Thông tư 199/2014/TT-BTC

CIRCULAR

ACCOUNTING FOR LIFE INSURANCE COMPANIES AND REINSURANCE COMPANIES

Pursuant to the Law on Accounting No. 03/2003/QH11 on June 17, 2003;

Pursuant to the Law on Insurance Business No. 24/2000/QH10 dated December 09, 2000 and the Law No. 61/2010/QH12 dated November 24, 2010 providing amendments to the Law on Insurance Business;

Pursuant to the Government’s Decree No. 129/2004/ND-CP dated may 31, 2004 detailing and guiding certain articles of the Law on Accounting for business operations;

Pursuant to the Government's Decree No. 45/2007/ND-CP dated March 27, 2007 detailing the implementation of a number of articles of the Law on Insurance Business;

Pursuant to the Government’s Decree No. 46/2007/ND-CP dated March 27, 2007 providing for financial policies for insurance companies and insurance broker enterprises;

Pursuant to the Government’s Decree No. 123/2011/ND-CP dated December 28, 2011 detailing the implementation of a number of articles of the Law on amendments to the Law on Insurance Business and providing amendments to the Government's Decree No. 45/2007/ND-CP dated March 27, 2007 detailing the implementation of a number of articles of the Law on Insurance Business;

Pursuant to the Government’s Decree No. 215/2013/ND-CP dated December 23, 2013 defining the Functions, Tasks, Powers and Organizational Structure of Ministry of Finance;

At the request of the Director of the Department of Accounting & Auditing Regulations;

Minister of Finance promulgates this Circular to provide guidance on accounting for life insurance companies and reinsurance companies.

Article 1. Scope and regulated entities

1. This Circular provides for accounts, rules and methods for accounting, and financial statement templates for enterprises providing life insurance, health insurance and life reinsurance that are duly established and operate under the law of Vietnam (hereinafter referred to as “life insurers”).

2. Life insurers shall perform other accounting contents which are not provided for in this Circular in accordance with applicable corporate accounting regulations (i.e. accounting regulations promulgated under Decision No. 15/2006/QD-BTC dated March 20, 2006 by Minister of Finance and amending or superseding documents (hereinafter referred to as the “Decision No. 15/2006/QD-BTC")) Circulars guiding the compliance with accounting standards and their amending or superseding documents, if any.

Article 2. Chart of accounts

1. Names of certain accounts prescribed in the applicable corporate accounting regulations are changed for application to life insurers.

a) Name of account 3387 - “Unearned revenue” is changed into “Provisional premium, unearned revenue”;

Account 3387 comprises the following sub accounts:

Account 33871 – “Provisional premium”;

Account 33872 – “Unearned premium revenue”;

Account 33878 – “Other unearned revenue”.

b) Names of sub accounts of account 511 – “Revenue from good sales and service provision” are changed as follows:

Name of account 5111 - “Revenue from goods sale” is changed into “Direct premium revenue”;

Name of account 5112 – “Revenue from sale of finished products” is changed into “Reinsurance premium revenue”;

Name of account 5113 – “Revenue from service provision” is changed into “Revenue from reinsurance ceded”.

c) Name of account 531 – “Sales returns” is changed into “Premium refund, commission refund”.

Account 531 comprises the following sub accounts:

Account 5311 – “Refund of direct premiums”;

Account 5312 – “Refund of reinsurance premiums”;

Account 5313 – “Refund of ceding commissions”.

d) Name of account 532 – “Sales allowance” is changed into “Premium and commission reductions”.

Account 532 comprises the following sub accounts:

Account 5321 – “Reduction in direct premiums”;

Account 5322 – “Reduction in reinsurance premiums”;

Account 5323 – “Reduction in ceding commissions”.

2. The following sub accounts are added to the chart of accounts in applicable corporate accounting regulations for application to life insurers.

a) The following sub account is added to account 128 – “Other short-term investments”: Account 1284 – “Advances of surrender value”.

b) The following sub accounts are added to account 244 – “Long-term deposits”:

Account 2441 – “Insurance deposits”;

Account 2448 – “Other deposits”.

c) The following sub accounts are added to account 131 – “Trade receivables” and account 331 – “Trade payables”:

Account 1311 – “Receivables from direct insurance”;

Account 1312 – “Receivables from reinsurance assumed”;

Account 1313 – “Receivables from reinsurance ceded”;

Account 1318 – “Other trade receivables”;

Account 3311 – “Payables for direct insurance”;

Account 3312 – “Payables for reinsurance assumed”;

Account 3313 – “Payables for reinsurance ceded”;

Account 3318 – “Other trade payables”.

d) Account 337 – “Receivables and payables between Funds”

Account 337 comprises the following sub accounts:

Account 3371 – “Receivables between Funds”.

Account 33711 – “Seed-money receivables between Funds”.

Account 33712 – “Receivables between Funds of shared expenditures allocated to fund separating activities”.

Account 33713 – “Receivables for deficit make-up of policyholder fund”.

Account 33718 – “Other receivables between Funds”.

Account 3372 – “Payables between Funds”.

Account 33721 – “Seed-money payables between Funds”.

Account 33722 – “Payables between Funds of shared expenditures allocated to fund separating activities”.

Account 33723 – “Payables for deficit make-up of policyholder fund”.

Account 33728 – “Other payables between Funds”.

dd) The following sub accounts are added to account 352 – “Provisions for payables":

Account 3521 – “Mathematical reserve”;

Account 3522 – “Unearned premium reserve”;

Account 3523 – “Claims reserve”;

Account 3524 – “Profit sharing reserve”;

Account 3525 – “Equalization reserve”;

Account 3526 – “Resilience reserve”;

Account 3527 – “Interest rate commitment reserve”;

Account 3528 – “Other reserves”;

Account 3529 – “Provisions for payables”.

e) Account 416 – “Statutory reserve”.

g) The following sub accounts are added to account 5111 – “Direct premium revenue”:

Account 51111 – “Insurance premiums”.

Account 51112 – “Initial fee”.

Account 51113 – “Insurance premiums for investment”.

Account 51118 – “Other fees”.

h) Account 533 – “Premiums for reinsurance ceded”.

i) Account 624 – “Direct costs of insurance business and others”.

Account 624 comprises the following sub accounts:

Account 6241 – “Direct costs of direct insurance business”:

Account 62411 – “Payment of direct insurance payouts”;

Account 62412 – “Payment of insurance commissions”;

Account 62413 – “Costs of damage assessment and claim review services”;

Account 62414 – “Technical reserves”; this account comprises the following sub accounts:

Account 624141 – “Mathematical reserve”;

Account 624142 – “Unearned premium reserve”;

Account 624143 – “Claims reserve”;

Account 624144 – “Profit sharing reserve”;

Account 624145 – “Equalization reserve”;

Account 624146 – “Resilience reserve”;

Account 624147 – “Interest rate commitment reserve”;

Account 624148 – “Other reserves”.

Account 62415 – “Contributions to the Fund for protection of the insured”;

Account 62418 – “Other direct insurance costs”.

Account 6242 – “Direct costs of reinsurance business”:

Account 62421 – “Payment of insurance payouts”;

Account 62422 – “Payment of insurance commissions”;

Account 62423 – “Technical reserves”;

Account 62428 – “Other direct costs of reinsurance business”.

Account 6243 – “Direct costs of reinsurance ceded”.

Account 6248 – “Other operating costs”.

k) The following sub-account is added to the account 641 – “Selling expense”:

Account 6416 – “Costs of management of insurance agents”.

3. The following accounts prescribed in the applicable corporate accounting regulations shall not be applied to life insurers:

a) The following balance sheet accounts shall not be applied:

Account 1385 – “Receivables from equalization”;

Account 154 – “Work in progress”;

Account 155 – “Finished goods inventory”;

Account 1561 – “Purchase rate”;

Account 1562 – “Costs of purchase”;

Account 157 – “Goods on consignment”;

Account 158 – “Goods in tax-suspension warehouse”;

Account 161 – “Administrative expenses”;

Account 2134 – “Trademarks”;

Account 337 – “Payment according to progress of construction contract";

Account 3385 – “Equalization payables”;

Account 4112 – “Share premium”;

Account 417 – “Enterprise reorganization assistance fund”;

Account 419 – “Stock fund”;

Account 441 – “Construction investment fund”;

Account 461 – “Budget resources”;

Account 466 – “Budget resources used to acquire fixed assets”;

Account 5114 – “Revenues from government grants”;

Account 521 – “Sales discounts”;

Account 611 – “Purchases”;

Account 621 – “Direct raw material costs”;

Account 622 – “Direct labour costs”;

Account 623 – “Costs of construction machinery”;

Account 627 – “Production overheads”;

Account 631 – “Production costs”;

b) The following off-balance sheet accounts shall not be applied:

Account 003 – “Goods received on consignment for sale, deposit and collateral”;

Account 008 – “Enterprise and project expenditure estimate”.

(The List of accounts applied to life insurers is available in the Appendix 01 enclosed herewith).

Article 3. Accounting of financial investments

1. Accounting of financial investments of a life insurer is reflected in groups of account 12 – “Short-term financial investments", account 22 – “Long-term financial investments” and other accounts relating trading in investment property (including account 1567 – “Real estate” and account 217 – “Investment property”).

2. The accounting of financial investments reflected in the accounts stated in Clause 1 of this Article must comply with the following regulations:

a) Financial investments of a life insurer must be carried out in accordance with the law and in the manner so as to ensure security, efficiency and liquidation;

b) The life insurer must separately record its financial investments reflected in groups of account 12 – “Short-term financial investments” and account 22 – “Long-term financial investments” in details in terms of owner’s equity, technical reserves and other legal sources of capital in accordance with the law so as to use as the basis for making reports on investment activities in accordance with applicable financial regulations;

c) When recording each account of financial investment, the life insurer must divide it into sub accounts or record fund codes to monitor detailed accounting of investments made by the equity fund and the policyholder fund (sub accounts shall be recorded according to insurance products: with-profits policies, without-profits policies, universal life insurance, unit-linked insurance and pension products) so as to provide figures for fund separating report and other technical reports as regulated by law;

d) With regard to investments of a unit-linked fund, the life insurer must determine and record the fund’s net asset value (NAV) in accordance with applicable law on insurance;

dd) The life insurer must implement other regulations on accounting of financial investments reflected in groups of account 12 – “Short-term financial investments" and account 22 – “Long-term financial investments”, including other accounts recording financial investments such as account 515 –“Financial income” and account 635 – “Financial expense” in accordance with applicable corporate accounting regulations.

3. Short-term and long-term investments (including term deposits at credit institutions, government bonds, corporate bonds, shares, investments in real estate, establishment or contribution to insurance companies abroad and other investment portfolios) must be specifically recorded.

a) Each investment must be recorded for monitoring historical costs, increases and decreases in investments and closing values of investments (with regard to unit-linked investments, the net asset value (NAV) must be determined and monitored in accordance with applicable law on insurance). Investments of funds (i.e. the equity fund and/or the policyholder fund) and those made with funding from technical reserves must also managed in accounting books.

b) At the end of accounting period, the life insurer shall base on figures in accounting books and codes of funds making investments sorted by each form of investment during the period to prepare technical reports such as fund separating report and reports on investment activities in accordance with applicable financial regulations.

Article 4. Account 131 – Trade receivables

1. Account 131 – “Trade receivables” is intended to record receivables and payments of receivables from direct insurance, reinsurance and cession and other receivables from customers.  

2. Besides the application of corporate accounting regulations, this account must be recorded in compliance with the following rules:

a) Account 131 must be recorded specifically to every debtor and to every receivables item from direct insurance, reinsurance, cession and other business operations of the life insurer so as to use as the basis for preparing the balance sheet and serving management requirements;

b) Account 1311 – “Receivables from direct insurance”: All direct insurance premiums receivable (including receivables from policyholders and insurance agents), other receivables from direct insurance activities and receivables to reduce direct insurance expenses (if any) must be recorded specifically. 

c) Account 1312 – “Receivables from reinsurance assumed”: Reinsurance premiums and other receivables from the assumption of reinsurance must be recorded specifically. 

d) Account 1313 – “Receivables from reinsurance ceded”: Receivables of ceding commission, claim payments made by reinsurers (if any) and refund of premium for reinsurance ceded, and other receivables from cession must be recorded specifically. dd) Account 1318 – “Other trade receivables” reflects receivables other than those from direct insurance, reinsurance and cession from customers.  

e) Ceding commissions receivable from the reinsurer shall not be recorded to account 131 – “Trade receivables”.  Accountant of the primary insurer (ceding company) shall record these ceding commissions to Dr 331 – “Trade payables” (Dr 331/ Cr 5113) as decreases in premium for reinsurance ceded payable to the reinsurer.

3. Structure and contents of account 131 – “Trade receivables”:

a) Debit:

Trade receivables from direct insurance, reinsurance, cession and other business operations.

b) Credit:

Payments made by relevant entities for direct insurance, reinsurance, cession and other business operations.

c) Debit balance:

Remaining trade receivables from direct insurance, reinsurance, cession and other business operations.

d) Account 131 – “Trade receivables” comprises the following sub accounts:

- Account 1311 – “Receivables from direct insurance” reflects receivables, payments collected and remaining amounts receivable from direct insurance activities such as direct insurance premiums receivable, other receivables from direct insurance activities and receivables to reduce direct insurance expenses (if any). 

- Account 1312 – “Receivables from reinsurance assumed” reflects receivables, payments collected and remaining amounts receivable from the assumption of reinsurance such as reinsurance premiums and other receivables of reinsurance assumed. 

- Account 1313 – “Receivables from reinsurance ceded” reflects receivables, payments collected and remaining amounts receivable from cession such as ceding commission, claim payments from reinsurers (if any) and refund of premiums for reinsurance ceded, and other reinsurance ceded receivables. 

- Account 1318 – “Other trade receivables” reflects receivables, payments collected and remaining amounts receivable of trade receivable items other than those from direct insurance, reinsurance and cession activities.  

4. Accounting methods for certain business transactions:

a) Direct insurance premiums receivable, including premiums to be collected directly from policyholders or insurance agents, shall be recorded to:

Dr 131 – Trade receivables (account 1311)

Cr 511 – Revenue from goods sale and service provision (sub account 5111)

b) When collecting direct insurance premiums, collected amounts shall be recorded to:

Dr 111 and 112

Cr 131 – Trade receivables (sub account 1311).

c) Amounts receivable recorded as decreases in direct insurance expenses such as insurance claim payments by the reinsurer shall be recorded to:

Dr 131 – Trade receivables (account 1311 - Receivables from direct insurance – sub account: claim payments receivable from the reinsurer)

Cr 624 – Direct costs of insurance business and others (sub account 62411)

d) When collecting receivables such as indemnities paid by the reinsurer, the enterprise providing direct insurance shall record them to:

Dr 111 and 112

Cr 131 – Trade receivables (account 1311 - Receivables from direct insurance – sub account: claim payments made by the reinsurer)

dd) Accountant of the reinsurer shall record reinsurance premiums receivable from the primary insurer under terms of the reinsurance agreement entered into by and between the reinsurer and the primary insurer to:

Dr 131 – Trade receivables (account 1312)

Cr 511 – Revenue from goods sale and service provision (sub account 5112) (Reinsurance premiums receivable).

The reinsurer shall also determine and reflect the ceding commission paid to the primary insurer and record it as a decrease in reinsurance premiums receivable to:

Dr 624 – Direct costs of insurance business (account 62422)

Cr 131 – Trade receivables (account 1312) (sub account: Ceding commission payable).

e) The reinsurer shall record the collected amount of reinsurance premiums minus (-) the ceding commission paid to the primary insurer to:

Dr 111, 112, …. (Amount actually received from the primary insurer)

Cr 131 – Trade receivables (account 1312).

g) The primary insurer’s amounts receivable recorded as decreases in its direct insurance expenses such as insurance claim payments by the reinsurer shall be recorded to:

Dr 131 – Trade receivables (account 1313 - Receivables from reinsurance ceded – sub account: claim payments receivable from the reinsurer)

Cr 624 – Direct costs of insurance business and others

h) When collecting receivables from the reinsurer, the primary insurer shall record them to:

Dr 111, 112

Cr 131 – Trade receivables (account 1313).

i) Other receivables of a life insurer from provision of damage assessment and claim review services shall be recorded to:

Dr 131 – Trade receivables (account 1318)

Cr 511 – Revenue from goods sale and service provision (sub account 5118)

Cr 333 – Taxes and other payables to the State (33311) (if any).

k) When collecting other receivables from provision of damage assessment and claim review services, the life insurer shall record them to:

Dr 111, 112

Cr 131 – Trade receivables (account 1318).

l) When receivables and payables of the same entity are offset against each other, they shall be recorded to:

Dr 331 – Trade payables

Cr 131 – Trade receivables.

Article 5. Account 1284 – Advances of surrender value

1. Account 1284 – “Advances of surrender value” is a sub account of account 128 and reflects advances of surrender value and payments of these debts.

2. Rules for accounting of account 1284

This account only reflects advances of surrender value paid to life insurance policyholders who are eligible to receive the surrender value in accordance with applicable regulations and payments of these advances.

3. Structure and contents of account 1284 – “Advances of surrender value”

a) Debit:

Advances of surrender value paid to life insurance policyholders.

b) Credit:

Recovered amounts of advances of surrender value paid to life insurance policyholders.

c) Debit balance:

Remaining amounts of advances of surrender value paid to life insurance policyholders.

4. Accounting methods for certain business transactions

a) Advances of surrender value paid to life insurance policyholders shall be recorded to:

Dr 1284 – Advances of surrender value

Cr 111, 112, ….

b) When collecting amounts of money advanced to policyholders, the insurer shall record them to:

Dr 111, 112, 331

Cr 1284 – Advances of surrender value.

