Hong Kong Regulations

INSURANCE COMPANIES (DETERMINATION OF LONG TERM LIABILITIES) REGULATION - SECT 4

Determination of long term liabilities

(1) Subject to this Regulation, the amount of liabilities of an insurer in
respect of long term business shall be determined in accordance with generally
accepted accounting concepts, bases and policies or other generally accepted
methods appropriate for insurers.

(2) The determination of the amount of long term liabilities (other than
liabilities which have fallen due for payment before the valuation  date)
shall-

   (a)  be made on actuarial principles which have due regard to the
        reasonable expectations of policy holders;

   (b)  make proper provision for all liabilities on prudent assumptions that
        shall include appropriate margins for adverse deviation of the
        relevant factors; and

   (c)  take account of all prospective liabilities as determined by the
        policy conditions for each existing contract, taking credit for
        premiums payable after the valuation date.

(3) Without prejudice to the generality of subsections (1) and (2), the amount
of the long term liabilities shall be determined in compliance with each of
sections 5 to 16 and shall take into account, inter alia, the following
factors-

   (a)  all guaranteed benefits, including guaranteed surrender values;

   (b)  vested, declared or allotted bonuses to which policy holders are
        already either collectively or individually contractually entitled;

   (c)  all options available to the policy holder under the terms of the
        contract; and

   (d)  expenses, including commissions. (Enacted 1995)