The Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditors Report of Insurance Companies) Regulations. 2000. Authority in consultation with the Insurance Advisory Committee, hereby makes the following regulations namely :

|Puvi HI—Sr-< 4| M }?_ TI^Ci^r^^)r^ND[A^XTR^ORD^INARY

|PM, i III—Sh 4| -tt 1097 GI/2002—5 ^L____________J5ffiijA2ETTTEO^^

|PAUI III—St-v.-H iS 36 THE GAZETTE OF INDIA: EXTRAORDINARY

[PAR I lll—Sf-.c. 4J V }X THEaAZnTTI^OFjNpiA. LXTRAORDINARY

| P -M III- Si 4| 39 •4<_)

THE GAZETTE OF INDIA , EXTRAORDINARY

\P\tu III—Si. . 4| 41 1097 GI/2002—6.

x>

. T HE G A Z E T TE OF INDIA E X T R A O R D I N A RY

|PAK i I I I —S K\ 4| INSURANCE REGULATORY A ND DEVELOPMENT AUTHORITY

NOTIFICATION

New Delhi, (he .30|h M.ircli. 2002

The Insurance Regularity and Development Authority (Preparation of Financial Statements and Auditor's Report of

Insurance Companies) Regulations, 2002

F.No. IRDA/Rc<;./03/2002.—-In exercise of the powers conferred b\ sections II4A of (he Insurance Acl. 1 ^3K (4 of 1938). and in suppression oflhc The Insurance Rcmilaroh and Development Authority (Preparation of Financial Slnlcmcnls and Auditor's Report of Insurance Companies) Regulations. 2000. Authority in consultation u ilh llic Insurance Advison Committee, hereby makes Hie following regulations ncmel\ , -

1. Short title and commencement.—(1) These regulations may be called the Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditor's Report of Insurance Companies) Regulations, 2002.

(2) They shall come into force from the date of (heir publication in the Official liawlte.

(3) On and from the commencement of these regulations, The Insurance Retaliatory And Development Authority (Preparation of Financial Statements and Auditor's Report of Insurance Companies) Regulations, 2000 shall stand superceded, except as respects things done or omitted lo he done Iheieunder.

2. Definitions.—( I) In these regulations, unless the context otherwise requires —

( a) 'Vie/'" means the Insurance Act, 1938 (4 of 1938); ( b) "Authority" means thelnsuiancc Regulatory and Development Authority established under sub-section (1) oi" section 3 of the Insurance Regulatory and Development Authority Acl, 1999 (41 of 1999); ( c) All words and expressions used herein and not defined but defined in the Insurance Act, 1938 (4 of 1938), or Insurance Regulatory and Development Authority Act, 1999 (41 of 1999), or Companies Act, 1950 (1 of 1950), shall have the meanings respectively assigned to them in those Acts.

3. Preparation oi financial statements management report and auditor's report.—(I) An insurer carrying on hie insurance business, after the cummencemem of these Regulations, shall comply with the requirements of Schedule A. (2) An insurer cairying on general insuianee business, after the commencement of these Regulations, shall comply with the requirements of Schedule B: Provided thai (his sub-regulation shall apply, mutatis mutandis, to reinsurers, until separate renulations are made. (3) The report of the auditors on the financial .statements of every insurer and reinsurer shall be in conformity with the requirements of Schedule C, or as near thereto as the circumstances permit. (4) The Authority may, from time to time, issue separate directions/ guidelines in the matter of appointment, continuance or removal of auditors of an insurer or reinsurer, as the case may be, and such directions/ guidelines may include prescriptions regarding qualifications and experience of auditors, their rotation, period of appointment, etc as may be deemed necessary by the Authority.

43

SCHEDULE A

(Sec Regulation 3)

PARTI

Accounting principles for preparation of financial statements

1 Applicability of Accounting Standards—Every Balance Sheet, Revenue Account [Policyholders' Account], Receipts and Payments Account [Cash Flow statement] and Profit and Loss Account [Shareholders' Account] ot un insurer shall be in conformity with the Accounting Standards (AS) issued by the ICAI, to the extent applicable to .usurers carrying on life insurance business, except that:

(i) Accounting Standard 3 (AS 3) - Cash Flow Statements - Cash Flow Statement, shall be prepared only under the Direct Method-

(n) Accounting Standard 17 (AS 17) - Segment Reporting - shall apply to all insurers irrespective of the requirements regarding listing and turnover mentioned therein.

2. Premium—Premium shall be recognised as uicoiue when due. For linked business the due date for payment may be taken as the date when the associated units arc created.

3. Acquisition CostS-Aajmsnion costs, if any. shall be expensed in the period ui which they are mcurrcd.

Acquisition costs are those costs that vary with and are primarily related to the acquisition of new and renewal insurance contacts. The most essential test is the'oblatory relational^ between costs and the execution ot insurance contracts (i.e., commencement of risk)

4. Claims Cost - T he ultimate cost of claims shall compose the policy benefit amount and specific claims settlement costs, wherever applicable.

5 Actuarial Valuation -- Liability for Life Policies - The estimation of liability against hfe policies shall be determined by the appointed actuary of the insurer pursuant to Ins annual investigation of the lite insurance business. Actuarial assumptions are to be disclosed by way of notes to the account

The liability shall be so calculated that together with future premium payments and investment income, die insurer can meet all future claims (including bonus entitlements to policy holders) and expenses,

6. Procedure to determine value of investments.—An insurer shall'determine the values of investments in the following manner:-

a) Real Estate I nvestment Property- The value of investment property shall be determined at historical cost, subject to revaluation at least once in every three years. 'Hie change in the carrying amount of the investment property shall be taken to Revaluation Reserve

The insurer shall assess at each balance sheet date whether any impairment of the investment property lias occurred.

Gams/ losses arising due to changes ,n the carrying amount of real estate shall be taken to equity under 'Revaluation Reserve. The 'Profit on sale of investments' or 'Loss on sale of investments', as the case may be. shall include accumulated changes m the carrying amount previously recognised in equity under the heading 'Revaluation Reserve' in respect of a particular property and being recycled to the relevant Revenue Account or Profit and Loss Account on sale of that property.

The bases for revaluation shall be disclosed in the notes to accounts. The Authority may issue directions specifying the amount to be released from the revaluation reserve for declaring bonus to the policyholders. For the removal of doubt it is clarified that except for the amount that is released to pohcyholders as per the Authority's direction, no

An impairment loss shall be recognised as an expense in the Revenue/Profit and Loss Account immediately, unless the asset is carried at re-valued amount. Any impairment loss of a re-valued asset shall be treated as a revaluation decrease ol that asset and .1 the impairment loss exceeds the corresponding revaluation reserve, such excess shall be recognised as an expense m the Revenue/Profit and Loss Account- 44 THE GAZETTE OF INDIA F:\TRAORDINARY

|P.'KI 111—SK 4| b) D e bt Securities--!)fht securities, including government securities and redeemable preference shares, shall be considered as "held to maturity" securities and shall be measured at historical cost subject to amortisation.

c) Equity Securities and Derivative Instalments that are traded in active markets—Listed equity securities and derivative instruments that are traded in active markets shall be measured at fair value on the balance sheet date. For the purpose of calculation of fair value, the lowest of the last quoted closing price ai the stock exchanges where the securities are listed shall be taken.

The insurer shall assess on each balance sheet date whether any impairment of listed equity secunty(ies)/derivative(s) instruments has occurred.

An active market shall mean a market, where the securities traded are homogenous, availability of willing buyers and willing sellers is normal and the prices are publicly available"

Unrealised gams/ losses arising due to changes in the fair value of listed equity shares and derivative instruments shall be taken to equity under the head 'Fair Value Change Account". The 'Profit on sale of investments' or 'Loss on sale of investments', as the case may be, shall include accumulated changes in the fair value previously recognised in equity under the heading "Fair Value Change Account' in respect of a particular security and being recycled to the relevant Revenue Account or Profit and Loss Account on actual sale of that listed security.

