Guidance Manual:
Completion of the
SHORT-TERM INSURANCE
Statutory Return (ST 2008)
Table of contents
INTRODUCTION 1
INFORMATION REGARDING THE RETURN 2
EXCEL FUNCTIONALITY 4
Statement A1 - REGISTRATION INFORMATION 5
Statement A2 - ADDRESSES AND PARTICULARS OF KEY PERSONS 6
Statement A3 – DIRECTORS, MANAGEMENT EXECUTIVES AND MEMBERS OF AUDIT COMMITEE 6
B STATEMENTS 7
Statement B1 – GROSS UNDERWRITING RESULTS 7
Statement B2 – REINSURANCE UNDERWRITING RESULTS 7
Statement B3 – SECURITIES IN RESPECT OF APPROVED FOREIGN REINSURANCE 7
Statement B4 – GROSS AND REINSURANCE PREMIUM ANALYSIS 7
Statement B5 – NET UNDERWRITING RESULTS 8
Statement B6 – SUMMARY OF BUSINESS COMPOSITION 8
Statement C1 and C2 – INCOME STATEMENT AND BALANCE SHEET 9
Statement C3 – COMPARISON OF STATUTORY UNDERWRITING RESULTS AND PUBLISHED UNDERWRITING ACCOUNT 9
Statement C4 – ANALYSIS OF ISSUED PREFERENCE SHARES & DEBENTURES 9
Statement C5 – CASH FLOW STATEMENT 10
Statement D1 – RESERVING DEVELOPMENT (Including Statements D1.1 to D1.8) 11
Statement D2 – UNEARNED PREMIUM PROVISIONS (“UPP”) 19
Statement D3 – SUMMARY OF TECHINCAL PROVISIONS 19
Statement E1 – CASH & BALANCES & DEPOSITS 21
Statement E2 – SECURITIES & LOANS 21
Statement E3 – DEBENTURES, LOAN STOCK & OTHER SECURITIES 21
Statement E4 – DEBTORS (CLAIMS AGAINST PERSONS AND ENTITIES) 21
Statement E5 – SHARES, UNITS & DEPOSITORY RECEIPTS 22
Statement E6 – LAND AND BUILDINGS – FREEHOLD ONLY 22
Statement E7 – FIXED ASSETS & SUMMARIES OF OTHER ASSETS 22
Statement E8 - DERIVATIVES 23
Statement E9 (total) – ASSETS AND LIABILITIES: COMPARISON OF STATUTORY TO SHAREHOLDERS’ VALUES 23
Statement E10 – RELATED PARTY BALANCES 24
Statement F1 – SURPLUS ASSETS, NET ASSET RATIO AND SOLVENCY MARGIN 25
Statement F2 – SPREAD OF DOMESTIC ASSETS 25
Statement G1 – GENERAL INFORMATION 27
Statement G2- RISK REPORT BY DIRECTORS 27
Statement G3- RISK REPORT BY MANAGEMENT 27
Statement G4 - Cross Border Insurance operations 27
Statement H ASSURANCE REPORT BY THE INDEPENDENT AUDITOR 29
Statement I – CELL CAPTIVE INSURERS 30
Statement J 1 – SHORT-TERM REINSURANCE SUPERVISION QUESTIONNAIRE 31
Statement J2 – SPREAD OF REINSURERS 31
Statement J3 – CATASTROPHE REINSURANCE 32
Statement J4 to J11 33
FCR calculation tool 35
DEFINITIONS 36
ii
INTRODUCTION
These notes have been compiled by the Financial Services Board to provide assistance to those responsible for completing the annual short –term insurance statutory return (ST2008).
It is important to note that every statement that is applicable to the insurer in question must be completed. The majority of Financial Services Board queries relate to statements that have not been fully completed. All information, however inconsequential it may appear, is relevant for a full assessment from the Regulators' point of view.
The return can be downloaded from the FSB official website, http://www.fsb.co.za (Departments – Insurance – Download documents for Short- term Insurance Returns). The return is compiled in Excel Microsoft. The printout made of your final return will be regarded as the official return to the FSB after being signed by the responsible parties. The signed return should be submitted in duplicate (only one need to be signed as an original) together with an electronic version of the completed return.
Statutory return, short-term return, statutory short-term return and return all refer to the official statutory return for all short-term insurers.
