Reserve Bank of New Zealand Insurer Return Definitions Draft V1

Insurer Return
Definitions
Insurance Oversight
Prudential Supervision Department V1 (03 July 2015 DRAFT) Archived

Insurer Return Definitions – V1 (03 July 2015 DRAFT) Contents
Purpose of the Insurer Return Definitions .................................................................. 3
Contact details for Insurance Oversight ..................................................................... 3
Materiality and Resubmissions ................................................................................... 4
Miscellaneous Terminology ........................................................................................ 5
Level of Detail ............................................................................................................ 6
Life Insurance classes ................................................................................................ 8
General Insurance classes ....................................................................................... 10
Health Insurance classes ......................................................................................... 12
Accounting ............................................................................................................... 13
Revenue ................................................................................................................... 14
Expense ................................................................................................................... 16
Net Profit .................................................................................................................. 19
Assets ...................................................................................................................... 20
Liabilities .................................................................................................................. 24
Deposits & Withdrawals ........................................................................................... 28
Net Assets ................................................................................................................ 29
Movement in Net Assets .......................................................................................... 30
Life Insurance Exposure ........................................................................................... 31
General Insurance Exposure .................................................................................... 33
Health Insurance Exposure ...................................................................................... 34
Archived

Insurer Return Definitions – V1 (03 July 2015 DRAFT) Purpose of the Insurer Return Definitions

1. The purpose of this Insurer Return Definitions document is to provide
   definitions for the information to be provided by insurers in the Reserve Bank of New Zealand’s (the “Reserve Bank”) Insurer Return.
2. Definitions may be updated from time to time. The Reserve Bank’s insurance
   website (http://www.rbnz.govt.nz/regulation_and_supervision/insurers/) has the latest version.
3. Nothing in this document overrides the provisions of the Insurance (Prudential
   Supervision) Act, Regulations, Solvency Standards or Guidelines.
4. Guidance for completing the Insurer Returns may also be issued by the
   Reserve Bank. Any guidance is published on the insurance website linked above.
5. Current version:
   Definitions Insurer Return
   V1 (03 July 2015
   DRAFT)
   V1 (02 July 2015
   DRAFT)
6. Prior versions:
   Definitions Insurer Return
   Not applicable Not applicable
   Contact details for Insurance Oversight
7. Phone +64 4 471 3951
   Email insurance@rbnz.govt.nz
   Secure upload https://sup.rbnz.govt.nz/send/ (please select subject of “Insurer Reporting & Returns”) Or contact your supervisor. Archived

Insurer Return Definitions – V1 (03 July 2015 DRAFT) Materiality and Resubmissions Insurer Return information is used to assist supervision of the insurer, analysis of the insurance sector (or portions of it) and to allow comparisons between insurers for prudential supervision. Accordingly a low materiality threshold is needed for the Insurer Return, and in particular financial information, compared with materiality thresholds for other purposes. For financial information, the materiality threshold is set based on insurer size measured by the greater of insurance premiums and insurance liabilities, with a cap of NZ $1 million – i.e. for the largest insurers materiality threshold is NZ$ 1 million with lower thresholds for smaller insurers. The formula below is calculated within the Insurer Return at the start of Part 1 – Insurer:
maximum { cap ; ( fin_factor  max { prem_size , liab_size } ) } cap = NZ $ 1million fin_factor = 5.0% prem_size = gross policy & premium revenue (annualised) liab_size = absolute value of total insurance liabilities For exposure information, the materiality threshold is set based on the total for each exposure measure (not movement in exposure measure) as follows:
exp_factor  exp_total exp_factor = 5.0% exp_total = value for total as at Report Date If an insurer identifies an error or subsequent change in relevant data for previously submitted returns, and this exceeds the materiality thresholds above, resubmission is likely to be required. Please contact the Reserve Bank to discuss. Archived

Insurer Return Definitions – V1 (03 July 2015 DRAFT) Miscellaneous Terminology Terms that have a definition in the Insurance (Prudential Supervision) Act 2010 and the Insurance (Prudential Supervision) Regulations 2010 have the same definition for the Insurer Return unless otherwise defined in these definitions. Terms that have a definition in NZ International Financial Reporting Standards (IFRS) accounting standards have the same definition for the Insurer Return unless otherwise defined in these definitions. Note that some definitions and classifications for the Insurer Return may differ from similarly labelled definitions and classifications under various solvency standards issued by the Reserve Bank. Term Definition IPSR r Insurance (Prudential Supervision) Regulations 2010 regulation . IPSA s Insurance (Prudential Supervision) Act 2010 section . Outwards reinsurance Insurance of insurance where risk is transferred (ceded) by the insurer to another insurer. Archived