The Authority may issue directions specifying the amount to be released from the Fair Value Change Account for declaring bonus to the policyholders. For the removal of doubt it is clarified that except for the amount that is released to policyholdcrs as per the Authority's prescription, no other amount shall be distributed to shareholders out of Fair Value Change Account. Also, any debit balance m Fail Value Change Account shall be reduced from profit/free reserves while declaring dividends

Hie insurer shall assess, on each balance sheet date, whether any impairment has occurred. An impairment loss shall be recognised as an expense in Revenue/Profit and Loss Account to the extent of the difference between the re-measured fail' value of the security/investment and its acquisition cost as reduced by any previous impairment loss recognised as expense in Revenue/Profit and Loss Account. Any reversal of impairment loss, earlier recognised in Revenue/Profit and Loss Account shall be recognised in Revenue/Profit and Loss Account.

d) Unlisted and other than actively traded Equity Securities and Derivative Instruments —Unlisted equity securities and derivative instruments and listed equity securities and derivative instruments that arc not regularly traded m active markets shall be measured at historical cost. Provision shall be made for diminution in value of such investments. The provision so made shall be reversed in subsequent periods if estimates based on external evidence show an increase in the value of the investment over its carrying amount. The increased carrying amount of the investment due to the reversal of the provision shall not exceed the historical cost

For the purposes ot this regulation, a security shall be considered as being not actively traded, if as per guidelines governing mutual funds laid down from time to time by SEBI, such a security is classified as "thinly traded".

7. L o a ns Loans shall be measured at historical cost subject to impairment provisions.

The insurer shall assess the quality of its loan assets and shall provide for impairment. Ilie impairment provision shall not be lower than the amounts derived on the basis of guidelines prescribed from time to time by the Reserve Bank of India, that apply to companies and financial institutions.

8. Linked Business—The accounting principles used for valuation of investments are to be consistent with principles enumerated above. A sepaiate set of financial statements, for each segregated fund of the linked businesses, shall be annexed.

Segrcpaf' mnds represent funds maintained in accounts to meet specific investment objectives of policyholders who bear the investment ri'3:. It. .estment income/ gains and losses generally accrue directly to the policyholders. The assets of each account are segregated and are not subiect to claims that arise out of any other business of the insurer.

9. F u n ds for F u t u re Appropriation—The funds for future appropriation shall be presented separately.

The tiinds for future appropriation represent all funds, the allocation of which, either to the policyholders or to the shareholders, has not been determined by the end of the financial year.

45

PART II

Disclosures forming part of Financial Statements

A. The following shall be disclosed by way of notes to the Balance Sheet:

1. Contingent Liabilities:

(a) 1'artly-paid up investments (h) Underwriting commitments outstanding (c) Claims, other than those under policies, not acknowledged as debts (d) Guarantees given by or on behalf of the company (c) Statutory dcm;inds/liabiiiiics in dispute, not provided for (f) Rcmsuiance Obligations to the extent no provided for in accounts (y) Others (to be specified I

2. Actuarial assumptions for valuation of liabilities for life policies m force.

3. Encumbrances tq_assets of the company in and outside India.

4. Commitments made and outstanding for Loans, Investments and Fixed Assets.

5. Basis of amortisation of debt securities

d. Claims settled and remaining unpaid for a period o l m o ie than six months as on the balance sheet date.

7. Value of contracts in relation to investments, for:

(a) Purchases where deliveries are pending; (b) Sales where payments are overdue.

K. Opeiating expenses relating to insurance business: basis of allocation of expenditure to various segments of business.

(). Computation of managerial remuneration.

10. Historical costs of those investments valued on fan value basis.

11. Basis of it-valuation of investment property.

B. The following accounting policies shall form an integral part ot the financial statements:

1. All significant accounting policies m terms of the accounting standards issued by the ICA1, and significant principles and policies given in Part I of Accounting Principles. Any other accounting policies, followed by the insurer, shall be stated in the manner required under Accounting Standard AS 1 issued by the ICAI.

2. Any departure Irom the accounting policies shall be separately disclosed with reasons for such departure.

( . The following information shall also be disclosed:

1. Investments made in accordance with any statutory requirement should be disclosed separately together with its amount, nature, security and any special rights in and outside India;

2 Segregation inlo performing/ noil performing investments for purpose of income recognition as per the directions, if any, issued by the Authority;

3. Assets to the extent requned to be deposited under local laws or otherwise encumbered in or outside India;

4. Peieenlau'C of business sector-wise;

5. A summary of financial statements for the last five years, in the manner as may be prescribed by the Authority;

0. Bases ol allocation of investments and income thereon between Pohcyholders¹ Account and Shareholders" Account.

7. Accounting Ratios as may be pi escribed by the Authority.

•46 THE GAZETTE OF INDIA : EXTRAORDINARY

|PwiIIl—Si 4|

PART III

General instructions for preparation of Financial Statements

1. The coiresponding amounts for the immediately preceding financial year for all items shown in the Balance Sheet, Revenue Account, Profit and Loss Account and Receipts and Payments Account shall be given.

2. The figures in the financial statements may btr rounded off to the nearest thousands.

3. Interest, dividends and rentals receivable in connection with an investment should be stated at gross amount, the amount of income tax deducted at source should be included under 'advance taxes paid' and taxes deducted at source.

4. (I) For the purposes of financial statements, unless the context otherwise requires -

(ii) ilit.- expression •provision' shall, subject to (II) below mean any amount written off or retained by way ol "providing lor depreciation, renewals or diminution in value of assets, or retained by way of providing for any known liability or loss of which the amount cannot be determined with substantial accuracy;

(b) the expression 'reserve' shall not, subject to as aforesaid, include any amount written off or retained by way of providing for depreciation, renewals or diminution in value of assets or retained by way of providing for any known liability or loss;

(c) the expression 'capital reserve' shall not include any amount legarded as free for distribution through the profit and loss account; and the expression 'revenue reserve' shall mean any reserve other than a capital reserve;

(d) The expression "liability" shall include all liabilities in respect of expenditure contracted for and all disputed or contingent liabilities.

(11) Where:

(a) any amount written off or retained by way of providing for depreciation, renewals or diminution m value of assets, or

(b) any amount retained by way of providing for any knownjiability or loss,

is in excess of the amount which in the opinion of the directors is reasonably necessary for the purpose, I lie excess shall be treated as a reserve and not provision.

5. The company shall make provisions for damages under lawsuits where the management is of the opinion that the award may go against the insurer.

6. Extent of risk retained and re-insured shall be separately disclosed.

7. Any debit balance of the Profit and Loss Account shall be shown as deduction from uncommitted reserves and the balance, if any, shall be shown separately.

47

PART IV

Contents of Management Report

There shall be attached to the financial statements, a management report containing, inter alia, the following duly

authenticated by the management:

1. Confirmation regarding the continued validity of the registration granted by the Authority;

2. Certification that all the dues payable to the statutory authorities have been duly paid;

3. Confirmation lo the effect that the shareholding pattern and any transfer of shares during the year are in uccoidance with the statutory or regulatory requirements;

4. Declaration that the management has not directly or indirectly invested outside India the funds of the holders of policies issued in India;

5. Confirmation that the required solvency margins have been maintained;

ft. Certification to the effect that the values of all the assets have been reviewed on the date of the Balance Sheet and that in his (insurer's) belief the assets set forth in the Balance-sheets are shown in the aggregate at amounts not exceeding iheir realisable or market value under the several headings - " Loans", " Investments", "Agents balances". "Outstanding Premiums", '"Interest, Dividends and Rents outstanding", "Interest, Dividends and Rents accruing but not due", "Amounts due from other persons or Bodies carrying on insurance business", " Sundry Debtors", " Bills Receivable". " Cash" and the several items specified under "Other Accounts";

7. Ceilifiailion to the effect that no part of the life insurance fund has been directly or indirectly applied in contravention of the provisions of the Insurance Act, 1938 (4 of 1938) relating to the application and investment of the life insurance funds;

8. Disclosure with regard lo (he overall risk exposure and strategy adopted to mitigate the sume;

'). Operations in other countries, if any, with a separate statement giving the management's estimate of country risk and exposuic risk and the hedging strategy adopted;

10. Ageing of chums indicating the trends in average claim settlement time during the preceding five years;

11. Certification to ihe effect as to how the values, as shown in the balance sheet, of the investments and stocks and shares have been arrived at, and how the market value thereof has been ascertained for the purpose of comparison with the values so shown;

12. RevK-v\ of asset quality and performance of investment in terms of portfolios, i.e., separately in terms of real estate, loans, investments, etc.

