On August 1, 1995, the Federal Insurance Supervisory Office (Bundesaufsichtsamt für das Versicherungswesen, BAV) issued the following circular:

Circular R 3/95

To all insurance undertakings subject to the supervision of the Federal Insurance Supervisory Office which are authorised to carry on life insurance, health insurance, general third-party liability insurance, accident insurance and motor insurance with the exception of insurance undertakings which have their registered office in another signatory state to the agreement of the European Economic Area

Requirements for the appointment of a responsible actuary in accordance with sections 11a, 11d, 11e, and 12 (2) and (5) of the Third Implementation Law/EEC on the Insurance Supervision Law (Versicherungsaufsichtsgesetz – VAG)

In accordance with section 11a (1) VAG, all life insurance undertakings (including “Pensionskassen” and funds distributing death benefits) shall appoint a responsible actuary. Pursuant to section 12 (2) and (5) VAG, this provision shall accordingly apply to insurance undertakings which carry on health insurance according to the technical principles of life insurance and, pursuant to section 11d VAG, to insurance undertakings which carry on accident insurance with premium refund. Furthermore, in accordance with section 11e VAG, insurance undertakings shall appoint a responsible actuary in the cases where the calculation of the mathematical provision for annuities under general third party liability insurance, motor vehicle third party liability insurance, motor accident insurance and general accident insurance without premium refund is concerned.

I. Before appointing the envisaged responsible actuary pursuant to VAG section 11a (2), the insurance undertaking shall inform the supervisory authority and provide it with the following information to enable it to judge his reliability and professional qualification required under section 11a (1) VAG:

1. Curriculum Vitae

The CV shall be complete and carry the personal signature of the envisaged actuary. It shall contain all first names, the names of birth, date and place of birth, the private address, a detailed description of the specialised educational background, the names of all the undertakings for which the envisaged responsible actuary has performed services, information as regards the kind and duration of the respective services, including honorary activities performed at insurance undertakings and other financial services companies. The description of the kind of services performed shall in particular define the envisaged responsible actuary's authority to represent the company and outline the business sectors which reported to him. In addition any intimate relation shall be stated with members of the management board or the supervisory board of the undertaking in which the function as responsible actuary is to be performed.

2. Certificate of good conduct of recent date

3. Extract from the central trade register (sections 149 and 150 of the Industrial Code [Gewerbeordnung - GewO]) in the case of former, and if need be, also in the case of present exercise of an independent business or trade.

4. Declaration of the envisaged actuary as to whether any criminal proceedings because of crimes or offences committed have been started, or whether any administrative offences committed in the connection with managerial activities are pending against him, or if either the envisaged responsible actuary himself or an undertaking led by him has been involved in the past as debtor in any proceedings of bankruptcy, arrangement, collective enforcement, or proceedings for making an affirmation in lieu of an oath, or if such an involvement is still the case at present.

II. In accordance with section 11a (2) VAG, it is the task of the supervisory authority to judge if the envisaged responsible actuary is of good repute and professionally qualified and whether he gives security that during his activity as responsible actuary he will carry out the tasks incumbent upon him by the regulations of the VAG in accordance with the provisions stipulated therein. So as not to risk that objections will be made by the supervisory authority against the person of a responsible actuary, the following should be taken into account at and after the appointment of a responsible actuary:

1. It shall be deemed that the envisaged actuary disposes of adequate knowledge in the field of actuarial theory and professional experience, as required by the provisions of section 11a (1), sentence 3 VAG if he

- has successfully concluded his mathematical studies at a University, a University of Applied Science or a Polytechnic and disposes of adequate actuarial basic and specialised knowledge,

and if he can furthermore

- furnish proof of constant relevant practice by having carried on an activity as actuary in an adequate undertaking for at least the past three years and if that former activity has comprised the substantial actuarial functions in an adequate scope.

Above prerequisites may also be considered fulfilled if the knowledge and the professional qualifications have been acquired through adequate training and professional experience abroad.

2. The responsible actuary must be a natural person. With tariffs and the bases of calculation not being subject to supervisory approval anymore, a special responsibility has been devolved upon the actuary. This responsibility includes also the duty to protect the rights and the interests of the insured (see legislative intent with regard to number 10, section 11a VAG). The special position of the actuary ensues, inter alia, from his duty to inform and the right to submit proposals in accordance with section 11a (3), numbers 2 to 4 VAG and the duties of the management board in accordance with section 11a (4) VAG.

The proper fulfilment of the tasks assigned to the responsible actuary demands that any conflicts of interests he might be exposed to owing to the position he otherwise holds within the undertaking, be kept as scant as possible. In this respect, the requirements the manager has to fulfil (see Circular R 1/78) with regard to remuneration shall also apply to the responsible actuary.

The obligation to exercise his activities in a conscientious and accurate way obliges the actuary to continually update the specialised knowledge required for his work.

3. The outstanding significance of his tasks makes it desirable that the responsible actuary, for the sake of an independent and appropriate performance of this function, shall be appointed and dismissed, respectively, only upon the approval of the supervisory board (administrative board), if he has not been appointed by the supervisory authority.

III. The supervisory authority shall carefully observe the development of the responsible actuary as an institution. Should the professional practice show that, in order to fulfil the objectives set by the legislator, additional requirements are needed, the supervisory authority shall examine the existing standards and, if need be, take into account new requirements by making appropriate amendments.