Star Union Dai Ichi Life Insurance Company

To assess the financial health of an insurance company, I would analyze key financial ratios such as the solvency ratio, liquidity ratio, and combined ratio. Additionally, reviewing the company's investment portfolio, claims ratio, and underwriting performance would provide insights into its financial stability and profitability.

Key risks include underwriting risk, credit risk, market risk, operational risk, and regulatory compliance risk. Each of these can impact the company's financial performance and reputation, so they need to be carefully evaluated during an audit.

Policyholders may benefit from tax deductions on premiums paid under Section 80C of the Income Tax Act. The maturity proceeds and death benefits are generally tax-exempt under Section 10(10D), subject to certain conditions.

Embedded value is a measure of the consolidated value of shareholders' interest in the life insurance business. It includes the present value of future profits from in-force policies and the net asset value. It is used to assess the company's profitability and growth potential.

I would start by understanding the regulatory framework governing life insurance, followed by reviewing the company's internal compliance policies. The audit would involve testing controls, evaluating compliance with regulations such as IRDAI guidelines, and assessing the effectiveness of the compliance function.

Interest rate changes can significantly impact the valuation of fixed-income securities, which are a major component of an insurance company's investment portfolio. Rising interest rates can lead to a decrease in bond prices, affecting the portfolio's market value and potentially leading to realized losses if bonds are sold.

Cross-border reinsurance transactions may involve withholding taxes, transfer pricing considerations, and compliance with international tax treaties. It's crucial to assess the tax implications in both the home and host countries to optimize tax efficiency.

Performance evaluation involves analyzing the portfolio's return on investment, risk-adjusted returns, asset allocation, and alignment with the company's risk appetite. Benchmarking against industry standards and peer performance is also essential.

I would review the claims processing workflow, assess the effectiveness of internal controls, verify the accuracy of claims data, and ensure compliance with regulatory standards. Testing a sample of claims for accuracy and timeliness would also be part of the audit.

The solvency margin is a measure of an insurance company's financial stability, representing the excess of assets over liabilities. It ensures that the company can meet its long-term obligations and is a key indicator of financial health required by regulators.

GST is applicable on life insurance premiums at different rates depending on the type of policy. For example, a 25% rate applies to the first-year premium of term insurance, while a lower rate applies to subsequent premiums. Understanding the GST slab rates for different insurance products is crucial.

I would analyze the specific regulatory changes, assess their implications on compliance, operational processes, and financial performance. Engaging with cross-functional teams to implement necessary adjustments and ensure alignment with the new regulations is essential.

Challenges include ensuring data integrity, evaluating cybersecurity measures, and assessing the adequacy of IT controls. Understanding the complexity of legacy systems and integration with new technologies is also crucial.

Actuarial assumptions, such as mortality rates, interest rates, and expense levels, are used to estimate future liabilities and determine premium pricing. Accurate assumptions are critical for ensuring the company's profitability and financial sustainability.

Tax treaties can provide relief from double taxation, reduce withholding tax rates, and offer clarity on tax jurisdiction issues. They are vital for insurance companies to optimize tax liabilities and ensure compliance with international tax laws.

Reserve adequacy is determined by evaluating the sufficiency of reserves to cover future policyholder liabilities. This involves actuarial analysis, stress testing, and comparing reserve levels against industry benchmarks and regulatory requirements.

I would document the findings, gather evidence, and report the suspicion to senior management or the audit committee. Maintaining confidentiality and following the company's fraud response protocol is crucial to ensure a thorough investigation.

Factors include market demand, competitive landscape, pricing strategy, regulatory compliance, and alignment with the company's strategic goals. Conducting a SWOT analysis and financial projections can also provide insights into the product's viability.