Article 6. Account 244 – Long-term deposits

1. This account reflects insurance deposits and other deposits of a life insurer.  Account 244 – “Long-term deposits” comprises the following sub accounts:

- Account 2441 – “Insurance deposits”

- Account 2448 – “Other deposits”

2. Account 2441 – “Insurance deposits” reflects the amounts of money deposited by the life insurer at a commercial bank in accordance with the Law on Insurance Business.

a) Structure and contents of account 2441 – “Insurance deposits”

- Debit:

Amounts of money deposited by the life insurer for long term when starting its insurance business and/or additionally deposited during its operations.

- Credit:

Amounts of deposits used by the life insurer to fulfill commitments to insurance buyers when the former’s solvency is inadequate;

Long-term deposits withdrawn by the life insurer upon its closure of operations.

- Debit balance:

Remaining amounts of long-term deposits.

b) Accounting methods for certain business transactions:

- When starting business operations, the life insurer must make insurance deposits and record them to:

Dr 244 – Long-term deposits (sub account 2441)

Cr 112 – Bank deposits.

- When closing business operations, the life insurer shall withdraw deposits and record them to:  

Dr 112 – Bank deposits

Cr 244 – Long-term deposits (sub account 2441).

- When the life insurer uses insurance deposits to fulfill commitments to insurance buyers when the former’s solvency is inadequate in accordance with applicable financial regulations, the used amounts of deposits shall be recorded to:

Dr accounts related

Cr 244 – Long-term deposits (sub account 2441).

3. Account 2448 – “Other deposits” reflects amounts of money or value of assets deposited or used as collaterals by the life insurer with enterprises or other economic organizations for a period lasting above one year besides insurance deposits. Accounting works relating account 2448 shall comply with those for account 244 – “Long-term deposits” prescribed in applicable corporate accounting regulations. 

Article 7. Account 331 – Trade payables

1. Account 331 – “Trade payables” reflects debts payable and payment of these debts of a life insurer in connection with its direct insurance, reinsurance, cession and other business operations.

2. Besides the application of corporate accounting regulations, this account must be recorded in compliance with the following rules:

a) Account 331 must be recorded specifically to every creditor and to every payables item from each of direct insurance, reinsurance and cession operations and every item of other payables of the life insurer so as to use as the basis for preparing the balance sheet and serving its management requirements;

b) Account 331 must specifically record all payables, including premiums for reinsurance ceded, insurance payouts and insurance commissions payable and other payables, so as to provide sufficient information for preparation of financial statements and serve the insurer’s management requirements.

c) Ceding commission payable to the primary insurer shall not be recorded to account 331 – “Trade payables”. The reinsurer shall record these insurance commissions payable to Cr 131 (Dr 624/Cr 131) as decreases in reinsurance premiums receivable from the primary insurer.

3. Structure and contents of account 331 – “Trade payables”

a) Debit:

Payments made to creditors related to direct insurance, reinsurance, cession and other business operations.

b) Credit:

Amounts payable to creditors related to direct insurance, reinsurance, cession and other insurance operations.

c) Credit balance:

Remaining amounts payable to creditors related to direct insurance, reinsurance, cession and other insurance operations.

d) Account 331 – “Trade payables” comprises the following sub accounts:

- Account 3311 – “Payables for direct insurance” reflects payables, payments made and remaining amounts payable for direct insurance activities such as payments of insurance payouts, commissions and damage assessment expenses, and other direct insurance payables.    

- Account 3312 – “Payables for reinsurance assumed” reflects payables, payments made and remaining amounts payable for reinsurance assumed such as ceding commissions, claim payments (if any) and other reinsurance assumed payables.

- Account 3313 – “Payables for reinsurance ceded” reflects payables, payments made and remaining amounts payable for reinsurance ceded such as premiums for reinsurance ceded, refund of ceding commission and other reinsurance ceded payables.

- Account 3318 – “Other trade payables” reflects payables, payments made and remaining amounts payable of trade payable items other than those for direct insurance, reinsurance assumed and reinsurance ceded.

4. Accounting methods for certain business transactions:

a) When making payment of insurance benefits to a beneficiary upon the occurrence of the insured event or at the maturity of the insurance policy or in another case as defined in the insurance policy entered into by and between the life insurer and the client (policyholder), the enterprise providing direct insurance shall record such payments to:

Dr 624 – Direct costs of insurance business and others (account 62411)

Cr 331 – Trade payables (TK 3311).

b) When using services (including damage assessment and claim review services and other direct insurance-related services), the enterprise providing direct insurance shall record payments for such services to:

Dr 624 – Direct costs of insurance business and others (corresponding sub account)

Cr 331 – Trade payables (TK 3311).

c) When making payment of insurance payouts to the insured or liabilities to providers of direct insurance-related services, the enterprise providing direct insurance shall record such payments to:

Dr 331 – Trade payables (TK 3311)

Cr 111, 112

d) Based on the primary insurer’s notice of indemnities and insurance payouts and relevant vouchers, the reinsurer shall record amounts of indemnities for reinsurance assumed and others payable to the primary insurer to:

Dr 624 – Direct costs of insurance business and others (account 6242) (corresponding sub account)

Cr 331 – Trade payables (TK 3312).

dd) When using services related to reinsurance assumed such as damage assessment and claim review services, etc., the reinsurer shall record payments for the used services to:

Dr 624 – Direct costs of insurance business and others (account 6242) (corresponding sub account)

Cr 331 – Trade payables (TK 3312).

e) When advancing or making payment of insurance payouts and other payments to the primary insurer or paying liabilities to providers of services related to reinsurance assumed, the reinsurer shall record such payments to:

Dr 331 – Trade payables (TK 3312)

Cr 111, 112

g) When making payment of premiums for reinsurance ceded to the reinsurer (including withholding tax) (if any), the primary insurer shall record such payments to:

Dr 533 – Premiums for reinsurance ceded

Cr 331 – Trade payables (sub account 3313) (Amounts of premiums for reinsurance ceded paid to the reinsurer).

Concurrently, ceding commissions receivable from the reinsurer shall be recorded to:

Dr 331 – Trade payables (sub account 3313) (Amounts of ceding commissions receivable which shall be deducted from premiums for reinsurance ceded payable to the reinsurer)

Cr 511 – Revenue from goods sale and service provision (sub account 51131).

h) When making payment of amounts of premiums for reinsurance ceded minus (-) the ceding commissions receivable from the reinsurer, the primary insurer shall record such payments to:

Dr 331 – Trade payables (sub account 3313)

Cr 111, 112 (Amount actually paid to the reinsurer)

Account 3338 – Other taxes (withholding tax) (if any).

i) The life insurer’s payables to sellers or providers of damage assessment and claim review services shall be recorded to:

Dr 624 – Direct costs of insurance business and others (corresponding sub account)

Cr 331 – Trade payables (Corresponding sub account).

k) When making payments to sellers or providers of damage assessment and claim review services, the life insurer shall record such payments to:

Dr 331 – Trade payables

Cr 111, 112.

l) Advances of surrender value which are unpaid by clients shall be deducted from insurance payouts to be paid to clients and recorded to:

Dr 331 – Trade payables (sub accounts: amounts paid to each policyholder)

Cr 128 – Other short-term investments (Account 1284).

m) When payables and receivables of the same entity are offset against each other, they shall be recorded to:

Dr 331 – Trade payables

Cr 131 – Trade receivables.

n) With regard to pension products and voluntary pension fund:

- In case the insured is not allowed to withdraw money from his/her pension account before the agreed-upon age prescribed in the insurance policy but is financially incapable of paying insurance premiums, the life insurer shall keep managing this amount payable by recording it to the account of provision for payables (technical reserves) until the full payment made.

- The value of a client’s pension account which is transferred into the group pension policy with a new insurer shall be recorded as follows:

+ The transferring insurer shall record it to:

Dr 624 – Direct costs of insurance business and others (sub account: Payment of insurance payout)

Cr 331 – Trade payables (sub accounts: amounts paid to each policyholder)

It shall be also recorded to:

Dr 352 – Provisions for payables

Cr 624 – Direct costs of insurance business and others (sub account: Technical reserves)

When making payment of the transferred value of the pension account to the receiving insurer, such payment shall be recorded to:

Dr 331 – Trade payables (sub accounts: amounts paid to each policyholder)

Cr 111, 112

+ The receiving insurer shall record amounts transferred from the individual’s pension account to the group pension policy to:

Dr 111, 112

Cr 352 – Provisions for payables.

Article 8. Account 337 – “Receivables and payables between Funds”

1. Account 337 – “Receivables and payables between Funds” reflects receivables, payables and payments made between Funds (equity fund and policyholder fund). The policyholder fund may be separated into without-profits fund, with-profits fund, universal life fund and unit-linked fund to serve management requirements.

Account 337 comprises the following sub accounts:

- Account 3371 – “Receivables between Funds”.

- Account 3372 – “Payables between Funds”.

2. Rules for accounting of account 337 – “Receivables and payables between Funds”:

a) This account is intended to record fund separating activities (equity fund and policyholder fund).

b) Rules for accounting of fund separating activities:

- A life insurer must separate and individually record the owner’s equity and the premiums earned from insurance policyholders (referred to as the equity fund and the policyholder fund).

- Rules for separating and determining assets, sources of funds, revenues, expenditures and financial performance of each fund must comply with financial regulations applicable to insurers and reinsurers.

- The life insurer must organize the system of accounting records and open detailed codes of accounts of each fund to individually record assets, sources of funds, revenues, expenditures and financial performance of each fund (equity fund and policyholder fund) to serve the preparation of fund separating report.

- Transactions in terms of assets, sources of funds, revenues, expenditures associated with a certain fund shall be recorded for such fund. Transactions relating to multiple funds shall be aggregated and distributed to each fund in a fair and reasonable basis. The life insurer must establish rules for distributing transactions in terms of assets, sources of funds, revenues, and expenditures relating to each fund. These rules must be given approval by the Ministry of Finance.

- Each life insurer shall only prepare a unique and official set of financial statements so as to submit to state agencies and serve financial disclosure. Accounting items of the policyholder fund and the equity fund shall be separately reflected in a separate section of a technical report (fund separating report). This fund separating report shall be only submitted to the insurance regulatory authority affiliated to the Ministry of Finance and kept at the life insurer.

c) Guidelines for accounting of separating the policyholder fund and the equity fund

- The life insurer must set specific code for each fund which must be consistently applied from preparing accounting documents, opening accounts, bookkeeping and preparation of financial statements and fund separating report.

- Accounting documents:

When preparing and collecting accounting documents for transactions related to the policyholder fund and the equity fund, the life insurer must use fund codes so as to use as the basis for recording such transactions in accounting books separately for each fund.

- Accounts:

The life insurer shall base on the applicable chart of accounts to open sub accounts or the fund codes to record assets, sources of funds, revenues, expenditures and financial performance of the policyholder fund and the equity fund separately.

3. Structure and contents of account 337 – “Receivables and payables between Funds”

Debit:               - Amounts receivable between Funds;

                        - Amounts paid between Funds.

Credit:               - Amounts payable between Funds;

                        - Amounts collected between Funds.

At the end of accounting year, this account does not have a balance.

Account 337 – “Receivables and payables between Funds” comprises the following sub accounts:

a) Account 3371 – “Receivables between Funds” reflects amounts receivable between the policyholder fund and the equity fund. This sub account serves the preparation of reports on the policyholder fund and the equity fund (fund separating report).

Debit:  Amounts receivable between Funds

Credit:  Amounts collected between Funds.

Debit balance: Remaining amounts receivable between Funds.

Account 3371 – “Receivables between Funds” comprises the following sub accounts:

- Account 33711 – “Seed-money receivables between Funds” reflects amounts receivable between the policyholder fund and the equity fund in respect of the seed money paid by the policyholder fund when establishing the fund. This sub account serves the preparation of fund separating report (the policyholder fund and the equity fund).
- Account 33712 – “Receivables between Funds of shared expenditures allocated to fund separating activities” reflects amounts receivable between the policyholder fund and the equity fund in respect of shared expenditures allocated to funds. This sub account serves the preparation of fund separating report (the policyholder fund and the equity fund).

- Account 33713 – “Receivables for deficit make-up of policyholder fund” reflects amounts receivable between the policyholder fund and the equity fund for making up deficits of the policyholder fund. This sub account serves the preparation of fund separating report (the policyholder fund and the equity fund).

- Account 33718 – “Other receivables between Funds” reflects amounts receivable between funds other than those specified in account 33711, account 33712 and account 33713.

b) Account 3372 – “Payables between Funds” reflects amounts payable between the policyholder fund and the equity fund. This sub account serves the preparation of reports on the policyholder fund and the equity fund (fund separating report). 

Debit:  Amounts paid between Funds

Credit:  Amounts payable between Funds.

Credit balance: Remaining amounts payable between Funds.

Account 3372 – “Payables between Funds” comprises the following sub accounts:

- Account 33721 – “Seed-money payables between Funds” reflects amounts payable between the policyholder fund and the equity fund in respect of the seed money paid by the equity fund when establishing the fund. This sub account serves the preparation of fund separating report.  

- Account 33722 – “Payables between Funds of shared expenditures allocated to fund separating activities” reflects amounts payable between the policyholder fund and the equity fund in respect of shared expenditures allocated to funds. This sub account serves the preparation of fund separating report (the policyholder fund and the equity fund).

- Account 33723 – “Payables for deficit make-up of policyholder fund” reflects amounts payable between the policyholder fund and the equity fund to make up deficits of the policyholder fund. This sub account serves the preparation of fund separating report (the policyholder fund and the equity fund).

- Account 33728 – “Other payables between Funds” reflects amounts payable between funds other than those specified in account 33721, account 33722 and account 33723.

At the end of accounting period, receivables and payables recorded in account 3371 and account 3372 shall be made up for each other when preparing the balance sheet in order that these sub accounts do not have balances.

Account 3371 and account 3372 are specifically recorded for each fund.

4. Accounting methods for certain business transactions: Account 337 – “Receivables and payables between Funds”:

a) The seed money transferred by the equity fund to the policyholder fund shall be recorded as follows:

- The equity fund shall record it to:

Dr 3371 – Receivables between Funds (account 33711) (details: amounts receivable by the equity fund from the policyholder fund) 

Cr 111, 112 (the equity fund)

- The policyholder fund shall record it to:

Dr 111, 112 (the policyholder fund)

Cr 3372 – Payables between Funds (account 33721) (details: amounts payable by the policyholder fund to the equity fund).

b) Depreciation of fixed assets of the equity fund allocated to the policyholder fund shall be recorded as follows:

- The policyholder fund shall record it to:

Dr 641, 642 (the policyholder fund)

Cr 3372 – Payables between Funds (account 33722) (details: amounts payable by the policyholder fund to the equity fund).

- The equity fund shall record it to:

Dr 3371 – Receivables between Funds (account 33712) (details: amounts receivable by the equity fund from the policyholder fund) 

Cr 214 – Depreciation of fixed assets (the equity fund)

c) Other shared expenditures of the equity fund allocated to the policyholder fund shall be recorded as follows:

- The equity fund shall record it to:

Dr 3371 – Receivables between Funds (account 33712) (details: amounts receivable by the equity fund from the policyholder fund) 

Cr accounts of expenses (account 641, account 642) (the equity fund).

- The policyholder fund shall record it to:

Dr 641, 642 (the policyholder fund)

Cr 3372 – Payables between Funds (account 33722) (details: amounts payable by the policyholder fund to the equity fund).

d) Amounts used for making up the deficits of the policyholder fund shall be recorded as follows:

- The equity fund shall record it to:

Dr 3371 – Receivables between Funds (account 33713) (details: amounts receivable by the equity fund from the policyholder fund) 

Cr 111, 112

- The policyholder fund shall record it to:

Dr 111, 112

Cr 3372 – Payables between Funds (account 33723) (details: amounts payable by the policyholder fund to the equity fund).

dd) Other receivables/ payables between Funds shall be recorded as follows:

E.g.: Payments made by the equity fund on behalf of the policyholder fund:

- The fund making payments on behalf of another fund must record such payments as receivables between Funds to:

Dr 3371 – Receivables between Funds (account 33718) (the equity fund)

Cr 111, 112 (the equity fund).

- The requesting fund must record such payments as payables between Funds to:

Dr accounts of expenses (account 641, account 642), payables (account 331) (the policyholder fund)

Cr 3372 – Payables between Funds (account 33728) (the policyholder fund).

e) At the end of accounting period, payments and amounts transferred between Funds shall be recorded as follows:

- The receiving fund shall record such payments to:

Dr 111, 112 (sub accounts: cash and deposits of each fund)

Cr 3371 – Receivables between Funds (accounts: 33711, 33712, 33713, 33718) or (sub account: receivables of each fund).

- Paying fund shall record such payments to:

Dr 3372 – Payables between Funds (accounts: 33721, 33722, 33723, 33728) or (sub account: payables of each fund)

Cr 111, 112 (sub accounts: cash and deposits of each fund).

Article 9. Rules for accounting of fund separating activities:

1. The following accounts shall be employed when preparing fund separating report.

Account 337 – “Receivables and payables between Funds”;

Account 511 – “Revenue from goods sale and service provision”;

Account 515 – “Financial income”;

Investment accounts:

Account 121 – “Short-term securities investment”;

Account 128 – “Other short-term investments”;

Account 228 – “Other long-term investments”.

Accounts related to cash, payments, receivables and payables such as accounts 111, 112, 131, 138, 331 and 338.

Account 352 – “Provisions for payables”.

