Entire Section

  • PRU 3 PRU 3 Instructional Guidelines

    • PRU 3.1 PRU 3.1 PIN 1 — Statement of Financial Position

      • Instructional Guidelines

        1. The 'Statement of Financial Position' provides the DFSA with the necessary information on assets, liabilities and capital to undertake an assessment of an Insurer's financial position and performance and facilitate assessing compliance with the Minimum Capital Requirements.
        2. section PIN 5.3 deals with the recognition and measurement of assets and liabilities on this form.
        3. The instructional guidelines in this section provide instructions as to the completion of specific lines on the form. Instructions that are provided in respect of a particular category of current assets or liabilities are normally applicable also (with the appropriate changes) to the corresponding category of non-current assets or liabilities, and vice versa.
        4. The completion of this form requires Insurers to make estimates, for example, in assigning assets and liabilities as current or non-current. As an example, the settlement date of outstanding claims, particularly IBNR, is often uncertain. An Insurer may make a reasonable estimate of the amount that is expected to be settled within twelve months, and record that amount as a current liability, with the balance being recorded as non-current. A similar approach would be acceptable for the assets representing reinsurance and other recoveries that would not normally become due and receivable until the underlying claim has been settled.
        5. Insurers are required to disclose the amount included in certain totals with respect to parties Related to the Insurer. These disclosures exclude amounts due to or from the Insurer under Contracts of Insurance.
        6. This form is required for each reporting unit in respect of which the Insurer must prepare a Return, except for a DIFC Business Return.
        7. Assets and liabilities must be reported as current or non-current. Current assets and liabilities are those expected to mature or be realised within a twelve-month period from the date as at which the Return is drawn up. Where an asset or a liability includes elements that are current as well as elements that are non-current, the asset or liability must be separated into the current and non-current components, if necessary by means of an estimate.
        Item No. Item Instructional Guidelines
        1. Cash and liquid assets Item 1 on the form includes only cash and liquid assets. Insurers must have regard to the following principles:
        a Item 1.2 includes only deposits available within 24 hours that are used by the Insurer for daily purposes of liquidity and operations. Deposits that form part of the Insurer's investments are reported at item 3 or item 7; and
        b Bank overdrafts must be reported at item 21.3, not netted against item 1 unless there is a legal right of offset.
        2. Receivables Item 2 on the form includes only receivables. In completing this item, Insurers must have regard to the following principles:
        a Receivables must be stated net of any provision for doubtful debt or impairment of asset;
        b Item 2.2 includes items such as subrogation or salvage recoveries in respect of claims that have been paid;
        c Item 2.3 includes instalment premiums on General Insurance contracts that are not yet due for payment. It also includes premiums on General Insurance contracts that have been entered into but not yet recorded. It does not include premiums on Long-term Insurance contracts that are not yet due for payment;
        d Item 2.4 includes amounts due and receivable under reinsurance contracts, including premiums due from cedants and deposits retained by cedants, as well as amounts due from reinsurers in respect of recoveries against claims that have been paid. Where there is a legal right of set-off, an Insurer may report the working balance on an account with a cedant or reinsurer as a net receivable or payable amount. However, if there is no legal right of set-off, amounts must be recorded gross as receivables and payables;
        e Item 2.5 includes amounts in respect of reinsurance and other recoveries in respect of claims that have been incurred but not paid, up to the date to which the Return is drawn up. This includes reinsurance and other recoveries in respect of IBNR. Because of the uncertainty of the outcome of outstanding claims and IBNR, it is necessary to estimate at least a part of this balance. The basis on which the estimate is made must be consistent with the basis of estimation of the related liability, reported at item 18;
        f Reinsurance and other recoveries in respect of claims that have not yet been incurred are reported at item 2.6. It is necessary to estimate this balance. The basis on which the estimate is made must be consistent with the basis of estimation of the related liability, reported at item 19; and
        g Where, in determining the amounts to be reported at item 2.4 or 2.5, an Insurer has made or considered making a provision for doubtful debt in respect of recoveries due or potentially due from a reinsurer, the Insurer must take into account the potential need to make a provision when determining any estimate to be included at item 2.5 or 2.6.

        It is common practice for Insurers to account for their exposures on General Insurance contracts in force by means of an unearned premium provision, an asset representing deferred reinsurance expense and (where necessary) a premium deficiency reserve. Insurers are referred to the instructional guidelines to item 19. An Insurer that uses an unearned premium provision and premium deficiency reserve as a proxy for Premium Liabilities may record its deferred reinsurance expense at item 2.6 (for the current portion) and item 7.6 (for the non-current portion).
        3. Investments An Insurer's current investments are reported at item 3. This item does not include derivatives used to hedge investments reported here. Hedging derivatives are included in item 5. Insurers must have regard to the following principles when completing item 3:
        a Investments that are strategic in nature must be assumed to be noncurrent, and must be reported at item 8 or item 9; and
        b Deposits that are of the nature of security deposits, or retentions under contracts, are not reported at item 3.1 but are reported as receivables.

        Investments that take the form of mudaraba or musharaka contracts must be reported in accordance with their nature. A contract that takes the form of a collective investment, where the Insurer is one of several investors providing capital to a mudarib who then provides the capital to the entrepreneur, should be reported as a collective investment (where it does not fall to be reported as a Profit Sharing Investment Account). Where however, a contract of mudaraba or musharaka is entered into by an Insurer as an investment directly with an entrepreneur, or through a mudarib with the Insurer as sole rab ul mal, the investment should be reported as a contract of mudaraba or musharaka as appropriate.
        4. Deferred Tax assets Deferred tax assets that are current assets are reported at item 4. Insurers must have regard to the following principles when completing item 4:
        a Netting off of deferred tax assets and liabilities is permitted only where both the asset and the liability relate to the same tax to which the Insurer is subject, and are expected to crystallise in the same taxation period; and
        b Amounts that represent refunds due from taxation authorities, that are not contingent on earning future taxable income, are not deferred tax assets but are receivables.
        5. Other Current Assets Item 5 includes current assets that do not fall to be reported under other items. In completing this item, Insurers must have regard to the following principles:
        a Acquisition costs in respect of General Insurance business must not be deferred, as the basis on which the premium liability is determined requires immediate expensing of acquisition costs; and
        b Item 5.2 does not include deferred reinsurance expense, as item 2.6 stands in place of this asset.
        6. Total Current Assets Item 6.1 reports the total of amounts due from, balances with or investments in Related parties that form a part of the total of current assets. This amount excludes amounts due under insurance contracts.
        7. Receivables
        (non current)
        In completing item 7 (non-current receivables) Insurers should have regard to the principles set out in this section for the equivalent categories of current assets.
        8. Investments (other than related entities) In completing item 8 (non-current investments) Insurers should have regard to the principles set out in this section for the equivalent categories of current assets.
        9. Investments in related entities In item 9, investments in Related parties must be recognised and measured in accordance with the principles of chapter PIN 5. PIN Rule 5.7 requires an Insurer to make allowance for any Minimum Capital Requirement or equivalent to which a Subsidiary or Associate is subject in the jurisdiction in which it is incorporated.
        10. Plant and equipment In item 10, an Insurer must exclude any properties of the Insurer, whether or not occupied. Properties must be reported at item 3.6 or 8.6 as appropriate.
        11. Intangible assets In item 11, an Insurer must report intangible assets after deducting any amortisation or impairment charge in respect of those assets.
        12. Deferred tax assets In completing item 12 (non-current deferred tax assets) Insurers should have regard to the principles set out in this section for the equivalent categories of current assets.
        13. Other Assets In completing item 13 (other non-current assets) Insurers should have regard to the principles set out in this section for the equivalent categories of current assets.
        14. Total Non-current assets Item 14.1 reports the total of amounts due from, balances with or investments in Related parties that form a part of the total of current assets. This amount excludes amounts due under insurance contracts.
        15. Total Assets  
        16. Creditors and accruals  
        17. Amounts due on reinsurance contracts Amounts due under reinsurance contracts at item 17 must include premiums payable but not yet due for payment under the terms of reinsurance contracts, and deposits withheld from reinsurers. Other items attributable to reinsurance contracts such as the reinsurer's portion of recoveries and salvage and commissions due to reinsurers must also be included under this item.
        18. Outstanding Claims Provision (including IBNR) Item 18 reports the current portion of the Insurer's provision for outstanding claims. This item must be completed having regard to the following principles:
        a The liability must represent the estimated cost to the Insurer of settling claims which it has incurred at the reporting date but which have not been finalised. The liability is in respect of both direct business and inward reinsurance business and must take into account unpaid claims, unreported claims, adjustments for claims development and the direct and indirect claims settlement costs that the Insurer expects to incur in settling its outstanding claims;
        b In the case of Long-Term Insurance Business, this item must include all claims liabilities in respect of Contracts of Insurance that are no longer included in the calculation of the net policy benefits at item 20;
        c The liability must be stated without deducting reinsurance and other recoveries (these are disclosed as an asset as reinsurance receivables);
        d The requirements for recognition and measurement of this liability are set out in PIN Rule 5.4 and PIN Rule 5.6; and
        e The liability does not include any amounts for catastrophe reserve, equalisation reserve or similar provisions that an Insurer may be required to maintain to satisfy regulatory requirements in a jurisdiction other than the DIFC.
        19. Premium liabilities under General Insurance contracts Item 19, Premium Liability, represents the current portion of the cost of providing insurance service over the unexpired period of general insurance contracts in force at the balance date. This item must be completed having regard to the following principles:
        a The Premium Liability reported is required to cover the value of future claims payments and associated direct and indirect settlement costs arising during the unexpired portion of the contracts in question.
        b Item 19 must be recorded without deducting reinsurance and other recoveries (these are disclosed as an asset as reinsurance receivables); and
        c The requirements for recognition and measurement of this liability are set out in PIN Rule 5.4.