Insurer Return Definitions – V1 (03 July 2015 DRAFT) Level of Detail The level of detail varies for each element of information according to its relevance for supervision and insurers’ ability to provide detailed allocations under their current reporting systems. At each level of detail there is a yes/no input for “Any business for each column?” Select “yes” if there is any business even if it is not material. This distinguishes blank or zero data for no business from immaterial amounts or where figures have not been allocated. Level Explanation L0 Not used in the Insurer Return. L1 Totals for the NZ Entity. L2 NZ Entity allocated between insurance and non-insurance. L3 Insurance allocated by insurance type. L4 Insurance type allocated between NZ Primary Insurance (further allocated by insurance class plus Unallocated and total), NZ Inwards Reinsurance, and Foreign Business. This is shown in the diagram below. L0 Insurer licensed under IPSA L1 NZ Entity total Non NZ business of Lloyd’s of London, or outside the NZ branch for overseas insurers. L2 Non￾insurance Insurance total L3 Life Insurance General Insurance Health Insurance Allocation within each insurance type:
L4 NZ Primary
Insurance by insurance class
NZ Primary
Insurance
Unallocated
NZ Primary
Insurance total
NZ Inwards
Reinsurance
Foreign
Business
Financial information is reported for all shaded areas in the above diagram. Exposure information is reported at L4 for NZ Primary Insurance – i.e. excluding NZ Inwards Reinsurance and Foreign Business. Exposure is not reported for L1 to L3. Archived

Insurer Return Definitions – V1 (03 July 2015 DRAFT) Level of Detail Definition NZ Entity The licensed insurer for NZ incorporated or mutual insurers, the NZ business of Lloyd's of London, or the NZ branch for overseas insurers. Non-insurance Activity that is not insurance business (from the insurer's perspective). This may include insurance￾related activity (such as distribution or administration of another insurer's products), as well as activities not related to insurance. Insurance All insurance or reinsurance business. Insurance type Classification of insurance with similar characteristics. Life Insurance As defined by IPSA s84, having regard to IPSA s85 (composite policies) and IPSR r14. General Insurance Insurance that is not Life Insurance or Health Insurance. Health Insurance As defined by IPSA s6. Insurance class Classification of insurance with similar characteristics, that is more detailed than Insurance type. NZ Insurance Insurance for the benefit of people and organisations based in NZ. This includes insurance of inbound visitors and workers where this is provided by a NZ licensed insurer. NZ Primary Insurance NZ Insurance that is not Inwards Reinsurance. Unallocated The portion of a total that has not been allocated to Insurance classes. Any non-zero figures for Unallocated are required to be explained in the commentary. NZ Inwards Reinsurance NZ Insurance of insurance where risk is transferred (ceded) by another insurer to the insurer. Foreign Business Insurance that is not NZ Insurance. This includes all foreign branches of NZ incorporated insurers and any other insurance for the benefit of people and organisations not based in NZ (excluding insurance of inbound visitors and workers). Archived

Insurer Return Definitions – V1 (03 July 2015 DRAFT) Life Insurance classes The life insurance classes are:
 Participating Traditional,
 Participating Investment,
 Investment-linked,
 Investment Account,
 Lump Sum Individual,
 Lump Sum Group,
 Disability Income Individual,
 Disability Income Group,
 Annuity,
 Credit Life Insurance, and
 Other Life Insurance.
Life Insurance class Definition
Non-participating non-investment
(not an insurance class but term is used in life insurance class definitions) Life Insurance that is non-participating as defined by IPSR r21(1), but excluding Investment-linked and Investment Account. Participating Traditional Life Insurance that is participating as defined by IPSR r21(1), but excluding Participating Investment. Participating Investment Life Insurance that is participating as defined by IPSR r21(1), and is either investment account contracts as defined in IPSA s84(5) or investment￾linked contracts as defined in IPSA s98(3). Investment-linked Life Insurance that is both non-participating as defined by IPSR r21(1) and investment-linked contracts as defined in IPSA s98(3). Investment Account Life Insurance that is both non-participating as defined by IPSR r21(1) and investment account contracts as defined in IPSA s84(5). Lump Sum Individual Life Insurance that is Non-participating non￾investment with lump sum benefits, and is issued on an individual basis, but excluding Credit Life Insurance. Lump Sum Group Life Insurance that is Non-participating non￾investment with lump sum benefits, and is issued on a group basis, but excluding Credit Life Insurance. Archived

