Statistical Statement of Life Insurance (Direct Insurance Transactions in Belgium)

Brussels, 23 July 1992 55415/PC4/MG NOTICE NO. D. 100 Subject: Statistical Statement of Life Insurance. (direct insurance transactions in Belgium).

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I. INTRODUCTION. The implementation of ex post facto control and, more specifically, the control of profitability per product or group of products (including the control of profit distribution) and technical provisions, makes a complete restructuring of the statistical statements necessary. To allow insurance companies to adapt their internal organization and, in particular, their computer systems from now on, the Control Service provides them as an attachment a model of the future statistical form. This model contains all the data they will have to provide. The statistical statement will be sent in its definitive form later. It will have to be filled out for the first time for figures concerning the fiscal year 1993. Tables C and Q3 must only be filled out starting from the fiscal year 1994. II. CHARACTERISTICS OF THE NEW STATISTICAL STATEMENT.

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1. The new statistical statement contains:

• the statistics of the basic form (see IV below);
• the additional statistics (see V below).

2. In order to avoid that companies would have to make new significant changes to the statistical scheme in the following years, the Control Service has anticipated the E.E.C. directive concerning annual accounts, specifically regarding operating costs, technical provisions, and financial returns.
3. The items for which explanation is possibly necessary - either because they appear for the first time, or because their content has changed - are detailed below in point IV. III. COLUMNS OF THE STATISTICAL STATEMENT. (Tables A1, A2 and A3) In the columns of the statistical statement, 2 levels are indistinguishable:
4. For the supervision of profitability, 7 categories of products are defined. These correspond to the columns printed slightly darker. They correspond to the categories included in point "B. Profitability" of Annex 1.
5. In the aforementioned categories, 13 product groups are distinguished which are of particular statistical importance for a more in-depth analysis of profitability. They correspond to the products or product groups listed in point "A. Statistical Statement" of Annex 1. IV. ITEMS OF THE BASIC FORM. The term "basic form" refers to the extract from the breakdown of the annual accounts, Chapter II, Section II (see Annex 2), i.e., tables A1 (Insurances not linked to an investment fund), A2 (Insurances linked to an investment fund) and A3 (Branch 27 for third parties).
6. Generalities

3.- 1.1. No explanation is given if there is no change to note compared to the analogous item of the old statistical statement. On the other hand, if an explanation is entirely or partially in contradiction with a previously taken position by the Control Service for Insurance (in Notices D.73-6 and D.73-6-1), it cancels the latter ex officio, and thus the new explanation must be taken into account for filling out the new statistical statement. 1.2. Operating Costs 1.2.1. Operating costs are split into 4 items in accordance with the E.E.C. directive concerning the annual accounts and consolidated annual accounts: internal claims settlement costs, acquisition costs, management costs, and costs related to the management of investments. This breakdown is, however, not mandatory prior to the transposition into Belgian law of the aforementioned directive. If this temporary possibility of breakdown is not used or only partially used, the item "management costs" will respectively contain the total or the balance of operating costs. 1.2.2. Insurance companies are required to distribute their operating costs (whether or not split as in point 1.2.1 above) across the 13 product groups. This distribution must be justified to the Control Service. 1.3. Returns and Costs of Investments Regarding the items related to investment returns (9.1 to 9.4) and investment costs (10.1 to 10.5), the elements to be taken into account (coverage values, total assets, ...), the method for distribution across columns, as well as all useful clarifications, will be communicated later. 1.4. Transfers The new statistical statement provides specific items for transferred provisions. In case of transfer, at any date, the transferred amounts must appear in those items. Under no circumstances may transferred reserves be allocated to the item "Provisions at the beginning of the fiscal year", this to avoid double use (even if the transfer takes effect on January 1). 1.5. Presentation 1.5.1. The references to the codes of the annual accounts (Chapter II, Section II) are not included in the tables to be filled out. They are located on 4 separate sheets at the front of the bundle of statistics.

4.- Some codes are placed in parentheses: this means that the item in question only corresponds to part of the item of the annual accounts. In some cases, empty parentheses appear: these concern items that do not appear in the current annual accounts. 1.5.2. The method of calculating subtotals and the final result is also found on these sheets. 1.6. Branch 27 for own account In this branch, the pension fund is both the policyholder and thus the debtor of the premiums (item 1.1.) as well as the beneficiary of the benefits (item 2.1.). 2. Specific Clarifications II. BENEFITS, RECOVERY AND CLAIMS MANAGEMENT

• Items 2.1., 2.2. and 2.4. are a breakdown of the "Benefits" item of the old statistical statement. Item 2.1. contains the allocated profit distribution in the form of premium restornos charged to previously formed provisions. Allocated profit distribution in the form of premium restorno charged to the provisions of the fiscal year will no longer be allowed.
• Item 2.3. is new: it stems from the breakdown of operating costs. It corresponds to the cost of claims management. III. TECHNICAL PROVISIONS AND ESTIMATED RECOVERY
• 3.1. The premium reserves of supplementary insurances are included in the mathematical provisions.
• 3.5. Companies that include on the asset side of the balance sheet the amounts receivable resulting from the acquisition of the rights of the insured against third parties (subrogation) or the acquisition of the legal ownership of the insured goods (salvage) must report these amounts in this item. These amounts must be estimated cautiously.
• 3.6. Reconstitution Fund. This item may only be filled out for individual insurances not linked to an investment fund. IV. OTHER TECHNICAL COSTS AND RETURNS 4.1. and 4.2. The elements included in these items must be mentioned in the attachment. Item 4.1. contains, among other things, the tax on profit distribution.

