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  • PIN App5 Calculation of Adjusted Non-Cellular Capital Resources and Adjusted Cellular Capital Resources

    • PIN A5.1 Purpose and general provisions

      • PIN A5.1.1

        This appendix applies to all InsurersG to which PIN section 4.4 applies.

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

        • PIN A5.1.1 Guidance

          1. This appendix sets out the manner in which an InsurerG that is a Protected Cell CompanyG is required to calculate its Adjusted Non-Cellular Capital ResourcesG and the Adjusted Cellular Capital ResourcesG applicable to each CellG . The calculation is in each case analogous to that applicable to InsurersG that are not Protected Cell CompaniesG , so that (except where changes are necessary to reflect structural differences) the capital of each CellG , and of the non-cellular portion of the InsurerG , is determined as though it was an InsurerG subject to PIN App3.
          2. The Adjusted Non-Cellular Capital ResourcesG and Adjusted Cellular Capital ResourcesG are calculated by making adjustments to the non-cellular equity of the InsurerG or cellular equity of the CellG , as at the Solvency Reference DateG .
          3. Provisions in respect of adjusted non-cellular capital resources are set out in sections PIN A5.2 to PIN A5.5. Provisions in respect of adjusted cellular capital resources are set out in sections PIN A5.6 to PIN A5.10.

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

    • PIN A5.2 Adjusted non-cellular capital resources

      • PIN A5.2.1

        An InsurerG must calculate its Adjusted Non-Cellular Capital ResourcesG according to the formula:

        ANCR = ANE – HNCA

        where:

        ANCR means the Insurer'sG Adjusted Non-Cellular Capital ResourcesG ;
        ANE means the Insurer'sG adjusted non-cellular equity; and
        HNCA means the Insurer'sG hybrid non-cellular capital adjustment.


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

      • PIN A5.2.2

        Adjusted non-cellular equity is calculated as set out in PIN section A5.4. The hybrid non-cellular capital adjustment is set out in PIN section A5.5


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

    • PIN A5.3 Base non-cellular capital

      • PIN A5.3 Guidance

        The commencement point for calculating an Insurer'sG adjusted non-cellular equity is the Insurer'sG base non-cellular capital.


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

      • PIN A5.3.1

        Subject to Rules PIN A5.3.2 and PIN A5.3.3, an Insurer'sG base non-cellular capital consists of the following capital instruments and equity reserves of the InsurerG :

        (a) paid-up ordinary shares, except for shares referred to in PIN Rule A5.5.1(3);
        (b) general reserves;
        (c) retained earnings;
        (d) current year's earnings after tax; and
        (e) hybrid non-cellular capital (as defined in PIN Rule A5.5.1).

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

      • PIN A5.3.2

        All Cell Share CapitalG and any capital instruments or equity reserves of the InsurerG that are attributable to a CellG must be excluded from base non-cellular capital.


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

      • PIN A5.3.3

        Hybrid non-cellular capital having a term to maturity of less than five years may only be included in base non-cellular capital with the written consent of the DFSAG .


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

    • PIN A5.4 Adjusted non-cellular equity

      • PIN A5.4.1

        An InsurerG must calculate its adjusted non-cellular equity by adding items to and deducting them from its base non-cellular capital, as set out in this section.

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

        • PIN A5.4.1 Guidance

          1. The purpose of these adjustments is to provide a consistent basis for the determination of the Insurer'sG Adjusted Non-Cellular Capital ResourcesG and to exclude from those resources assets that may not be readily realisable for the purposes of meeting any Non-Cellular LiabilitiesG of the InsurerG .
          2. A Takaful InsurerG may not count as non-cellular capital amounts loaned to Insurance FundsG that are attributable to CellsG , as those amounts will be counted towards base cellular capital of the CellsG concerned.

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

      • PIN A5.4.2

        The following items must be added to base non-cellular capital, to the extent that the InsurerG has excluded them in determining its base non-cellular capital:

        (a) any minority interests in companies that are SubsidiariesG of the InsurerG , where the Insurer'sG interest in those companies constitutes a Non-Cellular AssetG of the InsurerG ; and
        (b) any amount in respect of dividends to be paid by the InsurerG in the form of shares other than Cell SharesG .