        As stated in the Guidance to PIN Rule 5.4.7, it is common practice for Insurers to account for their exposures on General Insurance contracts in force by means of an unearned premium provision and (where necessary) a premium deficiency reserve. Where the aggregate of the unearned premium provision and the premium deficiency reserve (both gross of reinsurance) can be shown to be not less than the amount of Premium Liability determined in accordance with PIN Rule 5.4, an Insurer may use that aggregate as a proxy for Premium Liability for the purposes of recording items 19 and 29 on this form.
        20. Net policy benefits under Long-Term insurance contracts in force Item 20 represents the net value of future Policy Benefits under Long-Term Insurance contracts that are in force as at the date to which the Return is made up. The amount reported here must be determined in accordance with PIN Rule 5.6.
        21. Borrowings  
        22. Tax liability  
        23. Provisions Item 23, provisions, must be completed having regard to the following principles:
        a A provision must be made at item 23.1 in respect of dividends payable out of past and current year profit, to the extent that profit has been recognised;
        b Employee entitlements at item 23.2 include annual leave, gratuity, accrued allowances, staff housing and loan benefits, healthcare, pension and other employee entitlements; and
        c A provision must be made at item 23.3 in respect of any costs that the Insurer expects to incur as a result of restructuring, including severance, termination and redundancy payments, and integration costs.
        24. Other Liabilities  
        25. Total Current Liabilities Item 25.1 reports the amount of current liabilities representing amounts due to Related parties, other than amounts due under insurance contracts.
        26. Creditors and accruals In completing item 26, Insurers should have regard to the principles set out in these instructional guidelines for the equivalent categories of current liabilities.
        27. Amounts due on reinsurance contracts In completing item 27, Insurers should have regard to the principles set out in these instructional guidelines for the equivalent categories of current liabilities.
        28. Outstanding Claims Provision (including IBNR) In completing item 28, Insurers should have regard to the principles set out in these instructional guidelines for the equivalent categories of current liabilities.
        29. Premium liabilities under General Insurance contracts In completing item 29, Insurers should have regard to the principles set out in these instructional guidelines for the equivalent categories of current liabilities.
        30. Net policy benefits under Long-Term Insurance contracts in force In completing item 30, Insurers should have regard to the principles set out in these instructional guidelines for the equivalent categories of current liabilities.
        31. Borrowings In completing item 31, Insurers should have regard to the principles set out in these instructional guidelines for the equivalent categories of current liabilities.
        32. Tax liability In completing item 32, Insurers should have regard to the principles set out in these instructional guidelines for the equivalent categories of current liabilities.
        33. Provisions In completing item 33, Insurers should have regard to the principles set out in these instructional guidelines for the equivalent categories of current liabilities.
        34. Other Liabilities In completing item 34, Insurers should have regard to the principles set out in these instructional guidelines for the equivalent categories of current liabilities.
        35. Loan capital and hybrid securities Item 35 includes all loan capital and hybrid securities that have been issued by the Insurer and have a residual term to maturity of more than one year. Any loan capital or hybrid securities that have a residual term to maturity of less than one year should be reported as borrowings, at item 21.
        36. Total Non-Current Liabilities Item 36.1 reports the amount of non-current liabilities representing amounts due to Related parties, other than amounts due under insurance contracts and amounts reported at line 35.
        Item 36.2 reports the amount reported at item 35 representing interests of Related parties in loan capital or hybrid securities issued by the Insurer.
        37. Total Liabilities  
        38. Net assets  
        39. Equity In completing item 39, Equity, Insurers must have regard to the following principles:
        a Item 39.7 must be equal to item 38;
        b Hybrid securities and loan capital are reported at item 35, not item 39;
        c Item 3.19 is not used in a Fund Return;
        d Item 39.3 is used only in a Fund Return, to record amounts of capital transferred into the Long-Term Insurance Fund; and
        e Where an Insurer makes use of item 39.6, the Insurer must state in a Supplementary Note the nature of the amount recorded at this item.

        Insurers must record at item 39.8 the amount included at item 39.1 meeting the following descriptions:
        a in the case of a Global Return of an Insurer that is not a Protected Cell Company, the amount of ordinary share capital meeting the description at PIN Rule A3.5.1(d);
        b in the case of a Global Return of an Insurer that is a Protected Cell Company, the amount of ordinary share capital meeting the description at PIN Rule A5.5.1(e); and
        c in the case of a Cell Return, the amount of ordinary share capital meeting the description at PIN Rule A5.10.1(d).

        No amount must be recorded at item 39.8 in the case of a Fund Return.

        An Insurer must provide the following information in a Supplementary Note to this form:
        a any amount included in item 39.7 that is not available to meet the Insurance Liabilities of the Insurer;
        b the amount and details of any guarantees (apart from guarantees arising under Contracts of Insurance) given by the Insurer;
        c the amount and details of any contingent liabilities existing as at the date to which the Return is made up; and
        d where the amount of item 39.4 is not equal to the sum of items 39.4 and 39.5 for the comparative reporting period, a reconciliation of the differences. This applies only when the form forms a part of the Annual Regulatory Return.

        Derived from DFSA RM44/2007 (Made 1st June 2007). [VER2/06-07]
        [Amended] DFSA GM2/2007 (Made 5 July 2007). [VER3/08-07]

    • PRU 3.2 PRU 3.2 PIN 2 — Statement of Capital Adequacy

      • Instructional Guidelines

        1. This form summarises the capital adequacy position of the Insurer so far as concerns the reporting unit for which it is prepared (Global, Cell, or Fund).
        2. The same form is used for all types of Return, although in the calculation of the capital requirements applicable to different Insurers and to their Cells and Long-Term Insurance Funds, different terminology is used. The terms on the face of the form need to be replaced with the specific equivalent terms from the relevant section (as set out below in the interpretation table), depending on the nature of the Insurer and the type of Return.
        3. This form lists a number of adjustments to arrive at the figure to be compared to the Minimum Capital Requirement applicable to the reporting unit. The purpose of these adjustments is to remove significant anomalies that may arise due to the flexibility available to Insurers in selecting their accounting bases. Therefore, not all of these adjustments will be applicable to all Insurers. An item must not be added to the base capital figure if it is al included in the base capital figure because of the accounting basis adopted.
        4. The effect of the instructions, in line with the Rules in PIN, on the Return of a Takaful Insurer is to exclude from equity any element of equity that is not available to participate in the surpluses or deficits of the Insurance Business of the Takaful Insurer, either directly or by loan to the Insurance Fund. Loans that have been made from the Owners' Equity to the Insurance Fund are included in base capital without restriction, while amounts that are available for loan are treated as hybrid capital.
        5. This form is required for each reporting unit in respect of which the Insurer must prepare a Return, except for a DIFC Business Return.
        6. Insurers must follow the requirements of PIN chapter 4 when preparing this form.
        Item No. Item Instructional Guidelines
        1. Base capital Item 1, Base capital, represents the starting-point for the calculation of the capital resources of the Insurer to be compared to the Minimum Capital Requirement applicable to the Insurer. This item must be completed having regard to the following principles:
        a Item 1.1, Equity, must be equal to total equity reported at item 39.7 on form 1, less debt-financed equity reported at line 39.8 on form 1;
        b Item 1.2, Owners' Equity, must be equal to the amount of Owners' Equity in a Takaful Insurer that is available for loan to the Insurance Fund. It does not include any amount of loans made from Owners' Equity to the Insurance Fund and not repaid. This item applies only to Takaful Insurers;
        c Any amount recorded at item 1.3.1 must not exceed the amount recorded at item 35.1 on form 1;
        d Any amount recorded at item 1.3.2 must not exceed the amount recorded at item 35.2 on form 1;
        e Item 1.3.3 may only be used by a Takaful Insurer. This item must equal item 1.2; and
        f Item 1.3.4 may not exceed the amount of item 39.7 on form 1.
        2. Adjustments to base capital in accordance with PIN Item 2, Adjustments to base capital in accordance with PIN, must be completed having regard to the following principles:
        a Amounts referred to in item 2.1 must not be reported if those amounts are included at item 1.7;
        b Amounts referred to in item 2.2 must not be reported if those amounts are excluded from item 1.7;
        c Item 2.1.1, minority interests in subsidiaries, applies only where an Insurer excludes from its equity an amount representing minority interests in a controlled entity that is not accounted for as an investment;
        d Item 2.1.2, liability for dividends to be paid in the form of shares, applies only where an Insurer has recorded as a liability a provision for dividends that are to be paid by issuing shares. This item does not apply to a Fund Return;
        e Item 2.2.1 applies to the liability referred to in PIN Rule A3.4.3(a) and equivalent provisions in PIN Rule A5.4.3(a), PIN Rule A5.8.3(a) and PIN Rule A7.4.2(a). This item does not apply to a Fund Return;
        f Item 2.2.2 applies only to a Return of a Takaful Insurer. This item represents amounts of Owners' Equity that are not available for loan to the Insurance Fund or to participate in surpluses or deficits of the Insurance Fund;
        g Item 2.2.3 represents investments of the Insurer or by any Subsidiary of the Insurer in the base capital of the Insurer recorded at item 1.4;
        h Item 2.2.4 represents the amount of any tax on capital gains, that was not recognised as a liability on form 1, and that would be incurred by the Insurer if the investments reported on form were realised at the values shown on that form;
        i Item 2.2.5 must be equal to the amount of any deferred acquisition costs included on form 1, whether as a separate asset or as a reduction from liabilities;
        j Item 2.2.6 must be equal to the sum of items 4.3 and 12.3 on form 1;
        k Item 2.2.7 must be equal to the sum of any asset recorded on form 1 and representing the value of in-force Long-Term Insurance Business;
        l Item 2.2.8 must be equal to the sum of item 11.3 on form 1, and any other intangible assets recorded on form 1 and not otherwise excluded from base capital;
        m Item 2.2.9 applies only to a Return of a Takaful Insurer. This item represents any amount of Zakah or charity fund of a Takaful Insurer that is not otherwise excluded from base capital;
        n Item 2.2.10 is intentionally blank.
        o Item 2.2.11 must be equal to the amount reported at item 10.3 on form 1; and
        p Item 2.2.12 must record the amount of any other assets, not otherwise excluded from base capital, that are not available to meet the Insurance Liabilities of the Insurer recorded on form 1.

        Item 2 would normally be expected to include assets that are subject to mortgages or other charges, or than cannot for some other reason be realised for the benefit of policyholders.
        3. Adjusted Equity Item 3.11 may only be used with the written approval of the DFSA, to record an adjustment to the Minimum Capital Requirement that has been approved in writing by the DFSA.
        4. Hybrid Capital Adjustment Item 4.1, Hybrid Capital Adjustment before DFSA approval, must be calculated as the amount by which the sum of items 1.3.1 to 1.3.4 exceeds 15/85 of the amount arrived at by deducting item 1.2.1 from item 1.1.

