1 This Notice sets out the basic principles that shall govern the oversight of the asset management process of life insurance funds. Every insurer carrying on life business shall ensure that these basic principles are strictly adhered to at all times.
Senior Management Oversight
Board of Directors
2 The responsibility for the formulation, approval and establishment of investment policies of an insurer carrying on life business ("the insurer") must rest ultimately with its Board of Directors. The Board of Directors shall exercise added oversight to ensure that the interests and rights of policyholders are not compromised at all times.
3 For the purpose of the insurer's investment activities, the Board of Directors shall establish a committee (the "Investment Committee") that shall include the Principal Officer, Appointed Actuary and chief investment officer (or an officer in a similar capacity responsible for the investment functions).
4 At least once annually, the Board of Directors shall review the adequacy and relevance of the investment policy of the insurer- in terms of overall risk tolerance, long-term risk-return requirements and solvency position - in the light of the insurer's activities and risk profile.
Reports to the Board of Directors
5 The Investment Committee shall report regularly to the Board of Directors. If the Board of Directors delegates authority to the Investment Committee to make investment decisions on its behalf, the Investment Committee shall report to each meeting of the Board on any and all decisions of material consequence made since the last meeting of the Board of Directors.
6 In addition to the above reports, the Investment Committee shall also prepare reports for the Board of Directors, as and when any investment-related activity of material consequence arises, with details of the various issues and the impact on the funds and the insurer.
Duties of the Investment Committee
7 The Investment Committee shall ensure that a Board-approved investment policy of the insurer is implemented in an appropriate manner. It shall ensure that reports on investment activities are prepared in a timely manner for consideration on behalf of the Board of Directors so that it can provide general oversight of the investment policy of the insurer. The investment policy must incorporate the main elements as laid down in Appendix A (PDF, 5.95KB). The duties delegated to the Investment Committee shall include, but not be limited to the following functions:
a To review the investment policy of the insurer on a regular basis so that it remains appropriate, recognizing among other things, changes in business in-force and the economic environment;
b To ensure the investment policy is consistent with the asset-liability management strategies required to support any new products;
c To ensure the investment policy of the participating fund is consistent with the bonus and/or dividend policy of the insurer;
d To ensure the risk management functions continue to be appropriate;
e To review the adequacy of internal control systems to support investment activities; and
f To ensure resources dedicated to the investment activities of the insurer are sufficient to implement and manage the approved investment policy and any other activities requested by the Board of Directors.
