The Appointed Actuary’s Role in Risk Management
Article 57
The Appointed Actuary shall:
1. Coordinate with the Company’s risk management officers on estimating the impact of material risks and identifying appropriate mitigation techniques for those risks and provide input into SAMA’s risk management requirements.
2. In respect of an Insurance Company, assess the appropriateness of Reinsurance arrangements and risk Retention levels for each line of business having regard to the Company’s risk appetite, making recommendations to Senior Management and the Board of Directors in a form and at dates as prescribed by SAMA.
3. In respect of a Reinsurance Company, assess the appropriateness of Retrocession arrangements and risk Retention levels for each line of business having regard to the Company’s risk appetite, making recommendations to Senior Management and the Board of Directors in a form and at dates as prescribed by SAMA.
4. Coordinate with the Investment Committee and investment manager to provide recommendations to the Company’s Senior Management and Board of Directors regarding the Company’s investment policy and asset liability management strategy, keeping in view the nature and timing of Insurance Contract Assets and Liabilities and the availability of appropriate assets in a form and at dates as prescribed by SAMA.
Article 58
1. The Appointed Actuary of an Insurance Company shall submit a Reinsurance report to the Company’s Senior Management, Board of Directors and SAMA. The report shall be submitted in a form and at dates to be prescribed by SAMA’s instructions
2. This report shall assess the appropriateness of Reinsurance arrangements and risk Retention levels for each line of business having regard to the Company’s risk appetite, capital adequacy and the total exposure currently underwritten and expected to be underwritten in the following financial year and provide observations on risk Retention levels, considering:
a. Profit sharing mechanisms or variable commissions.
b. Loss sharing mechanisms.
c. Any caps on the Reinsurance Companies’ total exposure under Reinsurance treaties.
d. Any caps on the Reinsurance Companies’ exposure to single events, incidents or claims.
e. Any swing rates where Reinsurance premiums are adjusted based on the results of the Reinsurance.
f. The possible impacts of reinstatements or aggregate deductibles on excess of loss treaties.
g. How Reinsurance arrangements are expected to operate under stress scenarios.
3. The Appointed Actuary shall review and comment on the effectiveness of the Company’s procedures to assess whether or not any Reinsurance contracts transfer significant Insurance risk to the Reinsurance Company, particularly in conjunction with any side letters or other arrangements, and report accordingly.
Article 59
1. The Appointed Actuary of a Company that is a Reinsurance Company may be required to submit a Retrocession report to the Company’s Senior Management, Board of Directors and SAMA in a form and at dates to be specified by SAMA covering as a minimum the appropriateness of Retrocession arrangements and risk retention levels for each line of business having regard to the Company’s risk appetite, capital adequacy and the total exposure currently underwritten and expected to be underwritten in the following financial year and providing observations on the Reinsurance Company’s risk Retention levels.
2. The Appointed Actuary shall review and comment on the effectiveness of the Company’s procedures to assess whether or not any Reinsurance contracts issued or Retrocession arrangements entered into transfer significant Insurance risk, particularly in conjunction with any side letters or other arrangements, and report accordingly.
Article 60
1. The Appointed Actuary of a Company shall submit an investment and asset liability management report to the Company’s Senior Management, Board of Directors and SAMA in a form and at dates to be prescribed by SAMA.
2. This report shall assess the suitability of the Company’s investment policy and asset liability management strategy, having regard to the total exposure currently underwritten and expected to be underwritten in the following financial year, addressing the nature and timing of Insurance Contract Assets and Liabilities and the availability of appropriate assets, coordinating with the Investment Committee and investment manager for the purposes of its production.