UNIT - III

ACCOUNTS OF INSURANCE COMPANIES

Introduction

The business of Insurance in India is governed by TheInsurance Act, 1938 along with the regulations framed by InsuranceRegulations and Development Authorities Act, 1999 (IRDA)Insurance is an agreement or contract of indemnity betweeninsurer and insured. Insurer is one party agrees to provideprotection against loss or damage in the form of promise to pay forsuch loss to other party known as insured in consideration for afixed sum of money known as premium.

The terms and conditions of such insurance contract in thewritten is called Insurance Policy.

Insurance are of the types I) Life InsuranceII) General Insurancea) Fire insuranceb) Marine insurancec) Miscellaneous insurance

In case of Life Insurance, the insurer guarantees to pay a certain sum of money to the assured on completing a stipulated period or in the event of the death to his legal representative. It covers risks and gives protection for the investment.

Section 2(II) of the Insurance Act, 1938 has defined Life

Insurance Business as the business of effecting. Contracts of insurance upon human life, including any contract whereby the payment of money is assured on death or the happening of any contingency dependent on human life, and any contract which is subject to payment of premiums for a term dependent on human life and shall be deemed to include

a) The granting of disability and double or triple indemnity accident benefits, if so provided in the contract of insurance; b) The granting of annuities upon human life; and

c) The granting of superannuation allowances and annuities payable out of any fund applicable solely to the relief and maintenance of person engaged or who have been engaged in any particular profession, trade or employment or of the dependents of such persons.

FROM A-RA

Revenue Account for the year ended 31st March, 20

scheCurrentPrevious

ParticularsduleYearYear

(RS000)(Rs000)

Premiums earned net

(a) Premium1

(b) Re-insurance ceded

(c) Re-insurance accepted

Income from investments

(a) Interest,Dividendsand

Rent Gross

(b) Profit on sale / redemption

of Investments

(c) (Loss on sale / redemption

of Investments)

(d) Transfer/ Gainon

revaluation /change in fair

value*

Other Income (to be specified)

Total (A)

Commission2

Operating Expenses related to3

Insurance Business

Provision for doubtful debts

Bad debts written off

Provision for tax

Provision (other than taxation)

(a) For diminution in the value of investment (Net) (b) Other (to be specified)

Total (B)

Benefits Paid (Net)4

Interim Bonuses Paid

Change in valuation of liability in respect of life policies(a) Gross**

(b) Amount ceded in Reinsurance

(c) Amount accepted in Reinsurance

Total (c)

Surplus / (Deficit( (D) = (A) - (B) - (C)

Appropriations

Transferto Shareholders

Accounts

Transfer to other Reserves (to be specified)

Balancebeing Funds for

Future appropriations

Total (D)

FROM A-PL

Profit and Loss Account for the year ended 31st March, 20.

ScheCurrentPrevious

ParticularsduleYearYear

(RS000)(Rs000)

Amounts transferred from /to

the Policyholders Account

(Technical account)

Income from investments

(a)Interest,dividendsAnd

Rent Gross

(b) Profit on sale /redemption

of Investments

(c)(Loss on sale/ redemption

on Investments)

Other income (to be specified)

Total (A)

Expenses otherthanThose

directly related to the insurece

business

Bal debts written off

Provisions(otherThan

taxation)

(a)For diminution in the value

of investments (Net)

(b) ProvisionsforDoubtful

debts

(c)Others (to be specified)

Total (B)

Profit / (Loss) before tax

Provision for Taxation

Profit / (Loss) after tax

Appropriations

(a) Balanceat theBeginning

of the year

(b)InterimdividendsPaid

during the year

(c)Proposed final dividend

(d)Dividend distribution on tax

FORM A-BSBalance Sheet as at 31st March, 20

scheCurrentPrevious

ParticularsduleYearYear

(RS000)(Rs000)

SOURCES OF FUNDS

Shareholders Funds:

Share Capital5

Reserves and Surplus6

Credit / [Debit] Fair Value

Change Account

Sub total

Borrowings7

Policyholders Funds:

Credit/[Debit]FairValue

Change Account

Policy Liabilities

Insurance Reserves

Provision for Linked Liabilities

Sub Total

FundsForFuture

Appropriations

Total

APPLICATION OF FUNDS

Investments

Shareholders8

Policyholders8a

AssetsHeld toCoverLinked8b

Liabilities

Loans9

Fixed Assets10

Current Assets

Cash and Bank Balances11

Advances and other Assets12

Sub total

(A)

Current Liabilities13

Provisions14

Sub total

(B)

Net Current Assets (C) = (A)-

(B)

Miscellaneous Expenditure (to15

the extent not written off or

adjusted)

Debit balance in profit and loss

account(Shareholders

Account)

Total

CONTINGENT LIABILITIES

CurrentPrevious

ParticularsYearYear

(RS000)(Rs000)

1. Partly paid-up investments

2. Claims, other than against policies, not

acknowledge as debts by the company

3. Underwriting commitments outstanding (in

respect of shares and securities)

