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RBC First Quantitative Impact Study
General Business - Technical Specifications (as at 29/11/2017)
Date of receiptSection /
sheetPara. / Cell Questions Answers
15/9/2017 2 15., 16.
Our company operates branches outside of Hong Kong (e.g. Macau), and
incept insurance policies in overseas branches on direct basis.
Question 1: the related premiums and insurance liabilities from our overseas
branches shall be reported in QIS 1 template?
Question 2: if the answer to Question 1 is "yes", then these premiums and
insurance liabilities from our overseas branches should be categorized
under "Direct Insurance" in QIS 1 template? (which will be combined with
our direct premiums and insurance liabilities from local Hong Kong market)
- Q1: Yes, please include the onshore and offshore
business in the QIS 1 template.
- Q2: Yes, the premiums and insurance liabilities from
onshore and offshore business should be categorized
under "Direct Insurance" in QIS 1 template.U33
8/11/2017 3 15
We noted that the QIS Reporting should be carried out at the solo entity
level. We have some investments (properties, equity and debt securities,
etc) being held under HK and overseas investment subsidiaries, shall we
include those assets for the QIS Reporting purpose? If yes, shall we also
include liabilities under those investment subsidiaries.
- Please refer to paragraph 54III and 54VII of the tech
specs
- In QIS 1, look through is required for the real estate held
through a special purpose property holding company, while
the investment in subsidiary is presented as a single line
item using accounting value.
Page 1
RBC First Quantitative Impact Study
General Business - Technical Specifications (as at 29/11/2017)
Date of receiptSection /
sheetPara. / Cell Questions Answers
7/11/2017 6 57 & 67
Comparing some references about "Reinsurance Recoverable" in GL12 and
the Technical Specification:
GL12 (June 2017)
(e) “reinsurance recoverable” includes the reinsurer’s share of Unearned
Premium Reserve, the reinsurer’s share of mathematical reserve for long
term business and the reinsurer’s share of Claims and Claims Reserves,
together with other amounts due from the reinsurer in respect of
reinsurance contracts.
HKRBC Technical Specification for QIS1 (General Insurance)
SECTION 6 --- 57.
Reinsurance assets are the sum of (i) reinsurance recoverables and (ii)
reinsurers’ share of premium liabilities. For further guidance on these,
please refer to Section 8.
SECTION 8 --- 67.
II. Estimate of Reinsurance Recoverables: This is calculated as the
difference between the gross and net claims liabilities.
In sheet "P5_Credit Default Risk" , "1 Reinsurance Recoverables Credit
Default Risk", I followed QIS1 Tech Spec's definition (i.e. Reinsurance
Recoverables = Gross - Net Claims Liabilities).
My question is : for the second part of reinsurance assets "(ii) reinsurers’
share of premium liabilities", is it subject to any credit default risk charge? If
yes, where shall the balance goes into in the QIS 1 template?
- The reinsurers' share of premium liabilities is not tested
on credit default risk in QIS 1.
13/11/2017 7 58
We have accounting concession granted by IA, however, we still have to
prepare Part 9 under the current Cap.41 but modified to report onshore
business only. In this case, Part 9 data(onshore only) is not on the same
basis as HKFRS (onshore + offshore) and so not identical, please advise
what we should fill in for column G10 (S1_EBS Summary) of the General
Template.
- If you have the accounting concession granted, please
follow the branch accounting basis to report the Column G
in <S1>.
Page 2
RBC First Quantitative Impact Study
General Business - Technical Specifications (as at 29/11/2017)
Date of receiptSection /
sheetPara. / Cell Questions Answers
9/11/2017 8 68
The description "Premium liabilities is the maximum of the unearned
premium reserve (UPR) net of deferred acquisition costs, and the unexpired
risk reserves (inclusive of the risk margin)" is not consistent with the
calculation in the spreadsheet "L2_Premium Liabilities". In the spreadsheet,
Premium Liabilities is the maximum of the unearned premium reserve
(UPR) gross of deferred acquisition costs, and the unexpired risk reserves
(inclusive of the risk margin)
- Please refer to paragraph 71 of the technical specification
for the definition of Premium Liabilities. It is consistent with
the current Cap 41 basis that premium liabilities is not net
of DAC.
18/10/2017 8 79
We would like to confirm that the discounting of claims and premium
liabilities should be using the "spot" yield curve, not the "forward" curve
given in the Annex tab 1.1
- You can use either. If you use spot rate, please take the
correct year (power); if you use forward rate, please take
the product of the forward rate until the correct period.
9/10/2017 8 102
The most critical question is about "Contract Boundaries" and §102: If I
interpret it correctly, we have to take into account all policies of the renewal
2016->2017! Thus, if we had underwritten HKD 20m renewed or new
business, we have to add them for the UPR / URR estimates. Am I right or
wrong? As a consequence, this will boost the premium liabilities - in the
current practice for Hong Kong, there was a nil in the balance sheet as of
YE-2016 for these treaties.
-The interpretation is correct. Please follow the technical
specification in QIS 1. At this stage, IA would like to collect
the data for calibration purpose.
18/10/2017 8 102
Question on Contract Boundaries for reinsurance treaties. For example, if
we have a non-proportional treaty that has a policy duration between
01/04/2016 - 31/03/2017, when we report the financials as at 31 Dec 2016,
only 3 quarters of premium would have been booked as written premium.
Would the remaining one quarter of premium be treated as "bound but have
yet to incept" business and to be included as UPR/URR?
- Correct.
Page 3
RBC First Quantitative Impact Study
General Business - Technical Specifications (as at 29/11/2017)
Date of receiptSection /
sheetPara. / Cell Questions Answers
16/8/2017 16 219
For D2 and D3 it states that the incurred claims is the sum of paid claims
and outstanding claims liabilities. Does it mean that this should equal to
summation of Form 6 and Form 7 of the Annual Return of General
Business, Part 8?
D2 and D3 state that gross and net paid and incurred (the
sum of paid claims and case reserves) claims triangles will
be collected for each line of business. The QIS 1 is
collected data from on-shore and off-shore. It is not
consistent to the current Form, which only receive the on-
shore business.
31/8/2017 16 219We want to clarify that are gross claim payments net of recoveries from
others other than reinsurance?
No, the gross claim payments should not include the net of
recoveries from others other than reinsurance.
The gross claim payments should not reflect any
reinsurance or other adjustments; the net claim payments
should reflect all adjustments such as reinsurance.
7/11/2017 16 219
Please clarify if the "Paid" claim figures in the Cumulative Paid Claim
Triangles are also inclusive of that portion of the paid claims (i.e. all POA
claim payments paid) within the Cumulative Incurred Claims Triangles
(Given that : The incurred claims is defined as the sum of paid claims and
outstanding claims liabilities).
-The interpretation is correct. The definition of paid claim
should be the same in Form 6.
7/11/2017 16 219
The collected data for accident year "2002 and prior" - Please clarify how
many years data to be accumulated and provided by Insurers (Given that
Insurers may be established for more than 50 years) and why it is necessary
for the IA to obtain those old data.
- In term on how many years data, please follow the
current Form 6 and 8 in Cap 41.
5/9/2017 Appendix 1 Lob classification
Definition of property damage-engineering vs property damage -
nonengineering. Can further elaborate other than what is stated in the
Appendix 1. Definition of Pecuniarly Loss as well. Is that business
interruption cover? If we insure power generators and chemicals, where can
we classify them?
- The definition of "property damage - engineering" is same
as that in quarterly return. The classification should be
consistent with the current quarterly return. Please use the
current classification under Cap.41 as your starting point,
and map it to the QIS 1 classification.
