long term classes A and B (1) For long term business of class A or B, the required margin of solvency shall be determined by taking the aggregate of the results arrived at by applying the calculation described in subsection (2) ("the first calculation") and the calculation described in subsections (3), (4), (5), (6) and (7) ("the second calculation"). (2) For the first calculation- (a) there shall be taken a sum equal to 4% of the mathematical reserves for direct business and reinsurance acceptances without any deduction for reinsurance cessions; (b) the amount of the mathematical reserves at the end of the last preceding financial year after the deduction of reinsurance cessions shall be expressed as a percentage of the amount of such mathematical reserves before any such deduction; and (c) the sum mentioned in paragraph (a) shall be multiplied- (i) where the percentage arrived at under paragraph (b) is greater than 85% (or, in the case of a pure reinsurer, 50%), by that greater percentage; and (ii) in any other case, by 85% (or, in the case of a pure reinsurer, 50%).(3) For the second calculation- (a) there shall be taken, subject to subsections (4), (5), (6) and (7), a sum equal to 0.3% of the capital at risk for contracts on which the capital at risk is not a negative figure; (b) the amount of the capital at risk at the end of the last preceding financial year for contracts on which the capital at risk is not a negative figure, after the deduction of reinsurance cessions, shall be expressed as a percentage of the amount of that capital at risk before any such deduction; and (c) the sum arrived at under paragraph (a) shall be multiplied- (i) where the percentage arrived at under paragraph (b) is greater than 50%, by that greater percentage; and (ii) in any other case, by 50%.(4) Subject to subsections (5), (6) and (7), the percentage to be taken for the purposes of subsection (3)(a) shall be- (a) zero for the financial year immediately preceding 1 January 1996; and (b) 0.1% for the financial year immediately preceding 1 January 1997; and (c) 0.2% for the financial year immediately preceding 1 January 1998.(5) Where, in a case other than that of a pure reinsurer, a contract provides for benefits payable only on death within a specified period and is valid for a period of not more than 3 years from the date when the contract was first made, the percentage to be taken for the purposes of subsection (3)(a) shall be 0.1%; and where the period of validity from that date is more than 3 years but not more than 5 years, the percentage to be so taken shall be 0.15%. (6) For the purposes of subsection (5), the period of validity of the contract evidencing a group policy is the period from the date when the premium rates under the contract were last reviewed for which the premium rates are guaranteed. (7) In the case of pure reinsurers, the percentage to be taken for the purposes of subsection (3)(a) shall be 0.1%. |
