Chương 3 Nghị định 46/2007/NĐ-CP: Khả năng thanh toán và khôi phục khả năng thanh toán

Chapter III

SOLVENCY AND RECOVERY OF SOLVENCY

Article 15. Solvency

1. An insurer must always maintain solvency during its entire insurance business operation.

2. An insurer shall be deemed to have adequate solvency when all insurance reserves have been established and its solvency margin is not less than the minimum solvency margin set out in article 16 of this Decree.

Article 16. Minimum solvency margin

1. The minimum solvency margin of a non-life insurer shall be the greater of the following two calculations:

(a) Twenty five (25) per cent of the total premiums actually retained at the time of determination of the solvency margin;

(b) Twelve point five (12.5) per cent of the total primary insurance premiums plus reinsurance premiums at the time of determination of the solvency margin.

2. The minimum solvency margin of a life insurer shall be:

(a) In the case of contracts of life insurance with a term of ten years or less, four per cent of the insurance reserves and one tenth of one (0.1) per cent of the sums insured which carry risks;

(b) In the case of contracts of life insurance with a term of over ten years, four per cent of the insurance reserves and three tenths of one (0.3) per cent of the sums insured which carry risks.

Article 17. Solvency margin of insurers

The solvency margin of an insurer means the difference between asset value and debts payable by the insurer at the time of determination of the solvency margin. When calculating the solvency margin of an insurer, only liquid assets may be used, and the whole or part of some assets shall be deducted in accordance with guidelines of the Ministry of Finance.

Article 18. Danger of insolvency

An insurer shall be deemed to be in danger of insolvency when its solvency margin is less than the minimum solvency margin.

Article 19. Recovery of solvency

1. When an insurer is in danger of insolvency, it must immediately take its own measures to recover solvency and at the same time report to the Ministry of Finance on its current financial status and the reasons which lead to the danger of insolvency, and provide a plan for recovery of solvency.

2. If the insurer fails to recover solvency after taking its own measures, the Ministry of Finance shall have the right to request the insurer to take the following measures:

(a) Supplement owner's capital;

(b) Cede reinsurance; curtail the contents, scope and geographical area of the business operation; suspend a part of or the whole operation;

(c) Strengthen the organizational structure and change the managers and executives of the enterprise;

(d) Request assignment of insurance contracts;

(dd) Other measures.

3. If the insurer fails to recover its solvency at the request of the Ministry of Finance as stipulated in clause 2 of this article, the insurer shall be put under special control. The Ministry of Finance shall issue a decision on establishment of a Solvency Control Committee to implement measures to recover the solvency of the enterprise in accordance with article 80 of the Law on Insurance Business.