Domestic Insurance Business Regulations 2009

[2nd February 2009] Supplement to Official Gazette 97 S.l. 19 of 2009 INSURANCE ACT, 2008 (Act 11 012008) Insurance (Domestic Insurance Business) Regulations, 2009 In exercise of the powers conferred by section 124 of the Insurance Act, 2008, the Minister of Finance makes the following Regulations - .

1. These Regulations may be cited as the Insurance (Domestic Insurance Business) Regulations, 2009.
2. In these Regulations- "approved investments or approved. securities" means those approved investments or approved securities listed in regulation 4; "financial year" means the year in respect of which the accounts of a licensed insurer are made up, and where by reason of an alteration of the date on which the financial year of a licensed insurer terminates. the accounts have been made up for a lesser period, that lesser period shall be deemed to be the financial year; "Government" means the Government of the Republic of Seychelles; "Government securities" includes- (a) debentures, stocks, bonds, Treasury Bills and notes; and (b) any right or option in. respect of any such Citation . Interpretation

98 Supplement to Official Gazette [2nd February 2009] Act 12 of2004 Act 8 of2007 Act 8 of2007 Longteim and general insurance Fund debentures, stocks, bonds, Treasury Bills and notes, issu~d by the Central Bank under the Central Bank of Seychelles Act, 2004 on behalf of the Government or a foreign government approved by the Minister responsible for Finance; . "licensed insurer" means an insurer licensed by the Authority; "securities" has the meaning given to it under the Securities Act, 2007;. . "Seychelles Securities Exchange" has the meaning given to it underthe Securities Act, 2007. 3.( I) Subjectto subregulation (3), a licensed insurer shall invest and keep invested assets of the long term insurance fund to an amount equivalent to not lessthan the sum of- (a) the amount of its liabilities to holders in Seychelles of long term Insurance policies on account of matured claims; and (b) the amount required to meet its liabilities on long term insurance pplicies maturing for payment in Seychelles, less-"- (i) any amount of premiums which have fallen due to the long term insurer on those policies, but have not been paid and the days of grace for payment of which have not expired; and any amount due to the long term insurer for loans granted on, and within the surrender values of policies oflong term insurance maturing for payment in Seychelles, issued by that insurer or by (ii)

[2nd February 2009] Supplement to Official Gazette 99 another insurer, the business of which, the long term insurer has acquired and in respect of which that long term insurer has as.sumedliability. (2) Subject to subregulation (3), a licensed insurer shall invest and keep invested the assets of the general insurance fund to an amount not less than 40 per cent of the amount of premiums which have fallen due to the licensed insurer on such policies at the end ofthe preceding financial year, whether paid or not yet paid. (3) A licensed insurer shall invest and keep invested at least 50 per cent of the amount of the assets of the long term or general insurance fund in approved investments or approved . securities,withinSeychelles. (4) The investments required to be made under subregulations (1) and (2) shall be made in accordance with regulations 4 and 5.. . 4. A licensed insurer shall not invest or keep invested any part of its insurance fund otherwise than in any of the followirig approved inve.stmentsor approved securities- (a) Government securities; Approved invesrinents or approved securities (b) securities . Iisted on a Seychelles Securities h . . . Act 8'0f2007 Exc ange, or recogmsed overseas secuntles exchange as defined ;by the Securities Act, 2007; (c) immovable properties; (d) first mortgages on immovable property: Provided that- (i) the property mortgaged is not leasehold

100 Supplement to Official Gazette [2nd February 2009] Investment outside approved investments or approved securities (ii) propertywith an outstandingterm of less than30years;and . the value of the property exceeds by one￾third, or if .it. consists of buildings, exceeds by one-half, the mortgage money; G (e) first mortgages on immovable property situated in Seychelles under any housing or building scheme of the licensed insurer; (t) fixed deposits or current deposits with a commercial bank; (g) loans on life interests, or on policies of life insurance within their surrender values issued by the licensed insurer or by another insurer; ,(h) such other investments as the Authority may, . . by order published in the Gazette declare to be. approved investments or approved securities for the purposes ofthese regulations. .. 5. Notwithstanding regulation 4, a licensed insurer may invest or keep invested any part of the assets of its insurance funds in investments or securities other than the appro.ved investments or approved securities listed in that regulation: Prov ided that- (a) such investments do not exceed 10 per cent of the assets ofthe insurer; (b) such investments and their continuation are done with the consent ofal! the directors of the Iicensed insurer; and (c) such investments, including investments in ..