5.- V. PROFIT DISTRIBUTION AND RESTORNOS 5.1. The allocation of the fiscal year to the reserve for profit distribution and restornos (excluding taxes) must be included separately: it is therefore not in the reserve at the end of the fiscal year. The reserve at the beginning of the fiscal year, on the other hand, is equal to the reserve at the end of the previous fiscal year increased by the allocation of the previous fiscal year. VI. ACQUISITION COSTS AND COMMISSIONS Item 6.2 "Acquisition Costs" comes from the breakdown of the "Operating Costs" item of the annual accounts and refers to the costs incurred when concluding insurance contracts. These costs include file costs or costs for entering the insurance contracts into the portfolio, advertising costs, and administrative costs related to the processing of applications and the drawing up of policies ... Under no circumstances may acquisition costs include acquisition commissions. VII. Ceded Reinsurance 7. The filling out of this item must be done for the 13 categories of products. VIII. MANAGEMENT COSTS 8. This item stems from the "Operating Costs" item of the annual accounts. Management costs include, in particular, the costs for premium collection, portfolio management, management of profit distributions and restornos, and of ceded reinsurance. They include in particular personnel costs and depreciation of furniture and equipment insofar as these must not be included under acquisition costs, internal claims settlement costs, or costs related to investments. IX. INVESTMENT RETURNS

• 9.2. This item contains the reversal of impairments and the reversal of depreciation.
• 9.4. To be filled out only for insurances linked to an investment fund. X. INVESTMENT COSTS
• 10.2. This item stems from the "Operating Costs" item of the annual accounts. It includes all costs connected with the management of investments, including interest expenses (except for the interest reimbursed to the reinsurer which temporarily still appears in the balance of ceded reinsurance).

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• 10.3. This item contains the impairments and the depreciation.
• 10.5. To be filled out only for insurances linked to an investment fund. V. ADDITIONAL STATISTICS. Besides the basic form, the new bundle also contains purely statistical sections. The references to the old tables in the following list are mentioned in parentheses ( [] ).
• B1 Benefits to beneficiaries (including allocated profit distribution). [ C+D ]
• B2 Direct benefits to beneficiaries (paid profit distribution).
• C Premiums.
• D1 and D2 Reserves, provisions (provisions) and transfers for insurances not linked and linked to an investment fund. [ E ]
• E Status of the investment fund.
• O1 Statement of reinsurance. [ O ]
• O2 and O3 Risk capitals (direct and accepted business, gross and net of ceded business and retrocessions).
• P Present value of the insurer's obligations for individual life insurances per seniority of the contracts (including allocated profit distribution). [ P ]
• Q1 Movement of insured benefits of individual insurances. [ Q1]
• Q2 Movement of insured benefits of group insurances. [ S]
• Q3 Number of members and pension beneficiaries of group insurances. Status at the end of the fiscal year.
• R Surrenders and reductions of individual insurances per seniority of the contract. [ T]
• S1 and S2 Statistics of the number of deaths for men and women. [ V1 to X2]
• T Statistics of incidents - bridal dowry - birth. [ Y]

7.- Explanation Table B1 It is the result of merging the old tables C and D. Table B2 This table makes it possible to know the part of the said benefits that stems from the allocated profit distribution. Table C It concerns the consumed part of the premiums. 2.1. Acquisition of new contracts or of increases. It concerns the present value of the acquisition premium. 2.2. Acquisition repaid. It concerns the repaid part of the theoretical surrender value in case of reduction of the present value of the reduction premiums. Table D1 and D2 The references to the codes of the annual accounts (Chapter II, Section II) are not included in the tables. They are located in the statistics on a separate sheet after the 4 sheets concerning tables A1, A2 and A3.

• The item "mathematical balance provisions" does not contain the allocations of the fiscal year to the profit distribution provisions.
• The item "supplementary provisions" must only be filled out for insurances not linked to an investment fund. These provisions relate to contracts with periodic premiums and with an interest rate that is higher than the reference interest rate for a limited period. Table E
• Companies are requested to fill out such a table for each fund.
• 2. Number of units of the fund.

8.- If the number of units was changed independently of the value of the fund, the deposits and deductions, this must be reported.

• 3. Net deposits. These are the deposits after deduction of costs.
• 4. Gross deductions. These are the deductions before deduction of costs. Table Q3
• For contracts in co-insurance: only the administrator reports the members.
• 1 and 2 (assets upon death and upon life). These items contain only the members who are still in service at the company. Tables S and T These tables will have to be filled out annually from now on. VI. ANNEX. This annex contains the following items:
• Exceptional investment expenditures: companies must report the exceptional investment expenditures they have made during the fiscal year and precisely indicate the relevant item(s) of the basic form.
• Explanation to be provided in function of this notice:
• other technical costs;
• other technical returns. VII. SUBMISSION OF THE DOCUMENTS OF THE CONTROL SERVICE.

1. The Control Service must receive the basic form (tables A1, A2 and A3) at least six weeks before the general meeting.

9.- 2) The Control Service must receive the additional statistics by June 30 at the latest of the year following that to which these statistics relate. THE CHAIRMAN, J.-M. DELPORTE.