- If part of the insurance cover for loss of profit or incurring
of unforeseen expenses including advance loss of profit
under CAR and EAR policies, please report that portion
under Pecuniary Loss Business.
Page 4
RBC First Quantitative Impact Study
General Business - Technical Specifications (as at 29/11/2017)
Date of receiptSection /
sheetPara. / Cell Questions Answers
30/8/2017Line of
Business104 & Appendix I
Currently item 5a (Special Trades) is not treated as Construction EC
contracts and therefore related claims and premiums are grouped under
Non-Construction EC in item 5a (Special Trades) for reporting purposes.
However, under the QIS, item 5a (Special Trades) is classified as
Construction EC contract. In this situation, can we classify and group those
claims and premiums under item 5a (Special Trades) under Non
Construction EC contract?
Please classify and group (special Trades) claims and
premium in construction EC contracts under QIS basis;
classify and group (special Trades) claims and premium in
non-construction EC contracts under Cap 41 basis.
Page 5
RBC First Quantitative Impact Study
General Business - QIS Template (as at 29/11/2017)
Date of receiptSection /
sheetPara. / Cell Questions Answers
3/10/2017G3_Exchange
rateswhole tab
In Life Q&A section G3_Exchange rates on 8/9/2017, it mentioned that it is
not compulsory to use the exchange rate set in the worksheet. May I
confirm is it the same situation in General Template? So that we can use
our company rate (tied to audited report) to complete currency mismatch in
P1 worksheet in General Template.
- Yes, it is also situable for General Template. However,
please ensure the checks are OK on <S3_Data Validation>
tab.
- In addition, please submit a separate document of the
internal exchange rate along with submission template.
16/8/2017S1_EBS
Summary
10b Receivables from
Affiliates
11e Receivables from
p/h, intermediaries and
reinsurers
11g Any other assets
10b will be filled in with receivales from HO and other branches; 10e will be
filled in with net premium receivable from cedants; 11g will be filled in with
sundry debtors, utiltities deposits, amount due from long term business, tax
recoverable. The items are measured at amortised cost less impairment
which is approximates to market value and thus will be used as the
economic value. Pls advise if otherwise and if not, pls advise how to
measure the economic value for these items.
- HKFRS basis accounting values should be used for EBS
except for those items discussed in section 5 of Life
technical specifications.
- The item amount due from long term business should be
eliminated under solo entity basis.
- The accounting values for Receivables and Other
liabilities are considered to be a reasonable economic
value.
16/11/2017S1_EBS
SummaryCell I18,Cell I19
We have investments in Collective Investment Schemes which invest in
derivative. The market values of these investments (cell I18 of tab S1_EBS
Summary) include the value of derivative. The template also requires us to
fill the value of derivative in cell I19 of tab S1_EBS Summary. Therefore, it
seems that the market value of derivative will be double counted.
- The cell I19 <S1> is not included any derivative from CIS.
Please include the investments in CIS (derivative) in cell
I18 <S1>.
- For your information, please do not include any derivative
CIS in cell E11, E12 and Row 15+ in <A6>; moreover,
please look through the CIS for the base case and shock
scenarios.
7/11/2017S1_EBS
SummaryColumn G and I
1. We have letter of credit reported in Part 9 business return, which is an off
balance sheet item under HKFRS basis. Please advise whether we need to
include it in ICO and QIS valuation. If so, please advise which line item shall
we include in ICO and QIS valuation, respectively.
- Please input the letter of credit under item 25 in the
<S2_Capital Summary> tab.
- Please also fill up <Q13> and <Q13.2> accordingly.
6/10/2017S1_EBS
SummaryE29 DAC
As premium liabilities is defined as the higher of UPR net of DAC and URR,
the premium liabilities number (in row 42 or item 13b) already includes DAC.
As such, why do we still need to disclose the DAC in row 29? If required, will
that have to be net DAC since there is no DAC line in the liabilities section of
the same worksheet?
- DAC is treated as an asset on the Balance Sheet under
accounting treatment. Given the approach of UPR/URR
for measuring the premium liabilities, it is proposed to
capture DAC assets in EBS for QIS 1.
- Please report the "Gross" DAC in Row 29.
Page 6
RBC First Quantitative Impact Study
General Business - QIS Template (as at 29/11/2017)
Date of receiptSection /
sheetPara. / Cell Questions Answers
29/9/2017S1_EBS
SummaryHKICO Valuation
For liabilities side, if the ICO valuation shall be consistent with what we have
reported in Part 9 Statement of Assets and Liabilities, the total liabilities shall
also include "Relevant Amount", which the template do not show the item.
Please advise do we have to report the "Relevant Amount" in the template.
If so, please also advise which item to input.
- If it is operated in Hong Kong as a branch, and has
obtained accounting concession and relaxation of valuation
rule, the ICO valuation should be based on the branch
accounts.
"Relevant Amount" is not necessary to be reported in the
balance sheet.
29/9/2017S1_EBS
SummaryHKICO Valuation
For liabilities side, if the ICO valuation shall be consistent with what we have
reported in Part 9 Statement of Assets and Liabilities, the insurance liabilties
are reported on a net basis in Part 9 liabilities whereas the gross liabilities
are required in QIS template. Please advise whether we should report the
RI portion of Part 9 insurance liabilities as Reinsurance Assets in QIS ICO
valuation column, which will result in inconsistency of Total Assets and Total
Liabilities between QIS ICO vs. Part 9.
- If it is operated in Hong Kong as a branch, and has
obtained accounting concession and relaxation of valuation
rule, the ICO valuation should be based on the branch
accounts.
Please report in gross basis in the <S1_EBS Summary>
tab (i.e. RI portion as reinsurance assets), with valuation
consistent with ICO reporting.
19/10/2017S1_EBS
Summary
Item 11b - Deferred
Acquisition Cost
There's no guidance on the market value of Deferred Acquisition Cost
("DAC") and retroceded DAC in the Technical Specification. Shall we follow
HKFRS basis (i.e. cost less amortization and impairment) or HKICO
valuation (i.e. non-admissible) to determine the market value of DAC and
retroceded DAC?
- Please follow the HKFRS basis.
23/11/2017S1_EBS
Summary
Item 11b - Deferred
Acquisition Cost
Item 16c - Other
liabilities
Taking note of the Q&A sent to IA on 6/10/2017 and 19/10/2017 about DAC,
is it correct that we should report "retroceded DAC" in row 53 Other
Liabilities?
- Yes, please report the retroceded DAC in row 53 other
Liabilities.
29/9/2017S2_Capital
Summary
19a. Ordinary Share
Capital
Hong Kong Branch's capital is effectively the account balances with Head
Office and we do not have any issued shares as a branch. Please advise
which item (19a - 19e) to input the Head Office Account.
- In reporting your 'Head Office account', please input the
retained earnings portion in HKFRS basis in "19c. Retained
earnings (HKFRS basis)". It is also reminded that
valuation differences arising from HKFRS to EBS should
be separately reported in 19d.
- Furthermore, report the breakdown of the Head Office
account in Q12, Supp Q12 Paid Up and Supp Q12 Non-
paid up. Please input "N/A" if there is not applicable.
- Where applicable, for example, if the Head Office handles
the investment centrally, the balance should be split into
assets and liabilities and reported under <S1_EBS
Summary> tab under look-through principle..
Page 7
RBC First Quantitative Impact Study
General Business - QIS Template (as at 29/11/2017)
Date of receiptSection /
sheetPara. / Cell Questions Answers
18/10/2017S2_Capital
Summary
20. Surplus of assets
over liabilities
We have available-for-sale financial assets, subject to mark-to-market
revaluation. The fair value increase from these assets are currently
classified as “other reserves” in audited financial statements. Please advise
which item (19a - 19e) to input revaluation reserve.
