hLjg aLdf Aoj;fo ug]{ aLdssf] cfly{s l:yltsf] n]vf hf]vf /

bfloTjsf] d"NofÍg ;DaGwL lgb]{lzsf–@)^%

aLdf P]g, @)$( sf] bkmf * -3@_ n] lbPsf] clwsf/ k|of]u u/L ;f]xL P]gsf] bkmf *-ª_
sf] k|of]hgsf nflu aLDff ;ldltn] b]xfosf] æhLjg aLdf Aoj;fo ug]{ aLdssf] cfly{s :yltsf]
n]vf hf]vf / bfloTjsf] d"NofÍg ;DaGwL lgb]{lzsf–@)^% hf/L u/]sf] 5 .

!= ;+lIfKt gfd / k|f/De M

-!_ of] lgb]{lzsfsf] gfd æhLjg aLdf Aoj;fo ug]{ aLdssf] cfly{s l:yltsf] n]vf hf]vf /
bfloTjsf] d"NofÍg ;DaGwL lgb]{lzsf–@)^% /x]sf] 5 .
-@_ of] lgb]{lzsf @)^% ;fn a}zfv ! ut]b]lv nfu" x'g]5 .

@= lgb]{lzsf M
of] lgb]{lzsf g]kfndf hLjg aLdf Joj;fo ug]{ aLds tyf aLdf P]g, @)$( sf] bkmf
@^ adf]lhd aLdssf] cfly{s l:yltsf] n]vf hf]vf / bfloTjsf] d"Nof+sg ug]{
aLdfÍLsf] xsdf nfu" x'g]5 .

# aLdfÍLsf] lgo'lQm M
-!_ aLdsn] aLdf P]g, @)$( sf] bkmf @^ adf]lhd cfˆgf] cfly{s l:yltsf] n]vf hf]vf /
bfloTjsf] d"Nof+sg ug{sf nflu pko'Qm 1fg, cg'ej / VoftL ePsf] aLdfÍL lgo'Qm
ug'{kg]{5 .
-@_ pk–lgb]{lzsf -!_ adf]]lhd lgo'Qm ug]{ aLdfÍLsf] of]Uotf slDtdf aLdf lgodfjnL,
@)$( sf] lgod #% n] tf]ls lbP adf]lhd x'g'kg]{5 .
-#_ aLdsn] aLdf P]g, @)$( sf] bkmf @^ adf]lhd k|To]s k6s cfˆgf] cfly{s l:yltsf]
n]vf hf]vf / bfloTjsf] d"Nof+sg ug{sf nlfu pklgb]{lzsf -!_ / -@_ adf]lhd lgo'Qm
ug{ rfx]sf] aLdfÍLsf] JolQmut ljj/0f ;lxt ;ldltsf] k"j{ :jLs[ltsf] nflu k]z
ug'{kg]{5 .
-$_ pk–lgb]{lzsf -#_ adf]lhd k]z x'g cfPsf] sfuhft 5fgljg u/L pko'Qm b]v]df
;ldltn] aLdfÍL lgo'lQmsf] nflu k"j{ :jLs[lt lbg ;Sg]5 .
-%_ pk–lgb]{lzsf -$_ adf]lhd ;ldltsf] k"j{ :jLs[lt glnO{ aLdsn] cfˆgf] cfly{s
l:yltsf] n]vf hf]vf / bfloTjsf] d"Nof+sg ug{sf nflu aLdfÍLsf] lgo'Qm ug'{ x'Fb}g .

$= aLdfÍLsf] k|ltj]bg k]z ug'{ kg]{ M

-!_ aLdf lgodfjnL, @)$( sf] lgod #^ adf]lhd ;ldltdf k]z ug'{kg]{ aLdfÍLsf]
k|ltj]bg pQm d"Nof+sg ug'{kg]{ cjlw ;dfKt ePsf] ldltn] al9df bz -!)_ dlxgf
leq k]z u/L ;Sg' kg]{5 .
-@_ aLdf P]g, @)$( sf] bkmf @^ adf]lhd ul/Psf aLdfÍLsf] d"Nof+sg k|ltj]bgdf lgDg
tYox? v'n]sf]÷;+nUg /x]sf] x'g'kg]{ 5 .

1
 -s_aLdfÍLsf] d"Nof+sg k|ltj]bgdf ;dfj]z ul/Psf tYofÍsf] z'4tf tyf kof{Kttf
;DaGwdf aLdssf] ;+rfns ;ldltsf] pb\3f]if0f .
-v_ aLdfÍLsf] k|ltj]bgn] u/]sf] l;kmfl/; adf]lhd aLdsn] ug{ rfx]sf] Joj:yfx?
(Provisions) ;DaGwdf aLdssf] ;+rfns ;ldltsf] lg0f{osf] k|ltlnlk .
-u_ cGo cfjZos ljj/0f .

