Hong Kong Regulations

INSURANCE COMPANIES (MARGIN OF SOLVENCY) REGULATION - SECT 5

Long term class C

(1) For long term business of class C, the required margin of  solvency shall
be determined in accordance with subsections (2) to (5).

(2) In so far as an insurer bears an investment risk, the first  calculation
shall be applied.

(3) In so far as-

   (a)  an insurer bears no investment risk;

   (b)  the total expired and unexpired term of the relevant contract exceeds
        5 years; and

   (c)  the allocation to cover management expenses in the relevant contract
        has a fixed upper limit which is effective as a limit for a period
        exceeding 5 years, the first calculation shall be applied, but as if
        section 4(2)(a) contained a reference to 1% instead of 4%.

(4) If neither subsection (2) nor (3) applies, then, subject to subsection
(5), the required margin of solvency is zero.

(5) Where an insurer covers a death risk, a sum arrived at by applying
the second calculation (section 4(5) and (6) being disregarded) shall be added
to any required margin of solvency, including a required  margin of solvency
of zero, arrived at under subsection (2), (3) or (4). (Enacted 1995)