- Please report it in 19c.
6/10/2017S2_Capital
SummaryG19a to G19e
There was previously some clarification over where to classify the "share
capital" of branches. We were advised to include in the fact of the EBS. Will
that reduce the "surplus of assets over liabilities" and potentially lower
solvency ratio?
- The main purpose is to collect data and information in
QIS1. More details on capital resources will be considered
in QIS2.
19/10/2017S2_Capital
SummaryItem 19
We are a composite reinsurer, where part of the capital was injected from
general business to our long term business. How can we reflect this
reduction in general business capital in item 19? Also, how to account for
other reserves such as available-for-sale investment revaluation reserve,
share based payment reserve, etc. in item 19?
- Please reflect the capital injection from general business
to long term business in item 19c - retained earning.
- Please report the revaluation reserve and share based
payment reserve in item 19c - retained earning.
16/8/2017
S2_Capital
Summary
Q13
Borrowing &
Source of
Fund
19. Analysis of surplus
of assets over liabilities
21. Contribution of
specific items to
surplus over liabilities
23. Borrowings (paid
up)
25. Committed sources
of future funding (non-
paid up)
We are a HK branch of a German reinsurance company. Our net assets, ie,
the so called "shareholders equity" only includes a Head Office account
which is composed of capital injection from HO, minus our surplus fund
transfer to HO, plus retained earnings. In S2_Capital Resources and Risks
Results Summary, should this Head Office account amount be filled in the
19c. Retained earnings (HKFRS basis)? In our case I find items 21, 23 &
25 in S2 are not relevant and so these will be left blank. Pls advise if
otherwise.
Since there is no borrowing from affiliates and third parties, the Q13, Q13.1
& Q13.2 need not be completed, right?
- In reporting your 'Head Office account', please input the
retained earnings portion in HKFRS basis in "19c. Retained
earnings (HKFRS basis)". It is also reminded that
valuation differences arising from HKFRS to EBS should
be separately reported in 19d.
- Furthermore, report the breakdown of the Head Office
account in Q12, Supp Q12 Paid Up and Supp Q12 Non-
paid up, where applicable.
Page 8
RBC First Quantitative Impact Study
General Business - QIS Template (as at 29/11/2017)
Date of receiptSection /
sheetPara. / Cell Questions Answers
14/9/2017
S2_Capital
Summary
Q13
Borrowing &
Source of
Fund
19. Analysis of surplus
of assets over liabilities
21. Contribution of
specific items to
surplus over liabilities
23. Borrowings (paid
up)
25. Committed sources
of future funding (non-
paid up)
With refer to your reply, we reported "head office account" in the S2_Capital
Summary 19c. It's all make up of Non-Paid Up, how shall we disclose in
column "G" & "H" and also Q13.1 & Q13.2 as the "head office account"
make up of "capital from head office" and "retained earnings". For example,
capital from head office is not an instrument from third party, hence no
maturity date or incentive to redeem or distributions etc in Q13.1, and also
dislosure in Q13.2 for retained earnings. Shall we input N/A instead?
- In reporting your "head office account", please input the
retained earning portion in "19c. Retained earnings" in
<S2_Capital Summary> tab.
- For the "capital from head office", please split it into
assets and liabilities, and then report to <S1_EBS
Summary> tab.
- When you fill in the Q13, Q13.1 and Q13.2 tabs, please
input N/A if there is not applicable.
24/11/2017S3_Data
ValidationCell L162
Some of our CIS investments comprise of Other receivables/payables and
therefore, we input the amount under Liabilities/debt in tab "A5_CIS".
However, an error in cell N162 under tab "S3_Data Validation" prompt up as
Cell L162 under tab "S3_Data Validation" do not include Liabilities/debt in
tab "A5_CIS". Please advise.
'- The total market value of CIS should include the
liabilities/debt in <A5>. IA will correct the formula of the
total market value of CIS in <A5> and <A3> after receiving
the results in December.
- Please report the value of Liabilities/Debt for CIS in
negative value in <A5> tab.
13/11/2017S3_Data
ValidationL162
Regarding the collective investment scheme (CIS) investments, when the
amount of Liabilities/Debt is identified through “look-through test”, please
advise whether it should be included in the Market Value or not.
As we refer to the Cell L162 in tab S3_Data Validation, we found that the
value of Liabilities/Debt for CIS items was excluded in the Total Market
Value of QIS and thus received an Error sign in cell N162. Therefore, please
suggest any tab to report the value of Liabilities/Debt for CIS items.
- The total market value of CIS should include the
liabilities/debt in <A5>. IA will correct the formula of the
total market value of CIS in <A5> and <A3> after receiving
the results in December.
- Please report the value of Liabilities/Debt for CIS in
negative value in <A5> tab.
7/11/2017S3_Data
ValidationL62:68
Could be another error in the tab. In "A3_Fixed Income", we have no
securities that are subject to repo arrangement (i.e. cells K11:K30 are all
zeros). But in "S3_Data Validation", cells L62:68 returns some values which
causes error alert in the template.
- The L62:68 in <S3> tab had been wrongly referenced.
- IA acknowledges the comments.
Page 9
RBC First Quantitative Impact Study
General Business - QIS Template (as at 29/11/2017)
Date of receiptSection /
sheetPara. / Cell Questions Answers
15/11/2017A3_Fixed
Income
"Effective Duration" in
column I
Investment team advised that they just report with "Modified Duration", and
do not have the information of "Effective Duration" . Is it fine for us to leave
"Effective Duration" blank?- Noted. OK.
13/11/2017A3_Fixed
Income
1 Economic Balance
Sheet
Do the definition of "listed" and "unlisted" refer to ICO's list of foreign
exchange, ie Annex C of Insurance Companies (General Business)
(Valuation) Regulation Guidance Note?
- Yes
21/11/2017A3_Fixed
IncomeG29:K29
We have only fund investment for CIS (Collective Investment Scheme). In
cell G29, do we need to fill in the face value of fixed income from CIS? Do
we need to fill in H29 to K29?
- Please input as much as you can for cells G29:K29. You
would need some of the information for calculating the
stressed net assets amount.
14/11/2017A3_Fixed
IncomeH14
For the average term, please advise the term to adopted for perpetual
corporate bond for QIS purpose.- Please consider the term of the perpetual is 0.
21/11/2017A3_Fixed
IncomeK10
In cell K10, it mentions “ any amount subject to repo arrangements” What
does “repo arrangement” means?
- Repo is for repurchase agreements (sell/buy-backs). In a
typical example, Party A sells an asset to Party B at a price
at the start of the transaction and commits to repurchase
the assets back from the Party B at a different price at a
future date.
Page 10
RBC First Quantitative Impact Study
General Business - QIS Template (as at 29/11/2017)
Date of receiptSection /
sheetPara. / Cell Questions Answers
21/11/2017A3_Fixed
Income
Row 11-29, row 55-71,
row 95-111
In row 11-29, we need to fill in Average term, Effective Duration and
Modified duration for different class of Assets. Is these figures record the
weighted average value (by market value) of individual asset under the
same class of asset?
- Yes
21/11/2017A3_Fixed
IncomeRow 114-116
In row 114-116, we don’t have Sovereign Bonds. Do we need to fill in this
part?- Please input 0 if you do not have any Sovereign Bonds.
21/11/2017A3_Fixed
IncomeApart from listed Corporate Bonds, we have listed Financial Institution Bond.
Do we need to fill in this tab? If so, which class of asset we should fill in?- Please input as corporate bonds.
26/11/2017A3_Fixed
IncomeRow 29
We are not able to obtain or calculate the modified duration and average
term for some of our CIS investments. Can we leave cell H29, I29, J29,
K29 blank?