%= ;ldltsf] lgb]{zg adf]lhd ug'{ kg]{

-!_ lgb]{lzsf % adf]lhd ;ldltdf k]z x'g cfPsf] aLdfÍLsf] k|ltj]bgsf] cfwf/df
;ldltn] z]o/wgL sf]if (Shareholders Fund) af6 aLDffn]v lng]sf] sf]if
(Policyholders Fund) df /sd ;fg{ tyf cGo cfjZos lgb]{zg lbg ;Sg]5 .
-@_ pk–lgb]{lzsf -!_ adf]lhd aLdfn]v lng]sf] sf]ifdf ;fl/Psf] /sd z]o/wgL sf]ifdf
lkmtf{ nfg kfOg] 5}g .

^= ;ldltsf] :jLs[lt adf]lhd ug'{ kg]{ M

-!_ aLdf lgodfjnL, @)$( sf] lgod #^ adf]lhd ;ldltaf6 :jLs[t aLdfÍLsf] d"Nof+sg
k|ltj]bg cg';f/ æaLdfn]v lng]nfO{ k|bfg ul/g] d'gfkmf (Bonus) b/ d"Nof+sg cjlwsf]
z'? ldlt b]lv g} nfu" ug{'kg]{ 5 .
-@_ aLdf ;ldltaf6 csf]{ d"gfkmf b/ :jLs[t geP;Dd pk–lgb]{lzsf -!_ adf]lhd aLdsn]
aLdfn]v lng]nfO{ k|bfg ug]{ d'gfkmf b/ adf]lhd cGtl/d d'gfkmf (Interim Bonus) k|bfg
ug'{ kg]{ 5 .
-#_ aLdf lgodfjnL, @)$( sf] lgod #^ adf]lhd ;ldltaf6 :jLs[t Joj:yfx?
-Provisions_ pQm :jLs[lt ePsf] cfly{s aif{sf] lx;fadf b]vfpg' kg]{5 .

&= art (Surplus) afF8kmfF8 M

aLdfÍLsf] d"Nof+sg k|ltj]bg adf]lhd hLjg aLdf Joj;fodf ePsf] art

-sd{rf/LnfO{ af]g; 5'6\ofpg' cuf8L_ sf] 3l6df gAa] k|ltzt -()Ü_ /sd aLdfn]v lng]sf] sf]if
(Policy Holders Fund) df ;fg'{ kg]{5 .

*= aLdfÍLsf] st{Jo tyf d"Nof+sg sfo{ljlw M

-!_ hLjg aLdf Aoj;fo ug]{ aLdssf] cfly{s l:yltsf] n]vf hf]vf tyf bfloTjsf] d"Nof+sg
;DaGwdf cjnDag ug'{kg]{ ;fdfGo l;4fGtx? cg';"rL ! adf]lhd x'g]5 .

-@_ hLjg aLdf Aoj;fo ug]{ aLdssf] cfly{s l:yltsf] n]vf hf]vf tyf bfloTjsf] d"Nof+sg
ug]{ aLdfÍLsf] st{Jo cg';"rL @ adf]lhd x'g]5 .
-#_ hLjg aLdf Aoj;fo ug]{ aLdssf] cfly{s l:yltsf] n]vf hf]vf tyf bfloTjsf] d"Nof+sg
ubf{ kfngf ug'{kg]{ Joj:yfx? cg';"rL # adf]lhd x'g]5 .

2
 -$_ hLjg aLdf Aoj;fo ug]{ aLdssf] cfly{s l:yltsf] n]vf hf]vf tyf bfloTjsf]
d"Nof+sgaf6 x'g cfPsf] art afF8kmfF8 ubf{ kfngf ug'{kg]{ Joj:yfx? cg';"rL $
adf]lhd x'g]5 .
-%_hLjg aLdf Aoj;fo ug]{ aLdssf] cfly{s l:yltsf] n]vf hf]vf tyf bfloTjsf] d"Nof+sg
u/L aLdfÍLn] k]z ug'{kg]{ d"Nof+sg k|ltj]bgsf] 9Ffrf cg';"rL % adf]lhd x'g]5 .

(= vf/]hL / arfp M
-!_ hLjg aLdf Aoj;fo ug]{ aLdssf] cfly{s l:yltsf] n]vf hf]vf / bfloTjsf] d"NofÍg
;DaGwdf o; k"j{ ;ldltaf6 ;do ;dodf hf/L ul/Psf lgb]{zgx? vf/]h ul/Psf]
5 .
-@_ of] lgb]{lzsf nfu" x'g' cl3 hLjg aLdf Aoj;fo ug]{ aLdssf] cfly{s l:yltsf] n]vf
hf]vf / bfloTjsf] d"NofÍg ;DaGwdf o; ;ldltsf] lgb]{zg adf]lhd eP u/]sf sfd
sf/jfxLx? o;} lgb]{lzsf adf]lhd eP u/]sf] dflgg]5 .

3
 cg';"rL !
-lgb]{lzsf * -!_ ;+u ;DalGwt_

General

1. This directive should be interpreted in the context of the regulations and

practice of Nepal.
2. An Actuary should have the appropriate knowledge and practical experience
relevant to the insurer and types of business concerned.
3. An Actuary should be objective in the performance of his or her duties and take
reasonable steps to satisfy him or her that he or she is free from bias.
4. An Actuary must pay due regard to generally accepted actuarial best practice.
This directive establishes some elements of generally accepted actuarial best
practice. An Actuary to whom this directive applies should also consider
practices that may be considered generally accepted best practice. Where a
materially different practice is adopted from one which is a non-mandatory
generally accepted best practice, the Actuary should record the reasons for the
practice actually adopted.
5. An Actuary should render actuarial advice to the management of the insurer, in
particular in the areas of product design and pricing, insurance contract
wording, sales literatures, investments and re-insurance, valuation, and bonus
distribution.
6. An Actuary should ensure solvency of the insurer at all times.