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

      • PIN A5.4.3

        The following items must be deducted from base non-cellular capital, to the extent that the InsurerG has not excluded them in determining its base non-cellular capital, or has added them to base non-cellular capital under PIN Rule A5.4.2:

        (a) any amounts in respect of appropriations to be made from profit in respect of the reporting period most recently ended, including dividends, bonuses, pensions and welfare charges that are determined on the basis of the profit of that reporting period, whether or not the amounts have been approved by the InsurerG for payment;
        (b) Owners' EquityG in a Takaful InsurerG that does not, under the constitutional documents of the InsurerG or the terms of insurance contracts or both, participate in the surpluses and losses of Takaful business;
        (c) the amount of any investment by the InsurerG or by a SubsidiaryG of the InsurerG , in the Insurer'sG own shares;
        (d) the amount of any tax liability that would be attributable to unrealised gains on investments, if those gains were realised;
        (e) the amount of any deferred tax asset;
        (f) the amount of any goodwill, patents, service rights, brands and any other intangible items;
        (g) in a Takaful InsurerG , the amount of any loan made from the Owners' EquityG to an Insurance FundG that is attributable to a CellG , that has not been repaid as at the Solvency Reference DateG ;
        (h) the amount of any Zakah or charity fund of a Takaful InsurerG ;
        (i) the amount of any operating assets, including inventories, plant and equipment, and vehicles; and
        (j) the amount of any other assets that may not be applied to meet Non-Cellular LiabilitiesG of the InsurerG .

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

    • PIN A5.5 Hybrid non-cellular capital adjustment

      • PIN A5.5 Guidance

        1. This section acts to limit hybrid non-cellular capital to 15% of an Insurer'sG adjusted non-cellular equity.
        2. The purpose of the hybrid non-cellular capital adjustment is to limit the extent to which an InsurerG may rely for its Adjusted Non-Cellular Capital ResourcesG on instruments that do not or may not constitute permanent capital of the InsurerG . Such instruments include share capital contributed by a Holding CompanyG , where the Holding Company'sG investment is financed by debt rather than by its own capital.

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

      • PIN A5.5.1

        Subject to PIN Rule A5.5.2, hybrid non-cellular capital includes the following items:

        (a) subordinated debt;
        (b) preference shares; and
        (c) ordinary shares issued by an InsurerG to a Holding CompanyG whose own paid-up ordinary share capital, taken together with its general reserves, is lower than that of the InsurerG .

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

      • PIN A5.5.2

        Hybrid non-cellular capital excludes any instrument that is attributable to a CellG .


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

      • PIN A5.5.3

        Subject to PIN Rule A5.5.4, an InsurerG must calculate its hybrid non-cellular capital adjustment as the amount by which the total amount of hybrid non-cellular capital exceeds 15% of adjusted non-cellular equity.


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

      • PIN A5.5.4

        The DFSAG may at its discretion and on the application of an InsurerG , permit that InsurerG to apply PIN Rule A5.5.3 as though the figure of 15% was replaced with a higher figure approved in writing by the DFSAG . The approved figure may not be more than the actual percentage which the hybrid non-cellular capital represents of adjusted non-cellular equity, and may not in any case exceed 30%.


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

    • PIN A5.6 Adjusted cellular capital resources

      • PIN A5.6.1

        An InsurerG must calculate the Adjusted Cellular Capital ResourcesG in respect of a CellG according to the formula:

        ACCR = ACE +CCA – HCCA

        where, in respect of that CellG :

        ACCR means the Adjusted Cellular Capital ResourcesG ;

        ACE means the adjusted cellular equity
        CCA means the non-cellular capital adjustment; and
        HCCA means the hybrid cellular capital adjustment.


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

      • PIN A5.6.2

        Adjusted cellular equity is calculated as set out in PIN section A5.8. The non-cellular capital adjustment is determined as set out in PIN section A5.9. The hybrid non-cellular capital adjustment is set out in PIN section A5.10.