        Item 4.2, additional hybrid capital approved by DFSA, may only be used to record additional amounts of hybrid capital that have been approved in writing by the DFSA, in accordance with PIN Rule A3.5.2, PIN Rule A5.5.4, PIN Rule A5.10.4 or PIN Rule A7.5.3. The amount of item 4.2 may not exceed the amount of item 4.1

        Item 4.1 deducts hybrid capital that would normally be inadmissible because it exceeds the prescribed percentage. Item 4.2 reinstates hybrid capital that had been disallowed by item 4.1. Item 4.2 does not show the total amount of admissible hybrid capital, only that portion that exceeds the 15% ceiling.
        5. Adjusted Capital Resources  
        6. Minimum Capital Requirement Item 6, Minimum Capital Requirement sets out the components of the Minimum Capital Requirement applicable to the reporting unit of the Insurer in respect of which the Return is completed. For each reporting unit, the components must be calculated in accordance with the chapter applicable to that reporting unit. The terms used in this item must be interpreted in accordance with section 3.16.
        7. Absolute minimum requirement applicable to reporting unit Item 7, Absolute minimum requirement applicable to reporting unit, must be interpreted in accordance with the interpretation table below.
        8. Applicable result  
        9. Capital adequacy result  
        7. For the purposes of this form, the meaning that must be given to each of the terms set out in the leftmost column of the interpretation table below for each type of Return is contained in the column headed by that type of Return.
        8. Where a term does not apply to a type of Return, this is denoted by the characters 'N/A' and this item must be left blank on the form.
        Meaning of term for each type of Return
        Item No. Term used in form Global Return (all Insurers except Protected Cell Companies) Global Return (Protected Cell Companies) Cell Return Fund Return
        1. Base capital Base capital as defined in PIN Rule A3.3.1 Base non-cellular capital as defined in PIN Rule A5.3.1 Base cellular capital as defined in PIN Rule A5.7.1 Base fund capital as defined in PIN Rule A7.3.2
        3. Adjusted equity AE as defined in PIN Rule A3.2.1 ANE as defined in PIN Rule A5.2.1 ACE as defined in PIN Rule A5.6.1 AFE as defined in PIN Rule A7.2.1
        4. Hybrid Capital Adjustment HCA as defined in PIN Rule A3.2.1 HNCA as defined in PIN Rule A5.2.1 HCCA as defined in PIN Rule A5.6.1 FHCA as defined in PIN Rule A7.2.1
        5. Adjusted Capital Resources ACR as defined in PIN Rule A3.2.1 ANCR as defined in PIN Rule A5.2.1 ACCR as defined in PIN Rule A5.6.1 AFCR as defined in PIN Rule A7.2.1
        6. Minimum Capital Requirement MCR as defined in PIN Rule A4.2.1 MSCR as defined in PIN Rule A6.2.2 MSCR as defined in PIN Rule A6.2.2 MFCR as defined in PIN Rule A8.2.1
        6.1 Default risk component DRC as defined in PIN Rule A4.2.1 DRC as defined in PIN Rule A6.2.2 DRC as defined in PIN Rule A6.2.2 DRC as defined in PIN Rule A8.2.1
        6.2 Investment volatility risk component IVRC as defined in PIN Rule A4.2.1 IVRC as defined in PIN Rule A6.2.2 IVRC as defined in PIN Rule A6.2.2 IVRC as defined in PIN Rule A8.2.1
        6.3 Off-balance sheet asset risk component OARC as defined in PIN Rule A4.2.1 OARC as defined in PIN Rule A6.2.2 OARC as defined in PIN Rule A6.2.2 OARC as defined in PIN Rule A8.2.1
        6.4 Off-balance sheet liability risk component OLRC as defined in PIN Rule A4.2.1 OLRC as defined in PIN Rule A6.2.2 OLRC as defined in PIN Rule A6.2.2 OLRC as defined in PIN Rule A8.2.1
        6.5 Concentration risk component CRC as defined in PIN Rule A4.2.1 CRC as defined in PIN Rule A6.2.2 CRC as defined in PIN Rule A6.2.2 CRC as defined in PIN Rule A8.2.1
        6.6 Size factor adjustment SFAC as defined in PIN Rule A4.2.1 SFAC as defined in PIN Rule A6.2.2 SFAC as defined in PIN Rule A6.2.2 SFAC as defined in PIN Rule A8.2.1
        6.7 Underwriting risk component URC as defined in PIN Rule A4.2.1 N/A URC as defined in PIN Rule A6.2.2 N/A
        6.8 Reserving risk component RRC as defined in PIN Rule A4.2.1 N/A RRC as defined in PIN Rule A6.2.2 N/A
        6.9 Long-Term Insurance risk component LIRC as defined in PIN Rule A4.2.1 N/A LIRC as defined in PIN Rule A6.2.2 LIRC as defined in PIN Rule A8.2.1
        6.10 Asset management risk component AMRC as defined in PIN Rule A4.2.1 AMRC as defined in PIN Rule A6.2.2 AMRC as defined in PIN Rule A6.2.2 AMRC as defined in PIN Rule A8.2.1
        7. Absolute minimum requirement applicable to reporting unit The amount set out in PIN Rule A4.2.3, applicable to the Insurer The amount set out in PIN Rule A6.2.4 or, if higher, the MSCR as defined in PIN Rule A6.2.2 plus any amount that must be added to that amount pursuant to PIN Rule A6.2.6 The amount set out in PIN Rule A6.2.5 The amount set out in PIN Rule A8.2.3

        Derived from DFSA RM44/2007 (Made 1st June 2007). [VER2/06-07]
        [Amended] DFSA GM2/2007 (Made 5 July 2007). [VER3/08-07]

    • PRU 3.3 PRU 3.3 PIN 3 — Statement of Financial Performance

      • Instructional Guidelines

        1. This form summarises the financial performance of the Insurer.
        2. This form is required for each reporting unit in respect of which the Insurer must prepare a Return, except for a DIFC Business Return.
        3. This form must agree with other forms in the Return (where those forms are prepared for the same reporting unit) in the following respects:
        a. Item 1.1 must agree to form 4 item 9 column 5;
        b. Item 1.2 must agree to form 4 item 28 column 5;
        c. Item 2.1 must agree to form 4 item 19 column 5;
        d. Item 2.2 must agree to form 4 item 37 column 5;
        e. Item 4.1 must agree to form 5 item 9 column 5;
        f. Item 4.2 must agree to form 5 item 28 column 5;
        g. Item 5.1 must agree to form 5 item 19 column 5;
        h. Item 5.2 must agree to form 5 item 37 column 5;
        i. Item 10.1 must equal the sum of items 9 and 28 in column 5 on form 8;
        j. Item 10.2 must equal the sum of items 19 and 37 in column 5 on form 8;
        k. Item 13.1 must equal item 7 minus item 6.3 on form 7; and
        l. Item 13.2 must agree to form 7 item 6.3.
        4. An Insurer must present at item 7 the amount of the movement in the period reported on in the balance of Insurance Liabilities.
        5. An Insurer must present at item 8 the amount of the movement in the period reported on in the balance of reinsurance and other recoveries in respect of Insurance Liabilities.
        6. Insurance Liabilities are reported gross of reinsurance and other recoveries. Reinsurance and other recoveries that are recorded in respect of Insurance Liabilities are reported as assets. An increase in Insurance Liabilities is reported on form 3 as an expense. In the same manner, an increase in the reinsurance and other recoveries in respect of Insurance Liabilities is recorded as revenue.
        7. The other expenses disclosed at item 10.4 must be only those attributable to a Long-Term Insurance Fund. Expenses that are not so attributable are disclosed at item 10.5. By virtue of PIN Rule 3.5.5, expenses that do not relate to the Insurer’s Long-Term Insurance Business may not be attributed to a Long-Term Insurance Fund.
        8. An Insurer must present the following information in a Supplementary Note to this form:
        a. the amount if any included in item 11.2 that represents other operating income receivable from Related parties, and a description of the nature of that income;
        b. the amount if any included in item 13.3 that represents investment expenses payable to Related parties; and
        c. where item 18 does not agree to form 1 item 39.5, a reconciliation showing the differences between the two figures.
        Derived from DFSA RM44/2007 (Made 1st June 2007). [VER2/06-07]
        [Amended] DFSA GM2/2007 (Made 5th July 2007). [VER3/08-07]

    • PRU 3.4 PRU 3.4 PIN 4 — Statement of Premium Revenue and Reinsurance Expenses

      • Instructional Guidelines

        1. This form is required for each reporting unit in respect of which the Insurer must prepare an Annual Regulatory Return, except for the Global Return of an Insurer that is a Protected Cell Company.
        2. A Protected Cell Company is prevented by COB from carrying on Insurance Business other than through a Cell. Because this form would always be blank for such a company in its Global Return, there is no need for it to submit the form or to complete a Supplementary Note to explain its absence.
        3. An Insurer must record premiums and reinsurance premiums relating to its Insurance Business on this form as follows:
        a. An Insurer that is carrying on General Insurance Business must complete part I of this form.
        b. An Insurer that is carrying on Long-Term Insurance Business must complete part II of this form.
        c. Subject to d. an Insurer that is carrying on Long-Term Insurance Business and General Insurance Business of Class 1 or Class 2 may elect either to record the General Insurance Business in part I of this form, or to include that business in Class I on part II of this form. An Insurer may not, between successive Returns, change its election without the written approval of the DFSA.
        d. A DIFC Incorporated Insurer undertaking Direct Long-Term Insurance business and General Insurance Business of Class 1 or Class 2 that is Direct business must record that General Insurance Business as Direct Long-Term Insurance Business in Class I.
        4. At items 1 to 8 and items 21 to 27, against each Class of Business, and for each type of insurance contract as set out in columns 1 to 4, an Insurer must record its Gross Written Premium for the reporting period in respect of that Class of Business and for that type of insurance contract.
        5. At items 11 to 18 and items 30 to 36, against each Class of Business, and for each type of insurance contract as set out in columns 1 to 4, an Insurer must record the reinsurance premium ceded in respect of each Class of Business and each type of insurance contract. Reinsurance premiums recorded as ceded must be gross of any commissions or brokerage, and must be recognised on a basis consistent with the recognition of Gross Written Premium on this form.
        6. Reinsurance premiums ceded must be analysed between columns 1 and 4 on the basis of the underlying insurance contracts that they are protecting, not on the basis of the reinsurance contracts themselves. Where reinsurance arrangements protect more than one type of business (for example both direct and facultative business) or more than one Class of Business, the Insurer must make a reasonable allocation of the reinsurance premiums between the types or Classes of Business covered.
        7. An Insurer must disclose the aggregate amount of its insurance and reinsurance transactions with its Related parties as follows:
        a. at item 10, the amount of Gross Written Premium accepted from Related parties that has been included in the total at item 9;
        b. at item 20, the amount of reinsurance premium ceded to Related parties that has been included in the total at item 19;
        c. at item 29, the amount of Gross Written Premium accepted from Related parties that has been included in the total at item 28; and
        d. at item 38, the amount of reinsurance premium ceded to Related parties that has been included in the total at item 37.

