Surplus participation

(1) Amounts intended for the surplus participation of the insured must, insofar as they have not been directly allocated to the insured, be entered in the balance sheet in a provision for premium refunds.
(2) At insurance stock corporations, the management board, with the approval of the supervisory board, determines the amounts to be reserved for the surplus participation of the insured. However, amounts not required to be reserved by virtue of a legal entitlement of the insured may be allocated to surplus participation only insofar as, from the remaining balance sheet profit, a profit of at least 4 percent of the share capital can still be distributed. A balance sheet profit may be distributed only insofar as it exceeds any security requirement under subsection (4).
(3) Unrealised gains from fixed-income investments and interest-rate hedging transactions held directly or indirectly by the insurance undertaking must be taken into account for the purpose of policyholder participation in unrealised gains under section 153 of the Insurance Contract Act only insofar as they exceed any security requirement arising from insurance contracts with an interest rate guarantee under subsection (4).
(4) The security requirement arising from insurance contracts with an interest rate guarantee is the sum of the security requirements of the insurance contracts whose applicable actuarial interest rate exceeds the applicable euro interest rate swap rate at the time the unrealised gains are determined (reference rate). The security requirement of an insurance contract is the interest rate obligation of the insurance contract, actuarially valued having regard to the reference rate, less the premium reserve. Death benefit funds may, with the approval of the supervisory authority, calculate the security requirement arising from insurance contracts with an interest rate guarantee using a different method.