Accounts of expenses such as account 635 –“Financial expense”; accounts 624, 641, 642

Other accounts (if applicable).

2. The life insurer must open sub accounts of the accounts mentioned in Clause 1 of this Article and use fund codes to specifically record assets, sources of funds, revenues, expenditures, receivables, payables and financial performance of each fund (the equity fund, the policyholder fund (including without-profits fund, with-profits fund, universal life fund, unit-linked fund, voluntary pension fund)) so as to provide figures for the preparation of technical reports, including fund separating report, profit sharing report, income statement of each fund and reports on technical reserves in conformity with management requirements of the life insurer and competent authorities.

Article 10. Account 3387 - Provisional premium, unearned revenue

1. Account 3387 – “Provisional premium, unearned revenue” reflects payments made between the life insurer and its clients in respect of insurance premiums provisionally collected (even when the official insurance policy is unavailable), premium revenues previously recorded of several accounting periods and other unearned revenues.      

Account 3387 – “Provisional premium, unearned revenue” comprises the following sub accounts:

- Account 33871 – “Provisional premium” reflects payments of provisional premiums made between the life insurer and its clients (even when the official insurance policy is unavailable).  

- Account 33872 – “Unearned premium revenues” reflects amounts of premiums which have been already recorded of several accounting periods by the life insurer with its clients and payments, carryforward of these amounts.

- Account 33878 – “Other unearned revenues” reflects amounts paid by clients for several years (e.g. earnings from lease of assets or interests paid in advance for multiple periods, etc.)

2. Rules for accounting of account 33871 and account 33872

a) The life insurer must open sub accounts to record provisional premiums and following payments of premiums made by clients to the life insurer specifically to every client and every insurance product so as to serve management requirements.

b) The life insurer shall record the premium amounts paid in advance by clients for multiple periods to these accounts and open sub accounts to record amounts advanced by each client and specifically to every insurance product to serve management requirements.

c) The life insurer must keep track of unearned premium revenues and other unearned revenues in details and sort them by short-term unearned revenues (one year or less) and long-term unearned revenues (exceeding one year) so as to have figures serving the preparation of the balance sheet.

3. Structure and contents of account 33871 and account 33872

a) Debit:

- Carriedforward provisional premiums to revenues when the life insurer and the client enter into the life insurance policy.

- Carriedforward premiums in this period from account 33872 – “Unearned premium revenues” to revenue account.

- Reduced provisional premiums (in case policyholder is liable for health examination costs).

- Provisional premiums refunded to client when the life insurer refuses to provide insurance or the client no longer wants to purchase insurance (in case the life insurer and the client do not yet enter into the insurance policy).

b) Credit:

Provisional premiums collected from clients (including first payment and subsequent payments) and premiums collected in advance by the life insurer for multiple periods.

c) Credit balance:

Closing balance of provisional premiums paid by clients (including first payment and subsequent payments) and premiums collected in advance for multiple periods.

4. Accounting methods for certain business transactions of account 33871 and account 33872

a) When a client makes payment of provisional premiums directly to or through an insurance agent to the life insurer, such provisional premiums shall be recorded to:

Dr 111, 112

Cr 3387 – Provisional premium, unearned revenue (Account 33871).

b) When the life insurer transfers the premium amounts paid by a client for multiple periods from the account of provisional premiums to the account of unearned revenue, it shall record the transferred amounts to:

Dr 3387 – Provisional premium, unearned revenue (Account 33871)

Cr 3387 – Provisional premium, unearned revenue (Account 33872).

c) The life insurer shall transfer provisional premiums into the revenue account when it issues the insurance policy to the client and record transferred amounts to:

Dr 3387 – Provisional premium, unearned revenue (Account 33871)

Cr 511 – Revenue from goods sale and service provision (sub account 51111)

d) Carriedforward premiums in this period from account 33872 – “Unearned premium revenues” to revenue account shall be recorded to:

Dr 3387 – Provisional premium, unearned revenue (sub account 33872)

Cr 511 – Revenue from goods sale and service provision (sub account 51111).

dd) When the life insurer refuses to provide insurance or the client no longer wants to purchase insurance (in case the life insurer and the client do not yet enter into the insurance policy), the life insurer shall refund provisional premiums to the client and record it to:

Dr 3387 – Provisional premium, unearned revenue (Account 33871)

Cr 111, 112.

5. Account 33878 – “Other unearned revenues” shall be recorded in accordance with guidance on recording of account 3387 – “Unearned revenues” in applicable corporate accounting regulations.
Article 11. Account 352 – Provisions for payables

1. Account 352 –“Provisions for payables” reflects setting aside, use and current amounts of technical reserves and provisions for payables of the life insurer in accordance with the law on insurance.

2. Rules for accounting of account 352

a) The life insurer must set aside technical reserves for each insurance policy in correspondence with its liabilities.

b) Technical reserves consist of:

- Mathematical reserve is the difference between the present value of insurance payouts and the present value of future premiums and used to make payouts for liabilities undertaken upon the occurrence of insured events;

- Unearned premium reserve is used to make payouts that ensue throughout the duration of the insurance policy in the subsequent year;

- Claims reserve is used to make payouts for insured events that have occurred but have not been settled at the end of the fiscal year;

- Profit sharing reserve is used to pay profit upon which the insurer has agreed upon with the insurance buyer in the insurance policy;

- Equalization reserve is used to make payouts upon the occurrence of insured events due to a large variation of risk ratio or technical interest rate.

- Resilience reserve is used to guarantee the insurer’s commitment to clients as agreed upon in the insurance policy upon considerable changes in the investment market.

- Interest rate commitment reserve is used to maintain the rate of interest committed by the insurer to its client as agreed upon in the signed pension insurance policy.

- Other reserves mean technical reserves other than those prescribed above.

c) Provisions for payables (account 3529) are set aside and used in accordance with applicable corporation accounting regulations.

d) Methods of and basis for setting aside technical reserves must be approved in writing by Ministry of Finance before application.

dd) Technical reserves must be recorded specifically to every type of technical reserves in accordance with the law on insurance and separately for direct insurance and reinsurance.

e) The life insurer must calculate amounts of technical reserves which must be set aside in accordance with the law on insurance for each insurance policy in correspondence with the life insurer’s liabilities and record them as direct costs of insurance business (sub accounts: direct costs of direct insurance business and direct costs of reinsurance business).

g) Technical reserves shall be set aside at the end of accounting period when financial statements are prepared. Setting aside technical reserves must comply with applicable financial regulations.

h) At the end of accounting period, the life insurer shall determine technical reserves which must be set aside for the subsequent accounting period. To be specific:

- The positive difference between total amount of technical reserves which must be set aside in this period and unused amount of technical reserves set aside in the previous period shall be recorded as an increase in technical reserves and an increase in direct costs of insurance business.

- The negative difference between total amount of technical reserves which must be set aside in this period and unused amount of technical reserves set aside in the previous period shall be reserved and recorded as a decrease in technical reserves and a decrease in direct costs of insurance business.

3. Structure and contents of account 352 – “Provisions for payables”

a) Debit:  The value of technical reserves which is recorded as a decrease in direct costs of insurance business in the period.

b) Credit: The value of technical reserves set aside which is aggregated with direct costs of insurance business in the period.

c) Credit balance:  Closing balance of technical reserves.

d) Account 352 – “Provisions for payables” comprises the following sub accounts:

- Account 3521 – “Mathematical reserve” reflects the setting aside and reserval of mathematical reserves in accordance with financial regulations applicable to life insurers.

- Account 3522 – “Unearned premium reserve” reflects the setting aside and reserval of unearned premium reserves in accordance with financial regulations applicable to life insurers.

- Account 3523 – “Claims reserve” reflects the setting aside and reserval of claims reserves in accordance with financial regulations applicable to life insurers.

- Account 3524 – “Profit sharing reserve” reflects the setting aside and reserval of profit sharing reserves in accordance with financial regulations applicable to life insurers.

- Account 3525 – “Equalization reserve” reflects the setting aside and use of equalization reserves in accordance with financial regulations applicable to life insurers.

- Account 3526 – “Resilience reserve” reflects the setting aside and use of resilience reserves in accordance with financial regulations applicable to life insurers.

- Account 3527 – “Interest rate commitment reserve” reflects the setting aside and use of interest rate commitment reserves in accordance with financial regulations applicable to life insurers.

- Account 3528 – “Other reserves” reflects the setting aside and reserval of other reserves in accordance with financial regulations applicable to life insurers.

- Account 3529 – “Provisions for payables” reflects current provisions for payables, setting aside and use of these provisions for payables of a life insurer.

4. Accounting methods for certain business transactions

a) With regard to mathematical reserve, unearned premium reserve, claims reserve, profit sharing reserve, resilience reserve and interest rate commitment reserve:

- At the end of accounting period when technical reserves (including mathematical reserve, unearned premium reserve, claims reserve, profit sharing reserve, resilience reserve and interest rate commitment reserve) are set aside for each insurance policy in correspondence with liabilities of the life insurer in accordance with applicable financial regulations, such technical reserves set aside shall be recorded to:

Dr 624 – Direct costs of insurance business and others (account 62414, account 62423 (except equalization reserve))

Cr 352 – Provisions for payables (with sub accounts according to every type of technical reserve).

- At the end of the subsequent accounting period:

+ If total amount of technical reserves which must be set aside at the end of this period is greater than the unused amount of technical reserves set aside at the end of the previous period, the positive difference shall be recorded to:

Dr 624 – Direct costs of insurance business and others (account 62414, account 62423 (except equalization reserve))

Cr 352 – Provisions for payables (with sub accounts according to every type of technical reserve).

+ If total amount of technical reserves which must be set aside at the end of this period is lower than the unused amount of technical reserves set aside at the end of the previous period, the negative difference shall be reserved and recorded to:

Dr 352 – Provisions for payables (with sub accounts according to every type of technical reserve)

Cr 624 – Direct costs of insurance business and others (account 62414, account 62423 (except equalization reserve)).

b) With regard to equalization reserve:

- At the end of accounting period when technical reserve (i.e. equalization reserve) must be set aside in accordance with applicable financial regulations, equalization reserve set aside shall be recorded to:

Dr 624 – Direct costs of insurance business and others (sub account: equalization reserve)

Cr 352 – Provisions for payables (account 3525).

- At the end of the subsequent accounting period:

+ The additional equalization reserve which must be set aside in accordance with applicable financial regulations shall be recorded to:

Dr 624 – Direct costs of insurance business and others (sub account: equalization reserve)

Cr 352 – Provisions for payables (account 3525).

+ Pursuant to applicable financial regulations, payments made using equalization reserve shall be recorded to:

Dr 352 – Provisions for payables (account 3525)

Cr accounts related.

Article 12. Account 416 – Statutory reserve

1. Account 416 – “Statutory reserve” reflects current amount, setting aside and use of the statutory reserve of the life insurer.

The life insurer shall extract its profit after tax to set aside the statutory reserve.

Setting aside and use of statutory reserves shall comply with financial regulations applicable to life insurers.

2. Structure and contents of account 416 – “Statutory reserve”

a) Debit:

Decrease in the statutory reserve resulted from the life insurer’s use of the statutory reserve in accordance with applicable financial regulations.

b) Credit:

Increase in the statutory reserve because of additional statutory reserves set aside every year.

c) Credit balance:

Closing balance of the statutory reserve.

3. Accounting methods for certain business transactions

a) At the end of the fiscal year, after calculating the statutory reserve which the life insurer is required to set aside in accordance with applicable financial regulations, the life insurer shall record it to:

Dr 421 – Undistributed profit

Cr 416 – Statutory reserve.

b) When using the statutory reserve in accordance with applicable financial regulations, amounts used shall be recorded to:

Dr 416 – Statutory reserve

Cr accounts related.

Article 13. Account 511 - Revenue from goods sale and service provision

1. Account 511 – “Revenue from goods sale and service provision” reflects revenues derived from insurance business and other business operations of a life insurer, including:   direct premium revenue, revenue of reinsurance premiums, ceding commissions and revenues from other business operations of the life insurer in an accounting period.

2. Besides the application of corporate accounting regulations, this account must be recorded in compliance with the following rules:

a) Revenues from insurance business recorded to the account 511 must be specific to direct insurance business, reinsurance assumed, reinsurance ceded and other operations. Revenues from each form of insurance business operations shall be recorded specifically to every insurance operation and every client group as well as management requirements.

b) The life insurer must keep specific records of fund codes to monitor each insurance product and operation so as to meet fund separating requirements and management requirements of the life insurer and regulatory authorities.

c) The life insurer must record revenues and deductions from revenue for each insurance business operation at the time and contents of recording prescribed in applicable financial regulations.

d) Direct premium revenue, revenues of reinsurance premiums and insurance commissions may increase or decrease according to adjustments to insurance policies because policyholders (insurance buyers) make changes in sums assured, scope of insurance coverage or policy period. Increases in direct premium revenue, reinsurance premiums or ceding commissions resulted from the change in the sums assured, the scope of insurance coverage or the policy period shall be recorded to Dr 111, 112, 131, etc. and Cr 511. Decreases in direct premium revenue, reinsurance premiums or ceding commissions resulted from the change in the sums assured, the scope of insurance coverage or the policy period shall be recorded to Dr 511 and Cr 111, 112, 131, etc.

dd) Refunds or reductions in direct premiums, or reinsurance premiums or ceding commissions shall be considered as deductions from revenues and specifically recorded to account 531 "Premium refund, commission refund" and account 532 "Premium and commission reductions", and transferred to account 511 so as to calculate the net revenue at the end of the accounting period.

e) Premiums for reinsurance ceded which must be transferred to the reinsurer shall be considered as deductions from revenue and specifically recorded to account 533 “Premiums for reinsurance ceded”, and transferred to account 511 so as to calculate the net revenue of the life insurer at the end of the accounting period.

g) The primary insurer and the reinsurer must notify and certify liabilities with each other in a timely manner so as to ensure that revenue of ceding commissions receivable and premiums for reinsurance ceded (of the primary insurer) and revenue of reinsurance premiums and ceding commission payable (of the reinsurer) shall be recorded as soon as liabilities arise from the signed insurance policy within the same quarterly accounting period.    At the end of the fiscal year, the primary insurer shall together with the reinsurer certify accounts receivable and those payable so as to ensure that revenues and costs shall be recorded as soon as liabilities arise from the signed insurance policy in accordance with applicable financial regulations.

3. Structure and contents of account 511 – “Revenue from goods sale and service provision”:

a) Debit:

- Carriedforward refunds of direct premiums, reinsurance premiums and ceding commissions in the period;

- Carriedforward reductions in direct premiums, reinsurance premiums and ceding commissions in the period;

- Premiums for reinsurance ceded transferred to the reinsurer in the period;

- Decrease in insurance premium revenue to record increase in initial fee revenue (applicable to investment-linked insurance and pension products);

- Decrease in insurance premium revenue to record increase in insurance premiums for investment (applicable to investment-linked insurance and pension products);

- Net revenue from direct insurance business, reinsurance assumed, reinsurance ceded and other business operations transferred to account 911 to determine business performance of the life insurer.

b) Credit:

- Revenues from insurance business, including: direct premium revenue, reinsurance premiums, ceding commission and other earnings from cession recorded as revenues in the accounting period;

- Revenues from other business operations in the period (such as earnings from provision of damage assessment and claim review services, etc.)

c) Account 511 does not have a closing balance.

d) Account 511 – “Revenue from goods sale and service provision” comprises the following sub accounts:

- Account 5111 – “Direct premium revenue” reflects revenues and net revenue from direct insurance business in the accounting period;

Account 5111 comprises the following sub accounts:

Account 51111 – “Insurance premiums” reflects premium revenues earned by the life insurer.

Account 51112 – “Initial fee” reflects the initial fee collected by the life insurer.

Account 51113 – “Insurance premiums for investment” reflects the life insurer’s revenue as premiums invested in portfolios (the policyholder’s investments).

Accounting 51118 – “Other fees” reflects risks insurance premiums, administrative fee, leading fee and other fees collected by the life insurer.

- Account 5112 – “Reinsurance premium revenue” reflects revenues and net revenue from reinsurance assumed in the accounting period;

- Account 5113 – “Revenue from reinsurance ceded” reflects revenues and net revenue from reinsurance ceded in the accounting period;

- Accounting 5117 – “Revenue from investment properties”;

- Account 5118 – “Revenue from other business operations” reflects revenues and net revenue from other insurance business operations and receipts other than those reflected by accounts 5111, 5112, 5113, 5117 (such as receipts from provision of damage assessment and claim review services, etc.).
4. Accounting methods for certain business transactions

a) Direct premium revenue:

- When a client makes payment of premiums (including premiums paid in advance for multiple periods) to the life insurer (even the life insurer and the client do not enter into the insurance policy), the received amounts shall be recorded to:

Dr 111, 112

Cr 3387 – Provisional premium, unearned revenue.

- When the life insurer transfers the premium amounts paid by a client in advance for multiple periods from the provisional premium account to the unearned revenue account, such transferred amounts shall be recorded to:

Dr 33871 – Provisional premium

Cr 33872 – Unearned revenue.

- Upon the appraisal of a client’s dossier, if the life insurer and the client agreed to conclude the insurance policy from which liabilities arise, accountant of the life insurer shall record direct premium revenue to relevant accounts. To be specific:

When the insurance policy has been concluded and the policyholder has fully paid premium or when having documents proving the conclusion of the insurance policy and the policyholder has paid premium in full (in case of a new policy) or having an agreement made with the policyholder on the insurance premium debts, direct premium revenue shall be recorded to:

Dr 33871 – Provisional premium (Total premium paid) (In case the policyholder has fully paid premium)

Dr 131 – Trade receivables (sub account 1311) (In case the policyholder has come to an agreement on the insurance premium debts with the life insurer)

Cr 511 – Revenue from goods sale and service provision (account 51111).

