Approach to the audit of technical provisions SII

Approach to the audit of technical provisions (SII reporting) Company XXXXX

Preliminary notice • The purpose is to provide the NBB a basis for discussion on the main audit procedures performed with respect to the Best Estimate Life and Non-Life under Solvency II. • By having a better view and understanding of the tasks performed by the accredited auditors, the NBB will be in a better position to : • understand the weakness(es) reported, • align its own duties, and therefore avoid overlaps and act in a complementary way. • NBB expects a preliminary support document in order to pursue the open dialog in an efficient way. As such, NBB expects this basis for discussion to focus on the Best Estimate Life and Non-Life under Solvency II, and for these captions, to be more granular than the audit plan or annual report to the audit committee usually provided to the NBB. Proposal is to follow the structure of the IREFI work programme on the Best Estimate Life and Best Estimate Non-Life. • Canvas is to be filled in to reflect Life and Non-Life procedures separately Restriction of use NBB agrees that such document is intended solely for its own information and use in the context of the participation of the accredited auditors to the prudential supervision.

Approach to the audit of the technical provisions Risk Assessment

Approach to the audit of the technical provisions Best estimate reserve Internal control environment and control testing Provide the list of the main audit procedures performed in relation to the internal control environment and control testing in the following areas: — data input; — data manipulation and grouping; — assumption setting and back testing; — Individual tests per model point (e. g. on policy level) — performance of calculation; — validation of model operation and assessment of results; — preparation of results and reporting; — performance of model changes on cash flows, expense allocation (etc); — Cash flow model validation; — Other relevant procedures. For instance, consider the following types of internal controls : — Sense checks, logic checks, cross checks and plausibility checks performed by the Company on the data input, assumptions and the outcome of the calculations; — The application of a data quality policy; — Input checks on assumptions and other data used in the calculations; — Analysis of change and variance analysis; — Model governance controls on the authorization, review and sign-off; — General IT controls and automated controls on IT-interfaces; — Other relevant controls. Best estimate reserve Substantive procedures For the areas mentioned above, provide the list of the main substantive procedures performed. For instance, consider: — Verification of reconciliations of the data transferred from one system to the other system; — Verification of key assumptions; — Analysis of management actions in the calculations; — Verification of the contract boundaries; — Verification if assumptions and cashflow models are in line with the requirements issued by EIOPA; — Check of significance of un-modelled business; — Other relevant procedures.

Approach to the audit of the technical provisions Best estimate reserve Free format. Including comments from the accredited auditor. As examples : Focus on the Analysis of change Best estimate reserve NBB is willing to have a view on the independent recalculations performed by the auditors. Format is free. As examples : Life : Focus on the independent recalculations Non-Life :

Key messages Best Estimate Liabilities (BEL): • Overall result of test work relating to the internal control environment and ITGC; • Overview of significant internal control deficiencies (reference relevant sections in the management letter); • Summary of (un)corrected audit misstatements: • Overview of calculated differences • Overview of most likely differences (i. e. in case no exact calculation can be performed) • Other relevant matters (model changes, critical assumptions, analysis of change, etc. ).