IS IT REQUIRED FOR INSURANCE ENTERPRISES TO MAKE REPORTS ON THE ACTIVITIES OF UNIT LINKED FUNDS THAT MUST BE CONFIRMED BY INDEPENDENT AUDITS?

Is it mandatory for insurance enterprises to report on the activities of unit-linked funds to have confirmation from an independent auditor? What is the maximum investment limit in a group of subsidiaries with the same parent company of a unit-linked fund? In what cases can an insurance enterprise receive a full refund of the amount contributed to the unit-linked fund? Through today’s article, let’s learn about this issue with Pham Consult!

Pursuant to the provisions of Clause 2, Article 105 of the Law on Insurance Business 2022 as follows:

Independent audit

1. Insurance enterprises, reinsurance enterprises, and foreign branches in Vietnam must conduct annual independent audits of their annual financial statements.

2. Insurance enterprises, reinsurance enterprises, and foreign branches in Vietnam must have a confirmation from an independent auditing organization for their solvency assessment and risk management reports; Report separating equity sources and insurance premium sources; Report on the activities of general life funds, unit money funds, and pension funds.

3. Independent audit organizations when performing audits and confirmation of reports specified in Clauses 1 and 2 of this Article have the following responsibilities:

a) Comply with the provisions of law on independent audit;

b) Use actuaries when auditing capital adequacy ratio and insurance reserves; risk management experts when auditing risk management and other experts corresponding to the independent audit content;

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Thus, according to the above regulations, insurance enterprises that report on the activities of unit-linked funds must have confirmation from an independent audit organization.

Clause 3, Article 58 of Circular 67/2023/TT-BTC stipulates the content of reports on activities of general life funds, unit-linked funds, and voluntary pension funds as follows:

content reports

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3. Report on activities of general life fund, unit money fund, and voluntary pension fund:

a) Every year, the life insurance enterprise shall report on the activities of the universal life fund, unit-linked fund, and voluntary pension fund and have confirmation from an independent auditor about the report on the activities of the life insurance company. General linkage funds, unit linkage funds, and voluntary pension funds are established and presented in accordance with the provisions of law;

b) The independent audit organization’s confirmation must include the following minimum key issues: the initial investment capital contribution to form the fund and the resulting profits; Differences arising between assets in general association funds, unit association funds, voluntary pension funds and reports on separation of equity sources and insurance premium sources (if any);

c) Report on the activities of the general life fund, unit-linked fund, and report on the performance of the voluntary pension fund must include at least the information according to Form No. 14-NT, Form No. 15-NT, Form No. 16-NT, Appendix VIII issued with this Circular.

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Thus, the independent audit organization’s confirmation of the unit-linked fund’s operational report must include the following minimum key issues:

– The initial investment capital contribution to form the fund and the resulting profits;

– Differences arising between assets in unit-linked funds and reports separating equity sources and insurance premiums (if any);

Pursuant to Clause 5, Article 106 of Decree 46/2023/ND-CP on the establishment of unit-linked funds as follows:

Establishment of unit-linked funds

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4. In case an insurance enterprise adds a new unit-linked fund and this unit-linked fund is directly managed by the fund management company, the enterprise must ensure the value of each unit-linked fund This new price is not less than 50 billion VND.

5. Insurance enterprises are entitled to investment results corresponding to the amount of money contributed to the unit-linked fund. Insurance enterprises can receive a partial or full refund of the contributed amount if the value of the unit-linked fund is greater than 50 billion VND. In case the fund’s net asset value falls below VND 30 billion on the valuation date, the insurance enterprise must use the owner’s fund to ensure that the net asset value is not lower than VND 30 billion within 30 day period.

6. Insurance enterprises must ensure that assets formed from unit-linked funds must be separated and managed separately from owner funds and other contract owner funds. In case an insurance enterprise establishes unit-linked funds and these unit-linked funds are directly managed by the fund management company, the insurance enterprise must ensure the assets formed from the unit-linked funds. This unit must be separated and managed separately from other unit-linked funds.
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Thus, insurance enterprises can receive a full (or partial) refund of the amount contributed to the unit-linked fund in case the value of the unit-linked fund is large at 50 billion VND.

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