13. A lesponsibihty statement indicating theiem that.

(a) m the pieparation of Imancial statements, the applicable accounting standards, principles and policies have been followed along with proper explanations relating to material departures, if any;

(b) the management has adopted accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as lo give a true and fair view of the stale of affairs of the company at the end of ihe financial year and of the operating profit or loss and of (he profit or loss of the company for the year;

(c) ihe management has taken proper and sufficient care for ihe maintenance of adequate accounting records in accordance with ihe applicable provisions of ihe Insurance Acl 19-38 (4 of 1938) / Companies Act, I()M> (1 of 1956), for safeguarding ihe assets of the company and for preventing and delecting fraud and other irregularities;

(d) the management has prepared the financial statements on a going concern basis; (e) the management has ensured that an internal audit system commensurate with the size and-nature of the business exists and is operating effectively.

14. A schedule of payments, which have been made to individuals, firms, companies and organisations in which Directors of the insurer aie interested.

4S THE GAZETTE OF INDIA EXTRAORDINARY

\P\\u 111—Siv 4|

PART V

Preparation of Financial Statements

(1) An insurer shall prepare the Revenue Account [Pohcyholders' Account], Profit and Loss Account [Shareholders' Account| and the Balance Siieet in Form A-RA, Form A-PL and l-"onn A-I3S, as prescribed in this Part, or as near thereto as the citvumslances permit.

Provided that an insurer shall prepare Revenue Account and Balance Sheet for the under mentioned businesses separately and to that extent the application of AS 17 shall stand modified:-

a) Participating policies and Non-participating policies;

b) 1 ) Linked business [As defined in regulation 2 (i) of the IRDA (Registration of Indian Insurance Companies ) Regulations . 20001

ii) Non-Linked business separately for Oidmaiy Life, (ieneral Annuity, pensions and Health Insurance;

c) Business within India and business outside India.

(2) An insurer shall prepare separate Receipts and Payments Account in accordance with the Direct Method prescribed m AS 3 - "Cash Flow Statement" issued by the 1CA1.

£

FORM A-RA

Name of the Insurer:

Registration No. mid Date oi Registration with the 1RDA

REVENUE ACCOUNT FOR THE YEAR ENDED 31s' MARCH, 20 .

Policyhoklers' Account (Technical Account)

TOTAL (A)

Commission Operating L\penses related to Insurance Business

2 3

Balance being Funds for l-uiurc Appropriations

TOTAL (D)

Notes: * RrprcM'iils ihv deemed realised f-nin

(a) Interim Bonuses Paid:

(b) Allocation of Bonus to policyholdcrs:

(c) Surplus shown In the Revenue Account:

(d) Total Surplus: |(a)+(b)+(c)|.

See Notes appended at the end of Form A-PL

1097 GI/2002—7.

S>

THE GAZETTE OF INDIA: EXTRAORDINARY

[PAR r III—SEC. 4]

FORM A-PL

Name of the Insurer:

Registration No. and Date of Registration with the IRDA

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 3 1ST MARCH, 20 .

Shareholders' Account (Non-technical Account)

a) Premium income received from business concluded in and outside India shall be separately disclosed, h) ReniMirance premiums whether on business ceded or accepted are to be brought into account gross (i.e. before deducting commissions) under the head reinsurance premiums

c) Claims incurred shull comprise claims paid, specific claims settlement costs wherever applicable and change in the

ouistundinu; provision for claims at the year-end,.

d) Items of expenses and income in excess of one percent of the total premiums (less reinsurance) or Rs.5,00,000 whichever is higher, shall be shown as a separate line item.

e) Fees and expenses connected with claims shall be included in claims. f) Under the sub-head "Others" shall be included items like foreign exchange gains or losses and other items. g) Interest, dividends and rentals receivable in connection with an investment should be stated as gross amount, the amount of income tax deducted at source being included under 'advance taxes paid and taxes deducted at source".

h) Income from rent shall include only the realised rent. It shall not include any notional rent.

51

FORM A-RS

Name of the Insurer:

Registration No. and Date of Registration with the IRDA

BALANCE SHEET AS AT 31ST MARCH, 20

7

Sub-Total BORROWINGS POLICY!IOLDERS' FUNDS

C.REDIT/[DEBIT] I'AIR VALUE CHANGE ACCOUNT POLICY LIABILITIES INSURANCE RESERVES PROVISION FOR LINKED LIABILITIES

Sub-Total FUNDS FOR FUTURE APPROPRIATIONS TOTAL APPLICATION OF FUNDS

INVESTMENTS

Shareholdeis' Policyholders'

8 8A

ASSETS HELD 1 O COVER LINKED LIABILITIES

8B

LOANS

•)

FIXED ASSIiTS

10

11 12

CURRENT ASSETS Cash and Bank Balances Advances and Othei Assets Sub-Total (A)

13 14

CURREN 1 LIABILITIES PROVISIONS Sub-Total (B)

NET CL'RRENT ASSETS (C) = (A - B)

15

MISCELLANEOUS EXPENDITURE (to the extent not written off or adjusted)

DEBIT BALANCE IN PROFIT & LOSS ACCOl INT (Shuieholdcrs' Account) TOTAL 52 THE GAZETTE OF INDIA. EXTRAORDrNARY

| P wi III—Sw . 4| (CONTINGENT LIABILITIES

Particulars

Previous Year

Partly paid-up investments Claims, other than against policies, not acknowledged as debts by the company Underwriting commitments outstanding (in respect of shares and securities) Guarantees given by or on behalf of the Company Statutory demands/ liabilities in dispute, not provided for Reinsurance obligations to the extent not provided for in accounts Others (to be specified) TOTAL

SCHEDULES FORMING PART OF FINANCIAL STATEMENTS

SCHEDULE -1

PREMIUM

SCHEDULE- 2

COMMISSION EXPENSES

Current Year

Previous Year

Particulars

(Rs.'OOO)

(Rs.'OOO) •

Commission paid Direct - First year premiums

- Renewal-premiums - Mingle premiums

Add: Commission on Re-insurance Accepted Less: Commission on Re-insurance Ceded Net Commission

Nate

The profit/ commission, if any, arc to he combined with the Re-uisunnue accepted or Re-insurance ceded figures.

SI SCHEDULE - 3 OPERATING EXPENSES RELATED TO INSURANCE BUSINESS

Note : Items of expenses and income in excess of one percent of the total premiums (less reinsurance) or Rs.5,00,000 whichever is higher, shall be shown as a separate line item.

SCHEDULE - 4 BENEFITS PAID INETI

Notes: (a) Claims include specific claims settlement costs, wherever applicable.

(b) Legal and other fees and expenses shall also form part of the claims cost, wherever applicable.

5* THE GAZETTE OF INDIA. EXTRAORDINARY IP\i<, HI—S,.r ii

SCHEDULE - 5

SHARE CAPITAL

Notes:

(a) Particulars of the different classes of capital should he separately stated,

(b) The amount capitalised on account of issue of bonus shares should be disclosed.

(c) In case any part of the capital is held by a holding company, the same should be separately disclosed.

SCHEDULE - 5A

PATTERN OF SHAREHOLDING

(As certified by the Management]

SCHEDULE-6

RESERVES AND SURPLUS

Note. Additions to ami deductions from the reserves shall be disclosed under each of the specified heads.

55 SCHEDULE - 7

BORROWINGS

Particulars

Current Year

Previous Year

(Rs.'OOO).

(Rs/000).

1 2 3. 4.

Debentures/ Bonds Banks Financial Institutions Others (to he specified)

TOTAL

Notes

(a) The extent to which the borrowings are secured shall he separately disclosed stating the nature of the

security1 muter each sub-head.