4
 cg';"rL @
-lgb]{lzsf * -@_ ;+u ;DalGwt_

Duties of Actuaries

1. The Actuary should carry out the actuarial investigations specified and report in
accordance with the regulations. Where the Actuary believes that the regulatory
basis or format materially fails to make the real financial circumstances of
insurer clear, the Actuary should draw the attention of the insurer and Beema
Samiti to this in a supplementary report.
2. The Actuary should confirm financial soundness of the insurer.
3. All material valuation methods and assumptions should be stated.
4. All material risks to the solvency of the insurer should be identified.
5. If the Actuary considers that the report contains matters of significant concern
about the solvency of the insurer, he or she should present a copy of the
valuation report to the Beema Samiti.
6. The Actuary should notify the Beema Samiti, when he or she resigns from that
role or when his or her appointment in that role is terminated or not renewed.
7. If the insurer also carries out any non-insurance activities, the Actuary should
consider that business to the extent to which it might impact on the life
insurance business.
8. The Actuary should advise the insurer if he or she believes that it may not
currently be meeting liabilities to policyholders as they fall due or might not
have done so in the past, or might in reasonably foreseeable circumstances fail
to do so, either as a result of insufficient financial resources or otherwise. If the
Actuary believes that the insurer is not able to, or may not in the reasonably
foreseeable future be able to, meet any minimum solvency margin required by
regulation or considered appropriate by the Actuary, this is a sufficient (but not
necessary) condition to provide this advice .

5
9. Liability to policyholders may include obligations arising from regulatory
requirements to treat its policyholder fairly, including implicit liabilities created
by literature, illustrations or precedent. If so, the Actuary should ensure that the
insurer's management is aware of his or her interpretation of its obligations to
treat its policyholders fairly which need to be taken into account.
10.If the Actuary considers that the insurer's reinsurance arrangements are
inappropriate or inadequate he or she should advise the insurer on the
modifications advisable.
11.The Actuary should judge and decide whether the investment policy pursued by
the insurer is inappropriate having regard to the nature and term of the insurer's
liabilities and to the investments available. If this is the case, the Actuary should
advise the insurer of the constraints on investments policy.
12.Keeping into mind the current and likely future economic, investment,
regulatory environment and future taxation position of the insurer, The
following should be included in valuation report:-
12.1. The terms on which existing business has been, and current new business
is being written, with particular reference to all options and guarantees;
12.2. The Actuary should be satisfied that the premium rates being charged for
new business, and for existing business are adequate, taking into account
the other resources of the insurer. In particular they should be sufficient
to enable the insurer in due course to meet its emerging commitments
under the policies.
12.3. The insurer's policy with regard to the nature and timing of allocations of
profits to policyholders and/or shareholders;
12.4. the nature, extent and availability of the insurer's assets outside the life
insurance fund and of capital support from shareholders;
12.5. The existing investments of the life insurance business assets and the
continuing investment policy including the use of derivative instruments;

6
 12.6. The extent to which assets and liabilities cannot be or are not matched by
term and by type;
12.7. The exposure to and strength of investment and reinsurance
counterparties;
12.8. The systems of control which the insurer has established, especially those
relating to operational risk;
12.9. The reinsurance and underwriting arrangements;
12.10.The marketing plans, in particular the expected volumes and costs of
sales;
12.11.The current and likely future level of expenses;
12.12.The current and likely future levels of mortality and morbidity;
12.13.The persistency of the business written both in the short and long term,
and the terms for discontinuance.
13.The Actuary of an insurer shall furnish valuation report in the format
prescribed.

7
 cg';"rL #
-lgb]{lzsf * -#_ ;+u ;DalGwt_

The Actuarial Valuation

1. The Actuary should take all reasonable steps to ensure that the data is accurate.
If the Actuary has any doubts about the accuracy of the data, reserves should be
established for the risk that the actual value of the liabilities will be greater than
that derived from the available data. If the potential inaccuracy is material
report required should be appropriately qualified.
2. The Actuary should ensure that adequate systems of control are in place and
fully documented to enable the appropriate valuation procedures to be correctly
carried out and adequately recorded.
3. The statutory valuation at present is done tri-annually. An internal annual
valuation should be done to determine solvency and financial condition of the
business, and a copy of the annual valuation report should be submitted to
Beema Samiti.
4. Mathematical Reserve shall be determined separately for each contract by a
prospective method of valuation, called the Gross Premium Method.
5. The valuation method shall take into account all prospective contingencies
under which any premiums or benefits may be payable under the policy, as
determined by the policy conditions. The level of benefits shall take into
account the reasonable expectations of policyholders (with regard to bonuses)
and any established practices of an insurer for payment of benefits.
6. The valuation method shall take into account the cost of any options that may
be available to the policyholder under the terms of the contract.
7. The determination of the amount of liability under each policy shall be based on
prudent assumptions of all relevant parameters.
8. The amount of mathematical reserve in respect of a policy may be negative
(called “negative reserves”) or less than the guaranteed surrender value

