Order on the Responsible Actuary

Order on the Responsible Actuary

Pursuant to Section 139, paragraph 5, and Section 316, paragraph 1, of Act No. 718 of 13 June 2023 on Insurance Undertakings, it is hereby prescribed:

Scope of Application

Section 1. This Order applies to life insurance companies and cross-border pension funds that have permission to conduct insurance business, as well as general insurance companies that have permission to conduct business in the form of reinsurance of life insurance.

Paragraph 2. The companies mentioned in paragraph 1 are hereinafter referred to as "companies".

The Responsible Actuary

Section 2. The Responsible Actuary must be employed by the company. The appointment and dismissal of the Responsible Actuary may only be carried out by the board of directors. The position of Responsible Actuary cannot be combined with the position of member of the management board or the board of directors of the company.

Section 3. The Responsible Actuary must have completed one of the following educations:

1. The Actuarial Education from a Danish university (cand.act.).
2. The Actuarial Education from another country, if the education includes a) courses corresponding to the courses in insurance mathematics that are part of the actuarial education at the bachelor level from a Danish university, b) courses corresponding to the mandatory courses in life insurance mathematics that are part of the actuarial education at the master level from a Danish university, and c) courses in Danish insurance law and insurance accounting corresponding to the actuarial education at the bachelor level from a Danish university or equivalent.
3. An education related to no. 1 (such as cand.scient., cand.stat., cand.scient.oecon.) or a corresponding foreign education. The education must be supplemented with courses in insurance mathematics as well as courses in Danish insurance law and insurance accounting corresponding to the actuarial education at the bachelor level from a Danish university or equivalent. In addition, the education must be supplemented with courses corresponding to the mandatory courses in life insurance mathematics that are part of the actuarial education at the master level from a Danish university.

Paragraph 2. The Responsible Actuary must, after completing the education mentioned in paragraph 1, no. 1, have participated in practical actuarial work for one of the companies mentioned in Section 1 or for the Labour Market Supplementary Pension (ATP) on a full-time basis for at least 5 years within the last 10 years. At least 1 of the 5 years must be in close cooperation with a Responsible Actuary in the aforementioned companies or the Labour Market Supplementary Pension.

Paragraph 3. The Responsible Actuary must, after completing one of the educations mentioned in paragraph 1, no. 2, or paragraph 1, no. 3, first sentence, have participated in practical actuarial work for one of the companies mentioned in Section 1 or for the Labour Market Supplementary Pension on a full-time basis for at least 6 years within the last 10 years. The Responsible Actuary must, after completing one of the educations mentioned in paragraph 1, no. 2 or 3 (including the supplementary courses mentioned therein), have worked closely together with a Responsible Actuary in one of the companies mentioned in Section 1 or in the Labour Market Supplementary Pension for at least 1 of the 6 years.

Paragraph 4. The Responsible Actuary must, as a minimum, have acquired an in-depth knowledge of the preparation of notifications, bonus systems, actuarial calculations, including the calculation of solvency capital requirements, the calculation of provisions, and the preparation of the annual report to the Financial Supervisory Authority.

Section 4. When the board of directors has appointed a Responsible Actuary, this must be reported to the Financial Supervisory Authority no later than 14 days after the appointment.

Paragraph 2. The board of directors must, in the report pursuant to paragraph 1, provide a declaration that the Responsible Actuary complies with the requirements in Section 3.

Paragraph 3. When the Responsible Actuary is dismissed or leaves the position of Responsible Actuary, the board of directors and the Responsible Actuary must each submit a statement to the Financial Supervisory Authority regarding the background thereof no later than 1 month after the departure.

Section 5. The Responsible Actuary must have access to all information that this person deems necessary for the exercise of the duties, including the minutes of the board of directors. The actuary must provide the Financial Supervisory Authority with the information necessary for the assessment of the company's financial position.

Paragraph 2. The board of directors must prepare a job description for the Responsible Actuary. The job description must contain an overall description of the tasks to be performed in the capacity of Responsible Actuary. The job description may additionally contain a description of other tasks that the Responsible Actuary performs as part of the company's operations.

Paragraph 3. The job description must, in companies and groups respectively, where other employees perform tasks for the Responsible Actuary, generally indicate the distribution of tasks. The job description must also contain general guidelines for the Responsible Actuary's delegation of tasks, including the Responsible Actuary's subsequent control of the delegated tasks.

The Responsible Actuary's Reporting to the Board of Directors

Section 6. In connection with the board of directors' adoption of the annual report, the Responsible Actuary must prepare a written report (the actuary report) for the board of directors.

Paragraph 2. The actuary report must contain all significant conclusions of importance for the preparation of the accounts from the actuary's report to the Financial Supervisory Authority, pursuant to Section 7.