(b) •\mounts due within 12 months from the date of Balance Sheet should he shown separately

SCHEDULE- 8

[INVESTMENTS-SHAREHOLDERS

Note. Sec Notes appended at the end of Schedule- 8B

56 THE GAZETTE OF INDIA: EXTRAORDINARY

|P\i

Particulars

Current Year Previous Year

(Rs.'OOO) '

(Rs.'OOO)

1.

2. 3.

LONG TERM INVESTMENTS Government securities and Government guaranteed bonds including Treasury Bills Other Approved Securities (a) Shares.

(aa) Equity

(bb) Preference

4, 5.

(b) Mutual Funds (c) Derivative Instruments (d) Debentures/ Bonds (e) Other Securities (to be specified) (0 Subsidiaries (g) Investment Properties-Real listate Investments in Infrastructure and Social Sector Other than Approved Investments SHORT TERM INVESTMENTS Government securities and Government guaranteed bonds including Treasury Bills Other Approved Securities (a) Shares

(aa) Equity

(bb) Preference

j "

1

4

(b) Muiiial Funds (c) Denvame Instruments (d) Debentures; Bonds (e) < Mhei" Securities (to be specified) (f) Subsidiaries (g) Imesiment Properties-Real Estate Investments in Int'iastructurc and Social Sector Other than Appro\ed Investments TOTAL

,\nfc .Vr ArVi'.s iippcnttal in tnc end of jciicdiiic- a a

SCHKDILF-8B ASSETS HELD TO COVER LINKED LIABILITIES

Previous Year

Particulars

Current Year

(Rs.'OOO)

(Rs.'OOO)

LONG TERM INVESTMENTS Giiveininuii seciiriii^h and Gosernmenl guarantecil bonds includinjj Treasury

1-

Uill> OIIIL-I AppKivcJ Set urines

(JI Shares

•> -•3,

(;ui LquiK ihli) Preference

(h) \hiiiial 1 UIIIJ\

lei DL'II\ am c InMiuments (ill nehentines llonds u'l Oiliei Sctiiiilie.s (io be speeilled) 11) Subsidiaries (yi linestmcnt Properties-Real Estate

Imesmienis in IntVastriietiire and Social Sector

14.

Oihci than Appio\ed liu'cstments

1" • i! i

SHORT TERM IS\ F.STMENTS Goxernment securities and Government guaranteed bonds including Treasui v Hills Other Appnned Securities

2 V7

Notes (applicable to Sclwtlulus H and SA & SB) •

(u) Investments in subsidiary/holding companies, joint ventures and associates shall be separately disclosed, at cost (i) Holding company and subsidiary shall be construed us defined in the Companies Act, 1956. (n) Join! Venture is u contractual arrangement whereby two or more parties undertake an cconumic activity, which is subject lo |oint control. (iii) Joint control - is the contractually agreed sharing of power to govern the financial and operating policies of an economic aiMiviry lo obtain benefits fiom it.

(iv) Associate - is an enterprise in which the company lias significant influence and which is neither a subsidiary nor a |oint venture of ihc company (v) Significant influence (for the purpose of this schedule) -means participation in the financial and operating policy decisions of a company, but not control of those policies. Significant influence may be exercised in several ways, for example. b> representation on Ihc board of diroclors, participation in ihe policymaking process, malenal inier-company transactions, interchange of numageiial personnel or dependence on technical information. Significant influence may be gained by share ownership, statute or ayicement. As reyaids sluue ownership, if un investor holds, directly or indirectly through subsidiaries, 20 percent or more of the voting power of ihe invcslee, it is presumed thut the investor does have significant influence, unless it can be clearly demonstrated that this is not the ease Conversely, if the investor holds, directly or mdirecily through subsidiaries, less than 20 percent of the voting power of the investee, it is presumed that the investor does not have significant influence, unless such inllucnce is clearly demonstrated. A substantial or majority ownership by another investor docs not necessarily preclude an investor from having significant influence.

(b) Aggregate amount of company's investments other than listed equity securities and derivative instruments and also the market value thereof shall be disclosed, (c) Investment made out of Catastrophe reserve should be shown separately. (d) Debt securities will be considered as "held lo maturity'' securities and will be measured at historical costs subject to amortisation (e) Investment Pmpeny means a properly [land or building or part of a building or both] held to earn rental income or for capital appreciation or for both, icither than for use in services or for administrative purposes. (f) Investments matin nig w iihm twelve months fiom balance sheet date and investments made with the specific intention to dispose of within twelve months from balance sheet date shall be classified as short-term investments 1097 GI/2002—8.

W THE GAZETTE OF INDIA. EXTRAORDINARY

|P\RI HI—SEC, 41 SCHEDULE - 9 LOANS

Notes.

(a) Short-term hunx shall include tho.se, wliiih we repayable within 12 months, from the date of balance sheet.

Long term limns shall be the Iwinn other than .short-term loans,

(h) Provisions a\>ainst iiHii-peiibnniiig loans shall be shown separately

(c) The nature <>/ the s,vm'iiy in case of all long term sec tired loans shall he specified in each case. Secured loans

for the purposes of this scheihtle. mean.': loans SCLIII-UII wholly or partly against an asset of the company

{d) Loans considered iloiibtjid and the amount of provision created against such loans shull be disclosed.

5

FIXED ASSETS

(Rs.'OOO) Particulars

Opening

Cost/ Gross Block

Additions Deductions fliMiing 1 Ip Uv

~ T"

On Suits/

Adjustments

llML-

1 asi

Previous

Yew

Ycur

Depreciation lor The ' Year

Net Block

As

ul

yum

end

Goodwill Intangibles (specify)

Land-Freehold Leasehold Property Buildings Furniture & Fittings Information Technology Equipment

Vehicles Office Equipment Others (Specify natijrc) TOTAL Work in progress Grand Total

PREVIOUS YEAR

Note.

Asset.* included in hind, property and building uhow exclude Investment I'roperttes us defined in note (c) to Schedule

SCHEDULE-11

CASH AND BANK BALANCES

Particulars

Current Year

Previous Year

(Rs.'OOO).

(Rs.'OM).

1. 2.

Cash (meludinji cheques, drafts and stamps) Bank Balances (a) Deposit Accounts

(aa) ShovMerm (due within 12 months or'tin: date of

Halunce Sheet)

(bb) Others

(b) Current Accounts (c) Oihers (lo be specified)

3.

4.

Money at ( all and Short Notice (a) With Bunks (b) With other Institutions Others (to be specified) TOTAL Balances with non-scheduled banks included in 2 und 3 above

i }

CASH & HANk BALANCKS In India Outside India

1 2

TOTAL

Note. Hunk Indcwce mtiv uu hide renuiuwves in ininsil II so, she iniliur and iiinonnt sliidl lie scnaruteh suited.

60 THE GAZETTE OF INDIA EXTRAORDINARY

[PAKI III—Si/.4|

S C H E D U L E - 12 ADVANCE'S AlVnfVTHKR ASSFTS

Particulars

Current Year

(Rs.'OOO)

Previous Year (Rs.'OOO)

1,

t

2. 3. 4. 5.

6.

I. 2. 3. 4. 5

6.

7.

8.

ADVANCES Reserve deposits with ceding companies Application money for investments Prepayments Advances to Directors/Officers Advance lax paid and taxes deducted at source (Net of provision for taxation) Others (1O he specified) TOTAL (A) OTHKR ASSETS Income accrued on investments Outstanding Premiums Agents' Balances Foreign Agencies Balances Due from other entities carrying on insurance business (including reinsures) Due from subsidiaries/ holding company Deposit with Reserve Bank of India [Pursuant to section 7 of Insurance Act, I91N] Others (to be specified) TOTAL (U) TOTAL (A+B)

Notes:

(a) The (Wins under the above heads shall not he shown net of provisions for doubtful amounts The amount

<>lprovision against eaeh heailshould he shown se/wrate/y

(h) The term 'officer' should conform to the definition of that term as given under the Companies Act. 11->S(>.

(e) Sundry debtors will be shown under item ,V (Others)

S C H E D U L E - 13

CURRENT L1AHILI11ES

Particulars

Current Year

Previous Year

(Rs.'OOO).

(Ri/000).