Insurer Return Definitions – V1 (03 July 2015 DRAFT) Life Insurance class Definition Disability Income Individual Life Insurance that is Non-participating non￾investment, with income benefits payable upon disablement, and is issued on an individual basis, but excluding Annuity. Disability Income Group Life Insurance that is Non-participating non￾investment, with income benefits payable upon disablement, and is issued on a group basis, but excluding Annuity. Annuity Life Insurance that is Non-participating non￾investment and provides an income benefit that is contingent upon continuation of life but is not contingent upon disablement. Credit Life Insurance Life Insurance that is Non-participating non￾investment, with benefit amount defined by a connected loan, debt or mortgage. Other Life Insurance Life Insurance that is not elsewhere classified. Archived

Insurer Return Definitions – V1 (03 July 2015 DRAFT) General Insurance classes The general insurance classes are:
 Commercial Property,
 Commercial Motor,
 Marine & Aviation,
 Liability,
 Other Commercial,
 Domestic Property,
 Domestic Motor,
 Personal Accident,
 Travel,
 Credit General Insurance, and
 Other General Insurance.
General Insurance class Definition Commercial (not an insurance class but term is used in general insurance class definitions) General Insurance that is not issued on an individual or household basis. Personal Lines (not an insurance class but term is used in general insurance class definitions) General insurance that is issued on an individual or household basis. Commercial Property General Insurance that is Commercial with cover for buildings, contents and other physical assets with generally fixed locations; or cover for associated losses and expenses (i.e. including material damage, business interruption, consequential loss). Commercial Motor General Insurance that is Commercial with cover for vehicles (whether or not motorized); or cover for their cargo, but excluding Marine & Aviation. Marine & Aviation General Insurance that is Commercial with cover for airborne or water-borne vehicles and associated equipment; or cover for their cargo. Liability General Insurance that is Commercial with cover for liability to third parties, but excluding policies where the liability cover is ancillary and is not a significant benefit component. Other Commercial General Insurance that is Commercial and is not elsewhere classified. Archived

Insurer Return Definitions – V1 (03 July 2015 DRAFT) General Insurance class Definition Domestic Property General Insurance that is Personal Lines with cover for buildings, contents and other physical assets with generally fixed locations. Domestic Motor General Insurance that is Personal Lines with cover for vehicles including trailers and caravans. Personal Accident General Insurance that is Personal Lines with cover for accident involving injury to self, but excluding Credit General Insurance. Travel General Insurance that is Personal Lines with cover for medical or accident or other travel-related costs for persons temporarily outside their normal country of residence. Credit General Insurance General Insurance that is Personal Lines, with benefit amount defined by a connected loan, debt or mortgage. Other Personal Lines General Insurance that is Personal Lines and is not elsewhere classified. Archived

Insurer Return Definitions – V1 (03 July 2015 DRAFT) Health Insurance classes The health insurance classes are:
 Health Individual, and
 Health Group.
Health Insurance class Definition Health Individual Health Insurance that is not Health Group. Health Group Health Insurance that is issued on a group basis, provided that at least one of the following applies (and is not generally available on an individual basis):
 premium discount that is material,  premiums based on experience of the group,  premiums guaranteed for any period,  underwriting on a preferential terms, or  product tailored for the group. Archived

Insurer Return Definitions – V1 (03 July 2015 DRAFT) Accounting Definition Accounting standards The accounting standards adopted. Select one of:
 NZ IFRS,
 NZ IFRS (Reduced Disclosure Regime),  NZ IFRS (Differential Reporting),  NZ PBE IFRS,  NZ GAAP (that is not IFRS), and  Other – please explain in the comment box. Alternative Financial Information Any financial information other than NZ GAAP financial statements that are used to complete the Insurer Return. general insurance methods Insurance valuation methods that are consistent with Appendix D of NZ IFRS 4, or equivalents under other accounting standards. These are:
 mixture of past and future cash-flows but without including any future renewals. Information that is reported specifically for general insurance methods (and not life insurance methods) has the label shaded purple. life insurance methods Insurance valuation methods that are consistent with Appendix C of NZ IFRS 4, or equivalents under other accounting standards. These are either:
 projection (long-term future cash-flows including any renewals),  accumulation (past cash-flows), or  mixture. Information that is reported specifically for life insurance methods (and not general insurance methods) has the label shaded blue. NZ GAAP NZ generally accepted accounting practice as defined by IPSA s6. NZ IFRS NZ version of international financial reporting standards. NZ IFRS (Differential Reporting) NZ version of international financial reporting standards for entities with differential reporting exemptions. NZ IFRS (Reduced Disclosure Regime) NZ version of international financial reporting standards for entities with reduced disclosure regime exemptions. NZ PBE IFRS NZ version of international financial reporting standards that applies to public benefit entities. Archived