8
 available (called “guaranteed surrender value deficiency reserves”) at the
valuation date.
The Actuary shall, for the purpose of the Valuation set the amount of
mathematical reserve to zero, in case of negative reserve of a policy if any,
or to the guaranteed surrender values, as the case may be.
9. When a method of valuation other than the Gross Premium Method of valuation
is to be adopted; then, other approximations (e.g. retrospective method) may be
used. Provided that the amount of calculated reserve is expected to be at least
equal to the amount that shall be produced by the application of Gross Premium
Method.
10.The determination of the amount of mathematical reserves shall take into
account the nature and term of the assets representing those liabilities and the
value placed upon them and shall include prudent provision against the effects
of possible future changes in the value of assets on the ability of the insurer to
meet its obligations arising under policies as they arise.
11.The gross premium method of valuation shall discount the following future
policy cash flows if any, at an appropriate rate of interest:-
11.1. premiums payable;
11.2. benefits payable under basic benefits and /or rider benefits-
11.2.1.1. on death,
11.2.1.2. on survival,
11.2.1.3. on morbidity,
11.2.1.4. on voluntary termination of contract;
11.3. bonuses that have already been vested as at the valuation date;
11.4. bonuses as a result of the valuation at the valuation date;
11.5. commission and remuneration payable, if any, in respect of a policy
(this shall be based on the current practice of the insurer);
11.6. policy maintenance expenses, in respect of a policy;

9
 11.7. allocation of profit to shareholders, where there is a specified relationship
between profits attributable to shareholders and the bonus rates declared
for policyholders, provided that allowance must be made for tax.
12.Additional Requirements for Linked Business:
12.1. Reserves in respect of linked business shall consist of two components,
namely, unit reserves and general fund reserves.
12.2. Unit reserves shall be calculated in respect of the units allocated to the
policies in force at the valuation date using unit values at the valuation
date.
12.3. General fund reserves (non-unit reserves) shall be determined using a
prospective valuation method, which shall take into account of the
following, namely:-
12.3.1. Premiums, if any, payable in future;
12.3.2. Death benefits, if any, provided by the general fund (over and
above the value of units);
12.3.3. Management charges paid to the general fund;
12.3.4. Guarantees, if any, relating to surrender values or minimum death
and maturity benefits;
12.3.5. Fund growth rates and management charges.
12.3.6. Negative reserves, if any, shall be dealt with in accordance with
directive number twenty-seven.
13.Where a policy provides built-in options, that may be exercised by the
policyholder, such as conversion or addition of coverage at future date(s)
without any evidence of good health, annuity rate guarantees at maturity of
contract, etc., the costs of such options shall be estimated and treated as special
cash flows in calculating the mathematical reserves.
14.The valuation parameters shall constitute the bases on which the future policy
cash flows shall be computed and discounted. Each parameter shall have to be

10
 appropriate to the block of business to be valued. An Actuary shall take the
following into consideration:-
14.1. The value(s) of the parameter shall be based on the insurer’s experience
study, where available. If reliable experience study is not available, the
value(s) can be based on the industry study, if available and appropriate.
If neither is available, the values may be based on a published table
appropriately modified to Nepalese lives, or on the bases used for pricing
the product. In establishing the expected level of any parameter, any
likely deterioration in the experience shall be taken into account;
14.2. The expected level shall be adjusted by an appropriate Margin for
Adverse Deviations (MAD). Values used for the various valuation
parameters should be consistent among themselves;
14.3. Mortality rates to be used shall be with reference to a published table, as
prescribed by Beema Samiti;
provided further that such rates shall not be less than hundred percent,
unless the Actuary can justify a lower percentage;
14.4. Morbidity rates to be used shall be by reference to a suitably modified
published table or reinsurer's rates. Beema Samiti may in future prescribe
a table, when sufficient data is available;
14.5. Policy maintenance expenses may be divided into fixed and variable
expenses. The variable expenses shall be related to sum assured and/or
premiums and/or benefits and/or per policy expenses. All expenses shall
be increased in future years for inflation; the rate of inflation assumed
should be consistent with the valuation rate of interest.
15.Valuation rates of interest, to be used by Actuary-
15.1. shall not be higher than the rates of interest, for the calculation of the
present value of policy cash flows, determined from prudent assessment
of the yields from existing assets attributable to blocks of life insurance
business, and the yields which the insurer is expected to obtain from the
sums invested in the future, and such assessment shall take into account -

