Communication D.159 - Life Insurance Statistics

90735COM/JN Brussels, May 26, 1997.
COMMUNICATION D159.
Subject: - Statistics on direct life insurance activity in Belgium and abroad;

• Statistics on accepted "life" reinsurance business;
• "Eurostat" statistics.

I. Introduction
Following the introduction of the principle of supervision by the home Member State, it became necessary to create a table concerning direct insurance operations abroad. The existing tables relating to direct insurance activity in Belgium are also being revamped to provide a global synoptic overview and to establish consistency with the tables relating to insurance activity abroad. After the establishment of this statistic, the separate technical operating accounts will no longer need to be completed. Furthermore, in situations specified below, it is necessary to be able to request from Belgian insurance companies and insurance companies from third countries established in Belgium who, in addition to direct insurance operations, also practice accepted life reinsurance, a statistic concerning their life reinsurance activity. The data for all tables are expressed in BEF. For this purpose, foreign currency data are converted at the same exchange rates as those used in the detailed life technical account. Finally, a complementary statistic must be provided to meet information requests from "Eurostat". Companies are requested to adapt their internal organization and computer system so that they can collect this data starting with the 1998 financial year following the model described below. Unless otherwise stated, these statistics will then be integrated into the automatic data collection system. Life statistics for the 1997 financial year remain unchanged. However, the 1997 financial year data concerning operations related to the statutory pension of salaried workers "extra-legal benefits" (Royal Decree of May 14, 1969 concerning the granting of extra-legal benefits to salaried workers referred to in R.D. No. 50 of October 24, 1967 relating to the retirement and survivor's pension of salaried workers) must additionally be transmitted separately to the Office on paper by the concerned companies. It should also be recalled to companies that in the tables (current and future) concerning profitability, additional data relating to realized capital gains and losses (for life insurance linked to investment funds) must be filled in.

II. Tables relating to profitability.
These tables must reach the Office at the same time as the annual accounts of the same financial year.

1. Table relating to direct life insurance operations in Belgium.
   This table groups together the old tables A1, A2 and A3.
   A. Columns
   Regarding the columns of this table, the option taken was to perform a complete breakdown by branch. They are presented as follows:

• branch 21 :
  ´ individual insurance (excluding operations referred to in R.D. of May 14, 1969):
  µ main insurance (1)
  µ complementary insurance (2)
  µ total (1+2)
  ´ group insurance (excluding operations referred to in R.D. of May 14, 1969):
  µ main insurance (3)
  µ complementary insurance (4)
  µ total (3+4)
  ´ operations related to the statutory pension of salaried workers "extra-legal benefits" (R.D. of May 14, 1969):
  µ individual insurance (5)
  µ group insurance (6)
  µ total (5+6)
  ´ Total branch 21 (1+2+3+4+5+6)

• branch 22 (7)

• branch 23 :
  ´ individual insurance :
  µ main insurance (8)
  µ complementary insurance (9)
  µ Total (8+9)
  ´ group insurance
  µ main insurance (10)
  µ complementary insurance (11)
  µ total (10+11)
  ´ Total branch 23 (8+9+10+11)

• branch 24 (12)

• branch 25 (13)

• branch 26 (14)

• branch 27 (15)

• branch 28 (16)

• branch 29 (17)

• General Total (1+2+3+...+16+17)
  B. Items.
  The basic items (up to and including balance S5) of the old tables A1 (branches 21, 22, 24, 26, 28 and 29), A2 (branches 23 and 25) and A3 (branch 27) are maintained. We note that the reserve fund and the distribution fund referred to in Article 21 of the R.D. of May 14, 1969 are included respectively in the items "3.3. Other technical provisions" and "5.2. Provision for participation in profits and rebates". To highlight any potential transfer of amounts from the distribution fund to the reserve fund regarding these operations, the item "5.2.Z.2. Others" is split as follows:
  5.2.Z.2. Others (5.2.Z.2.b.- 5.2.Z.2.a.)
  5.2.Z.2.a. Levy in favor of the reserve fund
  5.2.Z.2.b. Other
  The difference between items 5.2.A and 5.2.Z.2.b. allows determining the amount of profit participation attributed in this system.
  The additional item relating to the variation of the Zillmerization value is replaced by the following basic items:
  XII. Variation of the Zillmerization value (12Z-12A)

12. Zillmerization value
    12.A. Beginning of financial year
    12.Z. End of financial year
    S6 NET TECHNICO-FINANCIAL BALANCE with Zillmerization (S5+XII).