Disclaimer
The statutory return you are about to open contains a calculation engine (“FCR Tool”) that demonstrates default capital requirements associated with certain input parameters. These capital requirements are the current levels Deloitte Actuarial and Insurance Solutions (“Deloitte”) and ABC Insight recommended in their FCR recalibration report.
While the FCR Tool is useful in evaluating capital requirements under various scenarios, the FSB supplies the FCR Tool for general information purposes and to assess the impact of proposed capital requirements for short-term insurers under various scenarios. Short-term insurers cannot make long-term capital decisions based only on the output of the FCR Tool. While every effort has been made to ensure the accuracy and correctness of the information provided, the Financial Services Board makes no representation and gives no warrantee, whether express or implied, relating to the correctness of the information of the material and or the correctness of the FCR Tool.
The Financial Services Board accepts no responsibility for and the user indemnifies the Financial Services Board from any loss, liability, damage or expense of whatsoever nature (including but not limited to direct, indirect or consequential loss), arising from reliance on information contained in the material/document, or the use of the FCR Tool, or otherwise connected with the information/document or use of the information /document /FCR Tool whether arising from breach of contract, delict, negligence, gross negligence or otherwise.
INFORMATION REGARDING THE RETURN
This return will be completed using audited figures and where applicable published audited financial statement figures as presented to the shareholders.
Some of the statements are available for public scrutiny. Those statements that are not available to the public are clearly marked in the right hand top corner "CONFIDENTIAL STATEMENT NOT AVAILABLE TO PUBLIC".
Two indices are available:
Index 1: Statements available to the public, and
Index 2: Statements not available to the public.
The insurer should only start to complete the electronic workbook from Statement A1 onwards.
“ After an insurer submitted its statutory return, a public version of the return will be created by removing all statements marked ”CONFIDENTIAL STATEMENTS NOT AVAILABLE TO PUBLIC” from the submitted return. Only the public version of an insurer’s return is available to the public.”
Completion of the Statements
The return covers the latest financial period. Value added tax (VAT) should be treated in the same manner as in the published annual financial statements.
Only shaded areas require figures or information to be entered where applicable.
All other areas (non shaded) are protected cells and contain automatic calculations, information or data or must remain blank or reflected as zero. No changes may be done to these protected areas (cells). No structural changes can be made to the return as each worksheet is protected.
Please note: No links, with reference to any spreadsheet of the insurer, should be inserted into the statutory return.
Supporting statements
Each statement is designed on a separate worksheet. Where additional detail is required but the statement does not have adequate space (e.g. statement E), a supporting statement is provided in the same format (i.e. statement E.1). The supporting statement will not be protected which means that the user will be able to customise the supporting statement, e.g.E1.1 add and delete rows as required. Please note that the values from the supporting statement will not automatically be transferred to the principle statement.
The supporting statement will be treated as part of the main statement for signature purposes.
Additional documentation
Any other documents, submitted to the registrar, must if it is:
· an original, be accompanied by one copy; and
· a copy, be accompanied by one copy, one of which has been certified as correct by an officer of the insurer.
The additional documents will be treated as part of the return for signature purposes.
Consistency & Completeness
All figures must be rounded off to the nearest thousand rand.
For the sake of consistency and completeness of statistical information compiled from the return and the statements, it is essential that the insurer complete all items that should or can be completed. With the exception of the "supporting statements", no item may be deleted or inserted.
Please note: although it is possible to create a copy of a worksheet to be able to change some of the protected cells, when doing so, you will lose the hidden reference numbers that are needed to extract the data to our central database. If the data is not in the original format, the return will be sent back to be re-submitted in the correct format.
The return must be printed & submitted even if nil.
Submission time & extension
The return must be submitted within 4 months of the end of the financial period to which it relates. Extension for the completion of the return can be applied for under Section 4(1) of the Act. Please note that any request for an extension to submit the return should be lodged before the due date of the return.
Where the auditors submitted any other report or statement to the shareholders and/or policyholders concerning the financial position of the short-term insurer, a copy must be submitted to the Registrar within 14 days.
Submission procedure & address
The short-term return must be submitted electronically to and an original signed copy of the statutory return must be sent to:
The Registrar of Short-term Insurance
Insurance Prudential Department
PO Box 35655
Menlo Park
Pretoria
0102
Version Control
Each new version issued by the FSB will be available on the official website: http://www.fsb.co.za
General
Declaration by the Auditor(s)
The declaration by the auditor appears in the bottom right-hand corner of each statement.