+ With regard to investment-linked insurance products (including universal life insurance, unit-linked insurance and pension products), in addition to the accounting entries stated above, the life insurer shall also keep the following records:

Dr 51111 – Insurance premiums

Cr 51112 – Initial fee

Cr 51113 – Insurance premiums for investment.

These entries are generally applied to investment-linked insurance products of a life insurer, the life insurer may itself open sub accounts or use fund codes to specifically record trade receivables and trade payables of each fund.

+ Since second and subsequent payment terms of insurance premium, the life insurer shall record premium revenue to:

Dr 33871 – Provisional premium (Total premium paid) (In case the policyholder has fully paid the premium payable of a respective payment term)

Dr 33872 – Unearned revenue (In case the policyholder has paid premiums in advance for multiple periods)

Cr 131 – Trade receivables (In case the life insurer does not yet receive payment of premium from the policyholder)

Cr 511 – Revenue from goods sale and service provision (account 51111).

+ With regard to investment-linked insurance products (including universal life insurance, unit-linked insurance and pension products), the life insurer must keep the following records:

Dr 51111 – Insurance premiums

Cr 51112 – Initial fee

Cr 51113 – Insurance premiums for investment.

These entries are generally applied to investment-linked insurance products of a life insurer, the life insurer may itself open sub accounts or use fund codes to specifically record trade receivables and trade payables of each fund.

- When the reinsurance agreement has been concluded by and between the primary insurer and the reinsurer and thence liabilities arise, accountant of the primary insurer shall record premium for reinsurance ceded transferred to the reinsurer (including withholding tax) (if any) to:

Dr 533 – Premiums for reinsurance ceded

Cr 331 – Trade payables (Account 3313) (Total premium for reinsurance ceded paid to the reinsurer).

Concurrently, the primary insurer’s revenue as the ceding commission receivable from the reinsurer shall be recorded to:

Dr 331 – Trade payables (Account 3313) (Ceding commission receivable from the reinsurer)

Cr 511 – Revenue from goods sale and service provision (account 51131 – Ceding commission).

+ When making payment of the premium for reinsurance ceded minus (-) the ceding commission receivable from the reinsurer, the primary insurer shall record such payment to:

Dr 331 – Trade payables (TK 3313)

Cr 3338 – Other taxes (sub account: withholding tax) (if any)

Cr 111, 112 (Amount actually paid to the reinsurer).

- In case a client (the policyholder) makes change in the sums assured, the scope of insurance coverage or the policy period specified in the insurance policy concluded with the life insurer, changes in insurance premiums shall be recorded as follows:

+ An increase in premium revenue resulted from the change in the sums assured, the scope of insurance coverage or the policy period shall be recorded to:

Dr 111, 112 (Total amount paid) (In case the policyholder has paid the additional premium)

Dr 131 – Trade receivables (In case the policyholder does not yet make payment of additional premium)

Cr 511 – Revenue from goods sale and service provision (account 51111).

Concurrently, an increase in the premium for reinsurance ceded which must be transferred to the reinsurer (including withholding tax) (if any) shall be recorded to:

Dr 533 – Premiums for reinsurance ceded

Cr 331 – Trade payables.

An increase in the primary insurer’s revenue as the ceding commission receivable from the reinsurer shall be also recorded to:

Dr 331 – Trade payables

Cr 511 – Revenue from goods sale and service provision (account 51131).

When making payment of the premium for reinsurance ceded minus (-) the ceding commission receivable from the reinsurer, the primary insurer shall record such payment to:

Dr 331 – Trade payables

Cr 111, 112 (Amount actually paid to the reinsurer)

Cr 3338 – Other taxes (sub account: withholding tax) (if any).

+ A decrease in premium revenue, which is equivalent to amounts refunded to the policyholder, resulted from the change in the sums assured, the scope of insurance coverage or the policy period shall be recorded to:

Dr 511 – Revenue from goods sale and service provision (sub account 51111)

Cr 111, 112, 131 (Total amount paid).

Concurrently, a decrease in the premium for reinsurance ceded as the amount of the premium for reinsurance ceded which must be recovered from the reinsurer under terms of the reinsurance agreement concluded (including withholding tax) shall be recorded to:

Dr 331 – Trade payables

Cr 533 – Premiums for reinsurance ceded.

A decrease in revenue as the amount of ceding commission refunded to the reinsurer shall be also recorded to:

Dr 511 – Revenue from goods sale and service provision (sub account 51131)

Cr 331 – Trade payables.

+ When receiving payment of the premium for reinsurance ceded minus (-) the ceding commission payable to the reinsurer, received amounts shall be recorded to:

Dr 111, 112

Dr 3338 - Other taxes (sub account: withholding tax) (if any)

Cr 331 – Trade payables.

- If the policyholder or the life insurer terminates the concluded insurance policy, a decrease in the life insurer’s revenue which equals the insurance premium refunded to the policyholder shall be recorded to:

Dr 531 – Premium refund, commission refund

Cr 111, 112 (Total amount paid) (In case the life insurer has refunded the insurance premium to the policyholder)

Cr 131 – Trade receivables (In case the life insurer does not yet refund the insurance premium to the policyholder).

The amount of premium for reinsurance ceded which must be collected from the reinsurer due to refund of premium to the policyholder shall be recorded to:

Dr 331 – Trade payables

Cr 533 – Premiums for reinsurance ceded.

The amount of the ceding commission refunded to the reinsurer shall be also recorded to:

Dr 531 – Premium refund, commission refund

Cr 331 – Trade payables.

+ The insurer shall record the received amounts of the premium for reinsurance ceded minus (-) the ceding commission payable to the reinsurer to:

Dr 111, 112

Dr 3338 - Other taxes (sub account: withholding tax) (if any)

Cr 331 – Trade payables.

- When a reduction in insurance premium is made after the issuance of invoice (with the approval by a regulatory authority) between the life insurer and the policyholder, accountant of the life insurer shall record a decrease in revenue, which equals the reduced amount of insurance premium to be paid to the policyholder, to:

Dr 532 – Premium and commission reductions

Cr 111, 112 (Total amount paid) (In case the life insurer has paid the reduced amount of insurance premium to the policyholder)

Cr 131 – Trade receivables (In case the life insurer does not yet the reduced amount of insurance premium to the policyholder).

The amount of premium for reinsurance ceded which must be collected from the reinsurer due to a reduction in premium given to the policyholder (including withholding tax, if any) shall be recorded to:

Dr 331 – Trade payables

Cr 533 – Premiums for reinsurance ceded.

A decrease in the primary insurer’s revenue as the ceding commission refunded to the reinsurer shall be also recorded to:

Dr 532 – Premium and commission reductions

Cr 331 – Trade payables.

+ The insurer shall record the received amounts of the premium for reinsurance ceded minus (-) the ceding commission payable to the reinsurer to:

Dr 111, 112

Dr 3338 - Other taxes (sub account: withholding tax) (if any)

Cr 331 – Trade payables.

- At the end of the accounting period, premiums for reinsurance ceded in the period shall be transferred to and deducted from the actual direct premium revenue in the period so as to determine the net revenue, and recorded to:

Dr 511 – Revenue from goods sale and service provision (sub account 5111)

Cr 533 – Premiums for reinsurance ceded.

- At the end of the accounting period, refunded amounts of direct premiums in the period shall be transferred to and deducted from the actual revenue in the period so as to determine the net revenue, and recorded to:

Dr 511 – Revenue from goods sale and service provision (sub account 5111)

Cr 531 – Premium refund, commission refund.

- At the end of the accounting period, reduced amounts of direct premiums in the period shall be transferred to and deducted from the actual revenue in the period so as to determine the net revenue, and recorded to:

Dr 511 – Revenue from goods sale and service provision (sub account 5111)

Cr 532 – Premium and commission reductions.

- At the end of the accounting period, the net revenue from direct insurance business shall be transferred to account 911 “Evaluation of business results” and recorded to:

Dr 511 – Revenue from goods sale and service provision (sub account 5111)

Cr 911 – Evaluation of business results.

b) Revenue from reinsurance assumed:

- When liabilities arise from the reinsurance agreement, accountant of the reinsurer may record the reinsurance premium which must be collected from the primary insurer to:

Dr 131 – Trade receivables (account 1312)

Cr 511 - Revenue from goods sale and service provision (sub account: 5112) (Amounts of reinsurance premium which must be collected from the primary insurer).

Concurrently, the ceding commission payable to the primary insurer (including withholding tax, if any) shall be recorded to:

Dr 624 – Direct costs of insurance business and others (sub account 62422)

Cr 131 – Trade receivables (sub account 1312) (Amounts of ceding commission which must be paid to the primary insurer and may be deducted from the amount reinsurance premium receivable).

+ The reinsurer shall record the received amount of the reinsurance premium minus (-) the ceding commission paid to the primary insurer to:

Dr 111, 112 (Amount actually received from the primary insurer)

Cr 131 – Trade receivables

Cr 3338 – Other taxes (sub account: withholding tax on the ceding commission payable to the primary insurer) (if any).

- In case the policyholder makes change in the sums assured, the scope of insurance coverage or the policy period specified in the insurance policy concluded with the primary insurer, changes in direct insurance premium and reinsurance premium shall be recorded as follows:

+ An increase in the revenue of reinsurance premium which must be collected from the primary insurer because of the change in the sums assured, the scope of insurance coverage or the policy period shall be recorded to:

Dr 131 – Trade receivables (Additional amount of reinsurance premium which must be collected from the primary insurer)

Cr 511 – Revenue from goods sale and service provision (sub account 5112).

Concurrently, an increase in costs as the ceding commission payable to the primary insurer in proportion to the additional amount of reinsurance premium (including withholding tax) (if any) shall be recorded to:

Dr 624 – Direct costs of insurance business and others (sub account 62422)

Cr 131 – Trade receivables (Additional amount of the ceding commission payable to the primary insurer).

+ The reinsurer shall record the collected amount of additional reinsurance premium minus (-) the ceding commission paid to the primary insurer to:

Dr 111, 112 (Amount actually received from the primary insurer)

Cr 131 – Trade receivables

Cr 3338 – Other taxes (sub account: withholding tax on the ceding commission payable to the primary insurer) (if any).

+ A decrease in premium revenue, which is equivalent to the amount refunded to the primary insurer, resulted from the change in the sums assured, the scope of insurance coverage or the policy period shall be recorded to:

Dr 511 – Revenue from goods sale and service provision (sub account 5112)

Cr 131 – Trade receivables (Amount of the reinsurance premium payable to the primary insurer).

Concurrently, a decrease in costs as the ceding commission which must be recovered from the primary insurer in proportion to the decrease in the reinsurance premium (including withholding tax) (if any) shall be recorded to:

Dr 131 – Trade receivables (Amount of the ceding commission which must be collected from the primary insurer)

Cr 624 – Direct costs of insurance business and others (sub account 62422).

+ When making payment of the reinsurance premium minus (-) the ceding commission receivable from the primary insurer, the amount paid shall be recorded to:

Dr 131 – Trade receivables

Dr 3338 – Other taxes (sub account: withholding tax on the ceding commission receivable from the primary insurer) (if any)

Cr 111, 112 (Amount actually paid to the primary insurer).

- In case the primary insurer makes change in the sums assured, the scope of insurance coverage or the policy period specified in the reinsurance agreement concluded with the reinsurer resulting in changes in the reinsurance premium, these changes shall be recorded as follows:

+ If the change in the scope of reinsurance coverage results in an increase in the reinsurance premium, accountant shall record an increase in revenue as the additional reinsurance premium collected from the primary insurer to:

Dr 131 – Trade receivables (Additional amount of reinsurance premium which must be collected from the primary insurer)

Cr 511 – Revenue from goods sale and service provision (sub account 5112).

Concurrently, an increase in costs as an additional amount of the ceding commission payable to the primary insurer in proportion to the additional amount of the reinsurance premium (including withholding tax) (if any) shall be recorded to:

Dr 624 – Direct costs of insurance business and others (sub account 62422)

Cr 131 – Trade receivables (Additional amount of the ceding commission payable to the primary insurer).

+ The reinsurer shall record the collected amount of the additional reinsurance premium minus (-) the ceding commission payable to the primary insurer to:

Dr 111, 112 (Amount actually received from the primary insurer)

Cr 131 – Trade receivables

Cr 3338 – Other taxes (sub account: withholding tax on the ceding commission payable to the primary insurer) (if any).

+ If the change in the scope of reinsurance coverage results in a decrease in the reinsurance premium, accountant shall record a decrease in revenue as the amount of reinsurance premium refunded to the primary insurer to:

Dr 511 – Revenue from goods sale and service provision (sub account 5112)

Cr 131 – Trade receivables (Amount of the reinsurance premium payable to the primary insurer).

Concurrently, a decrease in costs as the ceding commission which must be recovered from the primary insurer in proportion to the decrease in the reinsurance premium (including withholding tax) (if any) shall be recorded to:

Dr 131 – Trade receivables (Amount of the ceding commission which must be collected from the primary insurer)

Cr 624 – Direct costs of insurance business and others (sub account 62422).

+ When the reinsurer refunds the reinsurance premium minus (-) the ceding commission receivable from the primary insurer, the amount refunded shall be recorded to:

Dr 131 – Trade receivables

Dr 3338 – Other taxes (sub account: withholding tax on the ceding commission receivable from the primary insurer) (if any)

Cr 111, 112 (Amount actually paid to the primary insurer).

- If the reinsurance premium must be refunded because either the policyholder or the life insurer terminates the insurance policy concluded resulting in the termination of the reinsurance agreement, accountant shall record a decrease in the revenue as the amount of the reinsurance premium refunded to the primary insurer to:

Dr 531 – Premium refund, commission refund

Cr 131 – Trade receivables (Amount of the reinsurance premium payable to the primary insurer).

Concurrently, a decrease in costs as the ceding commission which must be recovered from the primary insurer in proportion to the amount of the reinsurance premium refunded to the primary insurer shall be recorded to:

Dr 131 – Trade receivables (Amount of the ceding commission which must be collected from the primary insurer)

Cr 624 – Direct costs of insurance business and others (sub account 62422).

+ When the reinsurer refunds the reinsurance premium minus (-) the ceding commission receivable from the primary insurer, the amount refunded shall be recorded to:

Dr 131 – Trade receivables

Dr 3338 – Other taxes (sub account: withholding tax on the ceding commission receivable from the primary insurer) (if any)

Cr 111, 112 (Amount actually paid to the primary insurer).

- When a reduction in reinsurance premium is made after the issuance of invoice (with the approval by a regulatory authority) under terms of the insurance policy signed by and between the primary insurer and the policyholder resulting in a reduction in reinsurance premium and ceding commission, accountant shall record a decrease in revenue, which equals the reduced amount of reinsurance premium payable to the primary insurer, to:

Dr 532 – Premium and commission reductions

Cr 131 – Trade receivables (Amount of the reinsurance premium payable to the primary insurer).

Concurrently, a decrease in costs as the ceding commission which must be recovered from the primary insurer in proportion to the reduced amount of the reinsurance premium refunded to the primary insurer shall be recorded to:

Dr 131 – Trade receivables (Amount of the ceding commission which must be collected from the primary insurer)

Dr 624 – Direct costs of insurance business and others (sub account 62422).

+ When the reinsurer makes payment of the reduced amount of the reinsurance premium minus (-) the ceding commission receivable from the primary insurer, such payment shall be recorded to:

Dr 131 – Trade receivables

Dr 3338 – Other taxes (sub account: withholding tax on the ceding commission receivable from the primary insurer) (if any)

Cr 111, 112 (Amount of the reinsurance premium actually paid to the primary insurer).

- At the end of the accounting period, reinsurance premiums refunded in the period shall be transferred to and deducted from the revenue from the assumption of reinsurance actually earned in the period so as to determine the net revenue, and recorded to:

Dr 511 – Revenue from goods sale and service provision (sub account 5112)

Cr 531 – Premium refund, commission refund.

- At the end of the accounting period, reductions in reinsurance premiums in the period shall be transferred to and deducted from the revenue from the assumption of reinsurance actually earned in the period so as to determine the net revenue, and recorded to:

Dr 511 – Revenue from goods sale and service provision (sub account 5112)

Cr 532 – Premium and commission reductions.

- At the end of the accounting period, the net revenue shall be transferred to account 911 “Evaluation of business results” and recorded to:

Dr 511 – Revenue from goods sale and service provision (sub account 5112)

Cr 911 – Evaluation of business results.

c) Revenue from reinsurance ceded

- When liabilities arise from the insurance policy and the reinsurance agreement, accountant of the primary insurer shall record the revenue as the ceding commission receivable from the reinsurer under terms of the reinsurance agreement to:

Dr 331 – Trade payables (Amount of ceding commission receivable which shall be deducted from premiums for reinsurance ceded payable to the reinsurer)

Cr 511 – Revenue from goods sale and service provision (sub account 51131).

Concurrently, accountant of the primary insurer shall record the premiums for reinsurance ceded which must be paid to the reinsurer (including withholding tax, if any) to:

Dr 533 – Premiums for reinsurance ceded

Cr 331 – Trade payables (Amount of premiums for reinsurance ceded payable to the reinsurer).

- When making payment of the premium for reinsurance ceded minus (-) the ceding commission receivable from the reinsurer, the primary insurer shall record such payment to:

Dr 331 – Trade payables

Cr 111, 112 (Amount actually paid to the reinsurer)

Account 3338 – Other taxes (withholding tax) (if any).