[2nd February 2009] Supplement to Official Gazette 101 which a director has an interest, are reported without delay to the Authority with full details of investments and the extent of the director's interest in any such investments. 6. In computing the assets referred to in regulation 3(1 ) and (2) ~ (a) an investment made in a currency other than .the Seychellesrupee,whichis inexcessof the amounts required to meet the liabilities of a licensed insurer in Seychelles in that currency, to the exfent of such excess; and (b) an investment in the purchase of an immovable property situated outside Seychelles or on the security of any such property, shall not be taken into account. 7. The Authority may, generally or in a particular case, direct that an investment, whether made - in or outside Seychelles, shall, subject to such conditions as may be imposed by the Authority, be taken into account in. such manner as may be specified in computing the assets referred to in regulation 3( I) and (2). 8. Where a licensed insurer- (a) has accepted reinsurance in respect of long term insurance policies issued by another insurer and those policies mature for payment in Seychelles. the assets referred to in regulation 3(1) shall be increased by the amount of liability involved in that accep￾tance; or (b) has ceded reinsurance to another insurer in respect of long term insurance policies issued by himself or herself. the assets referred to in Investment Direction of . Authority relating to local or toreign investmt:nt Rt:insurance busint:ss relating to life policit:s

102 Supplement to Official Gazette [2nd February 2009] Limitation of investment inbank deposits Direction relating to unsuitable investments Return regulation 3( 1) shall be decreased by the amoont ofliability involved in that cession. 9. A licensed insurer shall not keep more than 10 per cent of the assets of itslong term insurance fund in fixed deposit or current deposit, or partly in fixed deposit and partly in current deposit, with a commercial bank. . 10. If at any time the Authority considers anyone or more of the investments constituting a licensed insurer's insurance fund to be unsuitable or undesirable, the Authority may, after giving the insurer an opportunity of being heard, issue such directions as it considers fit, and the insurer shall comply with those directions. 11.(1) Every licensed insurer shall- (a) every year, within 40 days from the beginning of the subsequent year, submit to the Authority a return showing - . (i) as at the end of the preceding year, the assets held inve'sted in accordance with these regulations; and . other particulars necessary to establish that the requirements of these regulations have been complied with; (ii) (b) every year, with in 15 days from the last day of March, June, and September of that. year, submit to the Authority a return showing as at the end of those months, the assets held invested in accordance with these regulations; . and (c) submit to the Authority a return showing all the changes that have occured in the assets held invested in accordance with these regulations during each of the period ending on the last day

[2nd February 2009] Supplement to Official Gazette 103 . of June and December, within 31 days from the close ofthos.e periods. (2) The returns required to be submitted under paragraphs (a), (b) and (c). shall be certified by a principal officer of the licensed insurer. . 12.( I) A licensed insurer shall submit in respect of assets forming the general insurance fund and long term insurance fund. invested and kept invested in accordance with these regulations, a statement that the assets are free of any encumbrance, charge, hypothecation or lien, along with the returns referred to in regulation II, unless the encumbrance, charge, hypothecation or lien has been approved by the Authority, given generally or in a particular case. (2) The licensed insurer shall specify in every statement following. that first statement referred to in subregulation (I ), the charges, if any, created in respect of any of those assets since the date of that first statement immediately preceding, and, if any such charges have been liquidated, the date on which they were so liquidated. 13. The Authority shall be entitled at any time to take such steps as it may consider necessary for the inspection or verification of the assets required to be invested in compliance with these regulations, and the licensed insurer shall comply with any request made in this behalf by the Authority, and within such time as may be specified by theAuthority. 14. Notwithstanding anything contained in these regulations, a licensed insurer may, with t!te prior approval of the Authority, invest and keep invested the assets of its non￾Seychelles policy insurance fund in immovable property situated outside Seychelles, in foreign government securities or in bank deposits opened with a financial institution operating outside Seychelles. Statement relating to asset Inspection or verification by the Authority Offshore policy insurance fund