11
 15.1.1. the composition of assets supporting the liabilities, expected cash
flows from the investments on hand, the cash flows from the
block of policies to be valued, the likely future investment
conditions and the reinvestment and disinvestment strategy to be
employed in dealing with the future net cash flows;
15.1.2. the risks associated with investment in regard to receipt of
income on such investment or repayment of principal;
15.1.3. the expenses associated with the investment functions of the
insurer;
15.2. shall not be higher than, for the calculation of present value of policy
cash flows in respect of a particular category of contracts, the yields on
assets maintained for the purpose of such category of contracts;
15.3. in respect of non-participating business, shall recognize the risk of
decline in the future interest rates;
15.4. in respect of participating business, the scale of future bonuses used in
the valuation should be consistent with the valuation method and the
valuation rate of interest;
15.5. In respect of single premium business, shall take into account the effect
of changes in the risk-free interest rates.
16.The Actuary may take other parameters into account, depending on the type of
policy. In establishing the values of such parameters, the considerations set out
in this directive shall be taken into account.
17.The Actuary and the insurer shall be responsible for the value to be placed on
the assets as per regulations if any. The Actuary should, respectively, either
ensure or take reasonable steps to verify that adequate systems of control are in
place to ensure that appropriate values are placed on the assets and that any
limits on exposure to individual investments, classes of investment or
counterparties imposed by the regulations are properly applied. If it is difficult
to determine an accurate value for a material proportion of the assets, the

12
 Actuary should establish reserves, if necessary, in respect of the risk of over-
valuation.
18.Where assets are valued at current market value, as prescribed by the
accounting standards of Nepal (if revised) the deterministic or stochastic
discount factors used should be consistent with those market values. Where
assets are valued on a different basis, the rates of discount should be determined
consistently with that basis. In addition, due allowance should be made for the
current and future taxation position of the insurer. Any such allowance should
be consistent with any allowance made for tax relief on expenses.
19.The Actuary will need to ensure that allowance has been made for the effect or
possible effect of derivatives and other financial instruments when choosing the
valuation basis. The appropriate valuation interest rates should allow for the
return on the assets held as adjusted to reflect economic exposure under futures
contracts and contracts for differences. Consideration should also be given to
the treatment of, and allowance for, financial options, particularly when close to
an option date.
20.As regards the business ceded by insurers, this guideline shall be applicable to
the net sums at risk retained by the insurer. Reinsurance arrangement with an
element of borrowing in the form of deposit or credit of any kind from insurer
or reinsurer (s) without the prior approval of Beema Samiti shall not be treated
as credit for reinsurance for the purpose of determination of required solvency
margin.
21.The Actuary shall make aggregate provisions in respect of the following, where
it is not possible to calculate mathematical reserves for each policy, in the
determination of mathematical reserves:-
21.1. Policies in respect of which extra premiums have been charged on account
of underwriting of under-average lives that are subject to extra risks such
as occupation hazard, over-weight, under-weight, smoking history,
health, climatic or geographical conditions;

13
 21.2. Lapsed policies not included in the valuation but under which a liability
exists or may arise;
21.3. Options available under individual and group insurance policies;
21.4. Guarantees available to individual and group insurance policies;
21.5. The rates of exchange at which benefits in respect of policies issued in
foreign currencies have been converted into Nepalese Currency and what
provision has been made for possible increase of mathematical reserves
arising from future variations in rates of exchange;
21.6. Others (if any).
22.The Actuary should take account of the insurer's reinsurance arrangements in
the valuation, including any implicit financing provision and the possibility that
reinsurance contracts may lapse or prove unenforceable in certain
circumstances.
23.The Actuary should have regard to the possibility of failure of or dispute with a
reinsurance, investment or financial instrument counterparty to which the
insurer has material exposure, taking into account factors such as the financial
strength and regulatory environment of the counterparty.
24.The Actuary should ensure that adequate margins are included in the valuation
assumptions or methods, including in the credit taken for any reinsurance,
having regard to the Actuary's own assessment of the risks inherent in the
nature and conduct of the insurer's business and the financial strength and
regulatory environment of material counterparties.
25.Where there is any mismatching of assets and liabilities, the Actuary should
ensure that there is adequate explicit or implicit provision for reasonably
foreseeable adverse movements in asset values or yields.

14
 cg';"rL $
-lgb]{lzsf * -$_ ;+u ;DalGwt_

Recommendations on Allocation of Profits

1. The Actuary should determine, in accordance with applicable regulations, the

excess of the assets available for its participating life insurance business over its
liabilities attributable to that business. If rights of any life insurance
policyholders to participate in profits relate only to a part of the business, the
Actuary should also identify separately any excess which relates to that part.
2. The Actuary should advise the insurer, in accordance with Beema Samiti’s
Directives and or other applicable regulations, of the extent to which it would
be appropriate to transfer any excesses to shareholders or, in the case of with
profits business, distribute it between policyholders and shareholders, and,
where required to do so, should make recommendations for its specific
allocation.
3. In making recommendations in respect of any proposed allocation of profits, the
Actuary should carry out appropriate financial investigations including an
appraisal of the relevant past experience.
4. In the report that includes the recommendations, the Actuary should include
sufficient information and discussion about each factor and about the results of
any financial investigations to justify, and enable the insurer to judge, the
appropriateness of the recommendations and for the insurer to understand their
implications for the future course of the insurer's business. In particular, the
Actuary should state his or her:-
4.1.Conclusions from the appraisal of the relevant experience;
4.2.Understanding of the insurer's financial and business objectives; and
4.3.Assessment of the insurer's ability to meet any minimum required solvency
margin following the recommended allocation.