- In case the policyholder makes change in the sums assured, the scope of insurance coverage or the policy period specified in the insurance policy concluded with the primary insurer, changes in direct insurance premium and premium for reinsurance ceded shall be recorded as follows:

+ If the change in the sums assured, the scope of insurance coverage or the policy period results in an increase in the premium for reinsurance ceded, accountant of the primary insurer shall record an increase in revenue as the additional amount of ceding commission receivable from the reinsurer in proportion to the additional amount of premium for reinsurance ceded payable to the reinsurer to:

Dr 331 – Trade payables (Additional amount of ceding commission receivable which shall be deducted from the premium for reinsurance ceded payable to the reinsurer)

Cr 511 – Revenue from goods sale and service provision (sub account 51131).

Concurrently, an increase in the premium for reinsurance ceded which must be transferred to the reinsurer under terms of the concluded insurance policy (including withholding tax, if any) shall be recorded to:

Dr 533 – Premiums for reinsurance ceded

Cr 331 – Trade payables (Additional amount of the premium for reinsurance ceded payable to the reinsurer).

When making payment of the premium for reinsurance ceded minus (-) the ceding commission receivable from the reinsurer, the primary insurer shall record such payment to:

Dr 331 – Trade payables

Cr 111, 112 (Amount actually paid to the reinsurer)

Cr 3338 – Other taxes (withholding tax) (if any).

+ If the change in the sums assured, the scope of insurance coverage or the policy period results in a decrease in the premium for reinsurance ceded, accountant of the primary insurer shall record a decrease in revenue as the amount of ceding commission to be refunded to the reinsurer in proportion to the amount of premium for reinsurance ceded recovered from the reinsurer to:

Dr 511 – Revenue from goods sale and service provision (sub account 51131)

Cr 331 – Trade payables (Amount of ceding commission payable which shall be deducted from the premium for reinsurance ceded receivable from the reinsurer).

Concurrently, a decrease in the premium for reinsurance ceded as the amount of the premium for reinsurance ceded which must be recovered from the reinsurer under terms of the reinsurance agreement concluded (including withholding tax, if any) shall be recorded to:

Dr 331 – Trade payables

Cr 533 – Premiums for reinsurance ceded.

When receiving payment of the premium for reinsurance ceded minus (-) the ceding commission payable to the reinsurer, the received amount shall be recorded to:

Dr 111, 112 (Amount actually received from the reinsurer)

Dr 3338 - Other taxes (sub account: withholding tax, if any)

Cr 331 – Trade payables.

- In case the primary insurer makes change in the sums assured, the scope of insurance coverage or the policy period specified in the reinsurance agreement concluded with the reinsurer resulting in changes in the premium for reinsurance ceded, these changes shall be recorded as follows:

+ If the change in the scope of reinsurance coverage results in an increase in the premium for reinsurance ceded, accountant shall record an increase in revenue as the additional amount of ceding commission receivable from the reinsurer in proportion to the additional amount of premium for reinsurance ceded payable to the reinsurer to:

Dr 331 – Trade payables (Additional amount of ceding commission receivable which shall be deducted from the additional amount of premium for reinsurance ceded payable to the reinsurer)

Cr 511 – Revenue from goods sale and service provision (sub account 51131).

Concurrently, an increase in the premium for reinsurance ceded which must be transferred to the reinsurer under terms of the concluded insurance policy (including withholding tax, if any) shall be recorded to:

Dr 533 – Premiums for reinsurance ceded

Cr 331 – Trade payables (Additional amount of the premium for reinsurance ceded payable to the reinsurer).

When making payment of the premium for reinsurance ceded minus (-) the ceding commission receivable from the reinsurer, the primary insurer shall record such payment to:

Dr 331 – Trade payables

Cr 111, 112 (Amount actually paid to the reinsurer)

Cr 3338 – Other taxes (withholding tax) (if any).

+ If the change in the scope of reinsurance coverage results in a decrease in the premium for reinsurance ceded, accountant shall record a decrease in revenue as the amount of ceding commission refunded to the reinsurer in proportion to the amount of premium for reinsurance ceded which must be recovered from the reinsurer to:

Dr 511 – Revenue from goods sale and service provision (sub account 51131)

Cr 331 – Trade payables (Amount of ceding commission payable which shall be deducted from the premium for reinsurance ceded receivable from the reinsurer).

Concurrently, a decrease in the premium for reinsurance ceded as the amount of the premium for reinsurance ceded which must be recovered from the reinsurer under terms of the reinsurance agreement concluded (including withholding tax, if any) shall be recorded to:

Dr 331 – Trade payables

Cr 533 – Premiums for reinsurance ceded.

+ When receiving payment of the premium for reinsurance ceded minus (-) the ceding commission refunded to the reinsurer, the received amount shall be recorded to:

Dr 111, 112 (Amount actually received from the reinsurer)

Dr 3338 - Other taxes (sub account: withholding tax, if any)

Cr 331 – Trade payables.

- When the policyholder or the life insurer terminates the insurance policy concluded resulting in refund of insurance premium, premium for reinsurance ceded and the ceding commission, accountant of the primary insurer shall record a decrease in revenue as the ceding commission which must be refunded to the reinsurer because of the refund of the premium for reinsurance ceded to:

Dr 531 – Premium refund, commission refund

Cr 331 – Trade payables (Amount of ceding commission which must be refunded to the reinsurer and may be deducted from the premium for reinsurance ceded receivable from the reinsurer).

Concurrently, the amount of premium for reinsurance ceded receivable from the reinsurer (including withholding tax, if any) shall be recorded to:

Dr 331 – Trade payables

Cr 533 – Premiums for reinsurance ceded.

+ When receiving payment of the premium for reinsurance ceded minus (-) the ceding commission refunded to the reinsurer, the received amount shall be recorded to:

Dr 111, 112 (Amount actually received from the reinsurer)

Dr 3338 – Other taxes (withholding tax) (if any).

Cr 331 – Trade payables.

- When a reduction in insurance premium is made after the issuance of invoice (with the approval by a regulatory authority) under terms of the signed insurance policy resulting in a reduction in premium for reinsurance ceded and ceding commission, accountant shall record the premium for reinsurance ceded (if any) receivable from the reinsurer (including withholding tax, if any) to:

Dr 331 – Trade payables (The reduced amount of the premium for reinsurance ceded receivable from the reinsurer)

Cr 533 – Premiums for reinsurance ceded.

The amount of the ceding commission which must be refunded to the reinsurer shall be also recorded to:

Dr 532 – Premium and commission reductions

Cr 331 – Trade payables (Amount of ceding commission which must be refunded to the reinsurer and may be deducted from the premium for reinsurance ceded receivable from the reinsurer).

- When receiving payment of the premium for reinsurance ceded minus (-) the ceding commission refunded to the reinsurer, the received amount shall be recorded to:

Dr 111, 112, …. (Amount actually received from the reinsurer)

Dr 3338 – Other taxes (withholding tax) (if any).

Cr 331 – Trade payables.

- At the end of the accounting period, carriedforward premiums for reinsurance ceded payable to the reinsurer in the period shall be recorded to:

Dr 511 – Revenue from goods sale and service provision (sub account 5113)

Cr 533 – Premiums for reinsurance ceded.

- At the end of the accounting period, the ceding commission refunded in the period shall be transferred to and deducted from the revenue as the ceding commission actually earned in the period so as to determine the net revenue, and recorded to:

Dr 511 – Revenue from goods sale and service provision (sub account 5113)

Cr 531 – Premium refund, commission refund.

- At the end of the accounting period, reductions in ceding commissions in the period shall be transferred to and deducted from the revenue as the ceding commission actually earned in the period so as to determine the net revenue, and recorded to:

Dr 511 – Revenue from goods sale and service provision (sub account 5113)

Cr 532 – Premium and commission reductions.

- At the end of the accounting period, the net revenue shall be transferred to account 911 “Evaluation of business results” and recorded to:

Dr 511 – Revenue from goods sale and service provision (sub account 5113)

Cr 911 – Evaluation of business results.

d) Revenue from other business operations (account 5118)

- When having revenue from business operations other than direct insurance revenue, revenue from reinsurance assumed and revenue from reinsurance ceded prescribed above such as revenue earned from provision of damage assessment and claim review services in the period, such revenue shall be recorded to:

Dr 111, 112, 1318 (Total amount paid)

Cr 511 – Revenue from goods sale and service provision (price exclusive of VAT) (sub account 5118)

Cr 3331 – VAT payable (sub account 33311) (if any).

- At the end of the accounting period, the revenue from other business operations (account 5118) shall be transferred to account 911 “Evaluation of business results” and recorded to:

Dr 511 – Revenue from goods sale and service provision (sub account 5118)

Cr 911 – Evaluation of business results.

Article 14. Account 51112 – Initial fee

1. Account 51112 – “Initial fee” is a sub account of account 511 and reflects all amounts of money which the insurer may deduct from the premium paid by a policyholder before it is allocated to investment-linked funds (including universal life fund, unit-linked fund) and voluntary pension fund.

2. Rules for accounting of account 51112

a) Only initial fee paid under investment-linked policies (such as universal life or unit-linked policies) or paid to a voluntary pension fund are recorded to this account.

b) The insurer must open sub accounts according to fund codes to keep track of initial fee of each investment-linked product and each pension product.

3. Structure and contents of account 51112 – “Initial fee”

a) Debit:

Carriedforward initial fee to account 911 to evaluate business results at the end of the accounting period.

b) Credit:

Amounts of initial fee carriedforward from account 51111 - "Insurance premiums" to this account.

c) Account 51112 does not have a closing balance.

4. Accounting methods for certain business transactions

a) Initial fee paid under terms of investment-linked policies (including universal life, unit-linked and pension insurance policies) shall be recorded to:

Dr 51111 – Insurance premiums

Cr 51112 – Initial fee.

b) At the end of the accounting period, initial fee shall be transferred to account 911 “Evaluation of business results” and recorded to:

Dr 51112 – Initial fee.

Cr 911 – Evaluation of business results.

Article 15. Account 51113 – Insurance premiums for investment

1. Account 51113 – “Insurance premiums for investment” is a sub account of account 511 and reflects the portion of the premium, which is paid by the policyholder under an investment-linked policy or a pension insurance policy, used to make investments; this portion of premium for investment is recorded before risks insurance premiums, leading fee, fund management fee and other fees are deducted from the premium before it is allocated o investment-linked funds (including universal life fund and unit-linked fund) and voluntary pension fund).

2. Rules for accounting of account 51113

a) Only portions of premiums, which are paid under investment-linked policies or pension insurance policies, invested in portfolios are recorded to this account.

b) The insurer must open sub accounts to keep track of policyholder’s portion of premium invested in each fund.

3. Structure and contents of account 51113 – “Insurance premiums for investment”

a) Debit:

- Deductions such as risks insurance premiums, leading fee, fund management fee and other rational fees which the insurer may deduct from the premium before it is allocated to investment-linked funds (including universal life fund, unit-linked fund and voluntary pension fund).
- Carriedforward remaining amount of insurance premiums for investment to account 911 to evaluate business results in the period.

b) Credit:

Amounts of insurance premiums for investment carriedforward from account 51111 - "Insurance premiums" to this account.

c) Account 51113 does not have a closing balance.

4. Accounting methods for certain business transactions

a) Amounts of premiums, which are paid by policyholders under investment-linked policies such as universal life policies, unit-linked policies or pension insurance policies, invested in portfolios shall be recorded to:

Dr 51111 – Insurance premiums

Cr 51113 – Insurance premiums for investment.

b) When deducting risks insurance premiums, leading fees, fund management fees and other fees from premiums paid under investment-linked policies (including universal life policies, unit-linked policies or pension insurance policies), the insurer shall record deductions to:  

Dr 51113 – Insurance premiums for investment.

Cr 51118 – Other fees.

c) Amounts of premiums used for making investments after deducting risks insurance premiums, leading fees, fund management fees and other fees from premiums paid under investment-linked policies (including universal life policies, unit-linked policies or pension insurance policies) shall be transferred to account 911 “Evaluation of business results” and recorded to:  

Dr 51113 – Insurance premiums for investment.

Cr 911 – Evaluation of business results.

Article 16. Account 51118 – Other fees

1. Account 51118 – “Other fees” reflects risks insurance premiums, leading fees and fund management fees which a life insurer may deduct from the premium paid by a policyholder before it is allocated to investment-linked funds (including universal life fund, unit-linked fund and voluntary pension fund).  

2. Rules for accounting of account 51118

a) Only fees which the life insurer is allowed to deduct from the premiums paid under investment-linked policies (such as universal life policies, unit-linked policies or pension insurance policies) shall be recorded to this account.

b) The life insurer must open sub accounts to keep track of other fees which it is allowed to deduct from premiums paid under universal life policies, unit-linked policies or pension insurance policies.

3. Structure and contents of account 51118 – “Other fees”

a) Debit:

Carriedforward amount of other fees to account 911 to evaluate business results in the period.

b) Credit:

Deductions such as risks insurance premiums, leading fees, fund management fees and other rational fees which the insurer may deduct from premiums paid by policyholders before they are allocated to investment-linked funds (including universal life fund, unit-linked fund and voluntary pension fund).

c) Account 51118 does not have a closing balance.

4. Accounting methods for certain business transactions

a) When deducting fees such as risks insurance premiums, leading fees, fund management fees and other fees from premiums paid by policyholders before they are allocated to investment-linked funds (including universal life fund, unit-linked fund and voluntary pension fund), the insurer shall record deductions to:  

Dr 51113 – Insurance premiums for investment.

Cr 51118 – Other fees.

b) At the end of the accounting period, other fees shall be transferred to account 911 “Evaluation of business results” and recorded to:

Dr 51118 – Other fees.

Cr 911 – Evaluation of business results

The entries prescribed in Point a) and Point b) shall be generally applied to life insurers; a life insurer may itself open sub accounts or use fund codes to specifically record trade receivables and trade payables between funds.

Article 17. Account 531 – Premium refund, commission refund

1. Account 531 – “Premium refund, commission refund” reflects direct premiums, reinsurance premiums and ceding commissions which a life insurer must refund to its policyholders or other entities such as reinsurers or ceding companies or insurance brokers in cases where a policyholder (or the insurance buyer) terminates the insurance policy which has been concluded with the life insurer within the free look period or in other termination cases.

2. Rules for accounting of account 531

a) Account 531 must be kept records of premium refunds and commission refunds in details according to each type of insurance business such as direct insurance business (refund of direct premiums), reinsurance assumed (refund of reinsurance premiums) and reinsurance ceded (refund of ceding commissions).    Refunded amounts must be also recorded specifically to every insurance product or operation of a certain type of insurance business.

b) In the period, direct premiums, reinsurance premiums and ceding commissions which must be refunded shall be recorded to Dr 531 “Premium refund, commission refund”. At the end of the period, the sum of refunded premiums and commissions shall be transferred to account 511 – “Revenue from goods sale and service provision” so as to determine the net revenue in the reporting period.

3. Structure and contents of account 531 – “Premium refund, commission refund”

a) Debit:

Premiums and commissions which must be refunded in the period.

b) Credit:

Carriedforward sum of premiums and commissions refunded in the period to account 511 – “Revenue from goods sale and service provision” so as to determine the net revenue in the reporting period.

c) Account 531 does not have a closing balance.

d) Account 531 – “Premium refund, commission refund” comprises the following three sub accounts:

- Account 5311 – “Refund of direct premiums”: reflects direct premium amounts refunded in the period;
- Account 5312 – “Refund of reinsurance premiums”: reflects reinsurance premium amounts refunded in the period;- Account 5313 – “Refund of ceding commissions”: reflects ceding commission amounts refunded in the period.

4. Accounting methods for certain business transactions

a) Direct premiums and reinsurance premiums which must be refunded shall be recorded to:

Dr 531 – Premium refund, commission refund (sub accounts 5311, 5312)

Cr 331 – Trade payables (sub accounts 3311, 3312).

b) When refunding direct premiums and reinsurance premiums, refunded amounts shall be recorded to:

Dr 331 – Trade payables (sub accounts 3311, 3312)

Cr 111, 112, 131.

c) Ceding commissions which must be refunded shall be recorded to:

Dr 531 – Premium refund, commission refund (sub account 5313)

Cr 331 – Trade payables (TK 3313).

d) When refunding ceding commissions, refunded amounts shall be recorded to:

Dr 331 – Trade payables (TK 3313)

Cr 111, 112, 131.

dd) At the end of the accounting period, refunded premiums and commissions shall be transferred to account 511 “Revenue from goods sale and service provision” so as to determine the net revenue, and carriedforward sum shall be recorded to:  

Dr 511 – Revenue from goods sale and service provision

Cr 531 – Premium refund, commission refund.

Article 18. Account 532 – Premium and commission reductions

1. Account 532 – “Premium and commission reductions” reflects reduced amounts of direct premiums, reinsurance premiums and ceding commissions resulted from reductions in premiums and ceding commissions given by the life insurer to its policyholders (insurance buyers) or reinsurers after the issuance of invoices (these reductions in premiums and ceding commissions must be approved by competent authorities).

2. Rules for accounting of account 532

a) Account 532 shall be kept only records of reduced amounts of premiums and commissions after the issuance of invoice, i.e. reductions in premiums and/or ceding commissions are given after invoice has been issued (with the approval by a competent authority).

b) Reductions in premiums and/or commissions resulted in the policyholder’s change in the sums assured, the scope of insurance coverage or the policy period shall not be recorded to account 532.

c) Account 532 must be kept records of premium and commission reductions in details according to each type of insurance business such as direct insurance business (reduction in direct premiums), reinsurance assumed (reduction in reinsurance premiums) and reinsurance ceded (reduction in ceding commissions).   Premium and commission reductions must be also recorded specifically to every insurance product or operation of a certain type of insurance business.

d) Reductions in premiums and commissions given in the period shall be recorded to Dr 532 – “Premium and commission reductions”. At the end of the period, the sum of reduced premiums and commissions shall be transferred to the account reflecting revenue from goods sale and service provision so as to determine the net revenue in the reporting period.

