5 percent at the end of june 2012, down from 37 percent in june 2008, and well above the international benchmark, which usually ranges between 7 – 10 percent. asset quality has been steadily improving as life insurers reduce their exposures to related parties and as they boost the share of low - risk government securities in their investment portfolios. asset quality ( measured as the ratio of real estate plus unquoted equities plus accounts receivables to total assets ) stood at nearly 11 percent at the end of june 2012, compared with almost 15 percent a year earlier. limited re - investment opportunities, persistent low interest rates and the rise in operating expenses have all combined to negatively affect the earnings and profitability of the life insurance industry. hence, the return on investment fell to around 5. 5 percent in june 2012 from over 6 percent in the previous year, and the return on equity slowed to 12 percent from almost 14. 5 percent over the same period. at the end of june 2012, the statutory fund for the consolidated life insurance sector was in surplus. however, two life insurance companies were non - compliant with the statutory fund requirements and reported deficits. the central bank is working with these two life insurance companies to correct the deficiencies in their statutory funds. non - life insurance companies in the non - life insurance segment, growth in gross premium income was driven mainly by property business in 2012, as motor business remained tepid. non - life insurers continued to retain less risk for property business by ceding a larger share to international reinsurers. consequently, the retention ratio declined to around 42 percent as at june 2012, compared with about 45 percent in june 2011 and over 52 percent in june 2008. while the asset quality of non - life insurers improved in 2012, concerns remain in relation to debtors, prompting the central bank to recommend that companies strengthen their credit collection mechanisms. the net technical reserves ratio ( which is a measure of net technical reserves held relative to net claims paid out ) increased significantly in 2012 due to regulatory action by the central bank requiring companies to strengthen their claims reserves for motor vehicle business. despite the low interest rate climate, the ratio of investment income to net income increased for the non - life industry in 2012. this was due to an increase in income from trade financing activities at one institution. as a result, the return on equity and return on assets ratios both displayed increasing trends. at the end of june 2012, the non -

life industry reported a net surplus in the statutory fund in respect of motor insurance business. however, three non - life companies were non - compliant with the statutory fund requirements and reported deficits. the central bank is also working with these three companies to correct the deficiencies in their statutory funds. bis central bankers ’ speeches private pension plan industry the private pension fund industry in trinidad and tobago largely comprises occupational plans administered by insurance companies and annuity - type products sold by insurance companies, banks and trust companies. three corporate trustees administer assets that represent 90 percent of the total assets owned by pension funds. based on the information submitted by these trustees, pension plans continued to face challenges posed by limited new opportunities and the prevailing low interest rate environment. as a result, many pension plans have been forced to hold large amounts of cash in their investment portfolios. at the end of june 2012, pension plans held over $ 5. 2 billion or 16 percent of their funds under management in cash and near cash instruments. nevertheless, private pension plan assets rose to $ 32. 5 billion, a year - on - year increase of nearly 8 percent to june 2012, and represented nearly 13. 5 percent of total assets of the financial system. according to the valuation reports prepared by actuaries, the number of private pension plans in surplus declined from 97, for the triennial period 2006 to 2008, to 83 for the triennial period 2009 to 2011. in addition, the number of private pension plans in deficit increased from 16 in the triennial period covering 2006 to 2008 to 30 plans in the more recent period from 2009 to 2011. the average funded ratio ( assets / liabilities ) of all plans remaining in surplus fell to 158 percent in the period 2009 to 2011 from 177 percent in the previous triennial period 2006 to 2008. more private pension plans recorded deficits mainly on account of the lowering of the interest rate assumption used by actuaries to determine pension plan earnings on long term investments. in 2012, actuaries assumed long term interest rates would average around 5. 5 percent, down from an average of 7. 2 percent in 2005. higher than initially projected, salary increases have also contributed to the decline in pension plan surpluses. legislative reform and the central bank i now turn to my third point – the work of the central bank in strengthening the regulatory and supervisory architecture of the financial system, while preparing the groundwork for much needed legislative changes. the bank participated in several meetings with the legislative review committee of cabinet to finalize