I i

i 1. 2, 3. 4. 5. ft.

T\

8. 9.

Agents' Balances Balances due to other insurance companies Deposits held on re-insurance ceded Premiums received in advance Unallocated premium Sundry creditors Due to subsidiaries/ holding company Claims Outstanding Annuities Due Due to Officers/ Directors Others (to be specified) TOTAL 61 SCHEDDLK- 14

PROVISIONS

SCHEDDLK- 15

MISCELLANEOUS EXPENDITURE

(To the extent not written off or adjusted)

notes:

(a) No item sluill he included under the head "Miscellaneous Expenditure " and earned forward unless:

1 some benefit from the expenditure can rciisonahly he expected to he received in future, and

2 the amount of such benefit is reasonably determinable.

(h) The amount to he earned forward in respect of any item included under the head "Miscellaneous

Expenditure " shall not exceed the expected future revenue/other benefits related to the expenditure.

SCHEDULE B

(See Regulation 3)

PARTI

Account hit; principles for preparation of fiiiiincial statements

1. Applicability of Accounting Standards—Hvcry Balance Sheet, Receipts and Payments Account [Cash Flow statement) and Profit and Loss Account | Shareholders' Account] of the insurer shall be in conformity with the Accounting Standards (AS) issued by the IC'AI. to the extent applicable to the insurers carrying on general insurance business, except that:

(i) Accounting Standard .1 (AS 3) - Cash Mow Statements Cash Flow Statement shall be prepared only under the Direct Method.

(ii) Accounting Standard 13 (AS 13) Accounting for Investments, shall not be applicable.

(in) Accounting Standard 17 (AS 17) - Segment Reporting - shall apply to all insurers irrespective of the requirements regarding listing and turnover mentioned therein, til THE GAZETTE OF INDIA: EXTRAORDINARY

|P\ur III—Si-.. .41 2. Premium—Premium shall be recognised as income over the contract period or the period of risk, whichever is appropriate. Premium received in advance, which represents premium income not relating to the current accounting period, shall be disclosed separately in the financial statements,

A reserve for unexphed risks shall be created as the amount representing that part of the premium written which is attributable to, qnd to be allocated lo the succeeding accounting periods and shall not be less than as required under section 64 V( 1) (ii) (b) of the Act.

Premium Received in Advance, which represents premium received prior to the commencement of the risk, shall be showi} separately under the head 'Current Liabilities ' in the financial statements.

3. P r e m i um Deficiency-Premium deficiency shall be recognised if the sum of expected claim costs, related expenses and maintenance costs exceeds related reserve for unexpired risks.

4. A c q u i s i t i on Costs—Acquisition costs, if any, shall be expensed in the period in which they are incurred.

Acquisition costs arc those costs that vary with, and are primarily related to, the acquisition of new and renewal insurance contracts. The most essential test K the obligatory relationship between costs and the execution of insurance contracts (i.e.

commencement of risk ).

5. Claims—The components of the ultimate cost of claims to an insurer comprise the claims under policies and specific claims settlement cosls ('hums under policies comprise the claims made for losses incurred, and those estimated or anticipated under the policies following a loss occurrence.

A liability for outstanding claims shall be brought to account in respect of both direct business and inward reinsurance business. The liability shall include: -

(a) Future payments in relation to unpaid reported claims;

(b) Claims Incurred Rut Not Reported (IRNR) including inadequate reserves [sometimes referred to as ( hums Incurred Bui Not Itnough Reported (IHNI-R)l,

which will result in future cash/assei outgo for settling liabilities against those claims. Change in estimated liability represents the difference bclw een the eslimaied liability for outstanding claims at llie beginning and at the end of the financial perjod.

The accounting estimate shall also include claims cost adiustcd for estimated salvage value if there is sufficient degree of certainty of its realisation.

Actuarial Valuation of claim liability - in some cases

Claims made in respect of contracts where the claims payment period exceeds four years shall be recognised on an actuarial basis^subject to regulations that may be prescribed by the Authority. In such cases, certificate from a recognised actuary as to the fairness of liability assessment must be obtained, Actuarial assumptions shall be suitably disclosed by way of notes to the account.

6. P r o c e d u re to d e t e r m i ne t he v a l ue of i n v e s t m e n t s .— An insurer shall determine the values of investments in the following inuiinei¹:-

a) Real EslalC - I n v e s t m e nt Property— Investment Property shall be measured at historical cost less accumulated depreciation and impairment loss, residual value being considered zero and no revaluation being permissible.

flic Insurer shall assess at each balance sheet dqje whether any impairment of the investment property has occurred.

An impairment loss shall be recognised as an expense in the Revenue/Profit and Loss Account immediately.

Fair value as at the balance sheet date and the basis of its determination shall be disclosed in the financial statements as additional information.

63 b) Debt Secunties--Debt securities including government securities and redeemable preference shares shall be considered as "held to maturity" securities and shall be measured at historical cost subject to amortisation.

c) Equity Securities and Derivative Instruments that are traded in active markets—Listed equity securities and derivative instruments that are traded in active markets shall be measured at fair value as at the balance sheet date. For the purpose of calculation of fair value, the lowest of the last quoted closing price of the stock exchanges where the securities are listed shall be taken.

The insurer shall assess on each balance sheet date whether any impairment of listed equity security(ies)/ derivative(s) instruments has occurred.

An active market shall mean a market, where the securities traded are homogenous, availability of willing buyers and willing sellers is normal and the prices are publicly available.

Unrealised gams/losses arising due to changes m the fair value of listed equity shares and derivative instruments shall be taken to equity under the head "Fair Value Change Account'. The 'Profit on sale of investments' or 'Loss on sale of investments', as the case may be, shall include accumulated changes in the fair value previously recognised in equity under the heading Fair Value Change Account in respect of a particular security and being recycled to Profit and Loss Account on actual sale of that listed security.

For the removal of doubt, it is clarified that balance or any part thereof shall not be available for distribution as dividends. Also, any debit balance in the said Fair Value Change Account shall be reduced from the profits/free reserves while declaring dividends.

The insurer shall assess, at each balance sheet dale, whether any impairment has occurred. An impairment loss shall be recognised as an expense in Revenue/Profit and Loss Account to the extent of the difference between the remeasured fair value of the security/ investment and its acquisition cost as reduced by any previous impairment loss recognised as expense in Revenue/Prolii and Loss Account. Any reversal of impairment loss, earlier recognised in Revenue/Profit and Loss Account shall be recognised in Revenue/Profit and Loss Account.

d) Unlisted and other than actively traded Equity Securities and Derivative Instruments-Unlisted equity securities and derivative instruments and listed equity securities and derivative instruments that are not regularly haded in active market will be measured at historical costs. Provision snail be made for diminution in value of such investments. The provision so made shall be reversed in subsequent periods if estimates based on external evidence show an increase in the value of the investment over its cany ing amount. The increased carrying amount of the investment due to the reversal of the provision shall not exceed the historical cost.

For the purposes of this regulation, a security shall be considered as being not actively traded, if as per guidelines governing mutual funds laid down from lime to time by LSBI31, such a security is classified as ''thinly traded",

7. Loans—Loans shall be measured at historical cost subject to impairment provisions, The insurer shall assess the quality of its loan assets and shall provide for impairment. The impairment provision shall not be lower than the amounts derived on the basis of guidelines prescribed from time to time by the Reserve Bank oflndia, that apply to companies and financial institutions.

8. Catastrophe Reserve — Catastrophe reserve shall be created in accordance with norms, if any, prescribed by the Authority. Investment of funds out of catastrophe reserve shall be made in accordance with prescription of the Authority.

M THE GAZETTE OF INDIA: EXTRAORDINARY IP wi III—Sw .41

PART II

Disclosures forming part of Financial Statements

A. The following shall be disclosed by way of notes to the Balance Sheet:

1. Contingent Liabilities:

(a) Partly-paid up investments (b) Underwriting commitments outstanding (c) Claims, other than those under policies, not acknowledged as debts (d) Guarantees given by or on behalf of the company (e) Statutory demands/liabilities in dispute, not provided for (0 Reinsurance obligations to the extent not provided for in accounts (g) Others (to be specified)

2. Encumbrances to assets of the company in and outside India.

3. Commitments made and outstanding for Loans. Investments and Fixed Assets. 4. Claims, less reinsurance, paid to claimants m/outside India.