Insurer Return Definitions – V1 (03 July 2015 DRAFT) Revenue Definition Gross policy & premium revenue Earned policy or premium revenue from insurance business, gross of outwards reinsurance premium. Excludes non-insurance (such as commissions for distributing another insurer’s products). Outwards reinsurance premium The premium for outwards reinsurance that corresponds to gross policy & premium revenue. Excludes commissions. Net policy & premium revenue Earned policy or premium revenue from insurance business, net of outwards reinsurance premium. Outwards reinsurance commission Commission earned on outwards reinsurance, whether this is fixed or dependent on experience on the outwards reinsurance policy(s). Other insurance revenue Other revenue arising from insurance business (such as management fee income on insurance investment contracts) that is not included elsewhere. Archived

Insurer Return Definitions – V1 (03 July 2015 DRAFT) Revenue Definition Interest, dividends & rent Revenue earned from investment assets, gross of investment management expense, but excluding Realised gains & losses and Unrealised gains & losses. Realised gains & losses Revenue earned from the realised increase in value of investment assets, gross of investment management expense. If value decreased then record as a negative figure. Unrealised gains & losses Revenue earned from the unrealised increase in value of investment assets, gross of investment management expense. Include movements in property revaluation reserves. If value decreased or movement is a decrease then record as a negative figure. Fee & commission revenue Fee & commission revenue that is from insurance￾related activity (such as distribution or administration of another insurer's products), as well as activities not related to insurance. Excludes fee & commission revenue from insurance business. Other revenue Other revenue not included elsewhere, such as increase in currency translation reserves (if movement is a decrease record as a negative
figure) and gains or losses on sale of a business (if
loss record as a negative figure). Excludes revenue from insurance business. Archived

Insurer Return Definitions – V1 (03 July 2015 DRAFT) Expense Definition Gross policy expense Under life insurance methods, the cost of policy related expenses, gross of outwards reinsurance & other recoveries. Gross benefit expense Under life insurance methods, the cost of insurance benefit & claim payments, gross of outwards reinsurance & other recoveries. Gross other policy expense Under life insurance methods, the cost of policy related expenses that are not included in gross benefit expense. Outwards reinsurance & other recoveries Under life insurance methods, the portion of gross policy expense that is met from outwards reinsurance or payments by third parties. Net policy expense Under life insurance methods, the cost of policy related expenses, net of outwards reinsurance & other recoveries. Increase in net policy liability Under life insurance methods, the increase since the start of the financial year in policy liabilities, net of outwards reinsurance & other recovery assets. Include Deposits component of premiums and Withdrawals component of benefits. If the movement is a decrease record as a negative figure. Increase in policyholder unvested benefit liability Under life insurance methods, the increase since the start of the financial year in policyholder unvested benefit liability. If the movement is a Archived decrease record as a negative figure.

Insurer Return Definitions – V1 (03 July 2015 DRAFT) Expense Definition Gross claims expense Under general insurance methods, the cost of claims, gross of outwards reinsurance recoveries and other recoveries. Gross claims paid Under general insurance methods, the cost of claims payments, gross of outwards reinsurance recoveries and other recoveries. Increase in gross outstanding claims liability Under general insurance methods, the increase since the start of the financial year in gross outstanding claims liability (includes claims handling expenses and risk margin). If the movement is a decrease record as a negative
figure.
Outwards reinsurance recoveries
Under general insurance methods, the portion of gross claims expense that is met from outwards reinsurance. Other recoveries Under general insurance methods, the portion of gross claims expense that is met from third parties (i.e. excluding outwards reinsurance). Outwards reinsurance & other recoveries Under general insurance methods, the portion of gross claims expense that is met from outwards reinsurance or payments by third parties. Net claims expense Under general insurance methods, the cost of claims, net of outwards reinsurance recoveries and other recoveries. Decrease in deferred acquisition cost Under general insurance methods, the decrease since the start of the financial year in deferred acquisition cost asset. If the movement is an increase record as a negative figure. Increase in unexpired risk liability Under general insurance methods, the increase since the start of the financial year in unexpired risk liability. If the movement is a decrease record as a negative figure. Archived