- If you are taking the no look through approach on the
CIS, you may not be able to get the modified and effective
duration. Please leave it blank in such case.
23/11/2017 A4_Equities EBS
For those equities listed in the stock exchange which is not in the IA's list of
foreign exchange, ie Annex 3 of GL 2 Guideline on Insurance Companies
(General Business) (Valuation) Rules, should we classify as emerging
market listed or non-listed investments
- Please base on the Appendix IV to classify the developed
markets for listed shares. If the shares are listed in
markets other than that in Appendix IV, please classify as
"emerging market listed"
30/8/2017 A4_Equities
Currently the stock is classified into 10 categories like Energy, Financial,
Health cares etc. Please advise the treatment if the stock did not fall into
any of the above categories, like CKH Holding (0001) is a conglomerates
company or Tracker Fund (2800) which not belong to any of the categories
in Column F to Column O.
- Please follow the MSCI sector definition.
- From your example, CKH Holding (0001) in Industrial,
and a special case , Tracker Fund (2800), please split the
tracker fund based on its characteristic such as track HSI
industry weighting.
13/11/2017
A4_Equities,
A9_Investmen
ts in Affiliates
Strategic investment
If the Investment in Associate also meet the defintion of Strategic
investments under para.54 section VIII of General tech spec document.
Should we report the market value of the Investment in Associate under
"Strategic Investment" on sheet A4 or "Investment in Associates" on sheet
A9?
- If there is no significant influence, please classify it as
"strategic investment" and value as fair value in <A4>.
Page 11
RBC First Quantitative Impact Study
General Business - QIS Template (as at 29/11/2017)
Date of receiptSection /
sheetPara. / Cell Questions Answers
23/11/2017 A5_CISCurrently, the CIS is allocated to Real Estate, Cash, Fixed income, equities,
Derivative, any unknown allocations and Liabilities/Debt. One of our CIS
invests in commodities. Which column should I put for the allocation?
Please put the commodities in the unknown allocations,
and document it in a NEW tab of the template.
26/9/2017A8_Reinsuran
ce Assets
Per technical specification page 15, reinsurance assets are the sum of (i)
reinsurance recoverable and (ii) reinsurers’ share of premium liabilities.
(i) Regarding Reinsurance recoverable, should we need to include
both Recoverable on case reserve and also IBNR? Or only recoverable on
case reserve is enough?
(ii) Regarding Reinsurers’ share of premium liabilities, should we
including both Ceded UEPR and also PDR adjustment? Or only Ceded
UEPR is enough?
(iii) Please also confirm Claims receivable is necessary or is not
necessary to include here?
We are able to split the Recoverable on case reserve and Ceded UEPR by
ultimate reinsurer but not IBNR and PDR because they are just reserve.
Would like to clarify with IA whether IBNR and PDR should be included or
not in worksheet A8 for QIS purpose. If yes, how should we allocate IBNR
and PDR among the rating band?
- (i) It should include the recoverable on case reserve and
IBNR (if available).
- (ii) It should include the unearned premium reserve and
premium deficiency reserve.
- (iii) Not necessary to include claims receivable
- Please pro-rata the IBNR based on the Recoverable on
case reserve, and pro-rata the PDR based on the ceded
unearned premium reserve in <A8_Reinsurance Assets>
tab. Moreover, ensure the check is ok on cell N165 in
<S3_Data Validation> tab.
- Please also document the pro-rata methodology in the
last questions of the <Q2_Lines of Business> tab.
19/10/2017A9_Investmen
ts in Affiliates
In the technical spec, investment in subsidiaries should be presented as a
single line item using accounting value from entity level accounting balance
sheet, where the accounting value is at cost. However, in the QIS template,
it requires us to input market value. Please clarify if it is fine to input the
cost in the template for investment in subsidiaries.
- QIS 1 is in the solo entity basis. Please take the
accounting value at cost.
Page 12
RBC First Quantitative Impact Study
General Business - QIS Template (as at 29/11/2017)
Date of receiptSection /
sheetPara. / Cell Questions Answers
29/9/2017
L1_OS Claims
Liabilities
L2_Premium
Liabilities
D1_Business
Data
D2_Claims
Triangles,
Gross
D3_Claims
Triangles, Net
D4_Liabilities
by Currency
Reinsurance Inward
Information
Our system do not support the split of Reinsurance inward business into
Facultative and Treaty. Based on discussions with business departments,
around 90% of our inward business should be facultative inward, shall we fill
in all the reinsurance inward as facultative inward for the time being. We'll
start to store this information in the system from now on.
- In such case, please group all reinsurance inward as
facultative inward.
1/11/2017
L1_OS Claims
Liabilities,
D1_Business
Data,
D2_Claims
Triangles,
Gross
L1 - Column L
D1 - Column E-S
D2 - Column E-S
Our company has certain products which we offered policyholders no-claim-
bonus or premium refund in certain situations. The relevant transaction are
currently reported as part of claims payment, and relevant provision
included as part of outstanding claims reserves in the annual return. In the
QIS1 template, shall we continue to include them in the relevant claims
payment and reserves entries?
- Yes, please continue to include them in the relevant
claims payments and reserves entries.
21/11/2017
L1_Outstandi
ng Claims
Liabilities
Undiversified Risk
Margin & Diversified
Risk Margin (Column
T-W)
(1) What is the different between Diversified Risk Margin and Undiversified
Risk Margin?
(2) If the Diversified is 100 (according to actuarial review), how about the
undiversified?
'- Please refer to the paragraph #74, #77, and #114 of the
technical specification.
26/10/2017
L1_Outstandi
ng Claims
Liabilities
Per current Quarterly / Annual Return, we adopt taxation concept (i.e.
source of income) to divide onshore / offshore business. As we write all
business in HK, we classify all our business as onshore. However, for QIS,
is that right to divide onshore / offshore business by risk location? If so, we
can identify Property, Project Policy under Engineering and Marine Stock
Throughput by risk locations. For other LOB and worldwide policy, please
advise what bases should be used to identify onshore / offshore business.
- The onshore definition on Cap 41 and QIS 1 are the
same. If you write all business in HK, please classify all
business as onshore.
Page 13
RBC First Quantitative Impact Study
General Business - QIS Template (as at 29/11/2017)
Date of receiptSection /
sheetPara. / Cell Questions Answers
9/10/2017L2_Premium
LiabilitiesCell M19 & T19 to V19
As per our actuarial report, the gross URR is equal to the net URR, which
both included cost of reinsurance. However, it's excluded in the components
of gross URR in L2, which resulted sum of gross URR components <column
T to column X> smaller than the gross URR <Column M> and an error
resuled in row 173 of worksheet <S3 Data validation>. Please advise how
we should input our data for the gross URR components.
- Please distinguish the gross, cost of reinsurance and net
URR in the L2 tab.
9/11/2017L2_Premium
LiabilitiesColumn M, Q, T to AG
As reinsurer, we calculated Unearned Pipeline Premium to offset the URR.
Please let us know whether we should do the same for the QIS 1 purpose
and if so, where to enter such information.
- Yes, the Unearned Pipeline Premium can offset the URR.
Please adjust the URR on Column M & Q, and the
beakdown of URR on Column T to V, and Column AA to
AC.
9/10/2017L2_Premium
LiabilitiesColumn O, P & R
The net unearned premium reserve (Column O) may be smaller than net
deferred acquisition costs (Column P) and resulted a positive amount in
Column R. However, no URR was calculated for our non-motor classes
under existing Cap 41 basis, which means Column R of non-motor classes
should be zero. Please advise how to input our data for Column O and
Column P under Cap 41 basis.
