EVALUATION OF INVESTMENTS


An insurer shall determine the values of investments in the following manner:

Real Estate Investment Property:- 

The investment property shall be valued at historical cost subject to revaluation at least once in every three years. The change in the carrying amount of the investment property shall be taken to Revaluation Reserve. Fair value on the balance sheet date and the basis of its determination shall be disclosed in the financial statements as additional information.

Debt Securities: 
Debt securities, including government securities and redeemable preference shares shall be considered as "held to maturity" securities and shall be measured at historical cost, subject to amortisation

Equity Securities and Derivative Instruments:- 
Listed equity securities and derivative instruments that are traded in active markets shall be measured at fair value on the balance sheet date. For the purpose of calculation of fair value the lowest of the last quoted closing price at National Stock Exchange or Bombay Stock Exchange shall be taken. Unrealised gains and losses arising due to changes in the fair value of listed equity shares and derivative instruments shall be taken to equity under the head "Fair Value Change Account ".

Unlisted and Derivative Instruments:- 
Unlisted and other than actively traded equity securities and Derivative instruments are measured at historical cost. Provision shall be made for diminution in value of such investments

Loans:- Loans are measured at historical cost subject to impairment provisions

Linked Business:- The accounting principles used for valuation of investments are to be consistent with the above mentioned priciples. A separate set of financial statement for each segregated fund of the linked business shall be annexed

Catastrophe Reserve: Catastrophe reserve shall be created in accordance with the norms, if any, prescribed by the Authority. Investment of funds out of catstrophe reserve shall be made in accordance with the prescription of Authority

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