APPLICATION for APPROVAL to ENCUMBER ASSETS in TERMS of SECTION 34(1)(A) of the LONG-TERM

APPLICATION FOR APPROVAL TO ENCUMBER ASSETS IN TERMS OF SECTION 34(1)(a) OF THE LONG-TERM INSURANCE ACT OR SECTION 33(1)(a) OF THE SHORT-TERM INSURANCE ACT

APPLICATION FOR APPROVAL TO ENCUMBER ASSETS IN TERMS OF SECTION 34(1)(a) OF THE LONG-TERM INSURANCE ACT OR SECTION 33(1)(a) OF THE SHORT-TERM INSURANCE ACT (“ACT”)

A. Instructions for completion and submission

1. This form must be properly completed and signed. Questions must be answered either in full or not applicable (“n/a”). The signer(s) must be duly authorised to make the application.

2. The format of this form or the wording of questions may not be changed. However, this form may be reproduced.

3. Answers may be in writing or may be typed.

3.1 If the form is completed on a computer, -

(a) delete the solid lines in those areas provided for answers before the answers are typed or use the overtype mode whilst the answers are typed.

(b) rows may be inserted where insufficient space is provided for answers.

3.2 If the form is completed by hand, should the space provided not be sufficient, the detail can be provided on a separate page, duly cross-referenced to the relevant question.

3.3 If the form that is submitted contains any changes to typed or written information, those changes must be signed.

4. The completed form does not need to be accompanied by any number of copies.

5. The application must be submitted sufficiently long before the approval is needed to allow the Registrar to consider it and seek information or clarification, where necessary.

B. General information

1. This form is required in terms of section 3(2)(a) of the Act read with section 34(1)(a) of the Long-term Insurance Act or section 33(1)(a) of the Short-term Insurance Act.

2. The form must be accompanied by the fees prescribed by the Registrar in terms of section 3(2)(b)(i) and, where indicated, by the documents required in terms of section 3(2)(b)(ii) of the Act.

3. The Registrar, in terms of section 4(2) of the Act, may by notice direct a long-term or short-term insurer (“insurer”) to furnish the Registrar, within a specified period, with specified additional information or documents.

4. The application will not be considered favourably if it is not supported by a compelling reason(s).

C. Legal and policy framework

1. In terms of section 34(1)(a) of the Long-term Insurance Act or section 33(1)(a) of the Short-term Insurance Act an insurer may apply for approval, subject to such conditions as the Registrar may determine, to encumber its assets. The application must set out all the reasons for, and information relevant to, the request.

2. In terms of section 32(1)(c) of the Long-term Insurance Act or section 31(c) of the Short-term Insurance Act -

2.1 an asset shall be deemed not to be held by an insurer if it has been encumbered contrary to section 34(1)(a) of the Long-term Insurance Act or section 33(1)(a) of the Short-term Insurance Act in favour of another person, unless the person in whose favour it is encumbered is -

(a) the Minister of Labour or the Director-General: Labour, or any person acting on behalf of that Minister or Director-General in accordance with the laws of the Republic relating to compensation for occupational injuries and diseases;

(b) the government of any country other than the Republic in which the long-term or short-term insurer carries on insurance business or intends to carry on such business, or any person acting on behalf of such government, if the long-term or short-term insurer has encumbered those assets in favour of, or transferred those assets into the name of, that government or that person in order to comply with the laws of that country relating to long-term or short-term insurance; or

(c) another insurer and the encumbrance or transfer takes place in terms of a reinsurance policy.

3. Assets should only be encumbered in favour, preferably, of a subsidiary or fellow subsidiary of the insurer.

4. The period for which the assets are encumbered must be temporarily and must be determinable.

5. The amount or maximum amount of the encumbrance must be determinable.

6. The insurer’s financial statements and statutory return must contain particulars of the encumbrance.

7. The conditions that the Registrar may determine may include that the encumbered assets, whether in the aggregate for all previous approvals or for this specific approval and at all times, may not be more than a specified percentage of the assets that are in excess of those assets that are required to meet the insurer’s liabilities, and capital adequacy requirements in the case of a long-term insurer, under the Act.

D. Specific information

I, the undersigned, being the Public Officer of ______

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hereby apply for approval that the insurer may encumber its asset(s).

The following information is provided in support of the application.

1. State the full name of the person in whose favour the asset(s) will be encumbered.

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2. Describe the relationship between the insurer and the person in whose favour the asset(s) will be encumbered.

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3. Describe the type of business that the person in whose favour the asset(s) will be encumbered, conducts.

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4. Describe the asset(s) that will be encumbered and indicate the fund (e.g. policyholders’, shareholder’s) in which it is held.

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5. State the value of the liability in respect of which the asset(s) is encumbered and value of the encumbered asset(s) in Rand.

Value of the liability

/ Value of the asset(s)

6. Indicate the commencement date and the period during which the asset(s) will be encumbered.

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7. Give the reasons for encumbering the asset(s) and indicate whether the assets are ceded as security for a specific transaction.

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8. Do the assets remain registered in the name of the insurer?

Yes
No1

1. If the answer is “No” kindly explain.

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9. Will the encumbered assets be held by a custodian such as a registered bank on behalf of the insurer?

Yes2
No

2. If the answer is “Yes” kindly give full details and indicate where the title of evidence of the insurer to these assets will be kept.

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10. Describe the circumstances under which the assets may be called upon and indicate what the likelihood is of the asset(s) being called upon.

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11. Express the value of the encumbered asset(s) in question 5 of Part D as a percentage of excess assets over liabilities and capital adequacy requirement in the case of a long-term insurer or surplus assets in the case of a short-term insurer in the most recent statutory return.

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12. State the total (maximum) value of encumbrances, other than those in question 5 of Part D, that are currently still in force, in Rand and express it as a percentage of excess assets over liabilities and capital adequacy requirement in the case of a long-term insurer or surplus assets in the case of a short-term insurer in the most recent statutory return.

Value / % of excess assets over liabilities and capital adequacy requirement in the case of a long-term insurer or surplus assets in the case of a short-term insurer

13. Describe the measures that will apply to monitor the total amount of encumbered asset in force in relation to excess assets over liabilities and capital adequacy requirement in the case of a long-term insurer or surplus assets in the case of a short-term insurer.

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14. Will the insurer continue to spread the encumbered assets in terms of section 31 of the Long-term Insurance Act or section 30 of the Short-term Insurance Act?

Yes
No3

3. If the answer is “No” kindly explain.

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15. Did the insurer inform its auditor(s) and statutory actuary (where one is appointed) of this application?

Yes
No4

4. If the answer is “No” kindly explain.

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16. Are there any matters that might endanger the maintenance of financially sound condition as envisaged in section 29 of the Long-term Insurance Act or 28 of the Short-term Insurance Act?

Yes5
No

5. If the answer is “Yes” kindly furnish details.

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17. Are there any other information or documents that are relevant to this application?

Yes6
No

6. If the answer is “Yes” kindly specify the information or documents.

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18. I hereby enclose -

18.1 the payment or proof of payment of the fee prescribed by the Registrar by notice in the Government Gazette (the latest fee schedule as prescribed is available on the FSB’s website).

18.2 a copy of the agreement entered into for encumbering the asset(s).

18.3 the other documents, if any, mentioned in the Part D of this form in support of the application.

19. I certify, to the best of my knowledge, that the information given in the answers to the above questions are complete, accurate and true and not misleading in any respect.

Full forename(s) and surname of the public officer.

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SIGNATURE OF PUBLIC OFFICER DATE

Date: 23/04/2010 Page 11