- Please refer to the paragraph 68 in the Tech Spec.
26/10/2017L2_Premium
LiabilitiesD35:I85
1. The formula of sub-total (Row 36, 44, 52, 60, 68, 76) and grand total
(Row 35, 85) cannot reflect the sum of Premium Liabilities of each business
classes.
2. The formula of Premium Liabilities (Column D and Column I) is not net of
DAC if the (UPR - DAC) > URR
1. Acknowledged. The subtotal and grand total formulae in
QIS section is incorrect. IA will correct it after receiving the
results in December.
2. Please refer to paragraph 71 of the technical
specification for the definition of Premium Liabilities. It is
consistent with the current Cap 41 basis that premium
liabilities is not net of DAC.
6/11/2017L2_Premium
LiabilitiesG85, G118
Columns G to I formulas under QIS basis and Cap. 41 basis are not
consistent, for example cell G94 may not be the sum of cells G15, G37,
G45, G53, G61, G69 and G77. Hence on total basis (rows 85 and 115) the
amounts do not tally and we are only able to match the premium liabilities
figures under QIS basis with the actuarial report. Could you please advise
whether the formula under Cap. 41 basis will be revised, or do we need to
adjust the allocation of URR under Cap. 41 basis in order to tie the figures
under both bases?
Acknowledged. The subtotal and grand total formulae in
QIS section is incorrect. IA will correct it after receiving the
results in December.
Page 14
RBC First Quantitative Impact Study
General Business - QIS Template (as at 29/11/2017)
Date of receiptSection /
sheetPara. / Cell Questions Answers
23/11/2017L2_Premium
Liabilities
Row 93-116, Column
M, T to AG
What is the definition of Unexpired Risk Reserve on the Cap.41 basis? As
far as we know, only "additional amount for unexpired risks" is defined under
Cap 41. In our regulatoy reporting, we have not disclosed any components
of Unexpired Risks. The Technical Specification Para 71 VII is the definition
on the QIS basis, but not Cap. 41.
- Noted that there is no detail definition of the components
of URR in Cap 41. The additional amount for unexpired risk
should be same as the Column N and R, and please leave
it blanks if you dont have the components of Unexpired
Risks in Cap 41 section in <L2> tab.
15/11/2017L2_Premium
Liabilities
Unexpired Risk
Reserve (Column M)
In calculating the unexpired risk reserve, shall we net off the future cash
inflows of premium against future cash outflows of expected claims?
'- Please include the future cash outflows of expected
claims and expense for URR (Column M), and the break
down is showed in column T to column AG in <L2>, and
please also refer in paragraph 71 VII of technical
specification.
7/11/2017L2_Premium
Liabilities
1. Under the QIS basis, cell G14 does not equal sum of all LoBs. We
believe the total Gross premium liabilities should be equal to sum of each
individual lines (in column G), could you please clarify about our
understanding?
2. Under the Cap.41 basis, our company has calculated the premium
liabilities on a portfolio level currently (not in for individual basis) which is not
same as the setting in template. Could you please open the cell range N92-
N118 for us to fill up? Otherwise, the total figures in cell G118 will not tie
with our 2016 financial. Please confirm your allowance for us to fill up cell
range N92-N118. Or please allow us there is a discrepancy between cell
118 with our 2016 financial and all subsequence effect.
- 1. Acknowledged. The subtotal and grand total formulae
in QIS section are incorrect. IA will correct it after receiving
the results in December.
- 2. Please report the premium liabilities on the same class
level as in the current Cap. 41 basis. Please refer to
paragraph 71 of the technical specification for the definition
of Premium Liabilities. It is consistent with the current Cap
41 basis that premium liabilities is not net of DAC.
8/11/2017L2_Premium
LiabilitiesL11
The premium liabilities in our results are calculated as the higher of: [UPR
net of DAC] and [URR including risk margin]. This is in line with our
interpretation of point 68 of the Technical Specifications. However, we noted
that the QIS template produced by IA calculates premium liabilities as the
higher of: [UPR gross of DAC] and [URR including risk margin plus DAC].
We believed that this calculation is inconsistent with the Technical
Specifications. Is our understanding correct?
- Please refer to paragraph 71 of the technical specification
for the definition of Premium Liabilities. It is consistent with
the current Cap 41 basis that premium liabilities is not net
of DAC.
Page 15
RBC First Quantitative Impact Study
General Business - QIS Template (as at 29/11/2017)
Date of receiptSection /
sheetPara. / Cell Questions Answers
27/11/2017
P1_Asset
Risk - Stress
Based
"Interest rate risk
charge" and "Credit
spread risk charge"
Our investment is mainly in the "Collective Investment Scheme".
Investment team advised that on look through, there are approx 3000 items
under "Fixed Income" group. Therefore, calculation of "Interest rate risk
charge" and "Credit spread risk charge" according to page 50 & 51 of the
Technical Specifications is not practical. We will apply the approximation
approach as stated in paragraph 172 of the Techncial Specifications.
Is it correct that for "Fixed Income" group of both fixed interest rate and
variable interest rate, the same "stress" from tabs 1.2 to 1.5 of Annex -
Discount rate curves shall apply?
- Yes, both fixed and variable interest rate fixed income
apply the same discount rate curve at tabs 1.2 to 1.5.
- Please document your approximation method in
<Q9_Market and Credit Risk>.
16/8/2017
P1_Asset
Risk - Stress
Based
4. Currency mismatch
risk charge
Does the Assets and the Liability Exposure include all the items as reported
in the EBS Summary? How does this table tie to other tabs, eg, should the
claims liabilities split by currency in D4_Liabilities by Currency be used to fill
in the Currency mismatch risk charge table?
- Tab D4 refers to insurance liabilities only and not the
complete EBS. Tab S3_Data Validation would perform
consistency check. Participants are reminded to address
identified inconsistencies or input errors.
29/9/2017
P1_Asset
Risk - Stress
Based
4. Currency mismatch
risk charge
For insurance liabilities and related reinsurance assets, we only had 4
groups of currency information available, i.e. HKD, CNY, USD and others
(which is consistent with the information required in tab "D4_Liabilities by
Currency", ). We are not able to further split the IBNR or Premium liabilities
into currencies other than the 4 groups, shall we just fill in the template by
using these 4 groups.
- In such case, please fill in the template by four currency
groups.
- You are further advised to further breakdown the "other
currencies" in QIS 2. "Other currencies" are meant to
capture those immaterial ones.
14/9/2017
P1_Asset
Risk - Stress
Based
Column N
Are there suppose to have formula? How do we determine the capital
requirement? If we don't have financial mitigation arrangements, am I
correct to say that the numbers in column "F" & "G" will be the same as
column "K" & "L"?
- If you do not have any financial mitigation arrangements,
the asset & liability exposures and capital requirement are
the same between excluding/including financial mitigation
arrangements. (the numbers in column "F" & "G" & "J"
same as the column "K" & "L" & "N".)
13/10/2017
P1_Asset
Risk - Stress
Based
Column N1. Please advise what to fill in for "capital requirement".
2. Assuming all business are HK insurance business, does column N
referring to the net assets breakdown by currency reported in Part 9 return?
- The capital requirement (Column N) = Net exposure
(Column M) * Risk Factor (Column I).
- The stressed risk charges should be applied on QIS basis
EBS.
Page 16
RBC First Quantitative Impact Study
General Business - QIS Template (as at 29/11/2017)
Date of receiptSection /
sheetPara. / Cell Questions Answers
19/10/2017
P1_Asset
Risk - Stress
Based
Column N
We have deducted currency swaps from the liability exposure for Column L
to take into account financial mitigation arrangements. Please advise the
formula for calculating Column N in order to derive the "Capital
Requirement".
