How many times a week must an insurer in Vietnam value the assets in the unit-linked fund's portfolio?
- Vietnam: How many times a week must an insurer value the assets in the unit-linked fund's portfolio?
- Vietnam: What is the responsibility of the insurer in case of misvaluing of fund units of a unit-linked fund?
- Vietnam: In case the net asset value is misvalued at least 0.5%, what is the responsibility for insurer to compensate?
Vietnam: How many times a week must an insurer value the assets in the unit-linked fund's portfolio?
Pursuant to Clause 1, Article 109 of Decree 46/2023/ND-CP stipulates as follows:
Valuation of unit-linked funds
1. The insurer must value the assets in the unit-linked fund's portfolio at least once a week, at market value, or fair value (if market value is unavailable). The insurer must specify the valuation date in the rules and terms of insurance products in order to buy and sell fund units. If the valuation date coincides with a holiday or day off as prescribed by law, the insurer shall determine the valuation date on the next working day.
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Accordingly, the insurer must value the assets in the unit-linked fund's portfolio at least once a week.
How many times a week must an insurer in Vietnam value the assets in the unit-linked fund's portfolio?
Vietnam: What is the responsibility of the insurer in case of misvaluing of fund units of a unit-linked fund?
Pursuant to Clause 5, Article 109 of Decree 46/2023/ND-CP stipulates as follows:
The insurer must take full responsibility in case of misvaluing of fund units, and must compensate policyholders and the unit-linked fund for deviations arising from the purchase and sale of these fund units because the net asset value of the fund is misvalued with the deviation level as follows:
- Reach at least 0.5% of the net asset value, for a unit-linked fund that invests in stocks. The unit-linked fund invests in stocks no less than 70% of the total asset value in the stock portfolio;
- Reach at least 0.75% of the net asset value, for a unit-linked fund that invests in bonds. The unit-linked fund invests in stocks no less than 70% of the total asset value in the bond portfolio;
- Reach at least 1.00% of net asset value for other unit-linked funds of the insurer.
Vietnam: In case the net asset value is misvalued at least 0.5%, what is the responsibility for insurer to compensate?
Pursuant to Clause 6, Article 109 of Decree 46/2023/ND-CP stipulates as follows:
In case the net asset value per fund unit is misvalued with the error reaching the margins specified in Clause 5, Article 109 of Decree 46/2023/ND-CP, the insurer shall make a plan to remedy and compensate in the following order:
- Re-determine the net asset value of the unit-linked fund on each trading day during the time the fund is misvalued;
- Determine compensations for the fund and compensations for policyholders from mispricing the fund's assets on each trading day. The insurer is not required to compensate the policyholders for deviations of less than VND 100,000, but the entire amount corresponding to the deviation value of less than VND 100,000 must be put into the fund.
The amount of compensation for the policyholder and the unit-linked fund from the purchase and sale of fund units in case of misvaluing the fund units is determined as follows:
- In case the fund is undervalued, the compensation amount for the policyholder and the unit-linked fund is determined as follows:
If the premium is allocated to purchase fund units before the time the fund is misvalued and the units are sold during the period when the fund is misvalued: The amount of compensation to the policyholder is determined based on the margin of error and the number of fund units sold by the policyholder;
If the premium is allocated to purchase fund units during the period when the fund is misvalued and continues to be held after the period when the fund is misvalued: The insurer shall compensate the unit-linked fund. The compensation amount is determined based on the margin of error and the number of fund units that the policyholder has purchased and continues to hold after the misvaluing period.
- In case the fund is overvalued, the compensation amount for the policyholder and the unit-linked fund is determined as follows:
If the premium is allocated to purchase fund units before the time the fund is misvalued and the units are sold during the period when the fund is misvalued: The insurer shall compensate the unit-linked fund. The compensation amount is determined based on the margin of error and the number of fund units that the policyholder has sold during the mispricing period;
If the premium is allocated to purchase fund units during the period when the fund is misvalued and continues to be held after the period when the fund is misvalued: The compensation amount is determined based on the margin of error and the number of fund units that the policyholder has purchased and continues to hold after the mispricing period.
- All expenses for compensation to the policyholder and the unit-linked fund must not be accounted into the expenses of the unit-linked fund of the insurer.
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