French Insurance Code
In forceThe technical provisions corresponding to life insurance, marriage and natality insurance and capitalisation operations are as follows:
1° Mathematical provision: difference between the present values of the commitments made by the insurer and those made by the policyholders. For contracts using a survival or mortality table, the amounts of the mathematical provisions must include an estimate of the future management expenses which will be borne by the insurer during the period of cover beyond the period of payment of the premiums or the date of withdrawal of the accumulation capital; the estimate of these expenses is equal to the amount of the management charges provided for in the premium or accumulation capital tariff conditions and intended to cover the management expenses;
2° Provision for profit-sharing: amount of profit-sharing allocated to beneficiaries of contracts where these profits are not payable immediately after the winding-up of the financial year in which they were generated;
3° Capitalisation reserve: reserve intended to cover the depreciation of assets included in the company's assets and the reduction in their income;
4° Management provision: provision intended to cover future policy management expenses not covered elsewhere;
5° Provision for financial contingencies: provision intended to compensate for a fall in the yield on assets;
6° Provision for liquidity risk: provision intended to meet commitments in the event of a decline in the value of all the assets mentioned in article R. 343-10. The provision to be established is valued under the conditions defined in article R. 343-5 ;
7° Provision for deferred acquisition costs: provision intended to cover expenses resulting from the deferral of acquisition costs;
8° Provision for equalisation: provision designed to cope with fluctuations in claims experience relating to group life insurance operations;
9° Diversification provision: for commitments covered by article L. 134-1, a provision designed to absorb fluctuations in the assets allocated to these commitments and in which policyholders or members hold individualised rights in the form of units.
10° Collective deferred diversification provision: for commitments covered by article L. 134-1, provision intended to smooth the surrender value of contracts.
11° Provision for forward guarantees: for commitments covered by 2° of article L. 134-1, provision intended to cover a shortfall in assets in respect of contracted forward guarantees.
A commitment may be provisioned for only one of the categories mentioned in this article.
Subject to the provisions of this code relating to the valuation of the provisions mentioned in paragraphs 1°, 2°, 6°, 9°, 10° and 11°, the calculation methods for which are specified by order of the Minister for the Economy, the provisions are valued in accordance with the accounting requirements of the Autorité des normes comptables.