- The capital requirement (Column N) = Net exposure
(Column M) * Risk Factor (Column I).
- The stressed risk charges should be applied on QIS basis
EBS.
24/10/2017
P1_Asset
Risk - Stress
Based
Row 19/20
In the Q&A on 5/9/2017, IA's answer is that "The section 2 to 3 are related
to the impact on all assets sensitive to the interest rate and credit spread
risks". Can you please clarify whether for interest rate risk, insurance
liabilities (if interest rate risk sensitive) should be included in Section 2 in
row 20 or not, or this Section 2 relates to "all assets" only?
- Please input the insurance liabilities in row 20 of the
section 2. If your insurance liabilities is interest sensitive,
the interest rate up/ down liabilities will be different from
base case.
5/9/2017
P1_Asset
Risk - Stress
Based
We would like to confirm section 2 to 3 are for investments in bonds. While
section 4 should reflect all assets and liabilities balances in foreign
currencies (to compute the currency mismatch risk charge)
- The section 2 to 3 are related to the impact on all assets
sensitive to the interest rate and credit spread risks.
- The section 4 is related to all assets and liabilities in each
currency for the corresponding currency risk factors.
26/11/2017
P1_Asset
Risk Stress
Based
Table 2 and 3
We don't have detailed data for the fixed income investment in some of our
CIS investments and therefore, we are not able to perform the interest rate
risk charge and credit spread risk charge for these fixed income
investments. Please advise if we can exclude these fixed income
investment in performing the interest rate risk charge and credit spread risk
charge. Also, do we need to add the market value of these fixed income
investment to "other equity", Cell F15 in P2_Asset Risk - Factor Based?
- Referring to the paragraph #138 in the technical
specification doc, It should classify to the "other equity."
5/9/2017P5_Credit
Default RiskD50
The subheadings here refer to "loans" only but in the technical spec Pg 37
para 195, reference is made to "loans and receivables", which includes
intragroup receivables (unrelated to contract of reinsurance). We would like
to clarify if we should fill up D50 with intercompany receivables as well?
- Yes, please include the intercompany receivables in the
"loans" section of the <P5_Credit Default Risk> tab.
- Please note there are separately items 10a. Loans Made
to Affiliates and 10b. Receivables From Affiliates in
<S1_EBS Summary> tab.
14/9/2017P5_Credit
Default RiskD50
With refer to your reply , if we would have to be included the amount due by
affiliates in the "loans" section, there will be an error when validate the data
as it cross checked again tab "A7" which is the real "loans" from third party.
For our case, it was amount due by affiliated companies (nature of non-
trade: expenses paid on behalf). If that's the case, shall we group it in
"other non-investments assets" instead?
- No, please do not group it in "other non-investments
assets".
- Please include it in the loan section in <P5_Credit Default
Risk> tab and state the counterparty in column D.
- IA noted the inconsistency between A7 and P5 in line 318
of the <S3_Data Validation> tab.
Page 17
RBC First Quantitative Impact Study
General Business - QIS Template (as at 29/11/2017)
Date of receiptSection /
sheetPara. / Cell Questions Answers
28/11/2017P5_Credit
Default RiskRow 64-76
Q1. In row 64-76, we need to fill in information of deposits with banks and
other deposit taking Institution. However, in the header of E66, it shows
“Value of loans”. Should we input the amount of time deposits placed in
banks and other deposit taking Institution or the loan from them? If we don’t
have any loan in bank, is that we input $0 in this part?
Q2. If the answer for Q1 is to input amount of deposits placed in banks and
other deposit taking Institution, is the classification of rating classified by the
Bank and other deposit taking Institution in which we have placed time
deposit?
- Q1. Noted. Header of E66 is a typo. The definition of the
deposits with banks and other deposit taking institution is
referred to the paragraph # 197 in the technical
specification.
- Q2. Correct.
17/11/2017P5_Credit
Default RiskRow 82-89
For those not yet billed and not yet due premium, it is now booked under
both unearned premium and receivables. For the risk calculation, it seems
to be counted twice for premium liability and credit default risk. Anywhere
we can book to net off this double counting? Because the data validation
sheet will match the receivable with P5 figures. Therefore, there is
duplication if we input the above figures in P5. Please advise.
'- In term of the risk calculation, the premium risk is the risk
that the total claim losses, net of reinsurance, relating to
events that have not yet occurred, will be greater than
expected; the credit default risk is the risk of loss due to
the potential default of counterparty on current or future
obligations. There are two different risks prospective.
- The <S3> data validation is no matched the receivable
with P5 figures.
7/11/2017P5_Credit
Default Risk
Section 6 (O/S Premim
Credit Default Risk)
For the outstanding premium that is arising from business acquired via
brokers, should we use the rating of the RI broker or the cedant?
- It depends on the terms and condition of the reinsurance
treaty. For example, if the RI broker is insolvent, based on
the treaty, whether RI broker or cedant bear liability of the
outstanding premium.
5/9/2017P5_Credit
Default Risk
Where do we classify gross deferred acquistion cost, fixed assets, rental
deposits, prepayments and other assets like tax receivables into this
worksheet? Should only items 4,6,8,10 and 11 in S1_EBS Summary
worksheet flow to this P5_Credit Default Risk (any others)?
- The credit default risk factors are applied to the
exposures for non-investment counterparties.
- Deferred acquisition cost, fixed assets and tax
receivables do not generally have credit default risk.
- Rental deposits and prepayments do have credit default
risk. Please use the item 7 "Other Non-Investment Assets
Default Risk" (starting on Row 92) in <P5_Credit Default
Risk> tab if you have any other non-investment
counterparties risk.
Page 18
RBC First Quantitative Impact Study
General Business - QIS Template (as at 29/11/2017)
Date of receiptSection /
sheetPara. / Cell Questions Answers
20/11/2017D1_Business
DataPremium Data
We have premium rebate for certain policy based on overall claims ratio.
Please clarify if the premium rebate could be deducted from the "Gross
Earned Premiums" and "Net Earned Premiums" under the QIS template.
-Yes.
16/8/2017
D2_Claims
Triangles,
Gross
16 - 57 Cumulative
Paid claims,
Cumulative Incurred
Claims of different
business lines
Does the cumulataive paid claims refer to the claims paid? Does the
cumulative incurred claims refer to the summation of claims paid and the
movement in claim reserve for the year 2016 or summation of claims paid
and the claim reserve as at Dec 2016?
- The cumulative paid claims refer to the accumulation of
the paid claims; the cumulative incurred claims refer to the
summation of cumulative claims paid and the claim reserve
as at Dec 2016.
31/8/2017
D2_Claims
Triangles,
Gross
We want to clarify that are gross claim payments net of recoveries from
others other than reinsurance?
- No, the gross claim payments should not include the net
of recoveries from others other than reinsurance.
- The gross claim payments should not reflect any
reinsurance or other adjustments; the net claim payments
should reflect all adjustments such as reinsurance.
2/11/2017
D2_Claims
Triangles,
Gross
We would like to verify whether this worksheet is looking for paid/incurred
claims figures for year by year basis (e.g. for paid claims, for row of
underwriting year 2014, the figure for development year 1 is the paid claims
amount in 2014, the figure for development year 2 is the paid claims amount
in 2015, the figure for development year 3 is the paid claims amount in
2016), which is similar to what we have filled in for Forms 6 to 9, or
accumulative basis (e.g. for paid claims, for row of underwriting year 2014,
the figure for development year 1 is the paid claims amount in 2014, the
figure for development year 2 is the accumulative paid claims amount in
2014+2015, the figure for development year 3 is the accumulative paid
claims amount in 2014+2015+2016)?
