Long-Term Insurance Business Liabilities


In accordance with 6.2 to 6.4, the determination of the amount of long-term insurance liabilities (other than liabilities which have fallen due for payment before the valuation date) must be made in accordance with generally accepted actuarial principles and have due regard to the reasonable expectations of policyholders and make proper provision for all liabilities on prudent assumptions that include appropriate margins for adverse deviation.


The determination referred to in 6.1 must 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.


Without prejudice to the generality of 6.1, the amount of the long-term insurance liabilities must be determined in compliance with 7 to 16 and must take into account at least the following factors:

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

(2) declared bonuses to which policyholders are already contractually entitled;

(3) all options available to the policyholders under the terms of the contract;

(4) discretionary charges and deductions;

(5) expenses, including commissions; and

(6) any rights under contracts of reinsurance in respect of long-term insurance business.


The determination referred to in 6.1 must take into account the nature and term of the assets representing those liabilities and the value placed upon them and must include prudent provision against the effects of possible future changes in the value of the assets on:

(1) the ability of the firm to meet its obligations arising under contracts for long-term insurance business as they arise; and

(2) the adequacy of the assets to meet the liabilities as determined in accordance with 7 to 16.