5. Actuarial assumptions for determination of claim liabilities in the case of claims where the claims payment period exceed four years,

6. Ageing of claims - distinguishing between claims outstanding for more than six months and other claims.

7. Premiums, less reinsurance, written from business iivbuiside India.

8. Extent of premium income recognised, based on varying risk pattern, category wise, with basis and justification therefor, including whether reliance has been placed on external evidence.

9. Value of contracts in relation to investments, for:

(li) Purchases where deliveries are pending; (i) Sales where payments are overdue.

10. Operating expenses relating to insurance business: basis of allocation of expenditure to various classes of business.

11. Historical costs of those investments valued on fair value basis,

, 12. Compulation of managerial remuneration. 13. Basis of amortisation of debt securities.

14. (n) Unrealised gain/losses arising due to changes m the fan value of listed equity shares and derivative instruments arc to be taken to equity under the head 'Fair Value C'hungc Account" and on realisation reported in profit and loss Account.

(b) Pending realisation, the cicdit balance in the 'Fair Value Change Account' is not available for distribution.

15. Fair value of investment property and the basis therefor.

16. Claims settled and remaining unpaid for a period of more than six months as on the balance sheet dale.

B. The following accounting policies shall form an integral part of the financial statements:

1, All significant accounting policies in terms of ihe accounting standards issued by the ICA1, and significant principles and policies given in Part I of Accounting Principles. Any other accounting policies followed by the insurer shall be stated in the manner required under Accounting Standard AS 1 issued by the 1CA1.

2, Any departure from the accounting policies as aforesaid shall be separately disclosed with reasons for such departure.

C. The following information shall also be disclosed:

1. Investments made in accordance with any statutory requirement should be disclosed separately together with its amount, nature, security and any special rights in and outside India.

2. Segregation into performing/ non performing investments for purpose of income recognition as per the directions, if any, issued by the Authority.

3. Percentage of business sector-wise.

4. A summary of financial statements for the last five years, in the manner as may be prescribed by the Authority.

5. Accounting Ratios as may be prescribed by ihe Authority.

6. Husis of allocation of Interest, Dividends and Rent between Revenue Account and Profit and Loss Account.

65

PART HI

GENERAL INSTRUCTIONS FOR PREPARATION OF FINANCIAL STATEMENTS

1) The corresponding amounts for the immediately preceding financial year for all items shown in the Balance Sheet, Revenue Account and Profit and Loss Account should be given.

2) The figures in the financial statements may be rounded off to the nearest thousands.

3) Interest, dividends and rentals receivable in connection with an investment should be stated as gross value, the amount of income tax deducted at source being included under 'advance taxes paid'.

4) Income from rent shall not include any notional rent.

5) (I) For the purposes of financial statements, unless the context otherwise requires -

(a) ihe expression 'provision' shall, subject to note II below mean any amount written off or retained by way of providing for depreciation, renewals or diminution m value of assets, or retained by way of providing for any known liability or loss of which the amount cannot be determined with substantial accuracy;

(b) the expression "reserve" shall not, subject to as aforesaid, include any amount written off or retained by way of providing for depreciation, renewals or diminution in value of assets or retained by way of providing for any known liability;

(c) the expression capital reserve shall not include any amount regarded as free for distribution through the profit and loss account; and the expression "revenue reserve" shall mean any reserve other than a capital reserve;

(d) The expression "liability" shall include all liabilities in respect of expenditure contracted for and all disputed or contingent liabilities.

(II) Where:

(a) any amount written off or retained by way of providing for depreciation, renewals or diminution in value of assets, or

(h) any amount retained by way of providing for any known liability

is in excess of the amount which in the opinion of the directors is reasonably necessary for the purpose, the excess shall be treated for the purposes of these accounts as a reserve and not as a provision.

6) The company should make provisions for damages under lawsuits where the management is of the opinion-that the award may go against the insurer.

7) Extent of risk retained and reinsured shall be separately disclosed.

8) Any debit balance of Profit and Loss Account shall be shown as deduction from uncommitted reserves and the balance if any, shall be shown separately.

1097 GI/2002—9.

" •>

T HE G A Z E T TE OF I N D I A. E X T R A O R D I N A RY

| P \K I I I —SI 41

PART IV

CONTENTS OF MANAGEMENT REPORT

There shall be attache! to the financial statements, a management report containing, inter alia, the following dulv authenticated by the management:

1. Confirmation regarding the continued validity of the registration granted by the Authority;

2. Certification that all the dues payable to the statutory authorities have been duly paid;

3. Confirmation to the effect that the shareholding pattern and any transfer of shares during the year are m accordance with the statutory or regulatory requirements;

4. Declaration that the management lias not directly or indirectly invested outside India the funds of the holders of policies issued in India;

5. Confirmation that the required solvency margins h* been maintained;

6. Certification to the effect that the values of all the assets have been reviewed on the date of the Balance Sheet and that in his (insurer's) belief the. assets set forth in the Balance-sheets are shown in the aggregate at amounts not exceeding their realisable or market value under the several headings - " Loans", " Investments", "Agents balances", "Outstanding Premiums", "Interest, Dividends and Rents outstanding", "Interest, Dividends and Rents accruing but not due", "Amounts due from other persons or Bodies carrying on insurance business", " Sundry Debtors", " Bills Receivable", " Cash" and the several items specified under "Other Accounts";

7. Disclosure with regard to the overall risk exposure and strategy adopted to mitigate the same;

8. Operations in other countries, if any, with a separate statement giving the management's estimate of country risk and exposure risk and the hedging strategy adopted;

9. Ageing of claims indicating the trends in average claim settlement time during the preceding five years;

10. Certification to the effect as to how the values, as shown in the balance sheet, of the investments and stocks and shares have been arrived at, and how the market value thereof has been ascertained for the purpose of comparison with the values so shown;

11. Rev.cw of asset quality and performance of investment in terms of portfolios, i.e., separately in terms of real estate, loans, investments, etc.

12. A responsibility statement indicating therein that:

(i) in the preparation of financial statements, the applicable accounting standards, principles and policies have been followed along with proper explanations relating to material departures, if any:

(ii) the management has adopted accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so us to give a true and fair view of the state of affairs of the company at the end of the financial year and oi the operating profit or loss and of the profit or loss of the company for the year;

the management has taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the applicable provisions of the Insurance Act 1938 (4 of 1938) /Companies Act, 1956(1 of 1956), for safeguarding the assets of the company and for preventing and delecting fraud and other irregularities;

(iv) the management has prepared the financial statements on a going concern basis- (v) the management has ensured that an internal audit system commensurate with the size and nature of the business exists and is operating effectively.

13. A schedule of payments, which have been made to individuals, firms, companies and organisations in which Directors of the insurer are interested.

67 •

PART V

Preparation of Financial Statements

(1) An insurer shall prepare the Revenue Account. Profit and Loss Account [Shareholders' Account] and the Balance Sheet in Form B-KA, I"orm B-PL, and Form B-BS, .or as near thereto as the circumstances permit.

Provided that an insurer shall prepare Revenue Accounts separately for fire, marine, and miscellaneous insurance business and separate schedules shall be prepared for Marine Cargo, Marine Other than Marine Cargo and the following classes of miscellaneous insurance business under miscellaneous insurance and accordingly application of AS 17 - Segment Reporting - shall stand modified.

I. Motor 2. Workmen's Compensation/Employers'Liability 3. Public/Product Liability 4. Engineering 5. Aviation 6 Personal Accident 7. Health Insurance 8. Others (2) An insurer shall prepare separate Receipts and Payments Account in accordance with the Direct Method prescribed in AS 3 - "Cash Flow Statement" issued by the 1CA1.

FORM B-RA

Name of the Insurer:

Registration No. and Date of Registration with the IRDA

REVENUE ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 20 .