- The cumulative paid claims refer to the accumulation of
the paid claims (i.e. accumulative basis).
2/11/2017
D2_Claims
Triangles,
Gross
For underwriting year "2002 and prior", we do not have the data with
development years for very old underwriting years (e.g. paid claims for
underwriting year 1997 contracts in development year 1 (1997),
development year 2 (1998), development year 3 (1999), etc.). We only
have data for very old underwriting years but paid in last 12 accounting
years (e.g. paid claims for underwriting year 1997 contracts in accounting
year 2005 to 2016). What is HKIA's suggestion for us to fill in the row "2002
and prior"?
- Please estimate the row "2002 and prior" in your best
effort.
- Please also add a NEW tab <Q0> in the QIS1 template
and separately document, at your own format, the
approximation you have made.
Page 19
RBC First Quantitative Impact Study
General Business - QIS Template (as at 29/11/2017)
Date of receiptSection /
sheetPara. / Cell Questions Answers
22/9/2017
D2_Claims
Triangles,
Gross and
D3_Claims
Triangles, Net
12 Direct Insurance
General Liability
As there are three sub-classess of General Liability under the LOB
Definitions for QIS in Appendix I of the technical specification, is General
Liability the sum of Consturction EC, EC (Others) and Other General
Liability same as current accounting class?
- Yes, the general liability is the sum of Construction EC,
EC (Others) and Other general liability in QIS 1 basis. The
total of general liability (QIS 1) is the same as current
accounting class.
13/10/2017
D2_Claims
Triangles,
Gross and
D3_Claims
Triangles, Net
We have not captured historical data split by the specified sub-classes. We
would like to know if we should:-
a) only fill up the triangles with data for the main classes, and leave out
the rest of the tables; or
b) allocate into the sub-classes.
Is there a preferred/common allocation method for b)?
- The QIS lines of business should be found in existing
annual or quarterly returns. You are advised to fill in the
triangles as far as possible.
- If the data cannot be sorted after best effort, you may
apply approximation based on estimate proportion or fill in
the data in the majority subclass business.
- Please also add a NEW tab <Q0> in the QIS1 template
and separately document, at your own format, the
approximation you have made.
26/9/2017
D2_Claims
Triangles,
Gross
D3_Claims
Triangles, Net
All data from row 578
onwards
Our company has changed the accounting reference date from 31 Mar to 31
Dec in the year of 2015. As such, underwriting year 2015 is a period of 9
months from 1 Apr 2015 to 31 Dec 2015.
For the QIS claims triangles, would like to check which method shall be
used for the treatment of underwriting year:-
a) follow the same treatment of underwriting year in the audited HKGBAR as
agreed with OCI and KPMG; i.e. underwriting year 2015 is a period of 9
months from 1 Apr 2015 to 31 Dec 2015. Underwriting year 2014 or before
is for 12 months from 1 Apr to 31 Mar. From 2016 onwards, underwriting
year will be 12 months from 1 Jan to 31 Dec (as per our e-mail of 19 Apr
2016 with OCI); OR
b) re-define underwriting year as 12 months period from 1 Jan to 31 Dec for
all years
- Suggest using method a.
7/11/2017
D2_Claims
Triangles,
Gross;
D3_Claims
Triangles, Net
Per the Q&A on 16/8/2017 related to tab D2, IA's answered is that "the
cumulative incurred claims refer to the summation of cumulative claims paid
and the claim reserve as at Dec 2016." Please can you clarify if "claim
reserve" refers to case reserve only, or should also include IBNR, ULAE,
etc. (similar to the terminology per para 67 of the technical spec)?
- It is only referred to case reserve.
Page 20
RBC First Quantitative Impact Study
General Business - QIS Template (as at 29/11/2017)
Date of receiptSection /
sheetPara. / Cell Questions Answers
9/10/2017D4_Liabilities
by CurrencyCurrency
For International P/C, we do not split our reserving cells by currency. Now
for QIS, they ask for discounting via different base yield curves (USD, HKD,
CNY). I will simplify the approach in the following way: Most of the business
in HKD is related to the fac Workers Comp segment. I will handle this
segment with the HKD base yield curve. All other segments are dominated
by business and reserves in USD. I will handle these segments with the
USD base yield curves.
- Noted.
- Please add a NEW tab <Q0> in the QIS1 template and
separately document, at your own format, which business /
currency using the HKD yield curve / USD yield curve in the
NEW tab. If you have any other approximation made due
to the proportionality, please also document as well.
18/10/2017D4_Liabilities
by CurrencyRow 34 The cells are protected which prevent us from inputting the data.
- IA already circulated revised QIS 1 template, with
unlocked row 34, on 3 Oct 2017 to the industry.
14/11/2017D5_Cap. 41
Solvency
We are a branch reinsurer writing both long term and general reinsurance
business. In the note of this worksheet, it mentioned that it does not apply
to branch who do not required to calculate HKICO solvency ratio. Do we
need to complete this tab? If yes, shall we report the number for the whole
branch or just a standalone general business?
- Correct. Please leave in blank if you are currently not
required calculating the HKICO solvency ratio.
11/10/2017
Q1_Branch
Ownership
Assets
If our company is a local company and is not branches of overseas insurers,
do we have to fill in Q1_Branch Ownership Assets? If so, what needs to be
provided and which column to fill in?
- Please leave it blank.
31/10/2017Q4_Premium
Liabilities
Row 14 (Premium for
bound but not incepted
policies)
We answer "Yes" for this question and, hence, we need to tell what lines
and approximate volume. As at 31/12/2016, assuming there are two policies
as below, we trust we need to include the UPR for (1) but do we need to
include UPR for (2) to calculate the approximate volume?
(1) Policy incepted on 1 Jan 2017, UPR = 100% of policy premium
(2) Policy incepted on 1 July 2016, UPR = 50% of policy premium
- Please only include the (1) to calculate the approximate
volume.
5/9/2017Q7_Insurance
Risk ChargesD13 What does risk grouping refers to?
- The risk grouping for insurance risk is referred to three
groups of risks, which are premium risk, reserve risk, and
catastrophe risk.
Page 21
RBC First Quantitative Impact Study
General Business - QIS Template (as at 29/11/2017)
Date of receiptSection /
sheetPara. / Cell Questions Answers
1/11/2017Q8_Catastrop
he Exposures
Lines 22-26 and in the
repeated tables further
down the tab
IA has requested details of each company's cat exposure; are gross or net
(of outwards reinsurance recoveries) figures intended for this tab?
- Please provide the gross figure for this tab. Moreover,
please also provide the net figure (of outwards reinsurance
recoveries) in Column L if you have it.
10/10/2017Q8_Catastrop
he Exposures
Col I Aggregrate
exposure
We had previously clarification from the RBC team that aggregrate
exposure refers to “the net retained sums insured (aggregates) underwritten
by the insurer for the specified lines of business and peril.” We would like
further clarification if this mean insurable values above the deductible and
below the limit? In other words, does “net” refers to a value after limit and
deductible?
Yes.
5/9/2017Q8_Catastrop
he ExposuresI22 to I26 vs L22 to L26
What is the definition of Aggregate Exposure versus Modelled Losses?
What is the difference?
- The aggregate exposure refers to the net retained sums
insured (aggregates) underwritten by the insurer for the
specified lines of business and peril.
- The modelled losses refers to the modelled probable
maximum loss at the 1 in 200 year return period
(equivalent to an annual occurrence exceedance
probability of 99.5%) based on your catastrophe model
output.
6/9/2017Q8_Catastrop
he ExposuresL22 to L26
What is basis for 200 year modeled event, i.e. Ground up (total amount of
loss); Gross (limits and deductibles applied); or Pre-cat Net (location/policy
level reinsurance applied)?
