SEC Memorandum Circular No. 8, s. 2002 – Responsibilities of Actuaries in Pre-Need Actuarial Reserve Valuation
SEC Memorandum Circular No. 8, s. 2002 prescribes the responsibilities of actuaries in the valuation of actuarial reserve liabilities for pre-need plans, including valuation standards, reporting requirements, certifications, and compliance obligations.
SEC MEMORANDUM CIRCULARS
6/25/20263 min read
SEC Memorandum Circular No. 8, s. 2002
Responsibilities of Actuaries in Pre-Need Actuarial Reserve Valuation
Document Number: SEC Memorandum Circular No. 8, 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. 8, s. 2002 prescribes the professional responsibilities of actuaries engaged in the actuarial reserve valuation of pre-need plans. It establishes standards for validating valuation data, applying actuarial assumptions, computing reserve liabilities, submitting valuation reports and certifications, reporting to the Securities and Exchange Commission and the board of directors, and complying with the Guidelines and Standards of the Actuarial Society of the Philippines (ASP).
Full Text
SEC MEMORANDUM CIRCULAR NO. 8
Series of 2002
TO: ALL CONCERNED
SUBJECT: Responsibilities of Actuaries in Pre-Need Actuarial Reserve Valuation
In conducting actuarial reserve valuation of pre-need plans, the actuary must perform his/her responsibilities in accordance with the following guidelines:
1.
The actuary must conduct tests necessary to ascertain the reasonableness and integrity of the actuarial valuation data, and must briefly describe the tests undertaken.
2.
The actuary must submit to the Securities and Exchange Commission (SEC) all pertinent actuarial reserve valuation formulations and all required information as stated in SEC Memorandum Circular No. 7.
3.
The actuary must ensure that the assumptions used for valuation of liabilities of all pre-need plans are reasonable and appropriate, and within the limits set in SEC Memorandum Circular No. 6 on the valuation of actuarial reserve liabilities of pre-need plans.
The actuary must be able to justify the assumptions used, based on the actual and anticipated results that are reasonably applicable to the specific contract. The actuary must exercise prudence and good judgment in adopting the assumptions.
4.
The actuary must ensure that the actuarial reserve liabilities for all benefits and guarantees are valued in accordance with the prescribed assumptions, and that all insurance benefits included in the pre-need plan contract are adequately covered under a separate insurance contract.
5.
The actuary must compute the reserves independently of the required minimum deposits and verify that the resulting annual increases in reserves are not less than the required minimum deposits to the trust fund.
SEC-prescribed minimum deposits to the trust fund must not be used as the basis for actuarial reserve valuation.
6.
The actuary must ensure that the valuation reports are complete, accurate and timely.
The actuary must follow the standard reporting format for the Actuarial Valuation Report prescribed by the Commission.
Should the SEC require additional information or documents during its review of the actuarial reserve valuation reports, the actuary shall submit the same together with a sworn certification that he or she has reviewed them prior to submission.
7.
The actuary must submit to the Commission a Valuation Certification in accordance with the prescribed form.
8.
The actuary must discuss and explain fully the results of the actuarial reserve valuation to the Board of Directors of the pre-need company.
The actuary shall submit a written report together with the Statement of Changes of Actuarial Reserve Liabilities and Trust Fund (using the prescribed format) containing a comparison of actuarial reserve liabilities with the amount in the trust fund as of the valuation date. A copy of the report shall likewise be submitted to the SEC.
The actuary shall state all possible causes of any deviation between the amount in the trust fund and the required reserves, including, but not limited to:
Insufficient or untimely deposits to the trust fund;
Relatively high or low termination rates;
Differences between the trust fund yield rate and the assumed valuation interest rate; and
Capital losses reported by the trustees or fund managers.
These disclosures are intended to enable management to take appropriate corrective action.
9.
The actuary must adhere to these guidelines, the Rules and Regulations of the Securities and Exchange Commission, and the Guidelines and Standards of the Actuarial Society of the Philippines (ASP).
Compliance with these guidelines and standards shall serve as a basis for the continued renewal of accreditation to practice as an actuary for pre-need plans.
The Securities and Exchange Commission may prescribe additional requirements for compliance by actuaries of pre-need companies from time to time.
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-8/
Citation:
Securities and Exchange Commission. SEC Memorandum Circular No. 8, s. 2002, "Responsibilities of Actuaries in Pre-Need Actuarial Reserve Valuation," June 27, 2002.