4. Guarantees given by or on behalf of the

company

5. Statutory demands/liabilities in dispute, not

provided for

6. Reinsurance obligations to the extent not

provided for in accounts

7. Others (to be specified)

Total

SCHEDULES FORMING PART OF FINANCIAL STATEMENTS

SCHEDULE 1

Premium

CurrentPrevious

ParticularsYearYear

(RS000)(Rs000)

1.First year premiums

2.Renewal premiums

3.Single premiums

Net Premium

Total Premiums

SCHEDULE 2

Commission Expenses

CurrentPrevious

ParticularsYearYear

(RS000)(Rs000)

Commission paid

Direct First year premiums

Renewal premiums

Single premiums

Add: Commission on Re-insurance Accepted

Less: Commission on Re-insurance Ceded

Net commission

SCHEDULE 3

Operating Expenses Related to Insurance Business

CurrentPrevious

ParticularsYearYear

(RS000)(Rs000)

1.Employees remuneration and welfare

Benefits

2.Travel, conveyance and vehicle running

Expenses

3.Training expenses

4. Rents, rates and taxes

5.Repairs

6.Printing and stationery

7.Communication expenses

8. legal and professional changes

9.Medical fees

10. Auditors fees, expenses etc.

(a) as auditor

(b) as adviser or in any other capacity, in

respect of

i. taxation matters

ii. insurance matters

iii. management services, and

(c) in any other capacity

11. Advertisement and publicity

12. Interest and Bank Changes

13. Others (to be specified)

14. Depreciation

Total

SCHEDULE 4

Benefits Paid (Net)

CurrentPreviousParticularsYearYear

(RS000)(Rs000)

1. Insurance Claims

(a) Claims by Death

(b) Claims by Maturity

(c) Annuities/ Pension Payments

(d) Other Benefits, specify

2. (Amounts ceded n reinsurance):

(a) Claims by Death

(b) Claims by Maturity

(c) Annuities / Pension Payments

(d) Other Benefits, specify

3. Amount accepted in reinsurance:

(a) Claims by Death

(b) Claims by Maturity

(c) Annuities / Pension Payments

(d) Other Benefits, specify

Total

.

172

SCHEDULE 5

Share Capital

CurrentPrevious

ParticularsYearYear

(RS000)(Rs000)

1.Authorized capital

Equity shares of Rs.. each

2.Issued capital

Equity shares of Rs..each

3.Subscribed capital

Equity shares of Rs..each

4. Called-up capital

Equity shares of Rs.. each

Less: Calls unpaid

Add: Shares forfeited (amount originally paid

up)

Less: Par value of Equity Shares bought back

Less: Preliminary Expenses

Expenses including commission or brokerage

on underwriting or subscription of shares

Total

SCHEDULE 6

Reserves and Surplus

CurrentPrevious

ParticularsYearYear

(RS000)(Rs000)

1.Capital Reserve

2.Capital Redemption Reserve

3.Share Premium

4. Revaluation Reserve

5. General Reserves

Less: Debit balance in profit and

loss account, if any

Less: Account utilized for buyback

6.Catastrophe Reserve

7.Other Reserve (to be specified)

8.Balance of profit in profit and loss

account

Total

SCHEDULE 7

Borrowings

CurrentPrevious

ParticularsYearYear

(RS000)(Rs000)

1.Debentures / Bonds

2.Banks

3.Financial Institutions

4. Others (to be specified)

Total

.

SCHEDULE 8

Investments Shareholders

CurrentPrevious

ParticularsYearYear

(RS000)(Rs000)

LONG TERM INVESTMENTS

1. Governmentsecuritiesand

Governmentguaranteedbonds

including Treasury Bills

2. Other Approved Securities

3. Other Investments

(a)Shares

(aa) Equity

(bb) Preference

(b)Mutual funds

(c)Derivative instruments

(d)Debentures/ Bonds

(e)Other securities (to be specified)

(f)Subsidiaries investment properties

Real Estate

4.Investmentsin infrastructureand

Social Sector

5. Other than approved investments

SHORT TERM INVESTMENT

1.Governmentsecuritiesand

Governmentguaranteedbonds

including Treasury Bills

2.Other approved securities

3.Other investments

a)Shares

(aa) Equity

(bb) Preference

b)Mutual funds

c)Derivative instruments

d)Debentures/ Bounds

e)Othersecurities(tobe

specified)

f)Subsidiaries

g) Investment properties Real

Estate

4.investmentsin infrastructureand

social sector

5. Other than approved investments

Total

SCHEDULE 8A

Investments Policyholders

CurrentPrevious

ParticularsYearYear

(RS000)(Rs000)