Paragraph 3. The actuary report must contain a register of the company's notifications during the year and comments thereon.

Paragraph 4. It must be stated in the actuary report whether the Responsible Actuary has received all the information that was requested.

Paragraph 5. If the Responsible Actuary's control implies that, in their opinion, the annual report does not give a true and fair view of the company's actuarial conditions, the actuary report must contain a separate statement to this effect.

Paragraph 6. The actuary report must be signed by the Responsible Actuary and submitted to and signed by the entire board of directors.

Paragraph 7. No later than 10 days after the company's general meeting has approved the annual report, a copy of the actuary report must be received by the Financial Supervisory Authority.

Paragraph 8. The board of directors must be made aware of all other significant conclusions in the actuary's report other than those mentioned in paragraph 2.

The Responsible Actuary's Report

Section 7. The Responsible Actuary must annually submit a report to the Financial Supervisory Authority.

Paragraph 2. The report must be received by the Financial Supervisory Authority no later than 1 month after the company's general meeting has approved the annual report for the year to which the report relates.

Paragraph 3. The Financial Supervisory Authority may, upon application, grant exemption from the deadline set in paragraph 2.

Section 8. For life insurance companies and cross-border pension funds, the structure and content of the report must be prepared in accordance with the indications in Annex 1. For general insurance companies that have permission to conduct business in the form of reinsurance of life insurance business, the structure and content of the report must be prepared in accordance with the indications in Annex 2. Sections and points in the report must have the same numbering as in Annex 1 and Annex 2 respectively.

Paragraph 2. The report must have a table of contents with page references to the points in the report.

Paragraph 3. If the Responsible Actuary finds that a section or point in the report is not relevant for the company in question, the relevant section or point may be omitted. The reason for the lack of relevance is stated instead under the relevant section or point.

Paragraph 4. If the Responsible Actuary finds that there are additional matters under the individual sections that should be mentioned, the Responsible Actuary is obliged to include these, possibly under independent headings in section 14 (Annex 1) or section 10 (Annex 2) respectively.

Paragraph 5. The Responsible Actuary must sign the report.

Section 9. The report can also function as the actuary report, pursuant to Section 6. The report must in that case additionally comply with the provisions in paragraphs 2-4.

Paragraph 2. Section 1 of the report must be supplemented with

1. point 1.8 (Annex 1), which must contain a register of the notifications made during the year and comments thereon, pursuant to Section 6, paragraph 3,
2. point 1.9 (Annex 1) or point 1.3 (Annex 2), which must contain information on whether the actuary has received all information that was requested, pursuant to Section 6, paragraph 4, and
3. point 1.10 (Annex 1) or point 1.4 (Annex 2), which must contain separate information that the annual report, in the actuary's opinion, does not give a true and fair view of the company's actuarial conditions, if the actuary's control implies that this is the case in their opinion, pursuant to Section 6, paragraph 5.

Paragraph 3. The report must be submitted to and signed by the board of directors, pursuant to Section 6, paragraph 6.

Paragraph 4. The report must be received by the Financial Supervisory Authority no later than 10 days after the general meeting has approved the annual report for the year to which the report relates, pursuant to Section 6, paragraph 7.

Penal Provisions and Entry into Force

Section 10. Intentional or grossly negligent violation of Sections 2-4, Section 5, paragraph 1, first and second sentences, and paragraph 3, Section 6, Section 7, paragraphs 1 and 2, and Sections 8 and 9 shall be punishable by a fine, unless a higher penalty is incurred pursuant to Sections 312–317 and 319 of the Act on Insurance Undertakings.

Paragraph 2. Companies etc. (legal persons) may be subject to criminal liability pursuant to the rules in Chapter 5 of the Criminal Code.

Section 11. This Order enters into force on 1 January 2025.

Paragraph 2. Order No. 1305 of 28 November 2017 on the Responsible Actuary is repealed.

The Financial Supervisory Authority, 5 December 2024 Louise Mogensen / Line Bergmann

Annex 1 Content of the Actuary's Report for Life Insurance Companies and Cross-Border Pension Funds

1. General Information

1.1. The actuary must briefly reproduce the matters that the actuary finds to be of particular significance and which are mentioned in the other sections of the report. This includes an account of significant initiatives undertaken as well as significant changed assumptions and accounting principles and their significance for the company's future development.

1.2. The actuary must describe the overall categories of insurance that the company's total portfolio consists of. A company's categories of insurance must be divided at minimum according to insurance classes, however group insurance and life annuities without right to bonus must be described independently. The actuary must provide information for each category of insurance: a) insurance class, b) number of insurances, c) premium size, d) size of benefits paid, and e) size of the total retrospective provision.