        Derived from DFSA RM44/2007 (Made 1st June 2007). [VER2/06-07]
        [Amended] DFSA GM2/2007 (Made 5th July 2007). [VER3/08-07]

    • PRU 3.5 PRU 3.5 PIN5 — Statement of Claims and Reinsurance and other Recoveries

      • Instructional Guidelines

        1. This form is required for each reporting unit in respect of which the Insurer must prepare an Annual Regulatory Return, except for the Global Return of an Insurer that is a Protected Cell Company.
        2. A Protected Cell Company is prevented by COB from carrying on Insurance Business other than through a Cell. Because this form would always be blank for such a company in its Global Return, there is no need for it to submit the form or to complete a Supplementary Note to explain its absence.
        3. An Insurer must record claims paid and reinsurance and other recoveries in respect of claims paid relating to its Insurance Business on this form as follows:
        a. An Insurer that is carrying on General Insurance Business must complete part I of this form.
        b. An Insurer that is carrying on Long-Term Insurance Business must complete part II of this form.
        c. An Insurer that is carrying on Long-Term Insurance Business and General Insurance Business of Class 1 or Class 2 must record the General Insurance Business in a manner consistent with that adopted in respect of form 4 or determined in accordance with the instructional guidelines 3c under section 3.4.
        d. A DIFC Incorporated Insurer that carries on Direct Long-Term Insurance Business must complete part III of this form in addition to any other part that this rule requires it to complete. Part III of this form is completed in respect of Direct Long-Term Insurance Business only.
        4. At items 1 to 8 and items 21 to 27, against each Class of Business, and for each type of insurance contract as set out in columns 1 to 4, an Insurer must record its gross claims paid for the reporting period in respect of that Class of Business and for that type of insurance contract.
        5. For the purposes of this form, the amount of claims paid includes expenses incurred by the Insurer in the settlement of the claims.
        6. At items 11 to 18 and items 30 to 36, against each Class of Business, and for each type of insurance contract as set out in columns 1 to 4, an Insurer must record the reinsurance and other recoveries receivable in respect of claims paid, in respect of each Class of Business and each type of insurance contract.
        7. Reinsurance recoveries must be analysed between columns 1 and 4 on the basis of the underlying insurance contracts that they relate to, not on the basis of the reinsurance contracts themselves. Where the nature of the reinsurance contract is such that the Insurer cannot identify individual claims benefiting from the recoveries (for example, in the case of an aggregate excess of loss contract, or a stop loss contract) the Insurer must make a reasonable allocation of the recoveries across the types and Classes of Business that have benefit of the reinsurance contracts.
        8. An Insurer must disclose the aggregate amount of its insurance and reinsurance transactions with its related parties as follows:
        a. At item 10, the amount of gross claims paid to Related parties that has been included in the total at item 9;
        b. At item 20, the amount of reinsurance and other recoveries receivable from Related parties that has been included in the total at item 19;
        c. At item 29, the amount of gross claims paid to Related parties that has been included in the total at item 28; and
        d. At item 38, the amount of reinsurance and other recoveries receivable from Related parties that has been included in the total at item 37.
        9. An Insurer required to complete part III must record at items 39 to 45, against each Class of Business, and for each type of claim as set out in columns 1 to 4, the Insurer’s gross claims paid for the reporting period in respect of that Class of Business and for that type of claim.
        10. An Insurer required to complete part III must record, for each type of claim as set out in columns 1 to 4, at item 47 the amount of gross claims paid to Related parties that has been included in the total at item 46.
        11. For the purposes of this form, the amount of claims paid includes expenses incurred by the Insurer in the settlement of the claims.
        12. At items 48 to 54, against each Class of Business, and for each type of claim as set out in columns 1 to 4, an Insurer required to complete part III must record the reinsurance and other recoveries receivable in respect of claims paid, in respect of each Class of Business and each type of insurance contract.
        13. An Insurer required to complete part III must record, for each type of claim as set out in columns 1 to 4, at item 56 the amount of reinsurance and other recoveries receivable from Related parties that has been included in the total at item 55.
        14. Column 5 in part III of the form must equal column 1 in part II of the form as follows:
        a column 5, items 39 to 45 must equal column 1, items 21 to 27 respectively;
        b column 5 item 47 must equal column 1 item 29;
        c column 5, items 48 to 54 must equal column 1, items 30 to 36 respectively; and
        d column 5 item 56 must equal column 1 item 38.
        15. Part III of the form is completed only by DIFC Incorporated Insurers that undertake Direct Long-Term Insurance Business. This part provides an analysis of the information provided in column 1 of part II.

        Derived from DFSA RM44/2007 (Made 1st June 2007). [VER2/06-07]
        [Amended] DFSA GM2/2007 (Made 5th July 2007). [VER3/08-07]

    • PRU 3.6 PRU 3.6 PIN6 — Statement of Movements in Insurance Provisions

      • Instructional Guidelines

        1. This form is required for each reporting unit in respect of which the Insurer prepares an Annual Regulatory Return, or a part of an Annual Regulatory Return, in respect of General Insurance Business.
        2. A Protected Cell Company is prevented by COB from carrying on Insurance Business other than through a Cell. Because this form would always be blank for such a company in its Global Return, and it is exempted from the requirement to complete other forms relating to General Insurance Business, there is no need for it to submit the form, or to complete a Supplementary Note to explain its absence.
        3. A Global Return of an Insurer that does not carry on General Insurance Business, or a Cell Return, Fund Return or DIFC Business Return of such an Insurer, also omits this form, without the need for a Supplementary Note to explain its absence. However, if an Insurer that carries on Long-Term Insurance Business together with Class 1 or Class 2 General Insurance Business elects to report that Class 1 or Class 2 business as General Insurance Business for the purposes of form 4 or form 5, it must also complete this form in respect of that business.
        4. An Insurer must record separately, in parts I to IV and parts V to VIII respectively of this form, the information required in respect of claims outstanding (including IBNR) gross of reinsurance and other recoveries, and reinsurance and other recoveries in respect of those claims outstanding. This information must be presented for each Class of Business.
        5. Reinsurance recoveries must be analysed between parts V to VIII on the basis of the underlying insurance contracts that they relate to, not on the basis of the reinsurance contracts themselves. Where the nature of the reinsurance contract is such that the Insurer cannot identify individual claims benefiting from the recoveries (for example, in the case of an aggregate excess of loss contract, or a stop loss contract) the Insurer must make a reasonable allocation of the recoveries across the types and Classes of Business that have benefit of the reinsurance contracts.

        Parts I, II, III and IV:

        6. PIN chapter 5 requires an Insurer to record its Insurance Liabilities on a discounted basis. A liability for an outstanding claim increases between the beginning and end of a reporting period, because the amount of discount applied at the later is less. The expense represented by this increase is referred to in the form as release of discount.

        Parts I, II, III and IV must be prepared on the following basis:

        a. At column 1 in each part, the Insurer must record the amount of claims outstanding (including IBNR), at the end of the reporting period and in respect of claims incurred during the reporting period;
        b. At column 2 in each part, the Insurer must record the amount of claims outstanding (including IBNR), at the beginning of the reporting period and in respect of claims incurred during the previous reporting period;
        c. At column 3 in each part, the Insurer must record the amount of the movement during the reporting period in the provision for claims outstanding (including IBNR), in respect of claims incurred during the previous reporting period, that arises from those claims being one year closer to settlement;
        d. At column 4 in each part, the Insurer must record the amount of claims paid during the reporting period, in respect of claims incurred during the previous reporting period;
        e. At column 5 in each part, the Insurer must record the amount of other movements in the provision for claims outstanding (including IBNR), in respect of claims incurred during the previous reporting period;
        f. At column 7 in each part, the Insurer must record the amount of claims outstanding (including IBNR), at the beginning of the reporting period and in respect of claims incurred before the beginning of the previous reporting period;
        g. At column 8 in each part, the Insurer must record the amount of the movement during the reporting period in the provision for claims outstanding (including IBNR), in respect of claims incurred before the beginning of the previous reporting period, that arises from those claims being one year closer to settlement;
        h. At column 9 in each part, the Insurer must record the amount of claims paid during the reporting period, in respect of claims incurred before the beginning of the previous reporting period; and
        i. At column 10 in each part, the Insurer must record the amount of other movements in the provision for claims outstanding (including IBNR), in respect of claims incurred before the beginning of the previous reporting period.

        Parts V, VI, VII and VIII

        7. chapter PIN 5 requires an Insurer to record its Insurance Liabilities and associated assets on a discounted basis. The asset representing reinsurance and other recoveries against outstanding claims increases between the beginning and end of a reporting period, because the amount of discount applied at the later is less. The revenue represented by this increase is referred to in the form as release of discount.

        Parts V, VI, VII and VIII must be prepared on the following basis:

        a. At column 1 in each part, the Insurer must record the amount of the asset representing reinsurance and other recoveries in respect of outstanding claims (including IBNR), at the end of the reporting period and in respect of claims incurred during the reporting period;
        b. At column 2 in each part, the Insurer must record the amount of the asset representing reinsurance and other recoveries in respect of outstanding claims (including IBNR), at the beginning of the reporting period and in respect of claims incurred during the previous reporting period;
        c. At column 3 in each part, the Insurer must record the amount of the movement during the reporting period in the asset representing reinsurance and other recoveries in respect of outstanding claims (including IBNR), in respect of claims incurred during the previous reporting period, that arises from those recoveries being one year closer to settlement;
        d. At column 4 in each part, the Insurer must record the amount of recoveries received during the reporting period, in respect of claims incurred during the previous reporting period;
        e. At column 5 in each part, the Insurer must record the amount of other movements in the asset representing reinsurance and other recoveries in respect of outstanding claims (including IBNR), in respect of claims incurred during the previous reporting period;
        f. At column 7 in each part, the Insurer must record the amount of the asset representing reinsurance and other recoveries in respect of outstanding claims (including IBNR), at the beginning of the reporting period and in respect of claims incurred before the beginning of the previous reporting period;
        g. At column 8 in each part, the Insurer must record the amount of the movement during the reporting period in the asset representing reinsurance and other recoveries in respect of outstanding claims (including IBNR), in respect of claims incurred before the beginning of the previous reporting period, that arises from those claims being one year closer to settlement;
        h. At column 9 in each part, the Insurer must record the amount of reinsurance and other recoveries received during the reporting period, in respect of claims incurred before the beginning of the previous reporting period; and
        i. At column 10 in each part, the Insurer must record the amount of other movements in the asset representing reinsurance and other recoveries in respect of outstanding claims (including IBNR), in respect of claims incurred before the beginning of the previous reporting period.
        8. The aggregate of items 9, 18, 27 and 36 in column 12 of this form must together equal the sum on form 1 of items 18 and 28, except in the case of a Return that does not include form 1.
        9. The aggregate of items 45, 54, 63 and 72 in column 12 of this form must together equal the sum on form 1 of items 2.5 and 7.5, except in the case of a Return that does not include form 1.
        10. An Insurer must present, as a Supplementary Note to this form, the following information:
        a the assumed inflation and discount rates, expressed as an annualised percentage, used by the Insurer in determining the amounts reported on this form, distinguishing between the rates assumed for the periods:
        i. up to two calendar years after the end of the reporting period;
        ii. more than two and up to five calendar years after the end of the reporting period; and
        iii. more than five calendar years after the end of the reporting period;
        b the basis on which those assumed inflation and discount rates were determined; and
        c the estimated weighted average term to settlement of:
        i. claims incurred in the reporting period;
        ii. claims incurred in the previous reporting period; and
        iii. claims incurred in earlier reporting periods.