Note: See Note* appended al the end of Form H-IJL

⁶⁸

THE GAZETTE OF INDIA EXTRAORDINARY

IP ^, 111—Si/ . 41

FORM B-PL

Name of the Insurer:

Registration No. and Date of Registration with the IRDA

(a) Premium income received from business concluded in und outside India shall be separately disclosed.

(b) Reinsurance premiums whether on business ceded or -accepted arc to be brought into account gross (i e. before deducting commissions) under the head reinsurance premiums.

(c) Claims incurred shall comprise claims paid, specific claims settlement costs wherever applicable and change in the outstanding provision foi claims at the year-end,

(d) Items of expenses und income in excess of one percent of the lotul premiums (less reinsurance) or Rs 5,00,000 whichever is higliei, shall be shown as a separate line Hem

(e) Pecs and expenses connected with claims shall be included in claims. (f) Under the sub-head "Otheis" shall be included items¹ like foreign exchange gains or losses and other items.

(g) Interest, dividends and rentals receivable in connection with an investment should be staled as gross amount, the amount ol income ta\ deducted at source being included undci 'advance taxes paid and taxes deducted at source"

(h) Income from rent shall include only the realised renl. It shall not include any notional rent.

69

FORM B BS

Name of the Insurer:

Registration No. and Date of Registration with the 1RDA

BALANCE SHEET AS AT 31S1 MARCH, 20 .

Schedule

Current Year

Previous

Year (Rs.'OOO)

(Rs.'OOO)

SOURCES OF FUNDS

SHARE CAPITAL

5

RESERVES AND SURPLUS

6

FAIR VALUE CHANGE ACCOUNT

BORROW INC jS

7

TOTAL

APPLICATION OF FUNDS

INVESTMENTS

H

9

LOANS

10

FIXED ASSETS

CURRENT ASSETS Cash and Bank Balances Advances and Other Assets

11 12

Suti-Total (A)

CURRENT LIABILITIES

13

PROVISIONS

14

Sub-Totnl(H)

NET CURRENT ASSETS (C) = (A - B)

(5

MISCELLANEOUS EXPENDITURE (in the extern not written oil" or adjusted)

DEBIT BALANCE IN PROFIT AND LOSS ACCOUNT

TOTAL

⁷⁰

^THE GAZETTE OF INDIA: EXTRAORDINARY

|PAKI III—SEC. 4J CONTINGENT LIABILITIES

SCHEDULES FORMING PART OF FINANCIAL STATEMENTS

SCHEDULE -1

PREMIUM EARNED [NET1

Note: Reinsurance premiums whether on business ceded or accepted are to oe Drought into account, oejore deducting

commission, under the head of reinsurance premiums.

SCHEDULE- 2

CLAIMS INCURRED INET1

Notes:

a) Incurred But Not Reported (IBNR). Incurred but not enough reported [IBNER) claims should be included in the

amount for outstanding claims.

b) Claims includes specific claims settlement cost but not expenses of management

c) The surveyor fees, legal and other expenses shall also form part of claims cost.

d) Claims cost should be adjusted for estimated salvage value if there is a sufficient certainty of its realisation.

71 SCHEDULE- 3 COMMISSION

SCHEDULE -4 OPERATING EXPENSES RELATED TO INSURANCE BUSINESS

Note: Items of expenses and income in excess of one percent of the total premiums (less reinsurance) or Rs.5,00,000 whichever is higher, shall be shown as a separate line item.

SCHEDULE - 5 SHARE CAPITAL

(a) Particulars of the different classes of capital should be separately stated.

(b) The amount capitalized on account of issue of bonus shares should be disclosed.

(c) In case any part oj the capital is held by a holding company, the same should be separately disclosed.

72 THE GAZETTE OF INDIA. EXTRAORDINARY

IPMCI III—Sh 41 SCHEDULE - 5A SHARE CAPITAL

PATTERN OF SHAREHOLDING

[As certified bv the Managementl

SCHEDULE - 6

RF.SF.RVF.S AND SURPLUS

Note:

Additions to and deductions from the / w nw should he disclosed under each of the specified heads

SCHEDULE-7

BORROWINGS

Notes-

a) The extent to which the borrowings arc secured shall he separately disclosed stating the nature of the secunh'

under each sub-head

h) Amounts due within 12 months from the date of Balance Sheet should be shown separately

73 Schedule-8 Investments

.;, • • ,• . , Pa^tic^l^rs'A,¹;i • ,• i. •>,

CuMfentj^eattv

^ Fi&vifl^'psivS;

.'S .:.'"• \

, •••' ''',. 'i¹¹ i •

(Its. '000)

(RsJ'p(Hty L

LONG TERM INVESTMENTS

•

Government securities and Government guaranteed bonds including

1.

Treasury Bills

Other Approved Securities

Other Investments

2. 3.

(a) Shares

(aa) Equity (bb) Preference

(b) Mutual Funds (c) Derivative Instruments

(d) Debentures/ Bonds (e) Other Securities (to be specified)

(f) Subsidiaries (g) Investment Properties-Real Estate

Investments in Infrastructure and Social Sector

4. 5.

Other than Approved Investments

SHORT TERM INVESTMENTS

1.

Government securities and Government guaranteed bonds including

Treasury Bills

Other Approved Securities

Other Investments

7. 3.

(a) Shares

(aa) Equity (bb) Preference

•

(b) Mutual Funds (c) Derivative Instruments

(d) Debentures/ Bonds (e) Other Securities (to be specified) (f) Subsidiaries

(g) Investment Properties-Real Estate

,4.

Investments in Infrastructure and Social Sector

5.

Other than Approved Investments

TOTAL

notes:

(a) Investments in subsidiary/holding companies, joint ventures and associates shall be separately disclosed, at cost.

(0 Holding company and subsidiary shall be construed as defined in the Companies Act, 1956: (ii) Joint Venture is a contractual arrangement whereby two or more parties undertake an economic activity, which is subject to joint control.

(iii) Joint control - is the contractually agreed sharing of power to govern the financial and operating policies of an economic activity to obtain benefits from it.

(iv) Associate - is an enterprise in which the company has significant influence and which is neither a subsidiary nor a joint venture of the company.

(v) Significant influence (for the purpose of this schedule) - means participation in the financial and operating policy decisions of a company, but not control of those policies. Significant influence may be exercised in several ways, for example, by representation on the board of directors, participation in the policymaking process, material inter-company transactions, interchange of managerial personnel or dependence on technical information. Significant influence may be gained by share ownership, statute or agreement- As regards share ownership, if an investor holds, directly or indirectly through subsidiaries, 20 percent or more of the voting power of the investee, it is presumed that the investor does have significant influence, unless it can be clearly demonstrated that this is not the case. Conversely, if the investor holds, directly or indirectly through subsidiaries, less than 20 percent of the voting power of the investee, it is presumed that the investor does not have significant influence, unless such influence is clearly demonstrated. A substantial or majority ownership by another investor does not necessarily preclude an investor from having significant influence.

(b) Aggregate amount of company's investments other than listed equity securities and derivative instruments and also the market value thereof shall be disclosed.

(c) Investments made out of Catastrophe reserve should be shown separately.

\cfl WDoz.—jo

74 THE GAZETTE OF INDIA: EXTRAORDINARY

(PART III—SEC. 41 (d) Debt securities will be considered as "held to maturity" securities and will be measured at historical cost subject to amortisation.

(e) Investment Property means a property [land or building or part of a building or both] held to earn rental income or for capital appreciation or for both, rather than for use in services or for administrative purposes.

(0 Investments maturing within twelve months from balance sheet date and investments made with the specific _ intention to dispose of within twelve months.from balance sheet date shall be classified as short-term investments S C H E D U LE - 9 L O A NS

""fTO . ,WI

•"': "fiMBMP^QF • 1, ,'• L

I.

\?t;:™" • ':™v -' v r w a f t W* ^:^"',;,r'"-r!fN- -v? "••! '!''!••,V •. • •!• •• ' ' , !• • •; ,;J '." . .' ,'': SnCLiRITY-WISL- C'l.ASSI I-ICA'IION Secured (a) On mortgage of property

(aa) In India (bb) Outside India

) I 2.