If appears, the auditor only needs to initial the statement to confirm that this is the final statement that forms part of the submitted statutory return.
If appears, the auditor has to sign-off certain aspects of or the whole of the specific statement. In this regard, please refer to the declaration by the Auditors in Statement H.
Previous year
Where applicable, comparisons should be restated.
Additional information
The Registrar may direct an insurer to furnish the Registrar with such additional information and documents as may be necessary for purposes of the Act. (Refer to section 4(2) of the Act.)
EXCEL FUNCTIONALITY
Page Numbering
Each statement is numbered in the top right-hand corner.
Page set-up
Even though the various worksheets are “protected”, one is still able to change the page set-up for printing purposes:
· Page orientation, scaling, size and print quality can be changed,
· Margins can be changed,
· Page breaks can be added and deleted, and
· Printing colour can be changed (default setting: black & white).
A STATEMENTS
Statement A1 - REGISTRATION INFORMATION
Description
Registrar of Short-term Insurance Reference number
This number refers to the unique number that is allocated to each insurer at registration and used by the FSB in all correspondence with the insurer. This number will be displayed as 10/10/1/xxxx/8.
The name of the insurer can be chosen from the drop-down box (then this number will be inserted automatically) or the name of the insurer can be entered in, in which case the reference number will also need to be inserted manually. The dropdown box will be updated annually with each version of the return.
The types of policies listed are defined in the Act as short-term insurance policies, i.e. property, transportation, motor, accident and health, guarantee, liability, engineering and miscellaneous. Tick the appropriate boxes to indicate which types of policies the insurer is authorised to underwrite.
Registration conditions
Conditions imposed on an insurer are shown on the reverse side of the registration certificate, which the Registrar issued when the company was registered under the Short-term Insurance Act, 1998.
Although all insurers are registered to do short-term insurance business, a condition of registration may include types of policies that an insurer may issue and can include other specific conditions provided for in section 10 of the Act.
If any other person, company or legal entity requires a copy of the conditions of registration imposed on an insurer, they can contact the Registrar.
Certificate number
The number on the certificate (that the Registrar issued) will change if the conditions imposed on the insurer's registration are changed. Conditions of registration may vary or new conditions can be imposed by the Registrar or on request from the insurer in terms of section 11 of the Act. Please note that the reference number mentioned above will remain unchanged.
Names of contact persons
Refer to sections 16 and 18 to 21 of the Act.
The public officer and auditor(s)’ details must be provided. The Act requires that the Registrar be informed of the appointment of the public officer. The Registrar also needs to approve the appointment of the auditor(s). All these people have to complete and submit a personal questionnaire to the Registrar. The questionnaires are available on the FSB website:http/www.fsb.co.za
In addition, it is requested that any change in the persons' contact details or change to appointments, are forwarded to the Registrar.
Public Officer
A public officer must be appointed in terms of section 16 of the Act. Where the public officer has changed, the insurer must notify the Registrar within 30 days.
Auditor
Where only one firm of auditors is employed, please insert “N/A” under each of the headings provided for the second firm of auditors.
Shareholders
Refer to sections 25 and 26 of the Act.
Statement A2 - ADDRESSES AND PARTICULARS OF KEY PERSONS
If a key person does not have an e-mail address, please insert “N/A”.
Head Office and Public Officer
Refer to section 16 of the Act. In terms of section 16(1)(d) of the Act, insurers must notify the Registrar of any changes to the head office or public officer within 30 days of the change.
Auditors
Furnish particulars of the Responsible Partner.
Where only one firm of auditors is employed, please insert “N/A” under each of the headings provided for the second firm of auditors.
Consumer Complaints Person
The Registrar regularly receives complaints from policyholders regarding poor service or claims repudiations. The Registrar usually refer these complains to the insurer for their comment. To simplify matters the Registrar needs the contact details of the responsible person within the insurance company dealing with consumer related complaints. The insurer should notify the Registrar of any changes.
Statement A3 – DIRECTORS, MANAGEMENT EXECUTIVES AND MEMBERS OF AUDIT COMMITEE
Directors
It is important in relation to each and every director to complete the full requirements of the statement.
Appointment & resignations
If a director resigned during the year, details should still be included on the statement. The date of resignation should be stated. Notification of appointments and terminations must be done within 30 days after the appointment or termination, together with a reason for the termination in terms of section 18 of the Act.