What are regulations on capital adequacy ratio of insurance companies in Vietnam?

What are regulations on capital adequacy ratio of insurance companies in Vietnam?

Pursuant to Article 95 of the Law on Insurance Business in 2022 (takes effect from 01/01/2023) stipulating capital adequacy ratio of insurance companies in Vietnam as follows:

1. Capital adequacy ratio is the ratio of available capital to risk-weighted assets.

2. Insurance companies, reinsurance companies or foreign branches in Vietnam must always maintain the capital adequacy ratio not less than the prescribed one.

3. When determining the capital adequacy ratio, insurance companies, reinsurance companies or foreign branches in Vietnam shall not be allowed to include sums invested in the form of capital contribution or share purchase in other insurance companies, reinsurance companies, subsidiaries of insurance companies or subsidiaries of reinsurance companies.

4. The Minister of Finance shall impose detailed regulations on capital adequacy ratios, risk-weighted assets and available capital.

What are regulations on escrow of insurance companies in Vietnam?

Pursuant to Article 96 of the Law on Insurance Business in 2022 (takes effect from 01/01/2023) stipulating escrow of insurance companies in Vietnam as follows:

1. Insurance companies, reinsurance companies or foreign branches in Vietnam must set aside part of charter capital or allocated capital as an escrow held at commercial banks operating in Vietnam.

2. The sum held in escrow must make up 02% of the minimum requirement of charter capital or allocated capital at the time of establishment of an insurance company, reinsurance company or foreign branch in Vietnam.

3. Insurance companies, reinsurance companies and foreign branches in Vietnam can use sums held in escrow to meet commitments to the policyholder only when they are short of capability to pay and the written consent to such use is given by the Ministry of Finance. Within 90 days of use of sums held in escrow, insurance companies, reinsurance companies or foreign branches in Vietnam shall be responsible for replenishing escrow accounts with sums equaling the sums that they have withdrawn for use.

4. Insurance companies, reinsurance companies or foreign branches in Vietnam may withdraw all of money left in escrow accounts only when their business is closed or terminated.

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