Rules and Statement of Guidance - Actuarial Valuations (December 2019)

Summary

This CIMA measure sets out Rules and a Statement of Guidance governing the preparation, structure, content and submission of actuarial valuation reports required from insurers under Section 9(1) of the Insurance Law, 2010. It applies to insurers licensed under the Insurance Law, 2010, except Class C insurers and Class B insurers that do not write long-term business (unless CIMA has specifically imposed a reporting requirement on them), and to insurers granted a written exemption by the Authority. The Rules and Guidance came into effect immediately upon issuance in December 2019.

The document requires that a report be prepared annually by an actuary approved by CIMA, covering the insurer's assets and liabilities including loss and loss expense provisions, and submitted to the Authority within six months of the licensee's financial year end.

• Minimum content requirements: The report must include an executive summary, actuary credentials and independence declarations, data structuring by homogeneous lines of business, disclosure of accounting regime and methodology, peer review procedures, and comparative analysis in subsequent years.
• Ongoing communication obligations: Regulated entities must communicate on an ongoing basis with CIMA regarding changes to actuarial arrangements and matters affecting valuation quality.

Non-compliance is subject to CIMA's Enforcement Manual policies and procedures, as well as other powers available under the Insurance Law, 2010 and the Monetary Authority Law.

Key obligations

• Insurers (other than exempt Class B/C insurers) must submit to CIMA an actuarial valuation of assets and liabilities, including loss and loss expense provisions, certified by a CIMA-approved actuary, within six months of the insurer's financial year end.
• A report must be prepared by the actuary every annual financial cycle and additionally when directed by the Authority following major structural or operational changes to the licensee's business.
• The valuation report must include an executive summary containing key conclusions, including the excess of assets over liabilities and a comparison to the prescribed capital requirement.
• The appointed actuary must document required information including purpose of investigation, limitations, and verify the licensee's compliance with communication obligations in sections 7.1 and 7.2.
• The appointed actuary must disclose name, professional credentials, good standing, and whether engaged as an employed or consulting actuary; a peer reviewing actuary must also be nominated.
• If the appointed actuary lacks sufficient experience for certain lines of business, the report must be counter-signed by a secondary actuary with the necessary expertise.
• The peer reviewing actuary must formally communicate to CIMA the key steps taken to confirm the appointed actuary followed acceptable professional approaches, and confirm compliance with the Rules and Guidance.
• The regulated entity must notify CIMA in writing of any changes to its actuarial arrangements, including termination of an actuary (name, date, reason, and succession plans).
• The regulated entity must disclose to CIMA any matter that could impact the quality or validity of the actuarial valuation results.
• Beginning with the second year's report after the effective date of the Rules, the actuary must present a detailed comparison and variance analysis between current and prior year reports.
• The report must present gross, ceded and net-of-ceded data for specified items (e.g., policyholder reserves, surrenders, bonus payments, paid claims, IBNR reserves, premiums).

Applies to

insurers licensed under the Insurance Law, 2010, actuaries approved by CIMA (appointed and peer reviewing actuaries)

Deadlines

• within six months of the end of the insurer's financial year: Insurers must submit the actuarial valuation report (annual return) to CIMA.
• immediately (December 2019): The Rules and Statement of Guidance came into effect immediately upon issuance.
• beginning the second year for which the actuary submits a valuation report following the effective date of these Rules and Guidance: Actuary must present a detailed comparison and variance analysis with the prior year's report.