LONG TERM INVESTMENTS

1. Governmentsecuritiesand

Governmentguaranteedbonds

including Treasury Bills

2. Other Approved Securities

3. Other Investments

a)Shares

(aa) Equity

(bb) Preference

b)Mutual funds

c)Derivative instruments

d)Debentures/ bonds

e)Other securities (to be specified)

f)Subsidiaries

g)InvestmentpropertiesReal

Estate

4. Investments in infrastructure and

social sector

5. Other than approved investments

SHORT TERM INVESTMENT

1.Governmentsecuritiesand

Governmentguaranteedbonds

including Treasury Bills

2. Other approved securities

3. Other investments

a)Shares

(aa) Equity

(bb) Preference

b)Mutual funds

c)Derivative instruments

d)Debentures/ Bonds

e)Other Securities (to be specified)

f)Subsidiaries

g)InvestmentpropertiesReal

Estate

4. Investments in infrastructure and

social sector

2. Other than approved investments

Total

SCHEDULE 8B

Assets Held to Cover Linked Liabilities

CurrentPrevious

ParticularsYearYear

(RS000)(Rs000)

LONG TERM INVESTMENTS

1. Governmentsecuritiesand

Governmentguaranteedbonds

including Treasury Bills

2. Other Approved Securities

3. Other Investments

(a) Sharesaa) Equity bb)

Preference

(b)Mutual funds

(c)Derivative instruments

(d)Debentures/ bonds

(e)Othersecurities(to be

specified)

(f)Subsidiaries

(g)InvestmentpropertiesReal

Estate

4. Investments in infrastructure and

social sector

5. Other than approved investments

SHORT TERM INVESTMENT

1.Governmentsecuritiesand

Governmentguaranteedbonds

including Treasury Bills

2. Other approved securities

3. Other investments

a) Shares (aa) Equity

(bb) Preference

b) Mutual funds

c)Derivative instruments

d)Debentures/ Bounds

e) Other securities (to be specified)

f) Subsidiaries

g) InvestmentpropertiesReal

Estate

4. Investments in infrastructure and

social sector

5. Other than approved investments

Total

SCHEDULE 9

Loans

CurrentPrevious

ParticularsYearYear

(RS000)(Rs000)

1.SECURITY-WISE CLASSIFICATIONS

Secured

a)On mortgage property

(aa) in India

(bb) outside India

b)Shares, Bonds,Government

securities etc.

c)Loans against policies

d) Others (to be specified)

Unsecured

Total

2. BORROWER-WISE CLASSIFICATION

a) Central and state government

b) Banks and financial institutions

c)Subsidiaries

d)Companies

e)Loans against policies

f) Other (to be specified)

Total

3.PERFORMANCE-WISE

CLASSIFICATION

a) Loans classified as standard

(aa) in India

(bb) outside India

a)Non-standardloansless

provisions

(aa) in India

(bb) outside India

Total

4. MATURITY-WISE CLASSIFICATION

a) short-term

b) long-term

Total

SCHEDULE 11

Cash and Bank Balances

CurrentPrevious

ParticularsYearYear

(RS000)(Rs000)

1. Cash (including cheques, drafts and

stamps)

2. Bank Balance

a)Deposit accounts

(aa) Short term (due within 12

months of the date of balance

sheet)

(bb) Others

b)Current accounts

c) Others (to be specified)

3. Money at call and short notice

a)With banks

b)With other institutions

4. Others (to be specified)

Total

Balance with non-scheduled banks

included in 2 and 3 above

CASH AND BANK BALANCES

1.In India

2.Outside India

Total

181

SCHEDULE 12

Advances and Assets

CurrentPrevious

ParticularsYearYear

(RS000)(Rs000)

ADVANCES

1.Reservedeposits withceding

companies

2.Application money for investments

3. Prepayments

4. Advances to Directors / officers

5. Advance tax paid taxes deducted at

source (net provision for taxation)

6. Others (to be specified)

Total

(A)

OTHERS ASSETS

1.Income accrued on investments

2.Outstanding Premiums

3. Agents Balance

4.Foreign Agencies Balance

5. Due from other entities carrying on

insurancebusiness(including

reinsures)

6.Due from subsidiaries / holding

company

7.Deposit with Reserve Bank of India

(pursuant to Section 7 of Insurance

Act, 1938)

8.Others (to be specified)

Total

(B)

Total

(A+B)

SCHEDULE 13

Current Liabilities

CurrentPrevious

ParticularsYearYear

(RS000)(Rs000)

1.Agents Balance

2.Balance due to other insurance

companies

3.Deposits held on re-insurance ceded

4.Premium received in advance

5.Unallocated premium

6.Sundry creditors

7.Due to subsidiaries / holding

company

8.Claims outstanding

9.Annuities due

10.Due to officers / directors

11.Others (to b specified)

Total

SCHEDULE 14

Provisions

CurrentPrevious

ParticularsYearYear

(RS000)(Rs000)

1.For taxation (less payments and

taxes deducted at source)

2.For proposed dividends

3.For dividend distribution tax

4.Others (to be specified)

Total

SCHEDULE 15

Miscellaneous Expenditure (To the extent not written off a adjusted)

CurrentPrevious

ParticularsYearYear

(RS000)(Rs000)

1.Discount allowed in issue of shares /

debentures

2.Others (to be specified)

Total