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Dubai Financial Services Authority (DFSA): Contents

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PIN 9.4.7 Guidance



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The definitive version of DFSA handbook text is the PDF version as that is the text of the instrument as made and published by the DFSA.

To view past versions of this module in PDF format, please visit the Archive.

The terms and conditions of an arrangement or letter of credit will normally be expected to include provisions having the following effect:

a. the arrangement or letter of credit is not revocable or cancellable at the option of the InsurerG , and contains no provision for automatic cancellation on the insolvency of the InsurerG ;
b. the DFSAG has the right to apply assets deposited, or to draw upon the letter of credit, for the purpose of meeting Insurance LiabilitiesG of the InsurerG and any expenses incidental to that activity;
c. in the case of a custody arrangement, the InsurerG is prohibited from applying, directly or indirectly, the assets deposited, except in the following manners:
i. in settlement of Insurance LiabilitiesG of the InsurerG that are in respect of the Insurance BusinessG that is in run-off;
ii. in exchange for fair value, for other assets of a type described in PIN Rule 4.7.3 and deposited with the same custodian under the same conditions;
iii. in consideration for the transfer to another InsurerG of Insurance LiabilitiesG of the InsurerG that are in respect of the Insurance BusinessG that is, or has been placed into, run-off;
iv. withdrawal from the custody of the custodian for deposit with a different custodian approved by the DFSAG ;
v. withdrawal from the custody of the custodian in accordance with PIN Rule 9.4.12; or
vi. withdrawal from the custody of the custodian in accordance with a written notice issued by the DFSAG revoking or varying the collateral notice; and
d. in the case of a letter of credit, the amount of the letter of credit may be reduced only:
i. in order to achieve, in accordance with PIN Rule 9.4.12 a reduction in the amount of assets made available by the InsurerG ; or
ii. in accordance with a written notice issued by the DFSAG revoking or varying the collateral notice.

Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]