The actuary must also provide information on the pricing bases used for each category of insurance. The information must at minimum contain the corresponding pricing interest rate.

1.3. If the audit protocol contains special comments of an actuarial nature, the actuary must provide information on and comment on these comments. The actuary must here account for which measures the comments have possibly given rise to.

1.4. The actuary must prepare an overall actuarial analysis of the year's total result in accordance with the annual accounts corresponding to Table A. Based on the information in the table, the actuary must comment on: a) development trends, b) movements in equity, c) movements in special bonus provisions, and d) movements in collective bonus potential.

1.5. The actuary must prepare a total calculation of the margin on each of the basis elements interest, risk, and expenses for the year corresponding to Table B. The table must be filled out for the current accounting year as well as the four preceding accounting years. The actuary must comment on the information in the table, including development trends.

1.6. Table B must be supplemented with a risk analysis for each pricing basis of risk factors regarding death and disability, using the portfolios "positive mortality risk" (the company profits if the policyholder lives long) and "negative mortality risk" (the company loses if the customer lives long).

1.7. If the company is in a business plan period, totally or for categories of insurance, the actuary must describe how the business plan is followed.

2. Insurances with right to bonus, covered by the Order on the Contribution Principle

2.1. The actuary must state which groups of insurance are covered by the Order on the Contribution Principle.

2.2. The actuary must account for how the portfolio of insurance is divided into contribution groups for each of the elements interest, risk, and expenses.

2.3. The actuary must provide information on the distribution of the realized result between equity and policyholders for each contribution group.

2.4. The actuary must account for that the equity's share of the realized results corresponds to the company's notified equity return rules.

2.5. If equity and special bonus provisions (type B) have received a smaller share of the realized results than the previously notified rules dictate due to insufficient realized result before 1 January 2016, and if the life insurance company has been entitled to correct this in the distribution of future accounting years until 31 December 2015, the actuary must account for the development in the outstanding amount that is written down or collected in the accounting year. The actuary must account for that no redistribution of significant economic size has occurred between insurances when collecting the outstanding amount, beyond what follows from the risk coverages included in the insurances. If the actuary assesses that it is relevant, the actuary must account for the development in this for each contribution group of insurances.

2.6. If the life insurance company has used equity or special bonus provisions (type B) to cover deficits for the contribution groups in the accounting year, the actuary must for each group account for the amount that is transferred from the individual groups' collective bonus potential and for the interest groups subsequently in the individual bonus potentials to equity and special bonus provisions (type B) in the following accounting year.

The actuary must for each contribution group account for: a) the increase in the deficit, if the amount has increased, and, b) that no redistribution of significant economic size has occurred between insurances, including generations, beyond what follows from the risk coverages included in the insurances, if the amount has decreased.

2.7. The actuary must provide information for each contribution group on the distribution of the policyholders' share of the year's realized result between collective bonus potential and assigned bonus after any allocation to special bonus provisions.

2.8. The actuary must for each contribution group account for that no redistribution of significant economic size has occurred between policyholders, including between generations, beyond what follows from the risk coverages.

2.9. For the interest groups, the actuary must fill out Table C. For the risk groups, the actuary must fill out Table D. For the expense groups, the actuary must fill out Table E. Finally, the actuary must fill out Table F. Tables C, D, E, and F must be filled out for the current accounting year as well as the four preceding accounting years. If a group is expected to generate systematic deficits, the actuary must account for how the deficit can be covered and whether anything has been done in this regard.

2.10. If a negative contribution to the realized result in an interest group cannot be covered by collective bonus potential and profit margin not included in retrospective provisions in an insurance group from the insurances from which the negative contribution stems, the actuary must account for any use of the profit margin included in retrospective provisions and individual bonus potentials in the interest group.

2.11. The actuary must account for whether the profit margin included in retrospective provisions and individual bonus potentials in an interest group, which has previously been used to cover insurances' negative contributions to the realized result in the interest group pursuant to Section 8, paragraph 2, of the Order on the Contribution Principle, has been rebuilt. The actuary must here account for how the rebuilding has been carried out.

3. Insurances with right to bonus, not covered by the Order on the Contribution Principle

3.1. The actuary must state which groups of insurances with right to bonus are accounted for in this section.

3.2. The actuary must provide information on the distribution of the realized result between equity and policyholders.

3.3. The actuary must account for that the equity's share of the realized result corresponds to the company's notified equity return rules.