Insurer Return Definitions – V1 (03 July 2015 DRAFT) Expense Definition Commissions All remuneration that is directly dependent on sales of insurance business, including any volume or profitability bonuses. Allow for all claw-back and adjustments. Exclude salaries of the insurer’s own sales staff. Initial commission For insurance with cover in excess of one year, the cost of commissions in respect of the first year of cover. Other acquisition expense Expenses associated with sales of insurance business, but excluding commissions. For example marketing costs and salaries of employed sales staff. Other commission expense The cost of commissions, excluding Initial commission. This includes all commission in respect of cover of one year or less. Other insurance expense Administration and management expenses associated with insurance business that is not included elsewhere. Investment management expense Expense associated with management of investment assets (regardless of whether investments are managed internally or externally). Other expense Expenses that are not included elsewhere, but excluding expenses associated with insurance business. Archived

Insurer Return Definitions – V1 (03 July 2015 DRAFT) Net Profit Definition Insurance underwriting margin Revenue less expenses for insurance business, gross of tax expense. Excludes investment revenue, investment management expense and non-insurance revenue and expense. Gross profit Revenue less expenses, gross of tax expense. Tax expense Cost of tax in respect of gross profit. Profit after tax Revenue less expenses, net of tax expense. Archived

Insurer Return Definitions – V1 (03 July 2015 DRAFT) Assets Definition Policyholder debt Debt by policyholders that is associated with insurance policies. Excludes loans and mortgages to policyholders that are not associated with insurance policies. Premium debt Unpaid premiums and premiums yet to be forwarded to the insurer by agents or brokers. Policy loans Loans to policyholders that are secured against policy benefits and claims. Excludes loans and mortgages to policyholders that are not associated with insurance policies. Outwards reinsurance & other recovery assets The reinsurance assets in respect of insurance liabilities plus other claim recoveries. Outwards reinsurance of gross policy liabilities The portion of gross policy liabilities and policyholder unvested benefit liability that is met from outwards reinsurance. This may be negative in some circumstances. Outwards reinsurance of gross outstanding claims The portion of gross outstanding claims (including claims handling expense and risk margin) that is met from outwards reinsurance. Other outwards reinsurance assets Other assets in respect of insurance liabilities arising from outwards reinsurance. This includes prepaid reinsurance premiums, reinsurance recoveries on paid claims, reinsurance commission receivable, etc. Other claim recoveries The portion of gross policy liabilities and policyholder unvested benefit liability and gross outstanding claims that is met from third parties. Deferred acquisition cost asset Asset for capitalised (deferred) acquisition costs (unless this is included within gross policy liabilities), grossed up for any write-down associated with unexpired risk liability. Other insurance assets Any other asset associated with insurance business that is not included elsewhere, and excluding negative liabilities. Archived

Insurer Return Definitions – V1 (03 July 2015 DRAFT) Assets Definition Investment assets Assets that are intended to generate a return through income and/or gain in value, whether held to maturity or available for resale. Includes derivatives associated with investments, but excludes other derivatives (e.g. hedging of foreign currency liabilities). Note the definitions and classification of investment assets (and also some other assets) for Insurer Return have been chosen to align with other surveys of financial institutions. In general, they do not align with the definitions and classification of assets in the solvency standards issued by RBNZ. Cash & deposits Cash at bank, transferable deposits directly useable for making payments, and fixed term deposits. Amounts are redeemable or withdrawable (with or without penalty) and are usually held with registered banks or other deposit taking institutions. Excludes loans and advances, debt securities and securities purchased under agreement to resell. Short-term debt securities Negotiable instruments serving as evidence of debt with a residual term to maturity of 1 year or less. Excludes loans and advances, securities purchased under agreement to resell, and derivatives. Long-term debt securities Negotiable instruments serving as evidence of debt with a residual term to maturity of greater than 1 year. Excludes loans and advances, securities purchased under agreement to resell, and derivatives. Shares, listed Equity investments that are listed on an official stock exchange (such as NZX or ASX). Shares, unlisted Equity investments that are not listed on an official stock exchange. Excludes investments in subsidiaries and associates. Units in listed trusts Investment in pooled investment vehicles that are listed on an official stock exchange (such as NZX or ASX). Archived