15
 4.4.In addition, for with- profits business, the Actuary should state his or her:-
4.4.1. Method of use of asset share or other techniques, if any,
including the way in which the recommendations are derived
from those techniques;
4.4.2. Interpretation of any legal advice given to the insurer
constraining or potentially constraining the insurer's discretion
when allocating surplus and how this has been reflected in the
recommendations;
4.4.3. Interpretation of any requirements to treat policyholders fairly;
4.4.4. Opinion of the extent to which it is appropriate to distinguish
between groups of participating policies having regard inter alias
to the nature of the policies, their duration and their relevant
pooled experience;
4.4.5. Opinion of how the recommendations maintain fairness between
different categories of policy or policyholders and between
policyholders and the insurer and or shareholder.
5. If the recommendations anticipate the results of a determination of surplus, the
Actuary should include in the report the estimated results of the determination
and show how the recommendations can be financed.
6. The Actuary should discuss the relationship between the recommended
allocation and recent and expected future experience (economic, demographic,
etc.) In the case of with-profits business, the report should address bonus
prospects, in different future investment scenarios. If the recommended
allocation is excessive relative to the recent and expected experience (apart
from any non-recurrent elements ) and if the continuation of this relationship in
future years could result in a material deterioration in the insurer's financial
position, the report should indicate whether and how this could appropriately be
avoided, taking any requirement to treat policyholders fairly into account.
7. Where, in the opinion of the Actuary, there is uncertainty regarding the extent
to which the insurer can exercise its discretion when allocating surplus to

16
policyholders, he or she should state in the report the nature of the uncertainty,
the assumptions made with regard to the uncertainty when making the
recommendations and the consequences where the uncertainty is to be resolved
differently.

17
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Format of Valuation Report of Life Insurer

1. Details of Insurer:
 Name of Insurer:
 Particulars of head office:
 Address:
 Tel no:
 Fax no:
 Website address:
 Registration no
 Date of registration:
 Date of commencement of operations:

2. Location and Staffing of Offices:

Employees
Place No of offices
Regular outsourced

3. Paid up Capital
 Paid up capital at registration date:
 Paid up capital on valuation date:
 Promoters with their share of capital:

4. Particulars of Principal Officer:

 Name:
 Date of employment:
 Educational qualifications:
 Prior business experience:

5. Details of Actuary:
 Name:
 Date of appointment(attach a copy of appointment letter):
 Educational qualifications:
 Prior business experience:

18
  Business office:
 Address:
 Phone no:
 E-mail address:
 Particulars of CPD programs attended last year:
 Particulars of other assignments (Including actuarial consultancy)
done since last valuation:

6. Brief Overview of Business Operations:

 Insurer’s operational structure:
 Places of operations:
 Market share:
 Nature of business activity of promoters:
 Major events during the inter valuation period, relevant to
operations of the Insurer or promoter company (e.g. mergers,
acquisitions, a new business activity, significant financial loss,
changes in company structure etc).
 Financial highlights of the promoter companies from latest
published financial statements:

7. Lines of Business

8. New Products with Full Details:

 Brand name:
 Design of product:
 Benefit:
 Participating or non participating:
 Actuarial basis (mortality, morbidity, interest, and expenses):
 Minimum and maximum face value:
 Surrender benefit:
 Surrender basis:
 Riders:
 Options:
 Guarantees:
 Specimen premium rates for ages 20, 25, 30, 35, 40, 45, 50, 55, 60
and terms 10, 15, 20, 25:

9. Details of all Existing Products:

 Brand name:
 Design of product:

19
  Benefit:
 Participating or non participating:
 Actuarial basis (mortality, morbidity, interest, and expenses):
 Minimum and maximum face value:
 Surrender benefit:
 Surrender basis:
 Riders:
 Options:
 Guarantees:
 Specimen premium rates for ages 20, 25, 30, 35, 40, 45, 50, 55, 60
and terms 10, 15, 20, 25:

10.Changes to Existing Products with Details:

11.Withdrawal of any Product:

12.In Force Business Volumes as at End of Each FY:

(a) Individual
Description of Annualized Premium
Number of contracts Sum Assured
Product (Including Single Premium)

Total

(b) Group
Description of Number of
Annualized Premium Number of Lives
Product Schemes

13. No of Policies (Please make separate table for individual and group for each FY):

Line of Opening Opening Additions Additions Deletions Deletions Closing Closing

Business SP AP SP AP SP AP SP AP

Note; SP= Single Premium, AP= Annual Premium (Includes Hly, Qly, Mthly Modes)

20
14.Benefit Amount (Please make separate table for individual and group for each FY):
(In Lakh)
Line of
Opening Opening Additions Additions Deletions Deletions Closing Closing
Busines
SP AP SP AP SP AP SP AP
s

Note; SP= Single Premium, AP= Annual Premium (Includes Hly, Qly, Mthly Modes)

15.Premium Amount (Please make separate table for individual and group for each FY):
(In Lakh)
Line of
Opening Opening Additions Additions Deletions Deletions Closing Closing
Busines
SP AP SP AP SP AP SP AP
s

Note; SP= Single Premium, AP= Annual Premium (Includes Hly, Qly, Mthly Modes)

16.Net Lapse Ratios (%) (Please make three tables for end of each FY):