3.4. If equity and special bonus provisions (type B) have received a smaller share of the realized results than the previously notified rules dictate due to insufficient realized result before 1 January 2016, and if the life insurance company has been entitled to correct this in the distribution of future accounting years until 31 December 2015, the actuary must account for the development in the outstanding amount that is written down or collected in the accounting year. The actuary must account for that no redistribution of significant economic size has occurred between insurances when collecting the outstanding amount, beyond what follows from the risk coverages included in the insurances.

3.5. If the life insurance company has used equity or special bonus provisions (type B) to cover deficits for the groups in the accounting year, the actuary must for each group account for the amount that is transferred from the individual groups' collective bonus potential and for the interest groups subsequently in the individual bonus potentials to equity and special bonus provisions (type B) in the following accounting year.

The actuary must for each group account for: a) the increase in the deficit, if the amount has increased, and, b) that no redistribution of significant economic size has occurred between insurances, including generations, beyond what follows from the risk coverages included in the insurances, if the amount has decreased.

3.6. The actuary must provide information on the distribution of the policyholders' share of the year's realized result between collective bonus potential, assigned bonus, and special bonus provisions.

3.7. The actuary must account for that no redistribution of significant economic size has occurred between policyholders, including between generations, beyond what follows from the risk coverages.

3.8. To illustrate point 3.6, the actuary must at minimum fill out: a) Table G for each basis interest rate, b) Table H for each risk intensity divided into private schemes and corporate schemes, and c) Table I for each expense group divided into private schemes and corporate schemes.

Tables G, H, and I must be filled out for the current accounting year as well as the four preceding accounting years. If it is not possible to fill out the four last columns of the tables for each basis interest rate, each risk intensity, and each expense group, it is sufficient to state the total value. If different groups of insurances use the same pricing basis, it is possible to illustrate each group separately.

If a single element for a group of policyholders no longer has the necessary safety margin and therefore is expected to generate a deficit, the actuary must account for how the deficit can be covered and whether anything has been done in this regard.

3.9. If a negative contribution to the realized result in an interest group cannot be covered by collective bonus potential and profit margin not included in retrospective provisions in an insurance group from the insurances from which the negative contribution stems, the actuary must account for any use of the profit margin included in retrospective provisions and individual bonus potentials in the interest group.

3.10. The actuary must account for whether the profit margin included in retrospective provisions and individual bonus potentials, which has previously been used to cover insurances' negative contributions to the realized result pursuant to the notified rules, has been rebuilt. The actuary must here account for how the rebuilding has been carried out.

4. Health and Accident Insurance Business (Insurance Class 1 & 2)

4.1. The actuary must account for the risk-related and expense-related development for products underwritten under insurance class 1 and 2, including the development in the expense and claim percentage for the last five years. The actuary must account for the cause and significance of this development, and whether the company has possibly taken any action in this regard.

4.2. The actuary must provide information on the extent of health and accident insurances that are subject to a discount system, and account for the company's discount policy for health and accident business. The actuary must here provide information on which elements discounts are given for.

4.3. The actuary must account for how the claim provisions are calculated.

4.4. The actuary must perform an analysis of the development results corresponding to Table J (two tables).

4.5. The actuary must account for whether the year's surplus originating from life insurance business benefits the life insureds in the same way as if the company only conducted life insurance business.

4.6. The actuary must account for compliance with the requirement that the capital requirement applicable to health and accident insurance business is not borne by life insurance business.

4.7. The actuary must account for whether the respective interests are otherwise secured for the company's insureds within both life insurance business and health and accident insurance business.

5. Insurances under Insurance Class III

5.1. The actuary must describe the products underwritten under insurance class III. This includes among other things a description of guarantees on interest, guarantees on the biometric risks, guarantees on expenses, and payout guarantee, including whether the company has assumed an investment risk.

5.2. If products under insurance class III as part of the payout process have an embedded mechanism that smooths or stabilizes the payout stream, the actuary must briefly account for that the calculation basis for the mechanism is reasonable and secure.

5.3. The actuary must provide information on the extent of insurance class III insurances that are eligible for bonus. If the company has bonus-eligible insurance class III insurances exempted from the Order on the Contribution Principle, the actuary describes the method for bonus assignment.

5.4. If the company has bonus-eligible insurance class III insurances, the actuary must describe the size of provisions for bonus and the year's movements therein, including for which elements bonus is given. For insurance class III insurances covered by the Order on the Contribution Principle, the actuary must additionally account for the connection with the company's payment for risk.

5.5. The actuary must describe and comment on the expense structure, including filling out Table K. If the element is not covered by bonus calculation, this is stated under the comments, and columns with second-order numbers are not filled out.

5.6. The actuary must perform a risk analysis of the biometric factors in relevant groups of insurances, and the numbers in Table H are filled out to the extent that it is relevant.

5.7. If there is a difference in volume or time between an insured's investment...