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1、 Heng An Standard Life, 2006. All rights reserved,1,EV DisclosureSandy Reid BSc (Hons) FFA Chief Actuary Heng An Standard Life, Heng An Standard Life, 2006. All rights reserved,2,EV Disclosure,Who needs to disclose? When do I need to do it? What do I need to disclose? Which areas may cause me diffic
2、ulties/concern? Where do I start? How can I cope?, Heng An Standard Life, 2006. All rights reserved,3,Disclosure CIRC Regulation 200583,Who needs to disclose? All Life, Pension & Health Insurance Companies operating in China Only exemptions are companies for whom the following 2 conditions are both
3、met i) In Business less than 3 years ii) Premium Income in last year below 200 Million RMB if i) and ii) both met, dont have to submit an EV report, Heng An Standard Life, 2006. All rights reserved,4,Disclosure CIRC Regulation 200583,When do I need to do it? Before 1st July 2006 for 2005 year-end Em
4、bedded Value report For 2006 y/e EV report and onwards, by 30th April each year.,100 days left!, Heng An Standard Life, 2006. All rights reserved,5,Disclosure The Guidelines,Sections 64 to 72 of the Guidelines cover “Disclosure” Applies to the EV reports submitted to the CIRC EV result calculated/su
5、bmitted at company level At least once a year Aim of the disclosures Understand the movement over the period Understand the main risks and how they influence the results Enable comparisons with other companies Determine the credibility of the results, Heng An Standard Life, 2006. All rights reserved
6、,6,What do I need to Disclose? (Minimum),Calculated Results - “the numbers” Free Surplus Required Capital VIF Embedded Value Value of New Business Methodology - “the approach” Overview of Covered Business Participating Approach Cost of Capital Approach New Business Approach Approach to Expenses and
7、future pattern, Heng An Standard Life, 2006. All rights reserved,7,What do I need to Disclose? (Minimum),Assumptions Earning rate, RDR Asset allocation Mortality/Morbidity Lapses & Expenses + The basis for the derivation of the above + Reasons for changes Analysis of Change in EV see Final Session S
8、ensitivities As Prescribed in Regs Variations in Earning Rate, RDR Expenses, Heng An Standard Life, 2006. All rights reserved,8,Disclosure - Sign Off/Other,No external Audit Opinion required Sign Off by Company Signing Actuary to confirm EV Report: “reasonable, true, no major omissions” Calculated R
9、esults disclosed to Public should be same as those in this report, if not, explain to CIRC Aggregate Results for industry may be published by CIRC, company identity not disclosed, Heng An Standard Life, 2006. All rights reserved,9,What Areas Cause Me Difficulties/Concern?,Many? Where do I Start? How
10、 do I cope?, Heng An Standard Life, 2006. All rights reserved,10,Some Comfort,This is new to many of us Including CIRC First step down the road to a more transparent, professional industry in China Only need to calculate Opening EV! (and document all methodology, assumptions, sensitivities), Heng An
11、 Standard Life, 2006. All rights reserved,11,Some Comfort,CIRC will review initial results may discuss teething issues with EV task force in Autumn For 2006 y/e EV, many companies may choose to re-state their 2005 y/e EV before performing their Analysis of Change, Heng An Standard Life, 2006. All ri
12、ghts reserved,12,Example - Disclosure,The EV task force committee has developed a simple model to illustrate the disclosure requirements A guide to help you, no one correct approach., Heng An Standard Life, 2006. All rights reserved,13,Example - Background,In this example, the company commenced writ
13、ing business at the start of 2001. The company sells three simple products only: Non Participating Endowment (Regular Premium) Participating Whole Life (Regular Premium) Participating Bancassurance Endowment (Single Premium), Heng An Standard Life, 2006. All rights reserved,14,Example - Assumptions,
14、 Heng An Standard Life, 2006. All rights reserved,15,Example Disclosure Calculated Results at 31st Dec 2004,See also Analysis of Change, Line 17, in next session - split between Net Worth and VIF, Heng An Standard Life, 2006. All rights reserved,16,Example Disclosure - Methodology,The value of the i
15、n-force and one years new business are calculated as the present value of the projected stream of future after tax distributable profits for the existing business in-force at the valuation date and for one years new business respectively. Distributable profits are those profits arising after allowan
16、ce for the policy reserves on the required PRC statutory reserving basis and after allowance for solvency margins at 100% of the required regulatory minimum level. The values calculated have been determined using a deterministic discounted cash flow methodology. This methodology makes implicit allowance for the cost of investment guarantees and policyholder options, asset/liability mismatch risk, credit risk and the economic cost of capital through the use of a risk-adjusted discount rate.,