3. Structure and contents of account 532 – “Premium and commission reductions”

a) Debit:

Reductions in insurance premiums and commissions given in the period.

b) Credit:

Carriedforward sum of reduced amounts of premiums and commissions in the period to account 511 – “Revenue from goods sale and service provision” so as to determine the net revenue in the reporting period.

c) Account 532 does not have a closing balance.

d) Account 532 – “Premium and commission reductions” comprises the following three sub accounts:

- Account 5321 – “Reduction in direct premiums”: reflects reduced amounts of direct premiums given in the period.

- Account 5322 – “Reduction in reinsurance premiums”: reflects reduced amounts of reinsurance premiums given in the period.

- Account 5323 – “Reduction in ceding commissions”: reflects reduced amounts of ceding commissions given in the period.  

4. Accounting methods for certain business transactions

a) Reductions in direct premiums and/or reinsurance premiums given after the issuance of invoices (with the approval by a competent authority) shall be recorded to:

Dr 532 – Premium and commission reductions (sub accounts 5321, 5322)

Cr 331 – Trade payables (sub accounts 3311, 3312).

b) When making payment of reductions in direct premiums and/or reinsurance premiums, reduced amounts paid shall be recorded to:

Dr 331 – Trade payables (sub accounts 3311, 3312)

Cr 111, 112, 131.

c) Reductions in ceding commissions shall be recorded to:

Dr 532 – Premium and commission reductions (sub account 5323)

Cr 331 – Trade payables (TK 3313).

d) When making payment of reductions in ceding commissions, reduced amounts paid shall be recorded to:

Dr 331 – Trade payables (TK 3313)

Cr 111, 112, 131.

e) At the end of the accounting period, reductions in premiums and commissions shall be transferred to account 511 “Revenue from goods sale and service provision” so as to determine the net revenue, and carriedforward sum shall be recorded to: 

Dr 511 – Revenue from goods sale and service provision

Cr 532 – Premium and commission reductions.

Article 19. Account 533 – Premiums for reinsurance ceded

1. Account 533 – “Premiums for reinsurance ceded” reflects premiums for reinsurance ceded in the accounting period of a life insurer.

2. Rules for accounting of account 533

a) Account 533 is employed by a life insurer that engages in cession. Premiums for reinsurance ceded are considered as decreases in the insurer’s revenues from insurance business so as to calculate the net premium revenue;

b) Account 533 must be kept records of cession of primary insurance and reinsurance (or retrocession) in details;

c) The life insurer must record both amounts payable of premiums for reinsurance ceded and ceding commissions receivable from the reinsurer at the same time when liabilities arise from the insurance policy concluded;

d) The primary insurer and the reinsurer must notify and certify liabilities with each other in a timely manner so as to ensure that revenues as ceding commissions receivable and amounts payable of premiums for reinsurance ceded (of the primary insurer) and revenues as reinsurance premiums and ceding commissions payable (of the reinsurer) shall be recorded as soon as liabilities arise from the insurance policy concluded within the same quarterly accounting period.    At the end of the fiscal year, the primary insurer shall together with the reinsurer certify accounts receivable and those payable so as to ensure that revenues and costs shall be fully recorded as soon as liabilities arise from the signed insurance policy in accordance with applicable financial regulations;

dd) In the accounting period, amounts of premiums for reinsurance ceded which must be paid to the reinsurer shall be recorded to Dr 533; at the end of the accounting period, the sum of premiums for reinsurance ceded shall be transferred to account 511 - Revenue from goods sale and service provision so as to calculate the net premium revenue earned in the accounting period;

e) If a policyholder makes change in the sums assured, the scope of insurance coverage or the policy period specified in the insurance policy concluded with the life insurer resulting in an increase in the premiums for reinsurance ceded, such increase shall be recorded to Dr 533/ Cr 331. If the change in the sums assured, the scope of insurance coverage or the policy period results in a decrease in premiums for reinsurance ceded, such decrease shall be recorded to Dr 331/ Cr 533;

g) In cases where the premium refund which is made because the policyholder returns the policy within the free look period or in another termination case, or the premium reduction which is given with the approval by a competent authority under terms of the insurance policy concluded between the policyholder and the life insurer causes a decrease in premiums for reinsurance ceded, such decrease shall be recorded to Dr 331/ Cr 533.

3. Structure and contents of account 533 – “Premiums for reinsurance ceded”

a) Debit:

Premiums for reinsurance ceded which must be paid to the reinsurer in the period.

b) Credit:

- Amounts of premiums for reinsurance ceded which must be collected from the reinsurer in case of premium refund or premium reduction;

- Carriedforward sum of premiums for reinsurance ceded which must be paid to the reinsurer in the period to account 511 "Revenue from goods sale and service provision” so as to calculate the net revenue in the period.

c) Account 533 does not have a closing balance.

4. Accounting methods for certain business transactions

a) When liabilities arise from the insurance policy and the reinsurance agreement, premiums for reinsurance ceded which must be paid to the reinsurer shall be recorded to:

Dr 533 – Premiums for reinsurance ceded

Cr 331 – Trade payables.

Concurrently, the primary insurer shall record the revenue as the ceding commission receivable from the reinsurer to:

Dr 331 – Trade payables (Amount receivable of ceding commission which shall be deducted from amount of premiums for reinsurance ceded which must be paid to the reinsurer)

Cr 511 – Revenue from goods sale and service provision (sub account 51131).

- When making payment of the premium for reinsurance ceded minus (-) the ceding commission receivable from the reinsurer, the primary insurer shall record the amount paid to:

Dr 331 – Trade payables

Cr 111, 112 (Amount actually paid to the reinsurer)

Cr 3338 – Other taxes (sub account: withholding tax) (if any).

b) In case the policyholder makes change in the sums assured, the scope of insurance coverage or the policy period specified in the insurance policy signed with the primary insurer resulting in an increase in the premiums for reinsurance ceded, additional amounts of premiums for reinsurance ceded which must be paid to the reinsurer shall be recorded to:

Dr 533 – Premiums for reinsurance ceded

Cr 331 – Trade payables.

Concurrently, the primary insurer shall record the revenue as an additional amount of the ceding commission receivable from the reinsurer to:

Dr 331 – Trade payables.

Cr 511 – Revenue from service provision (sub account 51131).

- When making payment of the additional amount of premiums for reinsurance ceded minus (-) the additional amount of ceding commission receivable from the reinsurer, the primary insurer shall record the amount paid to:

Dr 331 – Trade payables

Cr 111, 112 (Amount actually paid to the reinsurer)

Cr 3338 – Other taxes (sub account: withholding tax) (if any).

c) In case the primary insurer refunds premium or gives any reduction in premium to the policyholder or the policyholder decreases the sums assured, the scope of insurance coverage or the policy period specified in the insurance policy signed with the primary insurer, the amount of premiums for reinsurance ceded which must be recovered from the reinsurer shall be recorded to:

Dr 331 – Trade payables

Cr 533 – Premiums for reinsurance ceded.

At the same time, a decrease in the ceding commission revenue in proportion to the decrease in premiums for reinsurance ceded shall be recorded. To be specific:

- If the policyholder decreases the sums assured, the scope of insurance coverage or the policy period specified in the insurance policy signed with the primary insurer, such decrease in ceding commission revenue shall be recorded to:

Dr 511 – Revenue from goods sale and service provision (sub account 5113)

Cr 331 – Trade payables.

- If the policyholder (or the insurance buyer) or the life insurer terminates the insurance policy, such decrease in ceding commission revenue shall be recorded to:

Dr 531 – Premium refund, commission refund

Cr 331 – Trade payables.

- If a reduction in premiums is given after the issuance of invoice (with the approval by a competent authority), such decrease in ceding commission revenue shall be recorded to:

Dr 532 – Premium and commission reductions

Cr 331 – Trade payables.

- When receiving the amount of premiums for reinsurance ceded minus (-) the amount of ceding commissions payable to the reinsurer, the primary insurer shall record the received amount to:

Dr 111, 112

Dr 3338 - Other taxes (sub account: withholding tax, if any)

Cr 331 – Trade payables.

d) At the end of the accounting period, the sum of premiums for reinsurance ceded which must be paid to the reinsurer in the period shall be transferred to account 511 so as to calculate the net revenue in the period, and recorded to:

Dr 511 – Revenue from goods sale and service provision

Cr 533 – Premiums for reinsurance ceded.

Article 20. Account 624 – Direct costs of insurance business and others

1. Account 624 – “Direct costs of insurance business and others” reflects direct costs in direct insurance business, reinsurance, reinsurance ceded and other operating costs incurred by a life insurer.

- Direct costs of insurance business include all actual costs incurred during the provision of insurance services, such as direct costs of direct insurance business (including payment of insurance payouts, technical reserves, payment of insurance commissions, costs of damage assessment and claim review services, contributions to the Fund for protection of the insured, and other costs of direct insurance business), direct costs of reinsurance business (including payment of insurance payouts, technical reserves, payment of ceding commissions and other costs of reinsurance business), and direct costs of reinsurance ceded.    

- This account shall be also kept records of other operating costs incurred during the provision of insurance services such as costs of damage assessment and claim review services, etc.

2. Rules for accounting of account 624

a) Account 624 – “Direct costs of insurance business and others” shall be only kept records of actual costs incurred (regardless of payment made or not) during the provision of life insurance services in the accounting period (including costs related to direct insurance business, reinsurance and reinsurance ceded), amounts receivable recorded as decreases in costs incurred in the period such as indemnities collected from reinsurers, reserved amounts of technical reserves, and other costs of insurance business.

b) Direct costs of insurance business reflected on account 624 must be specific to direct insurance business, reinsurance business, reinsurance ceded and other operations. Costs of every insurance operation of a certain insurance business type shall be specifically recorded to this account in accordance with applicable financial regulations and management requirements of the life insurer. Other operating costs recorded to account 624 (sub account 6248) include costs of other business operations of the life insurer such as costs of provision of damage assessment and claim review services, etc.

c) The reinsurer and the primary insurer must make notification and verification of indemnities and other payments in a timely manner so as to ensure that they shall fully be recorded in each accounting period. At the end of the fiscal year, the reinsurer must together with the primary insurer compare and verify debts payable and amounts receivable so as to record revenues and expenses as soon as liabilities arise from the concluded insurance policy in accordance with applicable financial regulations.

d) After deducting amounts recorded as decreases in business costs (if any), the sum of costs of direct insurance business, reinsurance business, reinsurance ceded and other operating costs that arise in the period shall be transferred to account 911 – “Evaluation of business results” so as to determine the life insurer’s business results in the period.  

3. Structure and contents of account 624 – “Direct costs of insurance business and others”:

a) Debit:

Direct costs that arise in the period in connection with life insurance business (including direct insurance business, reinsurance business and reinsurance ceded) and other operating costs of the life insurer.

b) Credit:

- Amounts recorded as decreases in direct costs of insurance business and others in the period (such as indemnities paid by reinsurers (if any) and reserved amounts of technical reserves);

- Carriedforward sum of direct costs of insurance business and others minus amounts recorded as decreases in costs in the period to account 911 – “Evaluation of business results”.

c) Account 624 does not have a closing balance.

d) Account 624 – “Direct costs of insurance business and others” comprises the following sub accounts:

- Account 6241 – “Direct costs of direct insurance business” reflects all direct costs of direct insurance business incurred in the period, including: payment of insurance payouts, technical reserves, payment of commissions, payment of costs of damage assessment and claim review services, contributions to the Fund for protection of the insured, and other direct insurance costs.

Account 6241 – “Direct costs of direct insurance business” comprises the following sub accounts:

+ Account 62411 – “Payment of direct insurance payouts”: reflecting direct insurance payout amounts payable to policyholders under terms of the concluded insurance policies;

+ Account 62412 – “Payment of commissions”: reflecting commission amounts which must be paid by a life insurer;

+ Account 62413 – “Costs of damage assessment and claim review services”: reflecting payments related to damage assessment and claim review services used by the life insurer;

+ Account 62414 – “Technical reserves”: reflecting amounts which must set aside as technical reserves in accordance with regulations of the Law on Life Insurance;

+ Account 62415 – “Contributions to the Fund for protection of the insured”: reflecting amounts which must be paid to the Fund for protection of the insured in accordance with regulations of the Law on Life Insurance;

+ Account 62418 – “Other direct insurance costs”: reflecting other payables related to direct insurance business of the life insurer.  

A life insurer may open more sub accounts to record costs of direct insurance business other than those reflected on sub accounts 62411, 62412, 62413, 62414, 62415 and 62418 in accordance with applicable financial regulations and its management requirements.

- Account 6242 – “Direct costs of reinsurance business” reflects all direct costs of reinsurance assumed in the period, including payment of insurance payouts, technical reserves, payment of commissions and other costs of reinsurance business.
Account 6242 – “Direct costs of reinsurance business” comprises the following sub accounts:

+ Account 62421 – “Payment of insurance payouts”: reflecting insurance payout amounts payable to policyholders under terms of the concluded insurance policies and reinsurance agreements;  

+ Account 62422 – “Payment of commissions": reflecting commission amounts which must be paid by a reinsurer;  

+ Account 62423 – “Technical reserves”: reflecting amounts which must set aside as technical reserves in accordance with regulations of the Law on Life Insurance regarding reinsurance operations;

+ Account 62428 – “Other direct costs of reinsurance business”: reflecting other payables related to reinsurance assumed.

A life insurer may open more sub accounts to record costs of reinsurance business other than those reflected on sub accounts 62421, 62422, 62423 and 62428 in accordance with applicable financial regulations and its management requirements.

- Account 6243 – “Direct costs of reinsurance ceded” reflects all direct costs of reinsurance ceded in the period.

- Account 6248 – “Other operating costs” reflects expenses related to insurance business and other business operations of a life insurer other than those reflected in accounts 6241, 6242 and 6243.

4. Accounting methods for certain business transactions:

a) Direct costs of direct insurance business:

- Payment of insurance payouts:

When a claim filed by a policyholder has been accepted but not yet paid at the end of the accounting period, it shall be recorded to:

Dr 624 – Direct costs of insurance business and others (sub account 62411)

Cr 331 – Trade payables (TK 3311).

When there are amounts payable at the maturity of a policy or annuities or upon termination of the policy under which the life insurer must pay insurance payout (in case the policy is terminated at the time when the surrender value is available), amounts payable shall be recorded to:

Dr 624 – Direct costs of insurance business and others (sub account 62411)

Cr 331 – Trade payables (sub account 3311).

Upon the occurrence of an insured event the insurer must pay insurance indemnity to the policyholder and the reinsurer must also pay a portion of indemnity and insurance payout to the primary insurer in proportion to the portion of risks it has taken on under terms of the reinsurance agreement signed by and between the primary insurer and the reinsurer, the primary insurer shall record amounts of insurance indemnity and payout paid by the reinsurer to:

Dr 111, 112, 131

Cr 624 – Direct costs of insurance business and others

When making payment of insurance payout to the policyholder, the amount paid shall be recorded to:

Dr 331 – Trade payables (sub account 3311)

Cr 111, 112

At the end of the period, carriedforward amounts of insurance payouts to evaluate business results shall be recorded to:

Dr 911 – Evaluation of business results

Cr 624 – Direct costs of insurance business and others (sub account 62411).

- Payment of commissions:

When determining commissions to be paid to insurance agents, commission amounts shall be recorded to:

Dr 624 – Direct costs of insurance business and others (sub account 62412)

Cr 331 – Trade payables (sub account 3311)

When paying commissions to insurance agents, amounts paid shall be recorded to:

Dr 331 – Trade payables (sub account 3311)

Cr 111, 112.

When paying commissions to an insurance agent and deducting personal income tax or amounts paid on behalf of such insurance agent according to promotion programs from the commission amounts paid to such insurance agent, amounts deducted and paid shall be recorded to:

Dr 331 – Trade payables (sub account 3311)

Cr 333 - Taxes and other payables to the State (sub account 3335) (Amount of personal income tax deducted from the insurance agent’s commissions)

Cr 138 – Other receivables (sub account 1388) (Amounts paid on behalf of the insurance agent according to promotion programs)

Cr 111, 112.

At the end of the period, carriedforward commissions to evaluate business results shall be recorded to:

Dr 911 – Evaluation of business results

Cr 624 – Direct costs of insurance business and others (sub account 62412).

- Costs of damage assessment and claim review services:

Costs of assessing, investigating and collecting information concerning an insured event, health examination or health check before accepting insurance from a client shall be recorded to:

Dr 624 – Direct costs of insurance business and others (sub account 62413)

Cr 331 – Trade payables (sub account 3311).

- Technical reserves:

+ At the end of the accounting period when technical reserves (including mathematical reserve, unearned premium reserve, claims reserve, profit sharing reserve, resilience reserve, interest rate commitment reserve and other reserves) are set aside for the first time, amounts set aside as technical reserves shall be recorded to:

Dr 624 – Direct costs of insurance business and others (specifically recorded according to each type of technical reserve)

Cr 352 – Provisions for payables (specifically recorded according to each type of technical reserves)

At the end of the following accounting period, if total amount of technical reserves which must be set aside in this period is greater than the unused amount of technical reserves set aside in the previous period, the positive difference shall be recorded to:

Dr 624 – Direct costs of insurance business and others (specifically recorded according to each type of technical reserve)

Cr 352 – Provisions for payables (specifically recorded according to each type of technical reserves)

At the end of the following accounting period, if total amount of technical reserves which must be set aside in this period is lower than the unused amount of technical reserves set aside in the previous period, the negative difference must be reserved and recorded to:

Dr 352 – Provisions for payables (specifically recorded according to each type of technical reserves)

Cr 624 – Direct costs of insurance business and others (specifically recorded according to each type of technical reserve).

