SEC Memorandum Circular No. 7, s. 2002 – Required Information to Accompany the Actuarial Reserve Valuation Report of Pre-Need Companies
SEC Memorandum Circular No. 7, s. 2002 prescribes the required information and supporting schedules that must accompany the actuarial reserve valuation reports of pre-need companies submitted to the Securities and Exchange Commission.
SEC MEMORANDUM CIRCULARS
6/25/20263 min read
SEC Memorandum Circular No. 7, s. 2002
Required Information to Accompany the Actuarial Reserve Valuation Report of Pre-Need Companies
Document Number: SEC Memorandum Circular No. 7, s. 2002
Date Issued: June 27, 2002
Issuing Agency: Securities and Exchange Commission
Signed by: Lilia R. Bautista, Chairperson
Effectivity: Immediately upon issuance
Overview
SEC Memorandum Circular No. 7, s. 2002 prescribes the information and supporting schedules that must accompany the annual Actuarial Valuation Report of pre-need companies. It requires the submission of product-specific information, actuarial reserve computations, valuation assumptions, reserve schedules, trust fund contribution schedules, and supporting financial statements to ensure consistency, transparency, and regulatory oversight of actuarial reserve liabilities.
Full Text
SEC MEMORANDUM CIRCULAR NO. 7
Series of 2002
TO: ALL CONCERNED
SUBJECT: Required Information to Accompany the Actuarial Reserve Valuation Report of Pre-Need Companies
The SEC requires the submission of an Actuarial Valuation Report as of the end of each fiscal year of the pre-need company, duly certified by a SEC-accredited actuary, containing the actuarial reserve liabilities on all pre-need plans for which the pre-need company continues to have liabilities.
The report shall be in the format prescribed by the SEC and shall contain the summary of reserves for each product for each year of issue.
The Financial Statements of the Company and of the Trust Fund corresponding to the same fiscal year shall also be submitted together with the Actuarial Valuation Report.
Beginning the year 2002, valuation reports of pre-need companies must contain the following information for each product class. By product class is meant a pre-need plan with features unique to itself. Such features shall include, at least, the following information:
1. Plan Classification
Life
Education
Pension
Others
2. Product Identification
Specific product name given by the company; or
Plan code, if used in the valuation.
3. Detailed Description of Product Benefits
The report shall contain:
a. Amount or unit of benefits.
b. Terms and conditions for delivery of benefits or services.
c. Insurance and other benefits to be paid or rendered by providers other than the company.
d. Schedule of termination values and conditions under which termination values are payable.
e. Gross contract price per unit or amount of benefit, together with computations of the installments based on the number of years or fractions of a year that the price is payable. If another name is given to the contract price, this must likewise be stated.
4. Tabular Actuarial Values Per Unit of Benefit
a. Terminal Reserve Factors
Schedule of terminal reserve factors for:
Pre-need benefits; and
Insurance premium
at each anniversary up to the end of the term of the contract.
A new schedule shall be submitted at subsequent valuation dates whenever there are projected changes in the assumptions enumerated in Item 5(a).
b. Contributions to the Trust Fund
Schedule of contributions to the trust fund that are periodically set aside to fund all pre-need benefits (referred to in the Actuarial Guidelines as contributions to reserves) for each anniversary up to the end of the installment payment period.
These contributions are not necessarily the same as the minimum deposits to the trust fund.
c. Contributions to Insurance Premium Reserve
Schedule of contributions to the reserve for insurance premium.
5. Computation of Actuarial Values
a. Assumptions Used for Reserve Calculations
Including the bases for the following rates:
i. Interest rates
ii. Surrender and cancellation rates during the installment payment period only
iii. Utilization rate
iv. Other applicable rates
b. Actuarial Formulations
i. Contributions to Reserves
a. Pre-Need benefits
b. Insurance premium benefits
ii. Terminal Reserves
a. Pre-Need benefits
b. Insurance premium benefits
iii. Terminal Values
iv. Dividends
v. Reserves as of Valuation Date
a. Pre-Need benefits
b. Insurance premium benefits
Unless otherwise particularly stated, the foregoing information shall be submitted as of the valuation date.
If any change has been made in any of the assumptions or computations enumerated under Item 5 of this Circular, its effect on the financial condition of the pre-need company shall be submitted together with the Actuarial Valuation Report.
Accordingly, previously submitted Actuarial Valuation Reports shall be adjusted to reflect such changes.
This Circular shall take effect immediately.
EDSA, Mandaluyong City, Metro Manila, Philippines.
June 27, 2002
(Original Signed)
LILIA R. BAUTISTA
Chairperson
Source
Official Source: Securities and Exchange Commission
Official URL: https://appointment.sec.gov.ph/mc-2002/sec-memorandum-circular-no-7/
Citation:
Securities and Exchange Commission. SEC Memorandum Circular No. 7, s. 2002, "Required Information to Accompany the Actuarial Reserve Valuation Report of Pre-Need Companies," June 27, 2002.