Insurer Return Definitions – V1 (03 July 2015 DRAFT) Assets Definition Units in unlisted trusts Investment in pooled investment vehicles that are not listed on an official stock exchange. Derivatives for investment Positive or negative value of derivatives associated with investments. Exclude other derivatives (e.g. hedging of foreign currency liabilities). Other financial assets Financial assets that are investments but not included elsewhere. Property Land and buildings for the purpose of investment as well as owner-occupied property. Archived

Insurer Return Definitions – V1 (03 July 2015 DRAFT) Assets Definition Related party assets Debt owed to the insurer by a related party, or equity investments in related parties. Related party is defined in IPSA s6. Related party assets must not be offset against Related party liabilities. Excludes assets in relation to insurance business (such as outwards reinsurance to a reinsurer that is a related party), Derivatives for investment and Derivatives not for investment. Loans Debt owed to the insurer including general debtors. Excludes assets in relation to insurance business (such as Policy loans), Investment assets (such as Debt securities), and Related party assets. Derivatives not for investment Positive or negative value of derivatives not associated with investments (e.g. hedging of foreign currency liabilities). Fixed assets Physical assets that are not investment assets. This includes plant and equipment, computer hardware, motor vehicles, furniture, etc. Excludes owner-occupied property. Goodwill & other intangible assets Value of businesses previously purchased (goodwill) and any other intangible assets. Tax assets Tax balances owing to the insurer. These must not be netted off against tax liabilities. Other assets (n.e.c.) Any other asset not elsewhere classified. Excludes assets in relation to insurance business and Archived investment assets.

Insurer Return Definitions – V1 (03 July 2015 DRAFT) Liabilities Definition Gross policy liabilities – insurance contracts Under life insurance methods, the liability for insurance contracts business, gross of outwards reinsurance. Excludes policyholder unvested benefits liability. The liability may be negative in some situations. future policy benefits Under life insurance methods, the liability for future contractual benefits to policyholders, gross of outwards reinsurance. Excludes future profits and outstanding claims. future expenses Under life insurance methods, the liability for future expenses associated with insurance policies, gross of outwards reinsurance. future premiums Under life insurance methods, the asset for future premium revenue from policyholders, gross of outwards reinsurance. Record as positive figure. other best estimate liability Under life insurance methods, the liability for insurance contracts business, gross of outwards reinsurance, that is not included elsewhere. future profits – policyholder Under life insurance methods, the liability for the portion of future profits from in force life insurance business that are expected to be paid to policyholders through bonuses. future profits – shareholder Under life insurance methods, the liability for the portion of future profits from in force life insurance business that are expected to accrue to the insurer (i.e. not paid as policyholder bonuses). outstanding claims Under life insurance methods, the liability for claims that have occurred but are unpaid, gross of outwards reinsurance. Includes both reported unpaid claims and incurred but not reported claims. Excludes any portion already included within gross policy liabilities. Archived

Insurer Return Definitions – V1 (03 July 2015 DRAFT) Liabilities Definition other (accumulation method) Under life insurance methods, the policy liabilities for insurance contracts that have been determined using accumulation methods (rather than projection methods). This may include a deferred acquisition cost component, in which case do not record these costs separately under Deferred acquisition cost asset. Gross policy liabilities – investment contracts Under life insurance methods, the liability for investment contracts business, gross of outwards reinsurance. Policyholder unvested benefit liability Liability for undistributed past profits that are expected to be paid to policyholders through future bonuses. Archived

Insurer Return Definitions – V1 (03 July 2015 DRAFT) Liabilities Definition Gross outstanding claims liability Under general insurance methods, the liability for claims in respect of cover up to and including the valuation date, inclusive of claims handling expenses and risk margins (if any), but gross of outwards reinsurance. best estimate Under general insurance methods, the best estimate liability for claims in respect of cover up to and including the valuation date, excluding claims handling expenses and risk margins (if any), and gross of outwards reinsurance. claims handling expense Under general insurance methods, the liability for claims handling expenses for claims in respect of cover up to and including the valuation date. risk margin Under general insurance methods, the liability for risk margin for claims in respect of cover up to and including the valuation date, gross of outwards reinsurance. Risk margin is the difference between outstanding claims liabilities at a conservative value and the best estimate value. Adjust for any diversification credit - at insurance class level of detail pro rate by best estimate if the risk margins are not calculated at insurance class level. Gross unearned premium liability Under general insurance methods, the liability for the portion of premiums that relates to the period of cover that is in the future, gross of outwards reinsurance. Unexpired risk liability Under general insurance methods, the liability for the failure of the liability adequacy test that is additional to gross unearned premiums liability. I.e. the expected deficiency of premiums to meet claims and relevant expenses in respect of the period of cover that is in the future. Figure is before adjustment associated with a write-down of deferred acquisition cost asset. Archived

