• PINS Part 8.7 PINS Part 8.7 Recognition and measurement of assets and liabilities in respect of long term insurance business

    Editorial changes (as from 1 January 2015).

    • PINS 8.7.1 Application of Part 8.7

      This Part applies to assets and liabilities in respect of long term insurance business.

      Amended by QFCRA RM/2015-3 (as from 1st January 2016).

    • PINS 8.7.2 [Deleted]

      Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

    • PINS 8.7.3 [Deleted]

      Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

    • PINS 8.7.4 [Deleted]

      Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

    • PINS 8.7.5 [Deleted]

      Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

    • PINS 8.7.6 [Deleted]

      Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

    • PINS 8.7.7 [Deleted]

      Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

    • PINS 8.7.8 [Deleted]

      Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

    • PINS 8.7.9 Treatment of policy benefits due before solvency reference date

      An insurer must recognise as a liability the amount of policy benefits that are due for payment on or before the solvency reference date.

      Amended by QFCRA RM/2017-3 (as from 1st April 2017).

    • PINS 8.7.10 Treatment of net value of future policy benefits

      An insurer must recognise as a liability the net value of future policy benefits under policies that are in force as at the solvency reference date, taking into account all prospective liabilities as determined by the policy conditions for each existing contract, and taking credit for premiums payable after the solvency reference date.

      Amended by QFCRA RM/2017-3 (as from 1st April 2017).

    • PINS 8.7.11 Measuring net value of policy benefits as liability

      In measuring the liability mentioned in rule 8.7.10, the insurer must:

      (a) use actuarial principles;
      (b) provide for all liabilities based on assumptions that meet the general requirements for prudent assumptions in rule 8.8.1 (including appropriate margins for adverse deviation of relevant factors that are sufficient to ensure that there is no significant foreseeable risk that liabilities to policyholders for long-term insurance contracts will not be met as they fall due); and
      (c) take into account:
      (i) all guaranteed policy benefits, including guaranteed surrender values;
      (ii) vested, declared or allotted bonuses to which policyholders are al either collectively or individually contractually entitled;
      (iii) all options available to the policyholder under the terms of the contract;
      (iv) discretionary charges and deductions from policy benefits, in so far as they do not exceed the reasonable expectations of policyholders;
      (v) expenses, including commissions; and
      (vi) any rights under contracts of reinsurance in respect of long term insurance business.
      Amended by QFCRA RM/2013-1 (as from 1st January 2015).

    • PINS 8.7.12 Valuation of future payments

      Where this Part requires an insurer to recognise as a liability the value of expected future payments, that liability must be measured as the net present value of those expected future payments.

      Amended by QFCRA RM/2015-3 (as from 1st January 2016).

    • PINS 8.7.13 Valuation of future receipts

      Where this Part requires an insurer to recognise as an asset the value of expected future receipts, that asset must be measured as the net present value of those expected future receipts.

      Amended by QFCRA RM/2015-3 (as from 1st January 2016).

    • PINS 8.7.14 PINS 8.7.14 Limit of operation of rule 8.7.10

      PINS Rule 8.7.10 does not require an insurer to obtain a valuation by an actuary or actuaries performing the actuarial function of the liability referred to in that Rule, at a solvency reference date other than the insurer's annual reporting date.

      Amended by QFCRA RM/2015-3 (as from 1st January 2016).

      • PINS 8.7.14 Guidance

        An insurer conducting long term insurance business is required to provide a financial condition report on its insurance liabilities that is prepared by an actuary or actuaries who are performing the actuarial function. The relevant provisions are set out in pt 9.1.

        Amended by QFCRA RM/2013-1 (as from 1st January 2015).

    • PINS 8.7.15 Negative values for reserves — long-term insurance

      An insurer must not calculate a negative value for its mathematical reserves for a long-term insurance contract unless:

      (a) the calculation is based on assumptions that meet the general requirements for prudent assumptions in rule 8.8.1;
      (b) the contract does not have a guaranteed surrender value at the actuarial valuation date; and
      (c) the total mathematical reserves established by the insurer have a value of at least:
      (i) if the insurer's long-term insurance contracts include linked long-term contracts — the sum of the surrender values of all its linked long-term contracts at the actuarial valuation date; and
      (ii) in any other case — zero.
      Inserted by QFCRA RM/2013-1 (as from 1st January 2015).