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

    • PIN A5.7 Base cellular capital

      • PIN A5.7 Guidance

        The commencement point for calculating the adjusted cellular equity in respect of a CellG is the base cellular capital in respect of that CellG .


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

      • PIN A5.7.1

        Subject to Rules PIN A5.7.3 and PIN A5.7.4, the base cellular capital in respect of a CellG consists of the following capital instruments and equity reserves that are attributable to that CellG :

        (a) paid-up Cell SharesG , except for shares referred to in PIN Rule A5.10.1(d);
        (b) general reserves;
        (c) in the Insurance FundG of a Takaful InsurerG , where the Insurance FundG is attributable to the CellG , amounts provided from the Owners' EquityG by loan to the Insurance FundG and not repaid as at the Solvency Reference DateG ;
        (d) retained earnings;
        (e) current year's earnings after tax; and
        (f) hybrid cellular capital (as defined in PIN Rule A5.10.1).

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

      • PIN A5.7.2

        Owners' EquityG in a Takaful InsurerG other than amounts referred to in PIN Rule A5.7.1(c) must be classified as hybrid capital for the purposes of this section if:

        (a) under the constitutional documents of the InsurerG or the terms of insurance contracts or both, participation in the surpluses and losses of Takaful business is limited to the policyholders of the InsurerG ; and
        (b) the Owners' EquityG is available for loan to the Insurance FundG of the InsurerG .

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

      • PIN A5.7.3

        Hybrid cellular capital having a term to maturity of less than five years may only be included in base cellular capital with the consent of the DFSAG .


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

    • PIN A5.8 Adjusted cellular equity

      • PIN A5.8.1

        An InsurerG must calculate its adjusted cellular equity in respect of each CellG by adding items to and deducting them from the base cellular capital of that CellG , as set out in this section.

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

        • PIN A5.8.1 Guidance

          The purpose of these adjustments is to provide a consistent basis for the determination of the Adjusted Cellular Capital ResourcesG in respect of a CellG and to exclude from those resources assets that may not be readily realisable for the purposes of meeting any Cellular LiabilitiesG of that CellG .


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

      • PIN A5.8.2

        The following items must be added to base cellular capital, to the extent that the InsurerG has excluded them in determining base cellular capital:

        (a) any minority interests in companies that are SubsidiariesG of the InsurerG , where the Insurer'sG interest in those companies constitutes a Cellular AssetG of that CellG ; and
        (b) any amount in respect of dividends to be paid by the InsurerG in the form of Cell SharesG of that CellG .

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

      • PIN A5.8.3

        The following items must be deducted from base cellular capital, to the extent that the InsurerG has not excluded them in determining base cellular capital, or has added them to base cellular capital under PIN Rule A5.8.2:

        (a) any amounts in respect of appropriations to be made from profit of the CellG in respect of the reporting period most recently ended, including dividends, bonuses, pensions and welfare charges that are determined on the basis of the profit of that reporting period, whether or not the amounts have been approved by the InsurerG for payment;
        (b) Owners' EquityG in a Takaful InsurerG that does not, under the constitutional documents of the InsurerG or the terms of insurance contracts or both, participate in the surpluses and losses of Takaful business;
        (c) the amount of any investment by the InsurerG or by a SubsidiaryG of the InsurerG , in the Insurer'sG own shares, where that investment or the SubsidiaryG concerned is a Cellular AssetG ;
        (d) the amount of any tax liability that would be attributable to unrealised gains on investments that are Cellular AssetsG , if those gains were realised;
        (e) the amount of deferred acquisition costs that are Cellular AssetsG ;
        (f) the amount of any deferred tax asset that is a Cellular AssetG ;
        (g) the amount of any Cellular AssetG representing the value of in-force Long-Term Insurance BusinessG of the InsurerG ;
        (h) the amount of any goodwill, patents, service rights, brands and any other intangible items that are Cellular AssetsG ;
        (i) the amount of any Zakah or charity fund of a Takaful InsurerG ;
        . . .
        (j) the amount of any operating assets, including inventories, plant and equipment, and vehicles, that are Cellular AssetsG ; and
        (k) the amount of any other Cellular AssetsG that may not be applied to meet Cellular LiabilitiesG of that CellG .

        Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]
        [Amended] RM46/2007 (Made 5th July 2007). [VER6/07-07]

      • PIN A5.8.4

        PIN Rule A5.8.3(l) does not require an InsurerG to exclude Cellular AssetsG attributable to a Long-Term Insurance FundG maintained by the InsurerG .


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

    • PIN A5.9 Non-cellular capital adjustment

      • PIN A5.9.1

        Where an InsurerG that is a Protected Cell CompanyG is organised such that Non-Cellular AssetsG may be used to meet Cellular LiabilitiesG of a CellG , the InsurerG may determine a non-cellular capital adjustment in respect of that CellG .

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

        • PIN A5.9.1 Guidance

          The purpose of the non-cellular capital adjustment is to permit an InsurerG to allocate all or part of its Adjusted Non-Cellular Capital ResourcesG to support the Adjusted Cellular Capital ResourcesG of its CellsG . The adjustment is limited to the amount of Adjusted Non-Cellular Capital ResourcesG that could be made available to meet Cellular LiabilitiesG .


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

      • PIN A5.9.2

        The amount of the non-cellular capital adjustment in respect of a CellG is an amount selected by the InsurerG , subject to the following constraints:

        (a) the non-cellular capital adjustment in respect of a CellG must not be negative;
        (b) the non-cellular capital adjustment in respect of a CellG must not exceed the amount that could be made available to meet the liabilities of that CellG in the event of insolvency of the InsurerG , after taking into consideration all other potential calls on the Insurer'sG Adjusted Non-Cellular Capital ResourcesG ; and
        (c) the sum of the non-cellular capital adjustments in respect of all CellsG must not exceed the amount that could be made available to meet the Cellular LiabilitiesG in the event of insolvency of the InsurerG , after taking into consideration all other potential calls on the Insurer'sG Adjusted Non-Cellular Capital ResourcesG .

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

    • PIN A5.10 Hybrid cellular capital adjustment

      • PIN A5.10 Guidance

        1. This section acts to limit hybrid cellular capital to 15% of an Insurer'sG adjusted cellular equity in respect of a CellG .
        2. The purpose of the hybrid cellular capital adjustment is to limit the extent to which an InsurerG may rely for its Adjusted Cellular Capital ResourcesG in respect of a CellG on instruments that do not or may not constitute permanent capital of that CellG . Such instruments include share capital contributed by an investor where the investor's investment in the CellG is financed by debt rather than by the investor's own capital.

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

      • PIN A5.10.1

        Subject to PIN Rule A5.10.2, hybrid cellular capital includes the following items:

        (a) subordinated debt;
        (b) preference shares;
        (c) Owners' EquityG in a Takaful InsurerG , of the type described in PIN Rule A5.7.2; and
        (d) Cell SharesG issued by a CellG to an investor who stands in the position of a Holding CompanyG in relation to the CellG , and whose own paid-up ordinary share capital, taken together with its general reserves, is lower than that of the CellG .

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

      • PIN A5.10.2

        Hybrid cellular capital excludes any instrument that is not attributable to a CellG .


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

      • PIN A5.10.3

        Subject to PIN Rule A5.10.4, an InsurerG must calculate the hybrid cellular capital adjustment in respect of a CellG as the amount by which the total amount of hybrid cellular capital exceeds 15% of adjusted non-cellular equity.


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

      • PIN A5.10.4

        The DFSAG may at its discretion and on the application of an InsurerG , permit that InsurerG to apply PIN Rule A5.10.3 as though the figure of 15% was replaced with a higher figure approved in writing by the DFSAG . The approved figure may not be more than the actual percentage which the hybrid cellular capital represents of adjusted cellular equity, and may not in any case exceed 30%.


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