        Derived from DFSA RM44/2007 (Made 1st June 2007). [VER2/06-07]
        [Amended] DFSA GM2/2007 (Made 5th July 2007). [VER3/08-07]

    • PRU 3.7 PRU 3.7 PIN 7 — Statement of Investment Income

      • Instructional Guidelines

        This form is required for each reporting unit in respect of which the Insurer must prepare an Annual Regulatory Return, except for a DIFC Business Return.

        Item No. Item Instructional Guidelines
        1. Interest receivable The Insurer must disclose at item 1 interest receivable, measured on an accruals basis, on securities and loans bearing a fixed or variable rate of interest. This item should include interest receivable on cumulative preference shares
        2. Dividends receivable The Insurer must disclose at item 2 dividends receivable on equity Securities
        3. Rental income receivable The Insurer must disclose at item 3 rental income receivable, on an accruals basis, for the use of real property
        4. Income under investment contracts of mudaraba and musharaka The Insurer must disclose at item 4 income receivable, on an accruals basis, under investment contracts of mudaraba and musharaka other than Profit Sharing Investment Accounts or contracts of the nature of collective investments;
        Item 4 should include income receivable under contracts of mudaraba and musharaka where the nature of the investment is that the Insurer provides capital to the counterparty either directly or through a mudarib, but not in the form of a Profit Sharing Investment Account (PSIA), mutual fund or other collective investment. Collective investments including PSIAs are disclosed at item 5
        5. Income from collective investments The Insurer must disclose at item 5 income receivable, on an accruals basis, from collective investments, including mutual funds, Profit Sharing Investment Accounts and contracts taking the form of collective investments;

        Item 5 should include income receivable under contracts that by their nature are collective investments, where the Insurer stands as one of several rab ul mal providing capital to a mudarib who in turn invests that capital. The rab ul mal may receive a Sukuk or certificate which may be transferable. Investments in Profit Sharing Investment Accounts will normally be disclosed here.
        6. Changes in value in invested assets The Insurer must disclose at item 6 the aggregate amount of changes in value in its invested assets. Where the aggregate amount of changes in value for either of item 6.1 or 6.2 represents a reduction in value, the Insurer must record that item as a negative figure
        7. Other investment income The Insurer must disclose at item 7 the aggregate amount of any investment income that does not fall into any of items 1 to 5. Where an Insurer uses this item, it must provide details of the item in question in a Supplementary Note to this form.

        Item 7 will normally be used only by Insurers with income on investments that do not readily fall into any of the categories described in this Rule. An Insurer reporting an amount under this item will normally be expected to provide sufficient information to explain to the DFSA the nature of the investment and the nature of the income arising from it.
        8. Total investment income  

        Derived from DFSA RM44/2007 (Made 1st June 2007). [VER2/06-07]

    • PRU 3.8 PRU 3.8 PIN 8 — Statement of Acquisition Expenses

      • Instructional Guidelines

        1. This form is required for each reporting unit in respect of which the Insurer must prepare an Annual Regulatory Return, except for the Global Return of an Insurer that is a Protected Cell Company.
        2. A Protected Cell Company is prevented by COB from carrying on Insurance Business other than through a Cell. Because this form would always be blank for such a company in its Global Return, there is no need for it to submit the form or to complete a Supplementary Note to explain its absence.
        3. An Insurer must record acquisition expenses relating to its Insurance Business on this form as follows:
        a. An Insurer that is carrying on General Insurance Business must complete part I of this form;
        b. An Insurer that is carrying on Long-Term Insurance Business must complete part II of this form;
        c. An Insurer that is carrying on Long-Term Insurance Business and General Insurance Business of Class 1 or Class 2 must record that business consistently with the election made pursuant to form 5;
        d. A DIFC Incorporated Insurer that carries on Direct Long-Term Insurance Business must complete part III of this form in addition to any other part that this rule requires it to complete. Part III of this form is completed in respect of Direct Long-Term Insurance Business only; and
        e. Commissions receivable by Insurers from their reinsurers (often referred to as exchange commissions, overriders or ceded acquisition costs) must not be netted against acquisition costs disclosed on this form but must be recorded as income on form 3 at item 11.1.
        4. Part III only of this form provides additional disclosures in respect of expenses recovered from reinsurers, in the case of Direct Long-Term Insurance Business. Those disclosures are not limited to commissions.
        5. At items 1 to 8 and items 21 to 27, against each Class of Business, and for each type of insurance contract as set out in columns 1 to 4, an Insurer must record commissions and brokerage payable by it for the reporting period in respect of that Class of Business and for that type of insurance contract.
        6. At items 11 to 18 and items 30 to 36, against each Class of Business, and for each type of insurance contract as set out in columns 1 to 4, an Insurer must record acquisition expenses other than commission and brokerage payable by it in respect of each Class of Business and each type of insurance contract.
        7. An Insurer must disclose the aggregate amount of acquisition costs payable to related parties as follows:
        a. at item 10, the amount of commissions and brokerage payable to Related parties that has been included in the total at item 9;
        b. at item 20, the amount of other acquisition expenses payable to related parties that has been included in the total at item 19;
        c. at item 29, the amount of commissions and brokerage payable to related parties that has been included in the total at item 28; and
        d. at item 38, the amount of other acquisition expenses payable to related parties that has been included in the total at item 37.
        8. An Insurer required to complete part III must record at items 39 to 45, against each Class of Business, and for each type of expense as set out in columns 1 to 4, the Insurer’s commission and management expenses paid for the reporting period in respect of that Class of Business and for that type of expense.
        9. At item 47, an Insurer required to complete part III must record the amount of each type of expense as set out in columns 1 to 4 and included in item 46 that is payable to Related parties.
        10. At item 48, an Insurer required to complete part III must record the amount of each type of expense as set out in columns 1 to 4 and included in item 46 that is recoverable from reinsurers.
        11. At item 49, an Insurer required to complete part III must record the amount of each type of expense as set out in columns 1 to 4 and included in item 46 that is recoverable from Related parties. Where amounts are disclosed here that are not included in item 48, particulars of the recovery must be disclosed in a Supplementary Note.
        12. Column 1, items 39 to 45 must equal column 1, items 21 to 27 respectively and column 1 item 47 must equal column 1 item 29.
        13. Column 2, items 39 to 45 must equal column 1, items 30 to 36 respectively and column 2 item 47 must equal column 1 line 38.
        14. An Insurer must present by way of Supplementary Note a reconciliation between the sum of item 46 column 3 and item 46 column 4, and item 10.4 in the current year column of Form PIN3.
        15. An Insurer must present by way of Supplementary Note a description of the method by which management expenses have been allocated between columns 2, 3 and 4 of part III.
        16. This part of the form is completed only by DIFC Incorporated Insurers that undertake Direct Long-Term Insurance Business. This part provides an analysis of the information provided in column 1 of part II, with additional information on management expenses not disclosed elsewhere on this form.
        17. In allocating management expenses between columns 2, 3 and 4, Insurers should follow generally accepted practice in the life insurance industry. Costs that are not attributable to the Direct Long-Term Insurance Business will not be included on this form as by virtue of PIN Rule 3.5.5 they may not be paid out of the Long-Term Insurance Fund. In general, an Insurer should observe the following principles when making the allocation:
        a. Acquisition costs include those incurred in writing new business or amendments to existing business, such as underwriting, issue of contracts, and setting up policy records. Expenses attributable to the sales and marketing organisation also fall within this heading.
        b. Maintenance costs include those incurred in maintaining the business, for example the cost of issuing periodic reports to policyholders and investment management expenses.
        c. Costs of a non-recurring nature should be recorded as ‘other’. Costs of this nature include the costs of establishing an operation or developing new systems.
        18. The Supplementary Note required by instructional guideline 14 in this section should provide particulars of reconciling items. Where the only difference between the two figures is management expenses attributable to Long-Term Insurance Business other than Direct, no further explanation is required.

        Derived from DFSA RM44/2007 (Made 1st June 2007). [VER2/06-07]
        [Amended] DFSA GM2/2007 (Made 5th July 2007). [VER3/08-07]

    • PRU 3.9 PRU 3.9 PIN9 — Reconciliation to Financial Statements

      • Instructional Guidelines

        1. This form is required only for an Insurer's Global Return. This form is not subject to audit.
        2. The purpose of this for is to provide a reconciliation between the net assets of the Insurer as recorded on form 1 and the net assets of the Insurer as recorded in its financial statements prepared under relevant companies legislation for the same reporting period.
        3. Where an Insurer's financial statements prepared under relevant companies legislation are not available at the time of lodgement of the Annual Regulatory Return, the Insurer will be expected to complete this form based on the draft financial position of the Insurer as at the end of the reporting period. Where the financial statements are subsequently provided to the DFSA as permitted by PIN Rule 6.5.7, the Insurer should consider whether it is necessary to draw the attention of the DFSA to any significant changes between the draft financial statements on which this form was based and the financial statements subsequently provided.
        4. An Insurer must disclose the amounts making up the difference between the Insurer's net assets reported at item 39.7 on form 1 and the Insurer's net assets (or equivalent designation) reported on the balance sheet, statement of financial position or equivalent document (referred to in this section as the 'statutory balance sheet') forming part of the financial statements that the Insurer is required to complete under the Companies Law 2004 (or equivalent legislation in jurisdictions other than the DIFC), made up as at the same date as the information contained in form 1.
        Item No. Item Instructional Guidelines
        1. Net assets according to Form 1 item 39.7 Item 1 must agree to form 1 item 39.7.
        2. Differences between item 1 and Net Assets according to Financial Statements Differences constituting differences in recognition of assets and liabilities must be disclosed at item 2.1. Where an asset is recognised in the statutory balance sheet but not in form 1, the item must be disclosed as a positive amount, and vice versa. Where a liability is recognised in the statutory balance sheet but not in form 1, the item must be disclosed as a negative amount, and vice versa.

        Differences constituting differences in valuation of assets and liabilities that are recognised in both the statutory balance sheet and form 1 must be disclosed at item 2.2. Where an asset is valued at more in the statutory balance sheet than in form 1, the item must be disclosed as a positive amount, and vice versa. Where a liability is valued at more in the statutory balance sheet than in form 1, the item must be disclosed as a negative amount, and vice versa.

        The information presented at items 2.1 and 2.2 must include:
        a. the amount of each material difference; and
        b. a description of each material difference.
        3. Net Assets according to Financial Statements Item 3 must agree to the amount of net assets (or equivalent designation) in the Insurer's statutory balance sheet.
        5. Where this form does not contain sufficient space for the presentation of the information required by this section, the Insurer must present a Supplementary Note containing that information.
        6. Presenting a Supplementary Note does not relieve an Insurer from the obligation to prepare the form. However it will be acceptable for an Insurer to include on the form a reference to the Supplementary Note containing the information required to be presented, together with the aggregate amount covered in that Supplementary Note.