Insurer Return Definitions – V1 (03 July 2015 DRAFT) Liabilities Definition Outwards reinsurance liabilities The liability associated with outwards reinsurance (such as outwards reinsurance premiums payable). Exclude negative assets. Other insurance-related liabilities The liability associated with insurance business that is not included elsewhere (such as premium refunds payable). Exclude negative assets. Related party liabilities Debt owed by the insurer to a related party. Related party is defined in IPSA s6. Related party liabilities must not be offset against related party assets. Excludes liabilities in relation to insurance business (such as outwards reinsurance liabilities to a reinsurer that is a related party). Tax liabilities Tax balances owed by the insurer. These must not be netted off against tax assets. Other liability (n.e.c.) Any other liability not elsewhere classified. Excludes liabilities in relation to insurance business. Archived

Insurer Return Definitions – V1 (03 July 2015 DRAFT) Deposits & Withdrawals Definition Deposits component of premiums Under life insurance methods, the deposit component of premiums that is recorded through movement in policy liabilities instead of revenue. For the Insurer Return this is included within Increase in net policy liability as well as in sub￾part 2.7. Withdrawals component of benefits Under life insurance methods, the withdrawal component of benefits that is recorded through movement in policy liabilities instead of expense. For the Insurer Return this is included within Increase in net policy liability as well as in sub￾part 2.7. Archived

Insurer Return Definitions – V1 (03 July 2015 DRAFT) Net Assets Definition Net assets Total assets less total liabilities. Declared but unpaid dividends & capital distributions Future dividends or distributions of capital that have been declared at Report Date but which are not fully reflected in the balance sheet. Defined benefit scheme deficit Deficit in any defined benefit scheme(s) for which the insurer is a sponsoring employer, to the extent this is not fully reflected in the balance sheet as a liability. Contingent liabilities The total value of any contingent liabilities that are required to be disclosed by the accounting standards, and which are not fully reflected in the balance sheet. For contingencies that are not included at all in the balance sheet the value is the face value or maximum possible liability. For contingencies that are partially included in the balance sheet the value is the difference between maximum possible liability and liability recorded in the balance sheet. Please include in the commentary an explanation of any contingent liabilities for which the maximum possible liability is not quantifiable. Archived

Insurer Return Definitions – V1 (03 July 2015 DRAFT) Movement in Net Assets Definition Capital additions New capital that has been raised during the financial year, other than through profit after tax or movement in reserves. This includes issue of new share equity, transfer from head office for an overseas insurer, and contributions to members’ funds for a mutual insurer. Dividends & capital distributions Capital that has been released during the financial year, other than through negative profit after tax or movement in reserves. This includes dividends and share buy-backs, transfers to head office for an overseas insurer, and repayment of contributions to members’ funds for a mutual insurer. Archived

Insurer Return Definitions – V1 (03 July 2015 DRAFT) Life Insurance Exposure Definition Lives insured Number of insured lives. This is not unique lives – some policies may cover multiple classes and some insureds have multiple policies (with one or more insurers). Annual premium Annual amount of regular premiums, excluding Single premium. This differs from premium revenue in financial data due to being a point in time measure (and movement between points in time). Single premium Total of single or ad hoc premiums during financial year to Report Date, whether fixed (contractual) or discretionary. Insured benefit Sum insured (except annual amount of benefit for Disability income individual, Disability income group and Annuity), gross of outwards reinsurance. Excludes any excess or deductible. New business Movement in exposure measure during financial year to Report Date in respect of business that commenced on or after the start of the financial year. For group life schemes new business includes all of a new scheme and also additions for an existing scheme. Excludes Adjustments and business that is cancelled from inception. Lapses, surrenders & cancellations Movement in exposure measure during financial year to Report Date in respect of business that terminated early due to policyholder election, whether by non-payment of premiums or active cancellation or surrender. Maturities & expiries Movement in exposure measure during financial year to Report Date in respect of business that reached the end of their contractual cover due to maturity or expiry. Deaths & disability exits Movement in exposure measure during financial year to Report Date in respect of business that ceased cover due to death or disablement of the insured live(s). Archived

