Additional Annual Reportorial Requirements

December 16, 1994 SEC-BED * MEMORANDUM CIRCULAR NO. 06-94 TO : All Pre-Need Companies SUBJECT : Additional Annual Reportorial Requirements In order to review the valuation of actuarial liabilities, every pre-need company licensed to operate in the Philippines shall submit within one hundred twenty (120) days from the end of its fiscal year the following: 1. Actuarial Report duly certified by a SEC accredited actuary which includes the following for each type of plan (e.g., Educational, Memorial, Pension, Interment and Travel): 1.1 Exhibit A - Actuarial Assumptions and Methodology * Description of benefits and guarantees * Amount registered and licensed, date registered and licensed * Distribution of Issued Contracts showing numbers and amounts, by issue year * Actuarial assumptions used in the valuation of reserves interest rate inflation rate withdrawal rate contingent benefit availment rate, if applicable present actual cost of benefits as of valuation date, if applicable other pertinent formulas * Actuarial formulas and methods used in the valuation of reserves * Justification for any changes in actuarial assumptions or methods 1.2 Exhibit B Summary of Issued Contracts (See attached format) 1.3 Exhibit C Valuation Results by Product Line (See attached format) 1.4 Exhibit D Summary of Valuation Results (See attached format) 1.5 Exhibit E Certification and statement of opinion as to the appropriateness and reasonableness of the assumptions and level of reserves 2. Sworn statements from insurance companies certifying the coverages or guarantees assumed by the company indicating extent, term and duration of such coverages and/or guarantees. cdlex 3. Sworn statements from Trustee Banks on the Trust Accounts, including 3.1 statement that trust accounts are maintained in accordance with trust agreement which had been approved by SEC; 3.2 statement that trust accounts are free from liens and encumbrances other than liabilities indicated in the trust fund statement; 3.3 the trust fund balance sheet(s) as of valuation date, including the income statement(s) for the year and subsidiary schedules that should identify the specific investments. 4. Sworn statements from the responsible officers of the pre-need company stating that 4.1 The data on which the valuation was based are complete and accurate; 4.2 Only withdrawals allowed by SEC have been made from the trust fund; 4.3 Deficiencies, if any, in trust fund have been duly covered up (submit proof). 5. Schedules showing the data for the last 5 years or a shorter period, if applicable, on the required actuarial reserves, trust fund equity and net investment rate of return on the trust fund. For the year-end 1994 report, data for 3 years (1992, 1993, 1994) shall be required; for 1995, data for 4 years; and for 1996 and beyond, data for 5 years. 6. Other subsidiary schedules which the SEC may require from some companies for purposes of table audit. prcd The foregoing certifications, reports and schedules required shall be accomplished in accordance with the attached forms. This Circular shall take effect immediately and the initial report shall cover the fiscal year ending December 31, 1994. (SGD.) ROSARIO N. LOPEZ Chairman ATTACHMENT Exhibit B - Summary of Issued Contracts as of (fiscal year ending) Exhibit C - Valuation Results by Specific Product as of (fiscal year ending) Exhibit D - Summary of Valuation Results as of (fiscal year ending) EXHIBIT E VALUATION CERTIFICATION Please be informed that I have undertaken the actuarial valuation of the pre-need plans of _______________ as of ____________. I have relied on data submitted by ________________________, and have conducted tests necessary to satisfy myself as to the reasonableness and integrity of such data. * The actuarial assumptions used in this actuarial valuation are in my opinion, reasonable and appropriate for the plans included in this actuarial valuation. The actuarial reserve liabilities for all benefits and guarantees therein are valued in accordance with the assumptions, and all insurance benefits included in the plan agreement are adequately covered under a separate insurance contract. I hereby certify that the actuarial formulations used in this actuarial valuation are in accordance with generally accepted actuarial principles and practices, and also with the existing laws, pertinent rules and regulations of the SEC. The reserve liabilities aggregating to in this actuarial valuation are in accordance with the above actuarial formulations and assumptions. Based on the Trustees' certification/s, the Trust Fund Equity has a net balance of ________________ as of __________________. Case A. If Trust Fund is sufficient: The Trust Fund Equity is sufficient to cover the actuarial reserve liabilities. Case B. If Trust Fund is deficient: The deficiency from the actuarially valued reserve liabilities amounting to _______________ should be in the Trust Fund within the time limit prescribed by the SEC regulations. * Any missing or unreported data/information as discovered by the Valuation Actuary and its pertinent financial impact shall be disclosed by the Valuation Actuary and included in this Certification.