9. Supervisory and Published Reporting Valuations

Question 1

Three valuations specified under SAP 104

Answer 1

1. Valuation of A, L for published reporting
   - Registrar of companies
   - Comply with Company Act and IFRS
   - FSV methodology
   - JSE companies comply with JSE rules
2. Valuation of A, L, SCR for prudential supervision reporting
   - Prudential Authority
   - Comply with and associated FSIs
3. Valuation of TL
   - SARS
   - comply with Income Tax Act

Question 2

Reserves for group risk business

Answer 2

Prospective
- Claims in-payment (for IP)
Retrospective
- UPR
- IBNR
- Deficiency
- Profit Share
- Discretionary
- Claim Expense

Question 3

PRE dependent on

Answer 3

• past practice
• industry practice
• product type
• manner in which benefit quoted and presented to ph
• marketing material - expectations created

Question 4

FSV

Requirements and principles

Answer 4

FSV
- SAP 104 provide guidance
- intended to be prudently realistic
- allowance explictly for actual premium as per contract
- best estimate allowance for interest rates, mortality, morbidity, expenses and other relevant factors

Financial resilience built in:
- adding compulsory margins on BE assumptions of all parameters
- further resilience and allowance for prudent release of profits added through discretionary margins

margins ensure profit recognised prudently to avoid PREMATURE recognition of profits and that may cause risk of loss in future years

Principles
- BE assumptions considered separately for relatively independent groups of homogeneous policies
- groupings include product type, distribution channel, geographic region, cohort
- BE assumptions should be
- realistic, guided by past experience
- modified by any knowledge of or expectations regarding the future
- BE assumptions should depend on the nature of the business, and term
- the valuations actuary should take cognisance of the sensitivity of results to changes in various parameters and may need to undertake valuation of more than one basis
- where this is done there is no requirement to report on the results of more than one basis