Insurer Return Definitions – V1 (03 July 2015 DRAFT) Life Insurance Exposure Definition Premium increases not included above Movement in Annual premium during financial year to Report Date that is due to contractual increases or voluntary increases (e.g. associated with optional changes in cover). Excludes movement in annual premium due to New Business, Lapses, surrenders & cancellations, Maturities & expiries, Deaths & disability exits. If the movement is a decrease record as a negative
figure.
Benefit increases not included above Movement in Insured benefit during financial year to Report Date that is due to contractual increases or voluntary increases (e.g. associated with optional changes in cover). Excludes movement in insured benefit due to New Business, Lapses, surrenders & cancellations, Maturities & expiries, Deaths & disability exits. If the movement is a decrease record as a negative figure. Adjustments Movement in exposure measure during financial year to Report Date that is not included elsewhere. This includes transfers of business to or from another insurer, business with an insurer that changes insurance class, correction of errors, etc. Growth The net movement in exposure measure during financial year to Report Date. Archived

Insurer Return Definitions – V1 (03 July 2015 DRAFT) General Insurance Exposure Definition Risk units insured Number of risk units that varies by insurance class as follows:
 commercial property – buildings,  commercial motor – vehicles (may be estimated maximum in the case of fleet),  marine & aviation – craft,  liability – policies,  other commercial – policies,  domestic property – residential dwellings,  domestic vehicle – vehicles,  personal accident – lives,  travel – lives,  credit general insurance – policies, and  other personal lines – policies. Risk units provide information on insurance penetration as well as a different exposure measure to assist interpretation of sum insured. Due to different measures by insurance class there is no total for risk units. Annual premium Annual amount of regular premiums, excluding Single premium. This differs from premium revenue in financial data due to being a point in time measure (and movement between points in time). Single premium Total of single or ad hoc premiums during financial year to Report Date, whether fixed (contractual) or discretionary. Sum insured Sum insured, gross of outwards reinsurance. Excludes any excess or deductible. If no sum insured applies then estimate the upper limit on potential claims on a conservative basis and disclose the estimation in the commentary. Growth The net movement in exposure measure during financial year to Report Date. Archived

Insurer Return Definitions – V1 (03 July 2015 DRAFT) Health Insurance Exposure Definition Lives insured Number of insured lives. This is not unique lives – some insureds have multiple policies (with one or more insurers). Annual premium Annual amount of regular premiums, excluding Single premium. This differs from premium revenue in financial data due to being a point in time measure (and movement between points in time). Single premium Total of single or ad hoc premiums during financial year to Report Date, whether fixed (contractual) or discretionary. New business Movement in exposure measure during financial year to Report Date in respect of business that commenced on or after the start of the financial year. For group health schemes new business includes all of a new scheme and also additions for an existing scheme. Excludes Adjustments and business that is cancelled from inception. Lapses, surrenders & cancellations Movement in exposure measure during financial year to Report Date in respect of business that terminated early due to policyholder election, whether by non-payment of premiums or active cancellation or surrender. Expiries Movement in exposure measure during financial year to Report Date in respect of business that reached the end of their contractual cover due to expiry. Deaths Movement in exposure measure during financial year to Report Date in respect of business that ceased cover due to death of the insured live(s). Premium increases not included above Movement in Annual premium during financial year to Report Date that is due to contractual increases or voluntary increases (e.g. associated with optional changes in cover). Excludes movement in annual premium due to New Business, Lapses, surrenders & cancellations, Expiries, Deaths. If the movement is a decrease record as a negative figure. Archived

Insurer Return Definitions – V1 (03 July 2015 DRAFT) Health Insurance Exposure Definition Adjustments Movement in exposure measure during financial year to Report Date that is not included elsewhere. This includes transfers of business to or from another insurer, business with an insurer that changes insurance class, correction of errors, etc. Growth The net movement in exposure measure during financial year to Report Date. Ends Archived

Insurer Return Definitions – V1 (03 July 2015 DRAFT)

Website http://www.rbnz.govt.nz/regulation_and_supervision/insurers/ Email insurance@rbnz.govt.nz Telephone +64 471 3951 Mail Reserve Bank of New Zealand Prudential Supervision – Insurance Oversight PO Box 2498 WELLINGTON 6140 Archived