Ministry of finance   The Socialist Republic of Vietnam
No: 1314TC/QD/TCNH      Independence-freedom-Happiness
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                            Hanoi,  21st December 1994

DECISION Of THE MINISTRY Of fiNANCE ON COMPULSORY REINSURANCE

MINISTER Of fiNANCE

- Pursuant to Decree 178/CP dated 28th October 1994 of the Government, stipulating the function, duties and staff organization of the Ministry of finance;

- Pursuant to Decree 100/CP dated 18th December 1993 of the Government, on insurance business;

- On the proposal of the Head of the financial Department for Banks and financial Organizations;

DICIDES:

Article 1:

Insurance Businesses operating in Vietnam (Original Insurance Businesses) are required to contribute the larger portion of their retention to the Vietnam National Reinsurance Company.

Article 2:

The rate of compulsory reinsurance with Vietnam National Reinsurance Company is stipulated as follows:

2.1. for insurance contracts, of which the portion of retention is held by original insurance businesses, is stipulated according to the rate reinsurance contract, the rate of compulsory reinsurance is:

- 15% of the insurance value that exceeds the retention held by he original insurance businesses for signed contracts on reinsurance for 1995, calculated before 19th December 1994.

- 30% of the insurance value that exceeds the retention held by the original businesses for non-signed contracts on reinsurance for 1995, calculated by 19th December 1994.

2.2. for insurance contracts, of which retention held by original insurance businesses is stipulated according to a non-rate reinsurance contract, compulsory reinsurance is temporarily not applied in 1995 through the Vietnam National Reinsurance Company.

Article 3.

The Vietnam National Reinsurance Company is responsible for handling reinsurance of original insurance businesses according to the stipulations in Article 2. for insurance contracts that came into effect on or after 1st January 1995, if not yet completing reinsurance contracts due to protecting its responsibility, Vietnam National Reinsurance Company has the right to refuse to handle the compulsory reinsurance from original insurance businesses before the deadline of 22nd December 1994.

Article 4.

After completing contracts on compulsory reinsurance all insurance businesses (including Vietnam National Reinsurance Company) have to give priority to volunteer reinsurance for domestic insurance businesses in regards to the remaining value of the contra cts before completing reinsurance contracts with overseas corporations/ organizations.

Article 5.

Original Insurance Businesses are responsible for paying Vietnam National Reinsurance Company a reinsurance premium according to the following form:

Reinsur. premium = (original insur. - Insur. premium) x Rate of 
                   premium after      of the retention  compulsory
                   being turnover     after being      reinsurance
                   tax deducted       turnover tax 
                                      deducted

Article 6.

Vietnam National Reinsurance Company is responsible for paying original insurance businesses:

6.1. A reinsurance commission calculated as follows:

Reinsurance commission = 
(rate of consumption    x   Reinsurance premium for management)
and exploited commission
of subjects that need 
reinsuring

6.2. Reinsurance compensation is calculated as follows:

Reinsurance compensation = 
(original   -  compensation belonging) x  Rate of
insurance      to the retention           compulsory reinsurance 
compensation

Article 7.

7.1. The payment of reinsurance premium, commission and compensation between original insurance businesses and Vietnam National Reinsurance Company is made monthly, based on the figures and the above calculations (according to official accountancy), withi n 10 days of the day of receiving the announcement stipulated in the reinsurance contract.

Article 8.

Other stipulations of reinsurance contracts will be agreed upon by the original insurance businesses and Vietnam's National Reinsurance Company, based on the conditions of the original insurance contracts.

Article 9.

9.1. If no implementation of compulsory reinsurance as stipulated in Article 1, the original insurance businesses have to pay the reinsurance premium to Vietnam National Reinsurance Company in accordance with the regulations in Article 5. Simultaneously t hey still have to bear responsibility for compulsory reinsurance.

9.2. If there is no handling of compulsory reinsurance stipulated in Article 3, Vietnam National Reinsurance Company has to bear the responsibility related in the contracts on compulsory reinsurance, but must not receive compulsory reinsurance premium, st ipulated in Article 5.

9.3. If original insurance businesses or Vietnam's National Reinsurance Company does not carry out the payment in time, as stipulated in Article 7, they will have to pay a fine for the delay, which is regulated by the State Bank of Vietnam.

Article 10.

This decision comes into effect from the signing date and is applied to insurance contracts made after 1st January 1995. The Directors of Insurance businesses operating in Vietnam, Head of the financial Department for Banks and financial Organizations, Ch ief of the Ministerial office and Heads of concerning bodies of the Ministry of finance are responsible for implementing this decision.

for Ministry of finance

Vice Minister

NGUYEN SINH HUNG