Net Lapse Ratio in Previous

Net Lapse Ratio in Same FY
FY
Particular Based on Based on Based on Based on
Benefit Number of Benefit Number of
Amount Policies Amount Policies
Policies Issued in Same
FY
Policies Issued in One
Year Before
Policies Issued in Two
Years Before
Policies Issued in Three
Years Before

21
 17. Movement Statistics:
Table A
NEW BUSINESS of FY………
(One table as at end of each FY)
Name of Average No of Death No of Pure
Average SA No of Surrenders
Insurance Premium Per Claims Per Lapses Per
Per Contract Per 1000 Policy
Product 1000 SA 1000 Policy 1000 Policy

Table B
ALL IN FORCE BUSINESS of FY………
(One table as at end of each FY)
Name of Average No of Death No of Pure
Average SA No of Surrenders Per 1000
Insurance Premium Per Claims Per Lapses Per
Per Contract Policy
Product 1000 SA 1000 Policy 1000 Policy

Table C
Premium Income by Percent
NEW BUSINESS of FY………
(One table as at end of each FY)
Name of
Insurance SP Yly Hly Qly Mly
Product

Note; All columns add upto 100%

SP=Single premium, Yly=yearly, Hly=Half yearly, Qly=quarterly, Mly=Monthly

22
 Table D
Premium Income by Percent
ALL IN FORCE BUSINESS of FY………
(One table as at end of each FY)
Name of
Insurance SP Yly Hly Qly Mly
Product

Note; All columns add up to 100%

18.Marketing Sales Force (Three tables as at end of each FY):
Particular At Beginning of Year Additions During Year Deletions At the End of Year
Agents
Corporate
Agents
Others
Total

19.Productivity of Sales Force

a. Average premium income per agent in each FY:
b. No of agents who have sold at least 25 policies in each FY:

20. Underwriting Practices :

a. Non medical limits:
b. Brief description of underwriting policy for individual lives and for
group, viz a vis selection of standard lives, treatment of sub standard,
declinature etc.

21.Analysis of Business (One table as at end of each FY):

Benefit Amount Premium amount
Particular No of Policies
(In Millions) (In Lakhs)
Ordinary
Non-Medical Special
Total
Standard
Medical Sub-Standard
Total
Postponed
Declined

23
22.Analysis of Early Death Claims:
(a) Individual Business
First Policy Year First Policy Year
First policy Year
Ending in Ending in
Early Death Claims Ending in Same FY
One Year Before Two Years Before
No Benefit Amount No Benefit Amount No Benefit Amount
Ordinary
Non
Special
Medical
Total
Standard
Medical Sub Standard
Total
Grand Total
(b) Group Business
First Policy Year First Policy Year
First policy Year
Ending in Ending in
Early Death Claims Ending in Same FY
One Year Before Two Years Before
No Benefit Amount No Benefit Amount No Benefit Amount
Ordinary
Non
Special
Medical
Total
Standard
Medical Sub Standard
Total
Grand Total

23.New Business For the Year

(a) Individual Business
First Policy Year First Policy Year
First policy Year
Ending in Ending in
New Business Ending in Same FY
One Year Before Two Years Before
No Benefit Amount No Benefit Amount No Benefit Amount
Ordinary
Non
Special
Medical
Total
Standard
Medical Sub Standard
Total
Grand Total

24
 (b) Group Business
First Policy Year First Policy Year
First policy Year
Ending in Ending in
New Business Ending in Same FY
One Year Before Two Years Before
No Benefit Amount No Benefit Amount No Benefit Amount
Ordinary
Non
Special
Medical
Total
Standard
Medical Sub Standard
Total
Grand Total

24.Ratio of Early death claims to New Business

(a) Individual Business
Ratio
First Policy Year First Policy Year
First policy Year
Particulars Ending in Ending in
Ending in Same FY
One Year Before Two Years Before
No Benefit Amount No Benefit Amount No Benefit Amount
Ordinary
Non
Special
Medical
Total
Standard
Medical Sub Standard
Total
Grand Total
(b) Group Business
Ratio
First Policy Year First Policy Year
First policy Year
Particulars Ending in Ending in
Ending in Same FY
One Year Before Two Years Before
No Benefit Amount No Benefit Amount No Benefit Amount
Ordinary
Non
Special
Medical
Total
Standard
Medical Sub Standard
Total
Grand Total

25
25.Reinsurance:
 Retention limits:
o For individual (Plan wise):

o For group ( Plan wise):

 Brief description of reinsurance arrangements:

 Catastrophic cover:

 Name of reinsures:

 Rating of reinsures:

 Nature of advice, if any, given by reinsures for product design and

pricing:

26.Reinsurance Premium Statistics:

(a) Individual Business
Same FY One Year Before Two Year Before
Particular New Total New Total New Total
Gross Premium

Business Business Business Business Business Business

(In Rs. Lakhs)

Basic

Riders

Total
Basic
RI Premium
(In Rs. Lakhs)

Riders

Total

Basic
Ratio of RI Premium to
Gross Premium

Riders

Total

26
 (b) Group Business
Same FY One Year Before Two Year Before
Particular New Total New Total New Total
Gross Premium

Business Business Business Business Business Business

(In Rs. Lakhs)