104 Supplement to Official Gazette [2nd February 2009] Stated capital 15. Forthe purpose of section 24( 1)ofthe Act, the stated capital of a licensed insurer - . (a) exclusively carrying on general. insurance business or long term insurance business or both general and long term insurance business, shall be at least 3,000,000 rupees; (b) exclusively carrying on reinsurance business, shall be not lessthan 5,000,000 rupees; or (c) exclusively carrying on captive insurance business, shall be not lessthan 500,000 rupees; Fund 16.(1) For the purpose of sections 15 and 23 of the Act, the marginof solvency margin of an insurance fund established in.respect of solvency I . b . b ." d b I " . . genera msurance usmess to e mamtame y a lcense d insurer at all times during any accounting period shall be￾Ca) for a fund established by a licensed inslJrer, other than a reinsurer or. captive insurer, relating to Seychelles policies, not lessthan- (i) 2,000,000 rupees; (ij) 20 per cent of net premium income ofthe fund in the preceding accounting period; or (iii) 20 per cent ofloss reserves of the fund at the end. of the preceding accounting period, whichever isthe highest; (b) for a fund established by a reinsurer or ca.ptive insurer relating to Seychelles policies, not less . than- (i) 2,000,000 \ rupees;

[2nd February 2009] Supplement to Official Gazette 105 (ii) 20 percent of net premium fncome of the fund in the preceding accounting period; or (in) 20 per cent ofloss reserves ofthe fund as at the end of the preceding accounting. period, whichever isthe highest (2) For the purpose of sections 15and 23 of the Act, the solvency margin of an insurance fund established in respect of long term insurance business to be maintained by a licensed insurer at all times during any accounting period shall be--,- , . , (a) for a fund established by a licensed insurer, other than a reinsurer or captive insurer, relating to Seychelles policies~not lessthan the sum ofthe following items,--,- (i) 3 per cent of the insurer's liabilities as determined under regulation 19 in respect of non-participating policies, and 2 per cent of such liabilities in respect of participating policies, as at the end of the preceding accounting period; (ii) . 1 per cent of the sum insured at risk for policies the original term of which istwo years or less, and 0.2 per cent of the sum insured at risk for policies the original term of which is more than two years, as at the end of the preceding accounting' period; (hi) 20 per cent of net premium income from , accident and health policies of the fund in the preceding accounting' period or 2,000,000 rupees,

106 Supplementto Official Gazette [2nd February 2009] Assetof insurer whichever isthe highest; (b) for a fund established by a reinsurer or captive insurer relating to Seychelles policies, such that the value of its assets exceeds the amount ofits liabilities. (3) For the purpose of subregulation (2)(a)(i), the sum insured at risk may be reduced for any reinsurance ceded up to a maximum of25 percent. ~ (4) For the purpose of subregulation (2)(b), assets representing the surplus of the assets over the liabilities of a reinsurer or captive insurer may be counted towards meeting the solvency margin of the fund, ifthose assets- (a) are valued in accordance with these. regulations; and (b) can be used .onlyfor the purpose of meeting the fund's liabilities. (5) . A reinsurer or captive insurer shall keep a separate account for the assets referred to in subregulation 4 and the Authority may direct that the whole ora specified proportion of those assetS be held by an approved custodian or trustee. r (6) The reinsurer or captive insurer may withdraw the assets in the separate account with the approval of the. Authority, if they are not needed to meet the fund margin of solvency requirements, but only after a valuation ofthe assets and liabilities of the fund is carried out. 17.( 1) The assets of a licensed insurer refer to properties, securities or other interests, owned by the insurer and located in, and are valued not exceeding their market value or realisable value. (2) Notwithstanding anything contained in subregu￾lation (I), the assets of a licensed insurer does not include-

[2nd February 2009] Supplement to Official Gazette 107 (a) a loan made to a person who is- (i) (ii) a director of the insurer; a director of a company that is a related company in relation to the insurer within the meaning of the CompaniesAct;or (iii) an associate of a director including his or her spouse, son, daughter and any person who is an employee or. partner of the director, referred to in paragraphs (i) and (ii); (b) an asset mortgaged or charged for the benefit ofa person other than the insurer, to the extent that it isso mortgaged or charged; (c) an intangible asset and unsecured loan; (d) a loan to, debenture of, or share in, a company that is a related company within the meaning of the Companies Act, in relation to the insurer, except to the extent approved by theAuthority; and (e) operational assets such as motor vehicles, office equipment, computers, furnitures, supplies in excess of their written-down values. . 18. The total amount of the liabilities of a licensed insurer includes- (a) for a licensed insurer carrying on long term insurance business, all liabilities shown in the balance sheet and the valuation of liabilities, and shall be calculated by the method and on the basis to be determined by a qualified actuary; and (b) for a licensed insurer carrying on general Cap.40 Cap. 40 Liability of licensed insurer

