Guidance Note on Actuarial Valuations

Summary

This guidance note sets out the minimum information the Guernsey Financial Services Commission expects to see in an actuarial valuation report submitted as part of a life insurer's annual regulatory returns under the Insurance Business (Bailiwick of Guernsey) Law, 2002. It applies to all Guernsey licensed life assurance companies and branches, other than non-Guernsey insurers writing policies solely on the lives of Guernsey residents. The guidance does not replace professional actuarial standards issued by the Institute and Faculty of Actuaries and does not prevent the Actuary from providing additional information.

• Compliance certificate: Actuaries who are members of the UK Institute and Faculty of Actuaries should state in the valuation report whether they have complied with Actuarial Practice Standard APS X1, using the specified certificate wording; members of other actuarial bodies should state compliance with any other applicable professional or technical standards.
• Policy details: Include a summary of all policy types in force, explicit charges (including fund management charges), premium conditions, options/guarantees, and data quality checks.
• Business in force: Provide a summary of business in force by policy type, including number of policies, premiums in force and, where relevant, sums assured.
• Assets and reassurance: Summarise assets matching policyholder liabilities and shareholder funds (including counterparty names for bonds/deposits) and details of reassurance arrangements (retention limits, treaty type, reassurer names).
• Experience, methodology and basis: Disclose relevant mortality, morbidity or persistency investigations; describe the valuation methodology (including any closure-to-new-business allowance, actuarial funding, derivative treatment and negative reserves); and give full details of the valuation basis (expenses, interest, unit growth, discount rate, inflation and mortality/morbidity assumptions).
• Valuation result and solvency: State the calculated surplus and its distribution to shareholders and policyholders, and compare regulatory capital resources against the Minimum Capital Requirement and Prescribed Capital Requirement.

The guidance is dated 1 January 2018 and does not specify a separate compliance deadline beyond alignment with the existing annual regulatory return filing cycle under the Insurance Business Law.

Key obligations

• Valuation reports submitted as part of annual regulatory returns must contain the minimum information items listed (policy details, business in force, assets, reassurance, claims/persistency experience, valuation methodology, basis, result, asset/liability matching, and solvency capital requirement comparison).
• Actuaries who are members of the UK Institute and Faculty of Actuaries must state in the valuation report whether they have complied with APS X1, using the specified certificate wording, or disclose compliance with equivalent standards if members of another professional actuarial body.
• Companies must include details of steps taken to ensure all policies are included in the valuation and that data is accurate.
• Companies must disclose treatment of derivative assets and any credit taken for negative reserves in the valuation methodology.
• Companies must show a comparison of regulatory capital resources against the Minimum Capital Requirement and Prescribed Capital Requirement.

Applies to

Guernsey licensed life assurance companies and branches