2. Tables relating to direct life insurance operations, abroad.
A. Columns
The columns are the same as those of the table concerning direct life insurance activity in Belgium, but without breakdown of branches 21 and 23 (i.e., one column per branch). B. Items The items are the same as those of the table concerning direct life insurance activity in Belgium, with the exception of items 5.2.Z.2.a. and 5.2.Z.2.b.
C. Number of tables
1. Basic tables
For each country of the European Economic Area (E.E.A.) in which it covers risks, the company must complete these statistics, on the one hand for its activities in that country via a branch established there and on the other hand for its activities under free provision of services in that country, whether from its registered office or from a branch established in another country. The company must furthermore complete these statistics for all its activities in all countries outside the European Economic Area.
2. Specific tables
In addition to the aforementioned statistics, the Office may request specific statistics from companies exercising relatively important activity abroad. Relative importance is assessed company by company based on various criteria such as the amount of premiums issued, the level of technical provisions, the nature of risks underwritten... These specific tables may consist of:

• a subdivision of the columns concerning branches 21 and 23.
• a separate table for any country in which a company exercises relatively important activity.
  These tables will not be integrated into the automatic data collection system.

3. Table concerning accepted "life" reinsurance operations
The basic statistics that must be completed for direct insurance operations are not required for reinsurance activity. Nevertheless, the Office may request specific statistics from companies exercising relatively important reinsurance activity. Relative importance is assessed company by company based on various criteria such as the amount of premiums issued, the level of technical provisions, the nature of risks underwritten... These statistics may consist of:

• a breakdown according to proportional reinsurance and non-proportional reinsurance;
• a separate statistic for any country in which a company exercises relatively important activity.
  These tables will therefore also not be integrated into the automatic data collection system.

III. Complementary tables concerning life insurance activity (Annex II)
These tables must reach the Control Office, no later than June 30 of the financial year following that to which they relate.
In the new statistics, table P concerning the age of contracts is no longer included. Companies that take into consideration the proportion of future profits relating to life activities for the constitution of the solvency margin submit a note signed by their appointed actuary to the Office. In this note, the method of calculating the factor corresponding to the average residual duration of contracts is justified in detail. In this calculation, account is taken of:

• the residual duration of each contract;
• the mortality rates of insureds / policyholders;
• the probability of early surrender of contracts;
• the weight of contracts determined according to the present value of future benefits.
  A. Complementary tables to the profitability tables These tables replace the old tables B, C, D and Q1-2
  1. Table concerning direct life insurance operations in Belgium. (see the 'collection A(1)' table in Annex II)
  a. Columns: same columns as the profitability table b. Items.
  The items are presented as follows:
  Theoretical surrender value and additional provisions.
  1. Theoretical surrender value (end of financial year).
  1. Insurer commitments (including funding fund).
  2. Policyholder commitments (based on reduction premiums).
  2. Additional provisions (imposed by regulation).
  Loading.
  Total.
  1. Inventory loading.
  2. Acquisition loading.
  1. of new contracts or increases.
  2. rebated.
  3. Collection loading.
  Benefits.
  1. Benefits and profit participation paid. (2.1+5.1 profitability table)
  1. Surrenders.
  2. Death capitals.
  3. Life capitals.
  4. Annuity arrears (annual amount).
  5. Premium rebates
  6. Marriage.
  7. Birth.
  8. Accidents.
  9. Illness and disability.
  2. Benefits converted into annuity.
  1. Life.
  2. Death.
  3. Marriage.
  4. Birth.
  5. Total and permanent disability.
  3. Benefits resulting from profit participation. (part of 2.1 + 5.1 profitability table)
  1. Surrenders.
  2. Death capitals.
  3. Life capitals.
  4. Annuity arrears (annual amount).
  5. Premium rebates.
  6. Marriage.
  7. Birth.
  8. Accidents.
  9. Illness and disability.

Evolution of death capitals and, in branch 26, guaranteed capitals
1. Situation at beginning of financial year.
2. Positive variations. (total)
1. Subscriptions or increases.
2. Other positive variations.
3. Negative variations. (total)
1. Total or partial surrenders or reductions.
2. Occurrences and maturity.
3. Other negative variations.
4. Situation at end of financial year.
Evolution of annuities.
1. Situation at beginning of financial year.
2. Situation at end of financial year.

2. Tables concerning direct life insurance operations abroad. (see the 'collection A(2)' table in Annex II)
a. Columns: same columns as the profitability table b. Items The items are the same as those of the table concerning direct life insurance activity, but the items concerning benefits are removed and the items concerning positive and negative variations of death capitals are no longer broken down.