Basic

Riders

Total
Basic
RI Premium
(In Rs. Lakhs)

Riders

Total

Basic
Ratio of RI Premium to
Gross Premium

Riders

Total

27.Analysis of Expenses (Please make one table for each FY):

(In Rs' 000)
Particular Detail Individual Group Total
First Year(FY)
Premium
Renewal
Income
Total
Total FY Commissions
First year
Agent Commission as % of FY
Commission Premiums

Total Commissions
Commission as % of Renewal
Renewal Premiums
Agent
Commissions

27
Particular Detail Individual Group Total
Medical

Underwriting
Policy issue

Salary
Travel

Training
Rent
Repairs
First Year Administrative Expenses

Water
Others (Describe Categories)

Electricity

Stationary

Legal /Auditors fee

Sales promotion /
Publicity

Interest/ Bank
charges

IT and call centre

Agents training
/Recruitment

Depreciation
Miscellaneous
Total FY Administrative
Expenses

Total FY Adm. Exp. as % of FY

Premiums
se
in

iv
m

Premium Collection
w

A
al

at
is
tr

E
n

x
p

n
e

28
Particular Detail Individual Group Total
Policy Maintenance

Expenses for Claims and Benefit

Payments
Salary
Travel

Training
Rent
Repairs

Water
Others(Describe Categories)

Electricity

Stationary

Legal /auditors fee

Sales promotion
/publicity

Interest/ Bank Charges

IT and Call Centre

Agents Training
/Recruitment

Depreciation
Miscellaneous
Total Renewal Expenses
Total Renewal Adm. Exp. as %
of Renewal Premiums
Total of Commission and Administrative
Expenses

Total Expenses (Adm. Exp. & Comm.)as % of

Total Premium
Notes: Administrative expenses to be allocated in a systematic manner to FY and renewal
expenses, and manner of allocation described.

29
28. Investments (Provide brief information on the following):

A. Investment policy:

B. Investment expenses:

C. Details of investment held with book value and market value at

end of each of the three FY.

D. Mean yield on the funds for each of the three FY.

E. Describe method for calculation of yield.

F. Details of assets defaults, non performing assets.

29.Reserves and Valuation:

A. Reserve Summary as at End of Each FY

(In Rs. Lakhs)
Particular Gross Ceded Net
Individual Life
Group Life
Total

B Negative and deficiency reserves for individual life, group life,

and total may be indicated net of reinsurance.

C Valuation systems:
Provide details of the valuation systems in use covering the
following aspects:

 How the policy data is accessed.

 How valuation bases are supplied to the system.
 General approach in computing and reporting reserves.
 Various accuracy and reconciliation checks.

D Valuation methods and bases:

For each line of business describe the following aspects of the
valuation

30
 Valuation method used. (And approximations used if
any).
 Various parameters used
o Mortality basis. (Please give the full table of rates
used and justification for using this basis for
Nepalese lives).
o Interest Basis with justification for rate used.
o Morbidity basis with justification for rates used.
o Expense basis.

 Provisions made for:

o IBNR.
o Revivals.
o Immediate payment of claims.
o Contingency reserves.
o Provisions for adverse deviations.
o Catastrophic reserves.
o Others.

 New business strain may be indicated for individual

life, group life, and total.
 Analysis of surplus(profits/strain)for individual life,
group life, and total may be given by source viz:

o Mortality.
o Lapses/surrenders.
o Interest.
o Expenses.
o New business.
o Change of basis.
o Others.
o Total.

 Valuation abstracts showing class wise and product

wise the details of valuation, viz:

o No of contracts.
o Value of sum assured.
o Value of premiums.

31
 o Value of vested bonus if any.
o The mathematical reserve.
o Provisions.
o Valuation balance sheet.
o Others.

 New business (Please give information on):

o Pricing policy
o Adequacy of pricing
o New business strain.

E. Appropriation of surplus as per table:

Particular Same Valuation Previous Valuation
Unallocated Surplus
Amount of Surplus at Beginning
(In Lakhs) Valuation Surplus
Total Surplus
Appropriation to Par Amount
Policyholders % to Total
Appropriation to Amount
Shareholders % to Total
Unallocated Surplus at End

30.Growth of Policyholders Fund

(In Rs.
Lakhs)
Same FY One Year Before Two Year Before
Particular
Par Non par Total Par Non par Total Par Non par Total

At Beginning
Increase During Year
At End of Year

31.Controls by the Actuary:

The Actuary is responsible for the accuracy of the reserves shown in
financial statements.
The following checks are to have been done:
 All policies valued and valued once only.
 Policy master file is accurate in respect of all contracts.
 Valuation systems pick up accurate policy data.

32
  Valuation bases are based on appropriate studies and are
appropriate for business to be valued.
 Accurate valuation reserves are included in the financial
statements.

The Actuary may kindly comment and certify that these have been done.

Any areas of concern regarding the business and the valuation including
inter valuation experience, Investments, operations may be stated.

Please clarify specifically with respect to valuation:

 The proposed bonus scales to policyholders.
 The cost of bonus.
 The proposed appropriations of surplus to the policyholders,
shareholders and the unappropriated surplus carried forward.

Date……………………… ……………………
Signature of Actuary

33