Home   Browse contents   View updates   Search  
     Quick search
Go
   

Dubai Financial Services Authority (DFSA): Contents

Dubai Financial Services Authority (DFSA)
Laws
Rulebook Modules
Prudential — Insurance Business Module (PIN) [VER15/01-18]
Sourcebook Modules
Consultation Papers
Policy Statements
DFSA Codes of Practice
Amendments to Legislation
Media Releases
Notices
Financial Markets Tribunal
Archive

BackText onlyPrint

You need the Flash plugin.

Download Macromedia Flash Player



  • PIN 9.4 Requirements for collateral for insurers in run-off

    • PIN 9.4 Guidance

      This section contains provisions that enable the DFSAG to require an InsurerG that is in run-off or going into run-off to post collateral assets or make equivalent arrangements by letter of credit, to support the Insurance LiabilitiesG and Minimum Capital RequirementsG applicable to the InsurerG . In considering whether to exercise the powers in this section, the DFSAG will have regard to the circumstances of the InsurerG and the interests of policyholders.


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

    • PIN 9.4.1

      This section applies only to an InsurerG that:

      (a) is in run-off as regards its entire Insurance BusinessG or the entire Insurance BusinessG of a CellG or Long-Term Insurance FundG ;
      (b) has provided a notice to the DFSAG in accordance with PIN Rule 9.2.2 in respect of its entire Insurance BusinessG or the entire Insurance BusinessG of a CellG or Long-Term Insurance FundG ; or
      (c) has received a written notice from the DFSAG withdrawing the Insurer'sG permission to effect Contracts of InsuranceG in respect of its entire Insurance BusinessG or the entire Insurance BusinessG of a CellG or Long-Term Insurance FundG .

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

    • PIN 9.4.2

      The DFSAG may, by written notice (referred to in this chapter as a 'collateral notice') require an InsurerG to make available assets:

      (a) of a type and in a manner described in PIN Rule 9.4.6; and
      (b) having a value, determined in accordance with the provisions of PIN chapter 5, of the lower of:
      (i) the amount, if any, specified in the notice; and
      (ii) the amount determined in accordance with PIN Rule 9.4.5.

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

    • PIN 9.4.3

      An InsurerG must comply with the requirements of a collateral notice within the period (if any) specified in the notice, or within two months of the date of the notice, whichever is the longer.


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

    • PIN 9.4.4

      The DFSAG may at any time, by written notice to the InsurerG , vary or revoke a collateral notice issued under PIN Rule 9.4.2.


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

    • PIN 9.4.5

      The amount referred to in PIN Rule 9.4.2(b)(ii) is calculated as follows:

      (a) in the case of an InsurerG that is not a DIFC Incorporated InsurerG , the amount of the assets that the InsurerG is required by PIN Rule 4.7.2 to make available;
      (b) in the case of a CellG of an InsurerG , the sum of the following two amounts:
      (i) the Insurance LiabilitiesG attributable to that CellG ; and
      (ii) the Minimum Cellular Capital RequirementG applicable to that CellG .
      (c) in the case of a Long-Term Insurance FundG , subject to (e) and (f), the sum of the following two amounts:
      (i) the Insurance LiabilitiesG attributable to that Long-Term Insurance FundG ; and
      (ii) the Minimum Fund Capital RequirementG applicable to that Long-Term Insurance FundG ;
      (d) in the case of an InsurerG that is a DIFC Incorporated InsurerG and that is not a Protected Cell CompanyG , the sum of the following two amounts:
      (i) the Insurer'sG Insurance LiabilitiesG ; and
      (ii) the Insurer'sG Minimum Capital RequirementG .
      (e) in the case of an InsurerG to which (a) and (c) both apply, the amount set out in (a); and
      (f) in the case of an InsurerG to which (c) and (d) both apply, the amount set out in (d).
      Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]
      [Amended] RM46/2007 (Made 5th July 2007) [VER6/07-07]

      • PIN 9.4.5 Guidance

        PIN Rule 9.4.5 describes the maximum amount of assets that the DFSAG may require to be made available as collateral. The RuleG includes provisions to avoid imposing multiple collateral requirements on the same InsurerG in respect of the same Insurance BusinessG in run-off.


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

    • PIN 9.4.6

      The assets referred to in PIN Rule 9.4.2 must be made available in one of the following two manners or in a combination of those two manners:

      (a) assets of a type described in PIN Rule 4.7.3 may be deposited with a custodian nominated or approved in writing by the DFSAG ; or
      (b) a financial institution nominated or approved in writing by the DFSAG may issue a confirmed letter of credit in favour of the DFSAG , for the amount of the assets required to be made available.

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

    • PIN 9.4.7

      The terms and conditions of a custody arrangement referred to in PIN Rule 9.4.6(a) or a letter of credit referred to in PIN Rule 9.4.6(b) and any change to those terms and conditions, must be notified to the DFSAG , which may within two months of such notification require the InsurerG to make any change to the terms and conditions of the arrangement or letter of credit.

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

      • PIN 9.4.7 Guidance

        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]

    • PIN 9.4.8

      The DFSAG may, by written notice to an InsurerG , require the InsurerG to charge in favour of the DFSAG part or all of any assets deposited with a custodian in accordance with PIN Rule 9.4.6(a).


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

    • PIN 9.4.9

      The InsurerG must reassess, as at the end of March, June, September and December in each year, the amount of the assets that the InsurerG is required by a collateral notice to make available, and the amount of assets made available by the InsurerG .


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

    • PIN 9.4.10

      The InsurerG must report to the DFSAG , within two months of the date as at which the reassessment referred to in PIN Rule 9.4.9 is performed, the results of that reassessment and details of any action taken or proposed to be taken as a result of that assessment.


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

    • PIN 9.4.11

      If the reassessment referred to in PIN Rule 9.4.9 shows that the amount of assets made available is less than the amount that the InsurerG is required to make available, the InsurerG must, within two months of the effective date of the reassessment, make additional assets available so that the InsurerG complies with the requirements of the collateral notice.


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

    • PIN 9.4.12

      If the reassessment shows that the amount of assets made available is more than the amount that the InsurerG is required to make available, the InsurerG may, with the written consent of the DFSAG , remove assets from those made available provided that the InsurerG complies with the requirements of the collateral notice after the assets have been removed.


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