+ At the end of the accounting period when the technical reserve (equalization reserve) must be set aside for the first time, technical reserve set aside shall be recorded to:

Dr 624 – Direct costs of insurance business and others (sub account: equalization reserve)

Cr 352 – Provisions for payables (sub account: equalization reserve)

When setting aside an additional equalization reserve at the end of a following accounting period in accordance with applicable financial regulations, such additional amount of equalization reserve set aside shall be recorded to:

Dr 624 – Direct costs of insurance business and others (sub account: equalization reserve)

Cr 352 – Provisions for payables (sub account: equalization reserve)

When using the equalization reserve in accordance with applicable financial regulations, amounts used shall be recorded to:

Dr 352 – Provision for payables

Cr accounts related.

- Contributions to the Fund for protection of the insured:

Periodical contributions to be paid to the Fund for protection of the insured shall be recorded to:

Dr 624 – Direct costs of insurance business and others (sub account 62415)

Cr 335 – Accrued expenses.

When making contributions to the Fund for protection of the insured, amounts actually paid shall be recorded to:

Dr 335 – Accrued expenses

Cr 111, 112.

- Other direct insurance costs:

Other costs that arise in course of direct insurance business shall be recorded to:

Dr 624 – Direct costs of insurance business and others (sub account 62418)

Cr 111, 112.

- At the end of the accounting period, direct insurance costs in the period shall be carriedforward and recorded to:

Dr 911 – Evaluation of business results

Cr 624 – Direct costs of insurance business and others (sub account 6241).

b) Direct costs of reinsurance business:

- Payment of insurance payouts:

Based on the primary insurer’s notice of insurance benefits which must be paid by the reinsurer in proportion to the portion of risks it has taken on and relevant vouchers, accountant of the reinsurer shall record amounts of insurance benefits payable to the primary insurer to:

Dr 624 – Direct costs of insurance business and others (sub account 62421)

Cr 331 – Trade payables (sub account 3312).

When making payment of insurance benefits to the primary insurer in proportion to liabilities incurred by the reinsurer, amounts paid shall be recorded to:

Dr 331 – Trade payables (sub account 3312)

Cr 111, 112.

- Payment of commissions:

When the reinsurer determines the commission amounts payable to the primary insurer (which shall be deducted from the reinsurance premium receivable under terms of the concluded insurance policy), such commission amounts payable shall be recorded to:

Dr 624 – Direct costs of insurance business and others (sub account 62422)

Cr 131 – Trade receivables (account 1312).

- Technical reserves:

+ At the end of the accounting period when technical reserves (including mathematical reserve, unearned premium reserve, claims reserve, profit sharing reserve, resilience reserve (if any), interest rate commitment reserve (if any) and other reserves) are set aside for the first time, amounts set aside as technical reserves shall be recorded to:

Dr 624 – Direct costs of insurance business and others (sub account 62423) (specifically recorded according to each type of technical reserves).

Cr 352 – Provisions for payables (specifically recorded according to each type of technical reserves).

At the end of the following accounting period, if total amount of technical reserves which must be set aside in this period is greater than the unused amount of technical reserves set aside in the previous period, the positive difference shall be recorded to:

Dr 624 – Direct costs of insurance business and others (sub account 62423) (specifically recorded according to each type of technical reserves).

Cr 352 – Provisions for payables (specifically recorded according to each type of technical reserves).

At the end of the following accounting period, if total amount of technical reserves which must be set aside in this period is lower than the unused amount of technical reserves set aside in the previous period, the negative difference must be reserved and recorded to:

Dr 352 – Provisions for payables (specifically recorded according to each type of technical reserves).

Cr 624 – Direct costs of insurance business and others (sub account 62423) (specifically recorded according to each type of technical reserves)

+ At the end of the accounting period when the technical reserve (equalization reserve) must be set aside for the first time, technical reserve set aside shall be recorded to:

Dr 624 – Direct costs of insurance business and others (sub account: equalization reserve)

Cr 352 – Provisions for payables (sub account: equalization reserve)

When setting aside an additional equalization reserve at the end of a following accounting period in accordance with applicable financial regulations, such additional amount of equalization reserve set aside shall be recorded to:

Dr 624 – Direct costs of insurance business and others (sub account: equalization reserve)

Cr 352 – Provisions for payables (sub account: equalization reserve)

When using the equalization reserve in accordance with applicable financial regulations, amounts used shall be recorded to:

Dr 352 – Provision for payables

Cr accounts related.

c) Direct costs of reinsurance ceded:

The life insurer shall base on relevant vouchers to record costs that arise in course of reinsurance ceded to:

Dr 624 – Direct costs of insurance business and others (sub account 6243)

Cr 111, 112, 331

At the end of the accounting period, direct costs of reinsurance ceded in the period shall be carriedforward and recorded to:

Dr 911 – Evaluation of business results

Cr 624 – Direct costs of insurance business and others (sub account 6243).

d) Other operating costs:

Other insurance business costs such as costs of damage assessment and claim review services, etc. and other operating costs that arise in the period shall be recorded to:

Dr 624 – Direct costs of insurance business and others (sub account 6248)

Cr 111, 112, 331

At the end of the accounting period, other operating costs in the period shall be carriedforward and recorded to:

Dr 911 – Evaluation of business results

Cr 624 – Direct costs of insurance business and others (sub account 6248).

Article 21. Account 641 – Selling expenses

1. Account 641 – “Selling expenses” reflects actual expenses incurred during the process of selling and providing life insurance services.

2. Supplementary rules for accounting of account 641:

a) Selling expenses include labour expenses, materials expenses, office supplies expenses; depreciation of fixed assets; expenses for management of insurance agents (including expenses for initial training and certification exams, advanced training, recruitment, incentives and aids for agents), costs of external services and other expenses.

b) This account is only kept recorded of selling expenses actually incurred (regardless of payment made or not) in association with the life insurer’s selling activities in the period in accordance with applicable regulations on business operations of the life insurer.

c) Every specific selling expense of the life insurer shall be recorded to account 641 in accordance with regulations. In addition to sub accounts of this account prescribed herein, the life insurer may open more sub accounts to specify details of selling expenses according to its management requirements.

d) At the end of the accounting period, selling expenses shall be transferred to debit side of account 911 - "Evaluation of business results" so as to determine business results of the life insurer.

3. Structure and contents of account 641 – “Selling expenses”

a) Debit:

Expenses incurred during the process of selling/ providing life insurance services.

b) Credit:

Carriedforward sum of selling expenses to account 911 – “Evaluation of business results” so as to determine business results of the life insurer in the period.

c) Account 641 does not have a closing balance.

d) Account 641 – “Selling expenses” comprises the following sub accounts:

- Account 6411 – “Labour expenses” reflects payments to sales persons, including salaries, allowances for meals, wages, contributions to social insurance and health insurance, and trade union fees.

- Account 6412 – “Materials expenses” reflects costs of office materials of sales departments of a life insurer.

- Account 6413 – “Office supplies expenses” reflects costs of office supplies and tools of sales departments of a life insurer.

- Account 6414 – “Depreciation of fixed assets” reflects depreciation of fixed assets of departments in charge of selling life insurance products such as warehouses, outlets, material handling equipment, etc.

- Account 6416 – “Expenses for management of insurance agents” reflects amounts payable such as expenses for initial training and certification exams, advanced training, recruitment, incentives and aids for agents of the life insurer.

- Account 6417 – “Costs of external services” reflects payments for using any external services during the process of selling/providing life insurance services such as lease of fixed assets serving the sales process, and warehouse rents.

- Account 6418 – “Other expenses” reflects other expenses incurred during the process of selling/providing life insurance services other than the expenses reflected in sub accounts 6411 – 6417 such as customer care expenses, advertising expenses and customer convention expenses.

4. Accounting methods for certain business transactions:

a) Determined salaries, allowances, allowances for meals, contributions to social insurance and health insurance, and trade union fees of employees in charge of selling life insurance products shall be recorded to:

Dr 641 – Selling expenses (sub account 6411)

Cr 334 – Payables to employees.

b) Costs of materials, office supplies and tools serving the sales process shall be recorded to:

Dr 641 – Selling expenses (sub accounts 6412, 6413)

Cr 152, 153, 242.

c) Depreciation of fixed assets of sales department shall be recorded to:

Dr 641 – Selling expenses (sub account 6414)

Cr 214 – Depreciation of fixed assets.

d) Expenses for management of insurance agents, including expenses for initial training and certification exams, advanced training, recruitment, incentives and aids for agents of the life insurer, shall be recorded to:

Dr 641 – Selling expenses (sub account 6416)

Dr 133 – Deductible VAT (if any)

Cr 331 – Trade payables.

dd) When making payments of expenses for management of insurance agents, amounts paid shall be recorded to:

Dr 331 – Trade payables

Cr 111, 112.

e) Expenses of external electricity and water services, communications expenses (telephone and fax use, etc.), and expenses of lease of fixed assets with low value shall be recorded as selling expenses and recorded to:

Dr 641 – Selling expenses (sub account 6417)

Dr 133 – Deductible VAT (if any)

Cr 111, 112, 141, 331.

g) At the end of the accounting period, selling expenses incurred in the period shall be transferred to account 911 – “Evaluation of business results” and recorded to:

Dr 911 – Evaluation of business results

Cr 641 – Selling expenses.

Article 22. Accounting books and accounting documents maintained by life insurers

A life insurer is required to maintain compulsory accounting books and accounting documents as specified by applicable corporate accounting regulations and the following documents:  

1. Supplementary list and templates of specific accounting documents used by a life insurer (Templates of specific accounting documents used by a life insurer are stated in the Appendix No. 03 enclosed herewith) consist of:

- Premium receipt – Form No. 01b-TT;

- Provisional premium receipt issued by the agent or collector when receiving first premium payment – Form No. 01c-TT;

- Premium receipt issued by agent or collector upon premium payments after the policy issuance – Form No. 01d-TT;

- Payment slip (issued to the policyholder) – Form No. 02b-TT;

- Application form for advance of accumulated dividends/ advance of surrender value, maintenance of an insurance policy with a decrease in the sums assured or termination of an insurance policy – Form No. 06a-TT;

- Application form for investment-linked insurance policy – Form No. 06b-TT.

2. Life insurers must adopt control procedures to manage their agents that use specific documents about premium payments such as Form No. 01b -TT, Form No. 01c - TT, and Form No. 01d –TT; life insurers shall assume primary responsibility for premium amounts paid by policyholders.

Article 23. Annual financial statement and interim financial statement system

1. Annual financial statements:

The annual financial statement system applied to life insurers includes the following statements:

- Balance sheet                                                              Form B01 - DNNT

- Income statement                                                        Form B02 - DNNT

- Cash flow statement                                                    Form B03 - DNNT

- Notes to financial statement                                         Form B09 - DNNT

2. Interim financial statements:

A life insurer is required to prepare the following interim financial statements:

Article 24. Forms of financial statements applied to life insurers

1. Forms of annual financial statements (stated in the Appendix No. 02 enclosed herewith).

2. Forms of interim financial statements (stated in the Appendix No. 02 enclosed herewith).

Forms of interim financial statements (complete statements) applied to life insurers are the same as those specified in applicable corporate accounting regulations. An interim financial statement (complete statement) shall include all items as those of an annual financial statement of same kind as mentioned herein.

Article 25. Contents and preparation of financial statements

1. Contents and methods of preparing Balance sheet (Form B01 stated in the Appendix No. 02).

Only specific items associated with operations of life insurers are instructed in this Article. Life insurers shall specify other items (entries) in financial statements in accordance with applicable corporate accounting regulations.

a) Trade receivables (Entry 131)

This entry reflects receivables related to direct insurance business, reinsurance business and reinsurance ceded and other receivables due within one year at the reporting time. This entry shall reflect total debit balance of sub accounts of account 131 “Trade receivables”.

Entry 131 = Entry 131.1 + Entry 131.2

b) Receivables related to insurance policies (Entry 131.1)

This entry reflects receivables related to direct insurance business, reinsurance business and reinsurance ceded that are due within one year at the reporting time. Total debit balance of sub accounts 1311, 1312, and 1313 of account 131 “Trade receivables” shall be recorded to this entry (Receivables related to insurance policies).

c) Other trade receivables (Entry 131.2)

This entry reflects receivables from other debtors at the reporting time. This entry shall reflect debit balance of sub account 1318 “Other trade receivables.

d) Other long-term receivables (Entry 218)

This entry reflects compulsory insurance deposits of the life insurer and other long-term receivables from relevant debtors at the reporting time. This entry shall reflect total debit balance of account 138 “Other receivables”, account 244 “Long-term deposits” and account 338 “Other payables” and its sub accounts.

Entry 218 = Entry 218.1 + Entry 218.2

dd) Insurance deposits (Entry 218.1)

This entry reflects long-term insurance deposits of the life insurer at the reporting time. Debit balance of account 2441 - “Insurance deposits” shall be recorded to this entry.

e) Other long-term receivables (Entry 218.2)

This entry reflects receivables from other debtors classified as long-term assets and long-term advance payments to sellers (if any). This entry equals (=) the total debit balance of account 138 “Other receivables”, account 338 “Other payables” and account 244 “Long-term deposits” minus (-) sum of insurance deposits reflected in the entry 218.1.

g) Trade payables (Entry 312)

This entry reflects amounts payable to creditors related to direct insurance business, reinsurance business and reinsurance ceded and other payables that are due within one year or within a course of business at the reporting time. This entry shall reflect total credit balance of sub accounts of account 331 “Trade payables”.

Entry 312 = Entry 312.1 + Entry 312.2

h) Payables related to insurance policies (Entry 312.1)

This entry reflects amounts payable related to direct insurance business, reinsurance business and reinsurance ceded that are due within one year or within a course of business at the reporting time. This entry shall reflect total credit balance of sub accounts 3311, 3312 and 3313.

i) Other trade payables (Entry 312.2)

This entry reflects other amounts payable to sellers at the reporting time. This entry shall reflect the credit balance of sub account 3318.

k) Short-term provisional premium, unearned revenue (Entry 319.1)

This entry reflects total amount of provisional premiums of the life insurer, premiums collected in advance for multiple periods and other unearned revenues (one year or less) which have not yet been  recorded as revenues in the period at the reporting time. This entry shall reflect the credit balance of account 3387 “Provisional premium, unearned revenue” which is total credit balance of sub account 33871 (entire credit balance) and sub accounts  33872 and TK 33878 (only short-term revenues (one year or less)).

l) Provision for short-term payables (Entry 320)

This entry reflects provision for short-term payables at the reporting time. This entry shall reflect the credit balance of account 3529 “Provision for payables” (sub accounts: provisions for short-term payables).

m) Provision for long-term payables (Entry 337)

This entry reflects provision for long-term payables at the reporting time. This entry shall reflect the credit balance of account 3529 “Provision for payables” (sub accounts: provisions for long-term payables).

n) Long-term unearned revenues (entry 338)

This entry reflects premiums collected in advance for multiple periods and other unearned revenues (exceeding one year) which have not yet been recorded as revenues in the period at the reporting time. This entry shall reflect the credit balance of account 3387 “Provisional premium, unearned revenue” which is total credit balance of sub accounts  33872 and TK 33878 (only long-term revenues (exceeding one year)).

o) Insurance technical reserves (Entry 344)

This entry reflects unused technical reserves at the reporting time.

Entry 344 = Entry 344.1 + Entry 344.2 + Entry 344.3 + Entry 344.4 + Entry 344.5 + Entry 344.6 + Entry 344.7 + Entry 344.8

+ Mathematical reserve (Entry 344.1)

This entry reflects the current amount of mathematical reserve of the life insurer at the reporting time.

This entry shall reflect total credit balance of account 3521 “Mathematical reserve” at the reporting time.

+ Unearned premium reserve (Entry 344.2)

This entry reflects the current amount of unearned premium reserve of the life insurer at the reporting time.

This entry shall reflect total credit balance of account 3522 “Unearned premium reserve” at the reporting time.

+ Claims reserve (Entry 344.3)

This entry reflects the current amount of claims reserve of the life insurer at the reporting time.

This entry shall reflect total credit balance of account 3523 “Claims reserve” at the reporting time.

+ Profit sharing reserve (Entry 344.4)

This entry reflects the current amount of profit sharing reserve of the life insurer at the reporting time.

This entry shall reflect total credit balance of account 3524 “Profit sharing reserve” at the reporting time.

+ Equalization reserve (Entry 344.5)

This entry reflects the current amount of equalization reserve of the life insurer at the reporting time.

This entry shall reflect total credit balance of account 3525 “Equalization reserve” at the reporting time.

+ Resilience reserve (Entry 344.6)

This entry reflects the current amount of resilience reserve of the life insurer at the reporting time.

This entry shall reflect total credit balance of account 3526 “Resilience reserve” at the reporting time.

+ Interest rate commitment reserve (Entry 344.7)

This entry reflects the current amount of interest rate commitment reserve of the life insurer at the reporting time.

This entry shall reflect total credit balance of account 3527 “Interest rate commitment reserve” at the reporting time.

+ Other reserves (Entry 344.8)

This entry reflects the current amount of other reserves of the life insurer at the reporting time.

This entry shall reflect total credit balance of account 3528 “Other reserves” at the reporting time.

p) Statutory reserve (Entry 419)

This entry reflects the unused amount of the statutory reserve of the life insurer at the reporting time. This entry shall reflect the credit balance of account 416 “Statutory reserve”.