B. Table concerning premium production, premium collection and life insurance provision concerning direct life insurance activity in Belgium. (see the 'collection B' table in Annex II)

1. Columns
   a. Fixed premium production [New business (numbers — amounts) — Increases].
   This refers to new production in which the drop in production is recorded as negative production. By drop in production, we mean both contracts without follow-up and contracts terminated during the first months. Production is broken down into, on the one hand, new subscriptions and on the other hand, increases to existing contracts, including premium indexations. These are annual premiums, i.e., the annual tariff premiums provided for at the end of the financial year, including the fixed collection loading and loadings for premium splitting, but without possible taxes. b. Flexible premium production [New business (numbers — amounts) — Increases]. This refers to the new production of flexible premium contracts for which an amount to be reached on an annual basis has been set, thus giving a recurring character to the premiums. As for the fixed premium production item, we therefore include annual premiums without the possible tax. The drop in production is recorded as negative production, which implies both contracts without follow-up and contracts cancelled during the first months. By the column "increases", we mean:

• any increase in the amount to be reached on an annual basis, communicated by the policyholder;
• any exceedance of the amount to be reached on an annual basis, noted by the company.
  c. Single premiums.
  In addition to traditional single premiums, it is necessary to mention all non-recurring payments for flexible premium contracts.
  Contrary to the previous columns, only the sums actually collected are mentioned. d. Collection (periodic premiums — flexible premiums) Premiums issued during the financial year in question are recorded in these columns. e. Life insurance provision (amounts) This refers to the life insurance provision at the end of the financial year.

2. The items
   The items are filled from top to bottom so that item t contains only data concerning the entire portfolio, which are not yet included in items 1, 2,..., t-1. Some explanations on how to complete certain of these items are given below. a. Executive insurance Only classic executive insurance, in which the policyholder and beneficiary are the company and the insured is the company executive, are included. Executive insurance concluded in group insurance is classified under the item "Group Insurance". b. Group insurance This item includes individual and collective capitalization payments from branches 21 and 23 as well as payments into the funding fund. Personal complementary contracts are also mentioned under this item. The same applies to group insurance falling under operations related to the statutory pension of salaried workers "extra-legal benefits" (R.D. of May 14, 1969). New affiliates to an existing group insurance are not included under the premium production item. By new business, we mean only new groups. Increases include rearrangements of existing groups but not new affiliations. The financing of back-service as well as payments into the funding fund are mentioned under the single premiums item. If however a premium leaves the funding fund to be paid as individual capitalization in group insurance, this premium must be accounted for negatively under the single premiums item and positively under the periodic premiums item.
   c. Contracts linked to a mortgage loan
   Under the item "Insurance for remaining balance", only premiums whose insurance contract serves to cover a mortgage loan are included.
   All other remaining balance insurance, even those covering a non-mortgage loan, are included under the item "Death Insurance". d. Annuity insurance Under this item, single premiums paid for annuity insurance are included, excluding conversions of insured capitals into annuity arrears. e. Other insurance Other insurance is broken down by branches 21, 23 and 26. These are insurance policies not listed under the previous items. A distinction is made between short-term single premium insurance with a duration not exceeding 8 years (such as 8-year or less insurance bonds...) and, for branch 21, individual insurance falling under operations related to the statutory pension of salaried workers "extra-legal benefits" (R.D. of May 14, 1969) and the rest of other insurance.

C. Table concerning investment funds linked to life insurance and earmarked funds (see the 'collection C' table in Annex II)
Companies must indicate a distinct code number allowing identification of each investment fund or earmarked fund; this code must be kept in subsequent years. It can be numeric or alphanumeric without spaces with a maximum of 15 positions. The distinction between an investment fund and an earmarked fund will be made based on the observation that the item is or is not filled for the number of units.

D. Table concerning the number of affiliates and the number of annuity beneficiaries in group insurance for direct life insurance activity in Belgium (see the 'collection D' table in Annex II) Active insured persons who have benefits in case of death and in case of life are included in both items despite the double counting that this could entail. Double counting resulting from the fact that the same person has several group insurance policies with benefits in case of life must be avoided as much as possible. This also applies to group insurance with benefits in case of death and to annuity beneficiaries. Affiliates and annuity beneficiaries in group insurance falling under operations related to the statutory pension of salaried workers "extra-legal benefits" (R.D. of May 14, 1969) are also included in this table.

E. Table concerning capitals at risk for the entire insurance activity (see the 'collection E' table in Annex II) This table serves primarily to verify the capitals at risk indicated for the calculation of the required solvency margin. It must therefore cover the entire life insurance activity (direct life insurance in Belgium and abroad as well as reinsurance activity).

F. Tables (old S1 and S2) concerning the number of insured persons and the number of deceased persons for direct life insurance activity in Belgium. (see the 'collection F' table in Annex II) These tables have not been modified but are included in the annex, for the sake of completeness.

Companies must pay particular attention to how these tables are filled. It is obvious that one cannot take into account persons who leave the insured age category for any reason other than death (e.g., final maturity of the insurance contract). Furthermore, for the number of insured persons, account must be taken of the duration of the period during which they remained in a specific age category. It is strongly recommended that companies consult their appointed actuary when preparing these tables.

G. Table (old T) concerning occurrences in marriage and birth insurance. (see the 'collection G' table in Annex II) This table has not been modified at all but has been included for the sake of completeness.

IV. Eurostat Statistics.
The third annex repeats the statistics requested by Eurostat.
The President,
Willy P. LENAERTS,