        Derived from DFSA RM44/2007 (Made 1st June 2007). [VER2/06-07]

    • PRU 3.10 PRU 3.10 PIN10 — Summary Statement to Operations

      • Instructional Guidelines

        1. This form is required only for a DIFC Business Return.
        2. The Summary statement of operations provides the DFSA with quarterly information on the operations of a DIFC Branch of an Insurer that is not incorporated in the DIFC.
        3. The instructional guidelines in this section provide instructions as to the completion of specific lines on the form. The instructions are similar to those applicable to corresponding items on forms 1 and 3, which are not applicable to DIFC Business Returns.
        4. On this form, reinsurance premiums and reinsurance recoveries refer to amounts ceded and recovered in respect of insurance contracts entered into as part of the Insurer's DIFC Insurance Business, regardless of where the reinsurance premiums and reinsurance recoveries are payable or receivable.
        Item No. Item Instructional Guidelines
        1. Gross Written Premiums An Insurer must present at item 1 the amount of its Gross Written Premium in respect of its business conducted in the DIFC.
        2. Reinsurance Premiums Ceded An Insurer must present at item 2 the amount of reinsurance premium ceded in respect of insurance contracts whose Gross Written Premium is recorded at item 1.
        3. Net written premiums  
        4. Claims paid An Insurer must present at item 4 the amount of claims paid in respect of its business conducted in the DIFC.
        5. Reinsurance and other recoveries received An Insurer must present at item 5 the amount of reinsurance and other recoveries receivable in respect of claims recorded at item 4.
        6. Net claims paid  
        7. Movements in Insurance Liabilities (gross) An Insurer must present at item 7 the amount of the movement in the period reported on in the balance of Insurance Liabilities.
        8. Movements in recoveries against Insurance Liabilities An Insurer must present at item 8 the amount of the movement in the period reported on in the balance of reinsurance and other recoveries in respect of Insurance Liabilities.

        Insurance Liabilities are reported gross of reinsurance and other recoveries. Reinsurance and other recoveries that are recorded in respect of Insurance Liabilities are reported as assets. An increase in Insurance Liabilities is reported on form 10 as an expense. In the same manner, an increase in the reinsurance and other recoveries in respect of Insurance Liabilities is recorded as revenue.
        9. Net movement in provisions  
        10. Expenses  
        11. Other operating revenue Where an Insurer reports any amount at item 11.2, the Insurer must present in a Supplementary Note the amount of any such income receivable from Related parties, and a description of the nature of that income.
        12. Operating income  
        13. Outstanding Claims Provision (including IBNR) Item 13 reports the Insurer's provision for outstanding claims. This item must be completed having regard to the following principles:
        a The liability must represent the estimated cost to the Insurer of settling claims which it has incurred at the reporting date but which have not been finalised. The liability is in respect of both direct business and inward reinsurance business and must take into account unpaid claims, unreported claims, adjustments for claims development and the direct and indirect claims settlement costs that the Insurer expects to incur in settling its outstanding claims;
        b In the case of Long-Term Insurance Business, this item must include all claims liabilities in respect of Contracts of Insurance that are no longer included in the calculation of the net policy benefits at item 17;
        c The liability must be stated without deducting reinsurance and other recoveries (these are disclosed as an asset as reinsurance receivables);
        d The requirements for recognition and measurement of this liability are set out in PIN Rule 5.4 and PIN Rule 5.6; and
        e The liability does not include any amounts for catastrophe reserve, equalisation reserve or similar provisions that an Insurer may be required to maintain to satisfy regulatory requirements in a jurisdiction other than the DIFC.
        14. Expected reinsurance and other recoveries in respect of item 13 Item 14 includes amounts in respect of reinsurance and other recoveries in respect of claims that have been incurred but not paid, up to the date to which the Return is drawn up. This includes reinsurance and other recoveries in respect of IBNR. Because of the uncertainty of the outcome of outstanding claims and IBNR, it is necessary to estimate at least a part of this balance. The basis on which the estimate is made must be consistent with the basis of estimation of the related liability, reported at item 13.

        Where, in determining the amount to be reported at item 14, an Insurer has made or considered making a provision for doubtful debt in respect of recoveries due or potentially due from a reinsurer, the Insurer must take into account the potential need to make a provision when determining any estimate to be included at item 14 or 16.

        It is common practice for Insurers to account for their exposures on General Insurance contracts in force by means of an unearned premium provision, an asset representing deferred reinsurance expense and (where necessary) a premium deficiency reserve. Insurers are referred to the instructional guidelines to item 15. An Insurer that uses an unearned premium provision and premium deficiency reserve as a proxy for Premium Liabilities may record its deferred reinsurance expense at item 16.
        15. Premium liabilities under General Insurance contracts Item 15, Premium Liability, represents the current portion of the cost of providing insurance service over the unexpired period of general insurance contracts in force at the balance date. This item must be completed having regard to the following principles:
        a The Premium Liability reported is required to cover the value of future claims payments and associated direct and indirect settlement costs arising during the unexpired portion of the contracts in question;
        b Item 15 must be recorded without deducting reinsurance and other recoveries (these are disclosed as an asset as reinsurance receivables); and
        c The requirements for recognition and measurement of this liability are set out in PIN Rule 5.4.

        As stated in the Guidance to PIN Rule 5.4.7, it is common practice for Insurers to account for their exposures on General Insurance contracts in force by means of an unearned premium provision and (where necessary) a premium deficiency reserve. Where the aggregate of the unearned premium provision and the premium deficiency reserve (both gross of reinsurance) can be shown to be not less than the amount of Premium Liability determined in accordance with PIN section 5.4, an Insurer may use that aggregate as a proxy for Premium Liability for the purposes of recording item 15 on this form.
        16. Expected reinsurance and other recoveries in respect of item 15 Reinsurance and other recoveries in respect of claims that have not yet been incurred are reported at item 16. It is necessary to estimate this balance. The basis on which the estimate is made must be consistent with the basis of estimation of the related liability, reported at item 15.
        17. Net policy benefits under Long-Term insurance contracts in force Item 17 represents the net value of future Policy Benefits under Long-Term Insurance contracts that are in force as at the date to which the Return is made up. The amount reported here must be determined in accordance with PIN section 5.6.

        Derived from DFSA RM44/2007 (Made 1st June 2007). [VER2/06-07]
        [Amended] DFSA GM2/2007 (Made 5th July 2007). [VER3/08-07]

    • PRU 3.11 PRU 3.11 PIN11 — Reconciliation of Direct to Total Long-Term Insurance Business

      • Instructional Guidelines

        1. This form is required only for a DIFC Incorporated Insurer that undertakes Direct Long-Term Insurance Business.
        2. This form requires an Insurer that undertakes Direct Long-Term Insurance Business to identify (in summary form) the assets and liabilities that are attributable to that business, and the amount of the Minimum Capital Requirement that is attributable to the business.
        3. The Rules in this section provide instructions as to the completion of specific lines on the form. The instructions are similar to those applicable to corresponding items on forms 1 and 2.
        4. The disclosures at item 1 in column 1 must be consistent with the disclosures made on form PRU PIN14 and form PRU PIN15. Form PRU PIN14 and form PRU PIN15 identify assets that are held to cover liabilities under Direct Long-Term Insurance Business. It would not be appropriate for an Insurer to disclose on form PRU PIN11 assets that were less, either by type or in the aggregate, than the total amount of assets of each type and in the aggregate, that are asserted on form PRU PIN14 and form PRU PIN15 to be held to meet liabilities under Direct Long-Term Insurance contracts and the Minimum Capital Requirement in respect of Direct Long-Term Insurance Business. The assets disclosed on form PRU PIN11 may on the other hand exceed the total amount of assets asserted on form PRU PIN14 and form PRU PIN15 to be held to meet liabilities under Direct Long-Term Insurance contracts and the Minimum Capital Requirement in respect of Direct Long-Term Insurance Business.
        5. An Insurer must present at items 1 and 2 in column 1 the amounts of its assets and liabilities that are attributable to its Direct Long-Term Insurance Business and that are otherwise attributable, respectively.
        6. An Insurer must present at item 3 in column 1 the amounts of the components of its Minimum Capital Requirement that are attributable to its Direct Long-Term Insurance Business and that are otherwise attributable, respectively.
        7. Column 3 of this form must agree to the current year column of form PRU PIN1 or of form PRU PIN2, as follows:
        a. item 1.1 must agree to item 1.4 in the current year column of form PRU PIN1;
        b. item 1.2 must agree to the sum of items 2.9 and 7.9 in the current year column of form PRU PIN1;
        c. item 1.3 must agree to the sum of items 3.12, 8.12 and 9.7 in the current year column of form PRU PIN1;
        d. item 1.4 must agree to item 10.3 in the current year column of form PRU PIN1;
        e. item 1.5 must agree to item 11.3 in the current year column of form PRU PIN1;
        f. item 1.6 must agree to the sum of items 4.3 and 12.3 in the current year column of form PRU PIN1;
        g. item 1.7 must agree to the sum of items 5.5 and 13.5 in the current year column of form PRU PIN1;
        h. item 2.1 must agree to the sum of items 16 and 26 in the current year column of form PRU PIN1;
        i. item 2.2 must agree to the sum of items 17 and 27 in the current year column of form PRU PIN1;
        j. item 2.3 must agree to the sum of items 18, 19, 28 and 29 in the current year column of form PRU PIN1;
        k. item 2.4 must agree to the sum of items 20 and 30 in the current year column of form PRU PIN1;
        l. item 2.5 must agree to the sum of items 21 and 31 in the current year column of form PRU PIN1;
        m. item 2.6 must agree to the sum of items 22 and 32 in the current year column of form PRU PIN1;
        n. item 2.7 must agree to the sum of items 23 and 33 in the current year column of form PRU PIN1;
        o. item 2.8 must agree to the sum of items 24 and 34 in the current year column of form PRU PIN1; and
        p. items 3.1 to 3.11 must agree to items 6.1 to 6.11 respectively in the current year column of form PRU PIN2.