1 I 1

3.

(b) On Shares, Bonds, Govt. Securities (c) Others (to be specified) Unsecured . TOTAL BORROWER-WISE CLASSIFICATION (a) Central and State Governments (b) Banks and Financial Institutions (c) Subsidiaries (d) Industrial Undertakings (e) Others (to be specified) TOTAL PERFORMANCE-WISE CLASSIFICATION (a) Loans classified as standard (aa) In India (bb) Outside India

(b) Non-performing loans less provisions

(aa) In India

. (bb)Outside India

4,

TOTAL MATURITY-WISE CLASSIFICATION (a) Short Term (b) Long Term TOTAL

Motes:

(a) Short-term loans shall include those, which are repayable within 12 months from the date of balance sheet.

Long term loans shall be the loans other than short-term loans.

(b) Provisions against non-performing loans shall be shown separately.

(c) The nature of the security in case of all long term secured loans shall be specified in each case. Secured loans for

the purposes of this schedule, means loans secured wholly or partly against an asset of the company.

(d) Loans considered doubtful and the amount of provision created against such loans shall he disclosed.

75 S C H E D U L E- 10

FIXED ASSETS

(Rs.'OOO) Particulars

Cost/ Cross Block

Depreciation Net Block OpL-miiji AllllltlllllS I'cduclioim C'lo^iny

T" Dale

I'revinui ^'i-ar

l-'or Hie Yuai

C)n Suit's/ Adjusl

Ai at yeai end

i 'pm 1 ast ^ cor

MKllts

(iiiiuKvill

Intangibles hpi-ulv)

1 .iml-l-Kvlinlil 1 caschukl PitipuI¹,

Mnil(lmi

1 LiiintiiiL- .SL I'lilmtis

11111 >i mil 1 Hill

1 i\ hno!oL'\ l:t|uipmL'iii

\VhiiM(;s

Olhtc 1 quipmnil Others (.Specify

nature)

TOTAL Work in prouiess

(ii'tind Total

I'KKVIOI'N ^ IvVK

Note.

Assets niclin/itl in liiiul. building ami property above exehule lnvc\tment Pioperties as defined in note (e) to Schedule 8.

SCHEDULE II CASH AM) HANK BALANCES

Current

Previous Year

Particulars

Year

(Rs.'OOO)

(Rs.'OOO) 1.

(.'ash (including cheques, ilrails aikl slumps)

liank ItaKinccs

(a) Dcpusil Aceoiinis

(iu) Slinrl-k'im (due wiihm 12 momlis)

(hh) Olhors

(b) t 'ui'ienl Acfiiuiils

(c) n d i c is (lo ho speeillcd)

.1.

MOIK'V .u (;ill and SIHHI Noiiee

(a) Will) Hanks

(h) Wnfi iilliu hisliiulioiis

4.

Olheis (ID lie specified) TOTAL

Mal.mccs w ilh iiciii-schedulcil hanks included in 2 and ,' ,ibo\e

" 1

N o te Hank l u d i i iu r m nv m c l i n le l e i i n i t t i n c es in t n n i Mi // ,\n t l ie i n i t u i t' i i nd a m o u nt s h o u ld be s e p a r t i i e lv stated.

1097 GI/2002—1| 7(1

T HE G A Z E T TE OF INDIA E X T R A O R D I N A RY

IP ,i<\ III— S i' 41

SCHEDULE-12

ADVANCES AND OTHER ASSETS

Notes

(it) /'lit' ilt'in\ under the nhiiw heads shall mil he shown net of provisions for tlouhtjul

amounts The amount oj provision against each head should he shown separately

fh) The term 'officer' should conform to the definition of that term as ^ivcn under the

Companies Act, 1056,

(c) Sinulrv Debtor* will he shown untler it<'m V(others)

SCHEDULE - 13

CURRENT LIABILITIES

77 S C H E D U L E - 14

PROVISIONS

Particulars

Current Year

(Rs.'OOO)

Previous Year (Rs.'OOO) I

1

3 4 5

Reserve for I'jxwpired Risk For taxation (less advance lax paid and taxes deducted at .sourcel [•'or proposed dividends For dividend distribution tax Others (to be specified) TOTAL

SCHEDULE - 15

MISCELLANEOUS EXPENDITURE (To Hie extent not written off or adjusted)

Notes

(ul No item shall he me Imled under the head "Miscellaneous Expenditure ' anil carried forward unless:

I some henelit liom the expenihture can reasonably he expected to he recened in future, and

2. the amount of .such henelit is reasonably detcrnumdile.

(hi The amount to he t timed forward in respect of any Uvm included under the head "Miscellaneous Expenditure "shall

not exceed the expected fiiluic lyyenue/other benefits related to the expenditure

SCHEDULE C

(See Regulation 3l

AUDITOR'S REPORT

The report of the auditors on the financial statements of every insurer shall deal with the matters specified herein:

1. (a) That they have obtained all the information and explanations which, to the best of their knowledge and belief were necessary for the purposes of their audit and whether they have found them satisfactory;

(b) Whether proper books ufaccount have been maintained by the insurer so far as appears from ah examination of those books;

(c) Whether piopei returns, audited or unaudited, from branches and other offices have been received and whether they were adequate lor the purpose ol audit,

(d) Whether the Balance sheet. Revenue account, Profit and Loss account and the Receipts and Payments Account dealt with by the tepori arc in agreement with the books of account and returns;

7S THE GAZETTE OF INDIA EXTRAORDINARY jfj^JliirlllJJ (e) Whether the actuarial valuation ol" liabilities is duly certified by the appointed actuary including to the effect that the assumptions for such valuation are in accordance with the guidelines and norms, if any, issued by the Authority, and/or the Actuarial Society of India in concurrence with the Authority.

2. The auditors shall express then opinion on. ta) (1) Whether the balance sheet gives a true and fair view of the insurer's affairs as at the end of the financial year'period:

(li) Whether the revenue account gives a true and fair view of the surplus or the deficit for the financial year/period;

(iii) Whether ihc pro lit and loss account gives a true and fair view of the profit or loss for the financial year/period;

(iv) Whether the receipts and payments account "ives a line and lau view of (he receipts and payments for the financial year/period:

(b) The financial statements stated ai (a) above are picpaied in accordance wilh the lcqutreineuts of ihe Insuiance Act, 1938 (4 of 103X), the Insurance Regulatory and Development Authority Act. 1 WO (41 of 1909) and the Companies Act, 1056 (1 of !(>56|. to the extent applicable and in the manner so requued.

(c) Investments h aw been sained in accordance wilh the provisions of the Act and these Regulations.

(d) The accounting policies selected by the insurer are appropriate and arc in compliance with the applicable accounting standards and v. ith the accounting principles, as prescribed in these Regulations or any order or direction issued by the Authority in this behalf.

3. The auditors shall further certilv that- (a) they have leviewed the management report and there is no apparent mistake or material inconsistencies wilh Ihe financial statements.

(b) tile insiner has complied w iih ihe terms and conditions of (he icgisliaiion stipulated by the Authority.

4. A ccitil'icaic signed by the audilois | which shall he in addition to any other certificate or report which is icqmrcd by

v

law To be given u uh icspect to Ihc balance sheet | certifying that:- (a) they have verified the cash balances and the securities relating to the insurer's loans, reversions and life interests (in the case of life insurers) and investments; (b)to what extent, if any. they have verified ihe investments and transactions relating to any Irusts undcitakcn h\ the insurer as trustee: anil (c) no part of the assets of the policyholders' funds has been directly or indirectly applied in contravention of the provisions of the Insurance Act, 1938 (4 of 1938) relating to the application and investments of the policyholders' funds.

N RANGAOIARY. Chairman

|AinT-(l!'l/F'Al_w<>M>;!| I ' m i t c tl In l l ic M . i i u i t j c i- ( n - \l e l' l i u lu I ' I CV R i m> K n . nl M . n . i p t i n. \ o" i V l l i i -I I i M )d I

; n ul P u b l i s h ed In l l ic I ' m i t i - n l l ci , .l I ' u h l i t . i i i n i iv I V l l n -1 I l Wi I