Hong Kong Regulations

INSURANCE COMPANIES (DETERMINATION OF LONG TERM LIABILITIES) REGULATION - SECT 12

Expenses

(1) Provision for expenses, whether implicit or explicit, shall be not less
than the amount required, on prudent assumptions, to meet the total net cost,
after taking account of the effect of taxation, that would be likely to be
incurred in fulfilling contracts if the insurer were to cease to transact new
business 12 months after the valuation date.

(2) The provision mentioned in subsection (1) shall have regard to, among
other things, the insurer's actual expenses in the last 12 months before the
valuation date and to the effects of inflation on future expenses on prudent
assumptions as to the future rates of increase in prices and earnings.
(Enacted 1995)