        [Added] DFSA GM2/2007 (Made 5th July 2007). [VER3/08-07]

    • PRU PIN 3.12 PRU PIN 3.12 PIN12 — Statement of Direct Long-Term Insurance Business

      • Instructional Guidelines

        1. This form is required only for a DIFC Incorporated Insurer that undertakes Direct Long-Term Insurance Business, and is completed in respect only of Direct Long-Term Insurance Business.
        2. When this form is presented as part of a Quarterly Regulatory Return, part III is not required to be completed.
        3. This form provides the DFSA with quarterly and annual information on the makeup of Direct Long-Term Insurance premiums accounted for by a DIFC Incorporated Insurer, and new business underwritten, during the reporting period. When presented as part of the Annual Regulatory Return, it also provides information on persistency
        4. Because this part of the form is required only in the case of an Annual Regulatory Return, the reporting periods covered in part III will only ever be financial years. The form will disclose the persistency rate (the contracts remaining in force expressed as a percentage of those written, less those terminating naturally) for the most recent financial year at the end of twelve months, and the three financial years beforehand at the end of, respectively, twenty-four, thirty-six and forty-eight months.
        5. Normally in part III, the disclosure in column 1 for the previous financial year will be equal to that for the then current year in the previous year’s Return, and in a similar fashion the disclosure in column 1 for the year before the previous financial year will be equal to that for previous financial year, in the previous year’s Return, and so on. This may not be the case if a portfolio of policies in force is acquired or disposed of by the Insurer. Where this occurs, the figures for contracts affected should be adjusted as though the contracts acquired had been affected by the Insurer at the time they were first affected, and the contracts disposed of had never been affected by the Insurer. Where this is the case, the provision of particulars in a Supplementary Note will assist the DFSA’s understanding
        6. On this form, reinsurance is classified according to the underlying premiums accepted by the Insurer, not on the basis of the form of the reinsurance contract. Thus, a reinsurance of a regular premium policy is classified in column 1 or 3, regardless of the form of the reinsurance contract
        7. On this form:
        a ‘regular premiums’ means premiums payable at regular intervals during the term of the contract;
        b ‘single premiums’ means premiums that are not regular premiums. An additional premium payable on an existing regular premium contract is not a regular premium unless it constitutes one in a series of regular premiums;
        c ‘new business’ means premiums on new contracts of insurance effected during the reporting period, together with additional premiums paid on existing contracts where those additional premiums have the characteristic of new business rather than representing a payment due on the original contract; and
        d ‘new policyholders/fund members’ means policyholders who have effected a new contract of insurance during the reporting year or (in the case of Class VII business) persons who have joined a pension fund that is the subject of a contract of insurance in that Class, during the reporting year.
        8. On this form, items 28 to 51 must be presented in whole numbers, not rounded, and with no decimal place.
        9. An Insurer must present at items 1 to 7, for each Class of Business, analysed across columns 1 to 4 between participating business and non-participating business and between regular premium business and single premium business, the gross Direct Long-Term Insurance Business premiums that it has accounted for in the reporting period.
        10. An Insurer must present at item 9 the total amount included in item 8 that represents premiums receivable from Related parties of the Insurer, for each of columns 1 to 4.
        11. An Insurer must present at items 10 to 16, for each Class of Business, the reinsurance premiums that it has accounted for as ceded in the reporting period, in respect of the premiums reported at items 1 to 7. Items 10 to 16 must be analysed across columns 1 to 4 according to the type of the underlying premium, namely participating and non-participating, and regular premium and single premium.
        12. An Insurer must present at item 18 the total amount included in item 17 that represents reinsurance premiums ceded to Related parties of the Insurer, for each of columns 1 to 4.
        13. Where an Insurer is required to complete this form, Column 5 of this form for items 1 to 18 must agree to column 1 of form PRU PIN4 for items 21 to 38 respectively.
        14. An Insurer must present at items 19 to 26, for each Class of Business, analysed across columns 1 to 4 between participating business and non-participating business and between regular premium business and single premium business, the gross Direct Long-Term Insurance new business premiums that it has accounted for in the reporting period. For the purposes of this disclosure, Class I is separated into two items: item 19 being annuities, and item 20 being Class I other than annuities.
        15. An Insurer must present at items 28 to 35, for each Class of Business, analysed across columns 1 to 4 between participating business and non-participating business and between regular premium business and single premium business, the new policyholders/fund members that it recorded in the reporting period. For the purposes of this disclosure, Class I is separated into two items: item 19 being annuities, and item 20 being Class I other than annuities.
        16. An Insurer must present at item 37 for the reporting period and items 38, 39 and 40 respectively for the previous reporting period and the two immediately prior to that (in each case, the ‘reporting year in question’), the following information in respect of participating long-term contracts of insurance:
        a in column 1, the number of Direct Long-Term Insurance contracts effected during the reporting period in question;
        b in column 2, the number of contracts effected during the reporting period in question that have, during the period from their inception up to the reporting date, terminated through expiry of the contract term, through occurrence of the insured event, or otherwise through an event contemplated in the policy document other than lapse, surrender or cancellation;
        c in column 3, the number of contracts effected during the reporting period that have, during the period from their inception up to the reporting date, terminated through lapse, surrender, or cancellation or otherwise through an event not contemplated in the policy document;
        d in column 4, the number of contracts (calculated as the figure in column 1 less the sum of the two figures in columns 2 and 3) remaining in force on the reporting date; and
        e in column 5, the persistency rate, calculated as the figure in column 4 divided by the figure in column 1 less the figure in column 2, expressed as a percentage.
        17. An Insurer must present at item 42 for the reporting period and items 43, 44 and 45 respectively for the previous reporting period and the two immediately prior to that (in each case, the ‘reporting year in question’), the information set out in instructional guideline 16(a) to (c), in respect of linked long-term contracts of insurance.
        18. An Insurer must present at item 47 for the reporting period and items 48, 49 and 50 respectively for the previous reporting period and the two immediately prior to that (in each case, the ‘reporting year in question’), the information set out in instructional guideline 16(a) to (c), in respect of longterm contracts of insurance not al included in the disclosures under participating or linked long term contracts.
        19. No figure is required to be presented in column 5 at item 41, item 46 or item 51.

        [Added] DFSA GM2/2007 (Made 5 July 2007). [VER3/08-07]

    • PRU PIN 3.13 PRU PIN 3.13 PIN13 — Statement of Direct Long-Term Insurance Policy Liabilities

      • Instructional Guidelines

        1. This form is required only for an Annual Regulatory Return prepared by a DIFC Incorporated Insurer conducting Direct-Long-Term Insurance Business, and is required only in respect of that Direct Long-Term Insurance Business.
        2. This form, which is prepared only by a DIFC Incorporated Insurer conducting Direct Long-Term Insurance Business, provides the DFSA with an analysis of the breakdown of gross insurance liabilities in respect of those liabilities, and reinsurance recoverable in their respect.
        3. An Insurer must present at items 1 to 7, for each Class of Business, the gross Direct Long-Term Insurance Business policy liabilities as at the reporting date, analysed across columns 1 to 4 as follows:
        a. in column 1, the amount in respect of participating business Direct Long-Term Insurance contracts, in respect of benefits that have vested in the policyholders;
        b. in column 2, the amount in respect of participating business Direct Long-Term Insurance contracts, in respect of benefits that have not vested in the policyholders;
        c. in column 3, the amount in respect of all other Direct Long-Term Insurance Contracts; and
        d. in column 4, the amount of any additional provisions made by the insurer, that form part of gross policy liabilities but do not fall within columns 1 to 3.
        4. Vested benefits are those to which policyholders are collectively or individually entitled as a result of a guarantee in the insurance contract, and include bonuses that have been declared or allotted, The Rules in PIN5 on valuation of assets and liabilities require an Insurer also to make provision for benefits that are discretionary, for example bonuses that are expected to be declared in the future. The provision in respect of these items will be included at Column 2.
        5. An Insurer must present at item 9, for each of columns 1 to 4, the amount of the figure at item 8 that relates to liabilities in respect of parties that are Related to the Insurer.
        6. In practice, a valuation of Insurance Liabilities may include provisions that are not readily attributable to particular insurance contracts. Where this is the case, such provisions should be shown in column 4. The Actuary’s Report prepared under section PIN 7.3 includes commentary on additional provisions. Insurers should ensure that disclosure on this form is consistent with the description in the Actuary’s Report. A reconciliation may be provided in a Supplementary Note to this form.
        7. An Insurer must present at items 10 to 16, for each Class of Business, the amount of gross Direct Long-Term Insurance Business policy liabilities as at the reporting date that is recoverable under reinsurance arrangements, analysed across columns 1 to 4 in the same manner as items 1 to 7.
        8. An Insurer must present at item 18, for each of columns 1 to 4, the amount of the figure at item 17 that relates to amounts recoverable from parties that are Related to the Insurer.

        [Added] DFSA GM2/2007 (Made 5th July 2007). [VER3/08-07]

    • PRU PIN 3.14 PRU PIN 3.14 PIN14 — Statement of assets covering linked Direct Long-Term Insurance Liabilities

      • Instructional Guidelines

        1. This form is required only for an Annual Regulatory Return prepared by a DIFC Incorporated Insurer conducting Direct Long-Term Insurance Business of Class III, and is required only in respect of that Class of its Direct Long-Term Insurance Business.
        2. This form, which is prepared only by a DIFC Incorporated Insurer conducting Direct Long-Term Insurance Business of Class III, provides the DFSA with information on the assets held to cover policy liabilities under insurance contracts of that Class.
        3. On this form, a reference to assets held to cover linked contract liabilities means assets that:
        a. are held by the Insurer with the intention of meeting liabilities under Class III contracts of insurance effected by it;
        b. are not reported by the Insurer on Form PRU PIN15; and
        c. so far as concerns linked benefits that are vested in policyholders, are the assets to which the contract is linked under the terms of the contract or assets that are closely equivalent to those assets, or, where the contract is linked to an index, are the assets on which that index is based or assets closely equivalent to those assets.
        4. An Insurer must present at items 1.1 to 4.3 the amount of its assets disclosed on Form PRU PIN1 that are held to cover linked contract liabilities under Direct Long-Term Insurance Business of Class III. The instructional guidelines at section 3.1 apply to the completion of this form where an item on this form has the same description as an item on Form PRU PIN1, except that no distinction is made on this form between current and non-current assets.
        5. An Insurer must present at item 4.4 the amount of any assets not falling within items 1.1 to 4.3 that are held to cover linked contract liabilities under Direct Long-Term Insurance Business of Class III. Where an Insurer includes an amount at this item, particulars of the asset must be included in a Supplementary Note, including a description of how that asset is disclosed on Form PRU PIN1.
        6. An Insurer must disclose at item 5.1 the amount of assets included in item 5 that represent amounts due from, balances with or investments in Related parties, other than amounts due under insurance contracts
        7. The amount at item 5 in column 1 must be not less than the amount on Form PRU PIN13 of item 3 column 5 less item 13 column 5.

