330 Government Finance Statistics Manual 2014
premiums (fees) re present a transaction in fi nan-
cial asset and lia bilities, and are recorded as an
increase in liabili ties for nonlife insurance techni-
cal reserves (33061) or provisions for calls under
standardized guarantee schemes (33065).- Property income earned on the investment of
reserves—Usually, the reserves related to insur-
ance or standardized guarantees are invested in fi -
nancial assets and the revenue generated by these
invest ments is generally in the form of interest
(1411) or dividends (1412). Sometimes, however,
the re ser ves may be used to generate net operat-
ing sur pluses either in a separate establishment or
as a sec ondary activity. Th e most common exam-
ple is rent (1415) gener ated from real estate assets. - Property income attributed to policyholders—
Property income generated by the investment
of reserves is deemed to be an implicit premium
sup plement.^24 Th erefore, the insurer or guaran-
tor should attribute the property income to the
policyholders^25 by recording an expense, clas-
sifi ed as property expense for investment income
dis burse ments (2813). Th e counterpart entry to
this ex pense is a transaction resulting in an in-
crease in liabilities for nonlife insurance technical
reserves (33061) or provisions for calls under stan-
dardized guarantee schemes (33065). - Claims (calls) payable—An expense for expected
claims (calls) should be recognized in premiums,
fees, and current claims (2831) or capital claims
(2832), as relevant, and with a counterpart entry
as an increase in the liability related to nonlife
insurance technical reserves (33061) or provisions
for calls under standardized guarantee schemes
(33065). For standardized guarantee schemes,
the expense recorded is the expected level of
calls (minus any expected asset recoveries) on
the stand ardized guarantees provided in the re-
cording pe riod. When claims (calls) are paid,
transactions are re corded reducing liabilities
(^24) Th e attribution should, in principle, be made according to
the proportion of reserves (stock of reserves) attributed to the
diff erent classes of insurance and policyholders. In practice, the
usual method is to distribute the investment income in propor-
tion to the actual premiums.
(^25) In the case of standardized guarantees, the institutional unit
that benefi ts from the guarantee may not be the same as the unit
paying the fee for the guarantee. In this case, the property income
is distributed to the unit paying the fee. Th e distributed property
income is treated as a supplementary fee.
related to nonlife in sur ance technical reserves
or provisions for calls under standardized guar-
antees with a corresponding reduction in assets
or an increase in other liabilities.
- Holdings gains and losses—In some exceptions,
if an amount for a claim outstanding has been
agreed upon and it has been agreed that it will be
indexed pending payment, there may be a hold-
ing gain or loss recorded for it. - Other changes in volume of assets and liabili ties—
Changes to provisions for calls under stand ar d ized
guarantee schemes not resulting from trans actions
and holding gains and losses are shown as other
changes in volume of assets—for example, when-
ever a signifi cant change to the expected level of
calls is recog nized, beyond any asset re covery.
Flows and stock positions recorded by
public sector units as nonlife policyholders
and holders of standardized guarantees
A4.80 Th e recording of fl ows and stock positions
re lated to standardized guarantees diff ers from the
rec ording of one-off guarantees (see paragraph 7.256).
For general government or public sector institutional
units as nonlife insurance policyholders, or holders of
standardized guarantees, the recording of their activi-
ties would require the following entries in GFS:- Actual premiums (fees) payable — Th e amount
of actual premiums payable represents premi-
ums incurred, prepayment of premiums, and
an implicit services charge payable. Because the
implicit ser vice charge can be calculated only
in the context of an analysis of the whole of the
economy, it is not recognized in GFS as an ex-
pense. Th e portion of actual premiums payable
representing premiums incurred for the report-
ing period is an expense, classifi ed as premi-
ums (28311) or fees for stand ardized guarantees
(28312), respectively. Prepaid premiums repre-
sent a transaction in fi nancial assets and liabili-
ties, and should be recorded as an increase in the
fi nancial assets in the form of non life insurance
technical reserves (32061) or provi sions for calls
under standardized guarantee schemes (32065). - Property income attributed to policyholders—As
explained in paragraph A4.78, property income
generated by insurers (guarantors) on the invest-
ment of reserves is deemed to be an implicit