- No basis was defined.
- Please provide as much information as you have. It is
helpful on developing the methodology of measuring the
catastrophe risk.
17/11/2017Q8_Catastrop
he Exposures
Row 21, Column G, H,
I
The information requirement should not be applicable to Reinsurer as their
meaning is different to the primary company due to the reinsurance
participation may be via different contracts (proportional treaty, non-
proportional treaty, proportional facultative and non-proportional facultative).
They can not add up together.
- Please add more rows on Row #26 and then input the
information by contract type (proportional treaty, non-
proportional treaty, proportional facultative and non-
proportional facultative) separately.
17/11/2017Q8_Catastrop
he Exposures
Row 21, Column J, K,
L
For Reinsurers, it is common to have business from out side of Hong Kong.
The Cat Excess of Loss protection is for all business, rather than for Hong
Kong risks only. So the information might not be relevent.
'- Please report the risks not located in Hong Kong in Row
30+ in <Q8>. We understood that the Cat Excess of Loss
protection is for all business, rather than for Hong Kong
risks only. Please follow the materiality and proportionately
to decide whether reporting the Hong Kong portion
individually or not.
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RBC First Quantitative Impact Study
General Business - QIS Template (as at 29/11/2017)
Date of receiptSection /
sheetPara. / Cell Questions Answers
11/10/2017Q8_Catastrop
he Exposures
a) For Line (22-24), and Line (32-35), what data are we supposed to
provide? Claims incurred related to the relevant peril in 2016 or Amount of
Risk underwrite in 2016 related to the relevant peril ?
b) Can you please clarify each of the column (G-L) for Line (22-24) and (32-
35) ? E.g. Definition, period, and criteria
(a) Please provide the risk exposure respect to the each
relevant peril as at 31 Dec 2016.
(b) Total sum insured (Column G) is the total amount of
money that an insurer is obligated to cover in the envent of
a covered loss.
Maximum retention per risk (Column H) is the maximum
amount of a risk that an insurer retains.
The aggregate exposure (Column I) refers to the net
retained sums insured (aggregates) underwritten by the
insurer for the specified lines of business and peril.
The Catastrophe excess of loss reinsurance provides
coverage to the insurer when aggregated claims and claim
expenses from an occurrence of a peril, covered under a
portfolio of insurance contracts written by the insurer,
exceed the attachment point specified in the reinsurance
contract with the insurer.
- Deductibles (Column J): An amount the reinsurer will
deduct from the loss before paying up to its policy limits.
- Limits (Column K): The total amount of losses to be paid
under a reinsurance agreement.
The modelled losses (Column L) refers to the modelled
probable maximum loss at the 1 in 200 year return period
(equivalent to an annual occurrence exceedance
probability of 99.5%) based on your catastrophe model
output.
Please enter N/A if it is not applicable.
11/10/2017Q10_Operatio
nal Risks
a) We are required to state “top ten operational risk events in the past 3
years”. We would like to ask whether these events refer to the events that
had “occurred” during the past 3 years, or refer to “possible risk events” that
may occur?
b) If the response to a) above is “possible risk events”, is it necessary for us
to provide all 10 possible risks and “Estimated Monetary Loss Amount” ?
(a) The operational risk events is referred to any historical
and potential events. Indication of historical or potential
events would be helpful.
(b) Please provide top 10 operational risk events with the
estimated loss amount in dollars in your best effort. If you
could not provide estimated loss amount in dollars, please
provide the estimated loss amount in percentage of certain
benchmark (e.g. premium or liabilities) and estimated
probability.
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RBC First Quantitative Impact Study
General Business - QIS Template (as at 29/11/2017)
Date of receiptSection /
sheetPara. / Cell Questions Answers
29/9/2017Q11_Risk
MitigationColumn G and I
Our system can't split the ceded reinsurance into proportional RI and non-
proportional RI, can we leave column G and I in blank
- In your case, please leave it blank in QIS 1.
- You are further advised to start capturing this information
from now on.
24/10/2017Q11_Risk
Mitigation
We are a reinsurer and we have different reinsurance program for each
underwriting year. We have the following questions:
a) For Quota Share retrocession, if a class of business have reinsurance
coverage in some underwriting years but no reinsurance coverage in some
other underwriting years, should we still answer Yes for Column F? If yes,
please advise the % to be filled in (using actual 2016 figures?)
b) If we simply use actual 2016 figures for the retro %, the data will be
sometimes not accurate, especailly when there is prior year adjustment on
retro premium. Or shall we use the retro % for the latest underwriting year
(i.e 2016)?
c) We have XOL reinsurance program for our offshore property treaty
business due to Cat Loss, and it is not possible to split into Prop and Non-
Prop as this retro is not for a particular treaty but for the whole offshore
property treaty portfolio. How should we fill in the % for Non-Prop Treaty
Reinsurance for Offshore Property Damage (cell I58) and Prop Treaty
Reinsurance for Offshore Property Damage (cell I72)? (estimated by
proportion of non-proportional assumed premium and proportional assumed
premium written in 2016?)
- (a) Please answer "Yes" for Column F and fill in the
actual 2016 figure if the class of business have reinsurance
coverage in 2016.
- (b) Please use the actual 2016 figure for the retro %.
- (c) You may estimate the proportional and non
proportional % by the proportional of the premium written
in 2016.
- Please document all above in the Column J.
27/11/2017
Q13_Borrowin
g & Source of
Fund &
Q13.1_Paid
Up
Off balance sheet item
We are the branch of an oversea company, there is a letter of credit, which
was arranged by Head Office on behalf of HK branch, the beneficiary is
Hong Kong Insurance Authority. HK branch does not bear any LC charges
and in case of any withdrawal, we are not obligated. Despite of this, we
have included the LC as our local assets under Cap. 41 solvency
calculation. Please advise whether we should include the details in Q13 and
Q13.1 tabs.
- Please fill in the details in Q13 and Q13.1 tabs on your
best effort.
19/10/2017Q13.1_Paid
Up
The Company issued debt securities (over 50 series) to investors for the
purpose of providing funding for the Company. Is the debt issuance not
applicable for Q13.1_Paid Up Capital Questionnaire?
- The debt issuance should be applicable Q13.1.
Page 24
RBC First Quantitative Impact Study
General Business - QIS Template (as at 29/11/2017)
Date of receiptSection /
sheetPara. / Cell Questions Answers
31/10/2017Q13.1_Paid
Up
The company issued debt securities to investors at discount with no
conversion features. Shall we put zero in this row 38? If not, please
elaborate the information required for this row as the debt securities issued
by the company cannot be converted into shares.
- Yes, please put zero in Row 38.
29/9/2017
Q13.1_Paid
up
&
Q13.2 Non-
paid up
N/A
We are a Hong Kong Branch of an oversea company and we do not have
issued capital, only Head Office Account. Please advise how should we fill in
the information in these two tabs because "paid up" and "non-paid up" seem
not relevant to Head Office Account.
When you fill in the Q13, Q13.1 and Q13.2 tabs, please
input "N/A" if there is not applicable
28/8/2017
Q14_Financial
Risk
Mitigation
What is the definition of Financial Risk Mitigation Arrangement? Is it refer to
financial instruments like swap or derivative for hedging the financial risk
that the company expose to? E.g. interest rate swap for a floating rate
loan,etc.
Your understanding is correct. It refers to using financial
instruments hedging the financial risk of the company
expose to.
14/9/2017Q15_Strategic
ParticipationsWhat is the definition of strategic participations? Can you quote us some
example?
For definition of strategic investment, please refer to
section 6 para 54(VIII) in technical specification.
Page 25