        [Added] DFSA GM2/2007 (Made 5th July 2007). [VER3/08-07]

    • PRU PIN 3.15 PRU PIN 3.15 PIN15 — Statement of assets covering non-linked Direct Long-Term Insurance Liabilities and Minimum Capital Requirement

      • Instructional Guidelines

        1. This form is required only for an Annual Regulatory Return prepared by a DIFC Incorporated Insurer conducting Direct-Long-Term Insurance Business and is required only in respect of that business.
        2. This form, which is prepared only by a DIFC Incorporated Insurer conducting Direct Long-Term Insurance Business, provides the DFSA with information on the assets held to cover policy liabilities under insurance contracts other than Class III, and assets held to cover the Minimum Capital Requirement. This form also provides the DFSA with information on the yields of those assets, to assist in interpretation of the Actuary’s Report.
        3. On this form, a reference in part I to assets held to cover participating contract liabilities, in part II to assets held to cover non-participating contract liabilities and in part III to assets held to cover the Minimum Capital Requirement means assets that:
        a. in the case of assets held to cover participating or non-participating contract liabilities, are held by the Insurer with the intention of meeting those liabilities under contracts of insurance effected by it, and in the opinion of the Directors, formed on reasonable grounds, are appropriate assets for that purpose; and
        b. are not reported by the Insurer on Form PRU PIN14 or in any other part of this form.
        4. An Insurer must present at items 1.1 to 4.3 in column 1 the amount of its assets disclosed on Form PRU PIN1 that are held to cover contract liabilities under participating Direct Long-Term Insurance Business. The instructional guidelines at section 3.1 apply to the completion of this form where an item on this form has the same description as an item on Form PRU PIN1, except that no distinction is made on this form between current and non-current assets.
        5. An Insurer must present at item 4.4 in column 1 the amount of any assets not falling within items 1.1 to 4.3 that are held to cover contract liabilities under participating Direct Long-Term Insurance Business. Where an Insurer includes an amount at this item, particulars of the asset must be included in a Supplementary Note, including a description of how that asset is disclosed on Form PRU PIN1.
        6. An Insurer must disclose at item 5.1 in column 1 the amount of assets included in item 5 that represent amounts due from, balances with or investments in Related parties, other than amounts due under insurance contracts.
        7. The amount at item 5 in column 1 must be not less than the amount on Form PRU PIN13 of the sum of item 8 in columns 1 and 2 less the sum of item 17 in columns 1 and 2, together with any element of the amount in column 4 that relates to participating business.
        8. An Insurer must present at items 6.1 to 9.3 in column 1 the amount of its assets disclosed on Form PRU PIN1 that are held to cover contract liabilities under non-participating Direct Long-Term Insurance Business other than Class III. The Rules at section 3.5 apply to the completion of this form where an item on this form has the same description as an item on Form PRU PIN1, except that no distinction is made on this form between current and non-current assets.
        9. An Insurer must present at item 9.4 in column 1 the amount of any assets not falling within items 6.1 to 9.3 that are held to cover contract liabilities under non-participating Direct Long-Term Insurance Business other than Class III. Where an Insurer includes an amount at this item, particulars of the asset must be included in a Supplementary Note, including a description of how that asset is disclosed on Form PIN1.
        10. An Insurer must disclose at item 10.1 in column 1 the amount of assets included in item 10 that represent amounts due from, balances with or investments in Related parties, other than amounts due under insurance contracts.
        11. The amount at item 10 in column 1 must be not less than the amount on Form PRU PIN13 in column 3 of item 8 after deducting item 3, less item 17 after deducting item 12, together with any element of the amount in column 4 that relates to non-participating business other than Class III.
        12. An Insurer must present at items 11.1 to 15.3 in column 1 the amount of its assets disclosed on Form PRU PIN1 that are held to cover the Minimum Capital Requirement in respect of Direct Long- Term Insurance Business. The Rules at section 3.5 apply to the completion of this form where an item on this form has the same description as an item on Form PRU PIN1, except that no distinction is made on this form between current and non-current assets.
        13. An Insurer must present at item 15.4 in column 1 the amount of any assets not falling within items 11.1 to 15.3 that are held to cover the Minimum Capital Requirement in respect of Direct Long- Term Insurance Business. Where an Insurer includes an amount at this item, particulars of the asset must be included in a Supplementary Note, including a description of how that asset is disclosed on Form PRU PIN1.
        14. An Insurer must disclose at item 15.1 in column 1 the amount of assets included in item 15 that represent amounts due from, balances with or investments in Related parties, other than amounts due under insurance contracts.
        15. For each item on this Form for which an Insurer is required to disclose an amount in column 1, the Insurer must disclose in column 2 the lower of the two following figures, expressed as a percentage:
        a. the actual annual yield achieved on the assets disclosed under that item, in the reporting period; and
        b. the annual yield expected to be achieved on the assets disclosed under that item, in the year following the reporting date.
        16. Where the figure in column 1 is derived as the result of a mathematical calculation expressed on the face of the Form. The amount to be disclosed in column 2 is not the sum of the values in column 2 for the items specified in the mathematical calculation expressed on the face of the form, but the yield in accordance with instrumental guideline 17 on the assets disclosed at the item in question in column 1.

        [Added] DFSA GM2/2007 (Made 5 July 2007). [VER3/08-07]

    • PRU PIN 3.16 PRU PIN 3.16 PIN16 — Calculation of Direct Long-Term Insurance element of Long- Term Insurance Component

      • Instructional Guidelines

        1. This form is required only for an Annual Regulatory Return prepared by a DIFC Incorporated Insurer conducting Direct Long-Term Insurance Business, and is required only in respect of that business.
        2. This form, which is prepared only by a DIFC Incorporated Insurer conducting Direct Long-Term Insurance Business, provides an Insurer with a working schedule for the calculation of the element of the Long-Term Insurance Risk Component that is attributable to its Direct Long-Term Insurance Business, and permits the DFSA to assess the compliance of that calculation with the Rules in PIN A4.12.
        3. On this Form, where an item is shaded in a column, no entry is made for that item in that column.
        4. In items 1 to 7.3 the Insurer must show, for each Class of Business, or for each sub-division of a Class of Business as shown on the face of the form:
        a. at columns 1 and 2, the amount of the Long-Term Insurance Liability, gross and net of reinsurance respectively;
        b. at column 4, expressed as a percentage, the reinsurance ratio calculated as the amount in column 2 divided by that in column 1, except that if the result is less than 85%, the figure shall be 85%; and
        c. at column 5, the amount determined by multiplying the amount in column 1 with the two percentages in columns 3 and 4.
        5. The amount in item 8 of column 1 must agree to form PRU PIN13 column 5 item 8 and the amount in item 8 of column 2 to form PRU PIN13 column 5 item 8 less item 17.
        6. At items 9 to 12 the Insurer must show, for all Direct Long-Term Insurance Business, according to the extent of death risk borne by the Insurer as shown on the face of the form:
        a. at columns 1 and 2, the amount of capital at risk, gross and net of reinsurance respectively, where capital at risk has the meaning given in PIN Rule A4.12.2(c);
        b. at column 4, expressed as a percentage, the reinsurance ratio calculated as the amount in column 2 divided by that in column 1, except that if the result is less than 50%, the figure shall be 50%; and
        c. at column 5, the amount determined by multiplying the amount in column 1 with the two percentages in columns 3 and 4.
        7. At item 14 the Insurer must show:
        a. at column 1, the amount of net administrative expenses incurred in the reporting period in respect of linked Direct Long-Term Insurance business where the Insurer bears no investment risk and expenses are not fixed for a period of more than five years; and
        b. at column 5, the amount determined by multiplying the amount in column 1 with the percentage in column 3.
        8. At item 15.1 the Insurer must show:
        a. at column 1, the amount of gross premiums in the reporting period in respect of Class IV as shown on form PRU PIN12 item 4 column 5, multiplied by 18% so far as concerns the amount up to $50 million and by 16% so far as concerns any amount in excess of $50 million;
        b. at column 3, expressed as a percentage, the amount determined by dividing the amount of form PRU PIN12 item 4 column 5 less item 13 column five, by the amount of form PRU PIN12 item 4 column 5, except that if the result of this calculation is less than 50% the figure shall be 50%.
        9. At item 15.2 the Insurer must show:
        a. at column 1, the amount of gross claims incurred in the reporting period in respect of Class IV, multiplied by 26% so far as concerns the amount up to $35 million and by 23% so far as concerns any amount in excess of $35 million; where
        b. at column 3, expressed as a percentage, the amount determined by dividing the gross claims incurred minus claims recovered, by the gross claims incurred, except that if the result of this calculation is less than 50% the figure shall be 50%.
        c. ‘gross claims incurred’ means the amount of gross claims paid at form PRU PIN5 item 42 column 5 plus the amount, if any, in respect of Direct Long Term Insurance Business of Class IV included at item 18 or 28 of column 1 of form PRU PIN1 and less any such amount included at those items of column 2 of that form: and
        d. ‘claims recovered’ means the amount of reinsurance and other recoveries in respect of paid claims at form PRU PIN5 item 51 column 5 plus the amount, if any, in respect of Direct Long Term Insurance Business of Class IV included at item 2.2, 2.4, 7.2 or 7.4 of column 1 of form PRU PIN1 and less any such amount included at those items of column 2 of that form.
        10. At item 17 the Insurer must show:
        a. at column 1, the amount of assets attributable to the Insurer’s Direct Long Term Insurance Business of Class V; and
        b. at column 5, the amount determined by multiplying the amount in column 1 with the percentage in column 3.
        11. The amount at item 18 must equal the amount at form PRU PIN11 item 3.9 column.

        [Added] DFSA GM2/2007 (Made 5th July 2007). [VER3/08-07]

    • PRU PIN 3.17 PRU PIN 3.17 PIN17 — Statement of Financial Group Capital Adequacy

      • Instructional Guidelines

        1. An Authorised Firm that is required to prepare a Financial Group Capital Adequacy Report may use this form to submit that Report. Use of this form is not mandatory.
        2. Where an Authorised Firm chooses to use form PRU PIN17 for its Financial Group Capital Adequacy Report, it must do so in accordance with the instructional guidelines in this section.
        3. An Authorised Firm completing this form must present:
        a. in the header portion of the Form the information required by PIN Rule 6.6.2(2)(a), (b) and (c);
        b. at item 1, the Financial Group Capital Resources;
        c. at item 2, the Financial Group Capital Requirement
        4. An Authorised Firm completing this form must present at item 4:
        a. the names of all Authorised Firms and Financial Institutions in the Financial Group; and
        b. where an entity disclosed at (a) is itself the Parent of a Financial Group, the Financial Group Capital Resources of that group at column 1, and the Financial Group Capital Resources Requirement of that group at column 2.
        5. Where an entity is disclosed in accordance with instructional guideline 5(a) is not the Parent of a Financial Group, the entries at columns 1 and 2 of item 4 must be left blank.
        6. An Authorised Firm completing this form must present at item 5:
        a. the names of all Authorised Firms and Financial Institutions meeting the conditions set out at PIN Rule 6.6.2(2)(i);
        b. in column 1, the Capital Resources or Adjusted Capital Resources as applicable of that entity; and
        c. in column 2, the capital requirement of that entity calculated in accordance with PIN Rule 8.3.3.
        7. Where the space on the form is inadequate for the disclosures required at item 4 or item 5, the Authorised Firm completing the form must attach a continuation sheet in the form of PRU PIN17. Separate continuation sheets must be used for disclosures required at items 4 and 5. Continuation sheets must be sequentially numbered and each continuation sheet must be completed in accordance with the Rules applicable to items 4 and 5.
        8. At each of item 4 and item 5, the Authorised Firm completing the form must indicate whether or not a continuation sheet is attached, and if so the number of such continuation sheets.
        9. Form PRU PIN17 must be signed in accordance with PIN Rule 6.6.2(4).

        [Added] DFSA GM2/2007 (Made 5th July 2007). [VER3/08-07]