2. Contents and methods of preparing Income statement (Form B02 stated in the Appendix No. 02)

Only items (entries) which are amended or supplemented shall be instructed herein so as to record balances in Column 4 “Current year” of the Income statement prepared for the current year. Other items (entries) shall be recorded in accordance with applicable corporate accounting regulations.

- Figures recorded in Column 5 “Previous year” of Part I and Part II of the Income statement of current year shall be those of respective items specified in Column 4 “Current year” of Part I and Part II of the Income statement of the previous year.

- Items in Column 4 "Current year" shall be recorded as follows:

Part I – General income statement: Items in this part shall reflect figures in respective items in Part II – Operation-based income statement herein.

Part II – Operation-based income statement:

a) Insurance premium revenue (Entry 01)

This entry reflects total revenue from direct insurance business and reinsurance business after deduction of the following amounts:  reductions in and/or refunds of direct premiums, reductions in and/or refunds of reinsurance premiums and decreases or increases in unearned premium reserves related to direct insurance business and reinsurance business in the reporting period of the life insurer.

Entry 01 = Entry 01.1 + Entry 01.2 - Entry 01.3

+ Direct premiums (Entry 01.1)

This entry reflects total revenue from direct insurance business minus (-) reductions in and/or refunds of direct premiums made in the reporting period of the life insurer.

This entry equals the accumulated value on the credit side of account 5111 “Direct premium revenue” minus (-) the accumulated value on the credit side of account 5311 – “Refund of direct premiums”, account 3521 “Reduction in direct premiums” and accounts 111, 112, 131 (sub accounts: reduction in direct premiums) and the debit side of account 5111 in the reporting period.    

+ Reinsurance premiums (Entry 01.2)

This entry reflects total revenue from reinsurance business minus (-) reductions in and/or refunds of reinsurance premiums made in the reporting period of the life insurer.

This entry equals the accumulated value on the credit side of account 5112 “Direct premium revenue” minus (-) the accumulated value on the credit side of account 5312 – “Refund of reinsurance premiums”, account 3522 “Reduction in reinsurance premiums” and accounts 111, 112, 131 (sub accounts: reduction in reinsurance premiums) and the debit side of account 5112 in the reporting period.   

+ Increase (decrease) in unearned premium reserve of direct insurance and reinsurance (Entry 01.3)

This entry reflects an increase or a decrease in unearned premium reserve of direct insurance and reinsurance which is the difference between amounts of unearned premium reserve of direct insurance and reinsurance to be set aside in the fiscal year and unused amounts of unearned premium reserve of direct insurance and reinsurance carriedforward from previous year.

In case of increase, this entry shall reflect the credit balance of account 3522 “Unearned premium reserve” and debit balance of account 624 “Direct costs of insurance business and others” (sub accounts 624142 and 62423) in the reporting period.

In case of decrease, this entry shall reflect the debit balance of account 3522 “Unearned premium reserve” and credit balance of account 624 “Direct costs of insurance business and others” (sub accounts 624142 and 62423) in the reporting period. This entry shall be recorded in round brackets (negative numbers).

b) Premiums for reinsurance ceded (Entry 02)

This entry reflects total premium for reinsurance ceded which must be paid to the reinsurer in the period.

This entry shall reflect the accumulated value on the credit side of account 533 “Premiums for reinsurance ceded” and debit balance of account 511 - “Revenue from good sales and service provision” (sub accounts: 5111 and 5112) in the reporting period.

c) Net premium revenue (Entry 03)

This entry reflects total revenue from insurance business minus (-) reductions in and/or refunds of insurance premiums, premiums for reinsurance ceded and increases or decreases in unearned premium reserve of direct insurance and reinsurance of the life insurer in the reporting period.

Entry 03 = Entry 01 - Entry 02

d) Ceding commission and revenue from other business operations (Entry 04)

This entry reflects ceding commission revenue and revenue from business operations other than insurance business earned in the reporting period.

Entry 04 = Entry 04.1 + Entry 04.2

+ Ceding commission (Entry 04.1)

This entry reflects total ceding commission revenue minus (-) refunds of and/or reductions in ceding commissions made in the reporting period.

This entry shall reflect the accumulated value on the debit side of account 51131 “Ceding commission” and credit balance of account 911 - “Evaluation of business results” in the reporting period.

+ Revenue from other business operations (Entry 04.2)

This entry reflects revenue from business operations other than direct insurance, reinsurance business and reinsurance ceded such as revenue earned from provision of damage assessment and claim review handling services, and other earnings in the period.

This entry shall reflect the accumulated value on the debit side of account 5118 -”Revenue from other business operations” and credit balance of account 911 - “Evaluation of business results” in the reporting period.

dd) Net revenue from insurance business (Entry 10)

This entry reflects total amount of insurance premium revenues, ceding commissions and other earnings from insurance business minus (-) reductions in insurance premiums and/or ceding commissions, refunds of insurance premiums and/or ceding commissions, premiums for reinsurance ceded and increases or decreases in unearned premium reserve of direct insurance and reinsurance of the life insurer in the reporting period.

Entry 10 = Entry 03 + Entry 04.

e) Payment of indemnities and insurance payouts (Entry 11)

This entry reflects total amount of indemnities and insurance payouts paid by the life insurer in the reporting period.

This entry shall reflect the debit balance of account 624 “Direct costs of insurance business and others” (sub accounts 62411 and 62421) and credit balance of accounts 111, 112, 331 in the reporting period.

g) Claim payments by reinsurers (Entry 12)

This entry reflects the amount of indemnities and insurance payouts receivable from reinsurers so as to record as decreases in indemnities and insurance payouts paid by the life insurer in the reporting period.

This entry shall reflect the debit balance of account 131 “Trade receivables” (sub account: 1313) and credit balance of account 624 “Direct costs of insurance business and others” in the reporting period.

h) Increase (decrease) in technical reserves of direct insurance (Entry 13)

This entry reflects an increase or decrease in technical reserves of direct insurance, which is the difference between total amount of technical reserves of direct insurance to be set aside in the fiscal year and the unused amount of technical reserves of direct insurance carriedforward from the previous year.

In case of increase, this entry shall reflect the credit balance of account 352 “Provision for payables” (sub accounts: technical reserves) and debit balance of account 624 “Direct costs of insurance business and others” (sub account 62414) in the reporting period.

In case of decrease, this entry shall reflect the debit balance of account 352 “Provision for payables” (sub accounts: technical reserves) and credit balance of account 624 “Direct costs of insurance business and others” (sub account 62414) in the reporting period. This entry shall be recorded in round brackets (negative numbers).

i) Increase (decrease) in technical reserves of reinsurance (Entry 14)

This entry reflects an increase or decrease in technical reserves of reinsurance, which is the difference between total amount of technical reserves of reinsurance to be set aside in the fiscal year and the unused amount of technical reserves of reinsurance carriedforward from the previous year.

In case of increase, this entry shall reflect the credit balance of account 352 “Provision for payables” (sub accounts: technical reserves) and debit balance of account 624 “Direct costs of insurance business and others” (sub account 62423).

In case of decrease, this entry shall reflect the debit balance of account 352 “Provision for payables” (sub accounts: technical reserves) and credit balance of account 624 “Direct costs of insurance business and others” (sub account 62423). This entry shall be recorded in round brackets (negative numbers).

k) Total indemnity and payout payment (Entry 15)

This entry reflects the sum of indemnities and payouts paid by the life insurer minus (-) amounts receivable to reduce indemnity and payout costs (such as claim payments made by reinsurers) after adjusting increase or decrease in technical reserves of direct insurance and reinsurance in the reporting period.

Entry 15 = Entry 11 - Entry 12 + Entry 13 + Entry 14

l) Other costs of insurance business (Entry 16)

This entry reflects payments of insurance commissions and other expenses incurred in the process of providing insurance services in the reporting period.

Entry 16 = Entry 16.1 + Entry 16.2

+ Payment of insurance commissions (Entry 16.1)

This entry reflects total commission paid by the life insurer in the reporting period.

This entry shall reflect the accumulated value on the credit side of account 624 “Direct costs of insurance business and others” (sub accounts 62412 and 62422) and debit side of account 911 “Evaluation of business results” in the reporting period.

+ Other costs of insurance business (Entry 16.2)

This entry reflects other costs related to insurance business, including: costs of damage assessment and claim review services, statutory reserves (such as contributions to the Fund for protection of the insured) and other expenses incurred in the course of insurance business in conformity with applicable financial regulations.

This entry shall reflect the accumulated value on the credit side of account 624 “Direct costs of insurance business and others” (sub accounts 62411, 62412, 62414, 62421, 62422 and 62423) and debit side of account 911 “Evaluation of business results” in the reporting period.

m) Total cost of insurance business (Entry 17)

This entry reflects total cost of insurance business, including payment of indemnities and insurance payouts, increases or decreases in technical reserves of direct insurance and reinsurance and other costs of insurance business.

Entry 17 = Entry 15 + Entry 16

n) Gross profit on insurance business (Entry 18)

This entry reflects the difference between the net revenue from insurance business and total cost of insurance business incurred in the reporting period by the life insurer.

Entry 18 = Entry 10 - Entry 17

o) Revenue from investment properties (Entry 19)

This entry reflects the revenue earned from trading in investment properties in the reporting period.

This entry shall reflect the accumulated value on the debit side of account 5117 -”Revenue from investment properties” and credit balance of account 911 - “Evaluation of business results” in the reporting period.

p) Costs of investment properties (Entry 20)

This entry reflects the costs of investment properties and other expenses directly related to trading in investment properties in the reporting period.

Figures of this entry shall be obtained from records of account 632 “Costs of goods sold” (Sub account: costs of investment properties).

q) Profit on investment properties (Entry 21)

This entry reflects the difference between the revenue from investment properties and the costs of investment properties arising in investment properties in the reporting period.

Entry 21 = Entry 19 - Entry 20

r) Financial income (Entry 22)

This entry reflects the net income from financial activities in the reporting period.

This entry shall reflect the accumulated value on the debit side of account 515 - ”Financial income” and credit balance of account 911 - “Evaluation of business results” in the reporting period.

s) Financial expense (Entry 23)

This entry reflects all expenses related to financial activities incurred by the life insurer in the reporting period.

This entry shall reflect the accumulated value on the credit side of account 635 - ”Financial expense” and debit balance of account 911 - “Evaluation of business results” in the reporting period.

t) Gross profit on financial activities (Entry 24)

This entry reflects the difference between the net financial income and the financial expense incurred in the reporting period.

Entry 24 = Entry 22 - Entry 23

u) Selling expense (Entry 25)

This entry reflects all expenses related to the process of selling or providing insurance products and services of the life insurer, including: labour expenses, materials expenses, office supplies expenses, depreciation of fixed assets, expenses for management of insurance agents, costs of external services and other expenses incurred in the reporting period.

This entry shall reflect the total credit balance account 641 - ”Selling expense” and debit balance of account 911 - “Evaluation of business results” in the reporting period.

v) Administration expense (Entry 26)

This entry reflects total administration expense, including:  labour expenses, materials expenses, office supplies expenses, depreciation of fixed assets, taxes and fees, provisions, costs of external services and other cash expenses incurred in the reporting period.

This entry shall reflect the accumulated value on the credit side of account 642 - ”Administration expense” and debit balance of account 911 - “Evaluation of business results” in the reporting period.

x) Net profit on business operation (Entry 30)

This entry reflects the insurer’s business performance in the reporting period. This entry equals (=) the gross profit on insurance business plus (+) the profit on investment properties plus (+) the gross profit on financial activities minus (-) selling expense and administration expense incurred in the reporting period.

Entry 30 = Entry 18 + Entry 21 + Entry 24 - Entry 25 - Entry 26.

3. Contents and methods of preparing Notes to financial statement (Form B09 stated in the Appendix 02)

The life insurer shall base on the following guidance on some contents supplemented to the Notes to financial statement (Form B09 - DNNT) to prepare its own one. Other items (entries) which are not mentioned herein shall be prepared in accordance with applicable corporate accounting regulations.

Section IV – Accounting policies applied:

- At Point 11 - Rules and methods for recording revenues: notes of direct insurance premiums, reinsurance premiums, ceding commissions, revenues from other business operations and revenue deductions shall be supplemented.

- Name of Point 12 shall be changed into "Rules and methods for recording costs and expenses” with additional notes of payments of indemnities and insurance payouts, payments of insurance commissions, expenses for management of insurance agents and decreases in costs of direct insurance and reinsurance business (such as claim payments made by reinsurers) (if any).

- Point 16 – Rules and methods for recording technical reserves shall be supplemented to this Section. In this point, notes of mathematical reserve, unearned premium reserve, claims reserve, profit sharing reserve, equalization reserve, resilience reserve, interest rate commitment reserve and other reserves (if any) shall be supplemented.

Section V – The information about certain items of the Balance sheet is supplemented as follows:

- At Point 07 – Other long-term receivables, item of insurance deposits is supplemented.

- At Point 18 – Other short-term payables, item of short-term provisional premium, unearned revenue is supplemented.

- Point 25.1 – Receivables related to insurance policies is supplemented so as to make notes about receivables related to insurance business.

- Point 25.2 – Payables related to insurance policies is supplemented so as to make notes about payables related to insurance business.

- Point 25.3 – Technical reserves is supplemented with addition of notes of mathematical reserve, unearned premium reserve, claims reserve, profit sharing reserve, equalization reserve, resilience reserve, interest rate commitment reserve and other reserves (if any).

Section VI – Additional information about items of the Income statement is amended, supplemented as follows:

- Point 26.1 – Insurance premium revenue is supplemented with the addition of notes of direct premiums and deductions thereof (reductions and refunds of direct premiums), reinsurance premiums and deductions thereof (reductions and refunds of reinsurance premiums), increases (decreases) in unearned premium reserves of direct insurance and reinsurance.

- Point 26.2 – Premiums for reinsurance ceded is supplemented with the addition of notes of total premium for reinsurance ceded.

- Point 27.1 – Ceding commissions is supplemented with the addition of notes of ceding commissions and deductions thereof (Refunds and reductions in ceding commissions).

- Point 27.2 – Revenue from other business operation is supplemented with the addition of notes of payments of agent services (such as damage assessment and claim review services) and other earnings from insurance business.

- Point 28.1 – Total indemnity and payout payment is supplemented with the addition of notes of payment of indemnities and insurance payouts, claim payments made by reinsurers (if any), increases (decreases) in technical reserves of direct insurance and reinsurance.

- Point 28.2 – Other costs of insurance business is supplemented so as to make notes of commission payments and other costs of insurance business such as costs of damage assessment and claim review services, statutory reserves (such as contributions to the Fund for protection of the insured) and other expenses incurred in course of providing insurance services.

- Point 28.3 – Selling expense is supplemented with notes of expenses for management of insurance agents such as expenses for initial training and certification exams, advanced training, recruitment, incentives and aids for agents.

- Point 33.1 – Administration expense is supplemented with detailed notes of labour expenses, materials expenses, office supplies expenses, depreciation of fixed assets, taxes and fees, provisions, costs of external services and other cash expenses.

Section VIII – Other information is supplemented and amended as follows:

- Point 1 is supplemented with notes of insurance risks and risk management policies applied to life insurer, policies applied to the life insurer to reduce risks from insurance policies, analysis on insurance risk concentration, notes of claims and payouts payment so as to compare the actual payment of indemnities and payouts with estimated amounts.

Contents and methods of preparing certain items amended, supplemented in notes to financial statement:

Receivables related to insurance policies (Point 25.1)

This entry reflects amounts receivable related to insurance business, including:  direct premiums receivable (receivables from policyholders, receivables from agents, reinsurance premiums receivable, and claim payments made by reinsurers in the reporting period of the life insurer).

This entry shall reflect debit balance of account 131 “Trade receivables” (sub accounts: direct premiums receivable, reinsurance premiums receivable and claim payments by reinsurers) at the reporting period.

Payables related to insurance policies (Point 25.2)

This entry reflects amounts payable related to insurance business, including:  payables of premiums for reinsurance ceded, indemnities and insurance payouts, insurance commissions, and other payables by the life insurer in the reporting period.

This entry shall reflect credit balance of account 331 “Trade payables” (sub accounts: payables of premiums for reinsurance ceded, indemnities and insurance payouts, insurance commissions, and other payables) at the reporting period.

Technical reserves (Point 25.3)

This entry reflects technical reserves of the life insurer, including mathematical reserve, unearned premium reserve, claims reserve, profit sharing reserve, equalization reserve, resilience reserve, interest rate commitment reserve and other reserves (if any) at the reporting time.

Life insurers must set aside technical reserves in accordance with applicable financial regulations so as to use as the basis for preparing notes of such technical reserves.

4. Contents and methods for preparing cash flow statement and those for preparing interim financial statements shall comply with applicable corporate accounting regulations.

Article 26. Entry into force and implementation

1. This Circular shall come into force as of January 01, 2016.

Regulations on accounting of life insurers in the Decision No. 1296/TC/QD/CDKT dated December 31, 1996 of Minister of Finance and the Decision No. 150/2001/QD-BTC dated December 31, 2001 on amendments to regulations on accounting of life insurers in the Decision No. 1296/TC/QD/CDKT dated December 31, 1996 of Minister of Finance shall be null and void as from January 01, 2016.

2. Director of the Department of Accounting & Auditing Regulations, Director of Insurance Supervisory Authority, Directors of life insurance companies, Directors of reinsurance companies and heads of relevant units shall implement this Circular.

3. Difficulties that arise during the implementation of this Circular should be reported to the Ministry of Finance for consideration./.