108 Supplement to Official Gazette [2nd February 2009] Valuation by actuary Unexpired outstanding risk and insured claim insurance business, current, contingent or prospective liabilities shown in the business balance sheet of the insurer relating to contracts of insurance concluded. . 19. For the purpose of regulation 18(a), a qualified actuary shall take into account the purpose for which such valuation is to be made, the rate of interest, mortality and sickness to be used in valuation. 20.(1) Every licensed insurer shall make adequate provision in its accounts for liabilities, in respect of unexpired risks outstanding, notably mathematical provisions regarding long term insurance, and incurred claims, including provisions for claims incuITt(dbut not reported, computed in accordance with a method approved by the Authority. (2) The amount of provision for unexpired risks in respect of general insurance business is- (a) subject to paragraphs (b) and (c), an amount calculated on a basis, not less accurate than the Ih . 1/24 method; (b) in the case of direct insurance business relating to cargo policies, at the election of the licensed insurer, an amount not less than 25 percent of the premiums for those policies or an amount calculated on a basis not less accurate than the 11241hmethod; and (c) in the case of reinsurance business, at the election of the licensed insurer, an amount not less than 25 per cent of the premiums in the case of marine and aviation policies, or 40 per cent of the premiums in other cases or an amount calculated on a basis not less accurate than the 11241hmethod.

[2nd February 2009] Supplement to Official Gazette 109 21. The Authority is entitled at any time to take such steps as it may consider necessary, for the inspection or verification ofthe assets and liabilities of a licensed insurer or for securing the particulars necessary to establish that the requirements of regulations 17to 21 have been complied with, as at any date and the insurer shall comply with any request in this behalf made by the Authority. ./

22.(1) Where a policy belonging to a licensed insurer's long term insurance business is removed from the register of Seychelles policies, the maximum amount that may be￾withdrawn from the insurance fund -in respect of the policy shall be an amount equal to the insurer's liabilities in respect of that p~licy as at the date of the removal. - (2) The liabilities under subregulation (1) shall be valued on the basis adopted. for the last statutory valuation relating to the insurer's long term insurance business or. if there has been no such valuation, on the-minimum basis in the case ofa life policy and on a basis approved by the Authority in other:cases, and shall be valued asfor a statutory valuation. 23.( I) On the surrender of a life policy, the surrender value of the life policy is- - - (a) in the case of an endowment policy, an amount equal to 80 per cent of a licensed insurer's liabilities in respect of the policy determined in accordance with subreguhltion (2); and (b) in the case of a whole term life policy, an amount equal to 95 per cent of a licensed . insurer's liabilities in respect of the policy determined in accordance with subregulation (2), at the date ofthe surrender. - (2) For the purpose of subregulation (1), a licensed insurer's liabilities are to be determined by using the same Verification of asset andliability Policy removed trom register of Seychelles policy Surrender and exchange of life policy

110 Supplement to Official Gazette [2nd February 2009] method as in the minimum basis, except that the valuation is to be made by using- (a) the Mortality Table for both male and female lives approved by theAuthority; and (b) a rate of interest of 4 per cent per annum. (3) Notwithstanding subregulation (l), in a particular case or in relation to a. particular type of life policies, the surrender values of the policies may be calculated on a basis different from that specified in subregulation (1) provided that the basis is approved inwriting by theAuthority. (4) An exchange of a life policy for a paid-up policy is for the amount determined, as at the date of exchange, by the following formula￾A B Where A is the surrender value in rupees of the policy exchanged, less any sums due under the policy to a licensed insurer; and B is the value of a licensed insurer's liabilities in respect of a paid-up policy for 1 rupee payable on the like contingencies as the policy moneys under the policy exchanged. . (5) The surrender value referred to in the formula in subregulation (4) is to be calculated in the manner specified in subregulations (1) and (2) for surrenders, and the liabilities referred to in the said formula is to be valued on the basis prescribed in subregulation (2). MADE this 30th day ofJanuary, 2008. . DANNY FAURE MINISTER OF FINANCE