PIN 8.3 PIN 8.3 Financial group capital requirements and financial group capital resources
PIN 8.3.1(1) PIN Section 8.3 does not apply to an
Insurerif:(a) the Insurer's Financial Groupis al the subject of Financial Groupprudential supervision by the DFSAas a result of the authorisation of another Financial Groupmember; or(b) the DFSAhas confirmed in writing, in response to an application from the Insurer, that it is satisfied that the Insurer's Groupis the subject of consolidated prudential supervision by an appropriate regulator; or(c) except where the DFSAhas directed the inclusion of an entity pursuant to PIN Rule 8.1.2(1), the percentage of total assets of Authorised Firmsand Financial Institutionsin the Financial Groupis less than 40% of the total Financial Groupassets.(2) Where an Insurer has received confirmation in writing from the DFSAin accordance with (1)(b), it must immediately advise the DFSAin writing if the circumstances upon which the confirmation was based change.
PIN 8.3.2 PIN 8.3.2
Financial Groupcontains both Insurersand Authorised Firmssubject to the requirements in PIB Module, the DFSAshall determine which of the sectoral rules in PIN section 8.3 and PIB section 7.3 shall apply in respect of the group.
PIN 8.3.2 Guidance1. The objective of PIN Rule 8.3.1(1)(a) is to avoid the necessity for multiple reporting of group capital adequacy.2. Where a
Financial Groupincludes both Insurersand entities subject to PIB, it is necessary to determine whether the Financial Groupsupervision applicable to the Financial Groupshould be that set out in PIN section 8.3 or PIB section 7.3. Normally, the DFSAwill exercise its power under PIN Rule 8.3.2 based on the relative size of the assets of the Financial Institutionsundertaking Insurance Business(representing the insurance sector) and the assets of other Authorised Firmsand Financial Institutions(representing a combined non-insurance sector). Pure holding companies will be excluded as being in neither sector. The Rulesthat will apply will be those of the sector with the larger total assets of the two. However, where the ratio of the assets of the two sectors differs by less than 1.5:1, the DFSAwill consider a request from the Authorised Firmsin the Financial Groupto apply the sectoral rules applicable to the smaller of the two sectors.
PIN 8.3.3 PIN 8.3.3
Insurermust ensure at all times that its Financial Group Capital Resources, as calculated in PIN Rule 8.3.5, are equal to or in excess of its Financial Group Capital Requirementas calculated in PIN Rule 8.3.4.
PIN 8.3.3 Guidance
Insurerbreaches PIN Rule 8.3.3, the DFSAwill take into account the full circumstances of the case including any remedial steps taken by another regulator or the Authorised Firm, in determining what action it will take.
Financial group capital requirement
PIN 8.3.4(1) An
Insurermust calculate its Financial Group Capital Requirementas the sum of the entity requirements calculated in accordance with (2) and (3);(2) Entity requirements for this purpose are:(a) an Authorised Firm's Capital Requirementor Minimum Capital Requirementcalculated in accordance with the requirements of whichever of the PIB or PIN Module applies to that Authorised Firm;(b) in the case of regulated entities supervised by a regulator other than the DFSA, then, with the written agreement of the DFSA, the capital requirement of that entity; and(c) for other entities in the Financial Group, a notional capital requirement calculated as directed by the DFSA.(3) Where an Authorised Firm's Financial Groupincludes an entity under (c) of the definition of Financial Groupin the GLO Module, that Financial Institution'scapital requirement is included on a proportionate basis.
Financial group capital resources
PIN 8.3.5 PIN 8.3.5(1) An
Insurermust calculate its Financial Group Capital Resourcesby applying either of the following methods, excluding those amounts referred to in PIN Rule 8.3.6:(a) the accounting consolidation method which calculates the Adjusted Capital Resourcesof the Financial Groupbased on the Financial Group'sconsolidated financial statements; or(b) the aggregation method, which is the sum of:(i) the Adjusted Capital Resourcesof the Parentof the Financial Group;(ii) subject to (3), the Adjusted Capital Resourcescalculated in accordance with the PIN Module, or the Capital Resourcescalculated in accordance with the PIB module, as may be appropriate, of Financial Institutionsincluded in the Financial Group; and(iii) subject to (3), the Financial Group'sproportionate share of the Adjusted Capital Resourcescalculated in accordance with the PIN Module, or the Capital Resourcescalculated in accordance with the PIB Module, as may be appropriate, of Financial Institutionparticipations included in the Financial Group.(2) In calculating the Adjusted Capital Resourcesof a member of the Financial Groupor of the Financial Group, an Insurermust follow the method of calculation set out in PIN section A3.2, with the exception that the deduction set out in PIN Rule A3.4.3(b) need not be made.(3) For the purposes of (1)(b)(ii) and (iii) an investment by one Financial Groupmember in another must not be included.
PIN 8.3.5 Guidance1. The calculation of
Financial Group Capital Resourcesis subject to PIN section 3.5 which limits the amount of hybrid capital (including subordinated debt) that may be included in Adjusted Capital Resources.2. In the calculation of Capital Resourcesof Financial Institutionsthat are Financial Groupmembers in accordance with the PIB Module, an Insurerapplies to that member the deductions for illiquid assets and material holdings and Qualifying Holdingsset out in the PIB Module.3. The deduction set out at PIN Rule 8.3.5(3) need not be made to the extent that the investment has al been excluded in whole or part by virtue of the application of the limits described in paragraphs 1 and 2 of this Guidance.
PIN 8.3.6 PIN 8.3.6
When calculating the
Financial Group Capital Resourcesof a Financial Group, an Insurermust not include Capital Resourcesor Adjusted Capital Resources(as the case may be) of Subsidiariesor participations to the extent that those Capital Resourcesor Adjusted Capital Resources:(a) exceed the entity requirement in respect of that Subsidiaryor participation, calculated in accordance with PIN Rule 8.3.4; and(b) are not freely transferable within the Financial Group.
PIN 8.3.6 Guidance1. Because the
Financial Group Capital Requirementset out in PIN Rule 8.3.4 includes capital requirements in respect of Groupentities, capital resources may be included in the calculation of Financial Group Capital Resourcesto the extent of those requirements. Capital that is surplus to those requirements is however subject to an additional condition before it may be taken into account for the purposes of Financial Groupcapital adequacy.2. In general, Capital Resourcesor Adjusted Capital Resourcesare considered not to be freely transferable if they are subject to a legal or constructive limitation on their transferability, whether that transfer would be made by dividend, return or capital or other form of distribution. Examples of relevant limitations might include obligations to maintain minimum capital requirements to meet domestic solvency requirements, or to comply with debt covenants.