Entire Section

  • 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 Insurer if:
      (a) the Insurer's Financial Group is al the subject of Financial Group prudential supervision by the DFSA as a result of the authorisation of another Financial Group member; or
      (b) the DFSA has confirmed in writing, in response to an application from the Insurer, that it is satisfied that the Insurer's Group is the subject of consolidated prudential supervision by an appropriate regulator; or
      (c) except where the DFSA has directed the inclusion of an entity pursuant to PIN Rule 8.1.2(1), the percentage of total assets of Authorised Firms and Financial Institutions in the Financial Group is less than 40% of the total Financial Group assets.
      (2) Where an Insurer has received confirmation in writing from the DFSA in accordance with (1)(b), it must immediately advise the DFSA in writing if the circumstances upon which the confirmation was based change.
      [Added] RM46/2007 (Made 5th July 2007). [VER6/07-07]

    • PIN 8.3.2 PIN 8.3.2

      Where a Financial Group contains both Insurers and Authorised Firms subject to the requirements in PIB Module, the DFSA shall determine which of the sectoral rules in PIN section 8.3 and PIB section 7.3 shall apply in respect of the group.

      [Added] RM46/2007 (Made 5th July 2007). [VER6/07-07]

      • PIN 8.3.2 Guidance

        1. 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 Group includes both Insurers and entities subject to PIB, it is necessary to determine whether the Financial Group supervision applicable to the Financial Group should be that set out in PIN section 8.3 or PIB section 7.3. Normally, the DFSA will exercise its power under PIN Rule 8.3.2 based on the relative size of the assets of the Financial Institutions undertaking Insurance Business (representing the insurance sector) and the assets of other Authorised Firms and Financial Institutions (representing a combined non-insurance sector). Pure holding companies will be excluded as being in neither sector. The Rules that 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 DFSA will consider a request from the Authorised Firms in the Financial Group to apply the sectoral rules applicable to the smaller of the two sectors.
        [Added] RM46/2007 (Made 5th July 2007). [VER6/07-07]

    • PIN 8.3.3 PIN 8.3.3

      An Insurer must 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 Requirement as calculated in PIN Rule 8.3.4.

      [Added] RM46/2007 (Made 5th July 2007). [VER6/07-07]

      • PIN 8.3.3 Guidance

        If an Insurer breaches PIN Rule 8.3.3, the DFSA will 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.

        [Added] RM46/2007 (Made 5th July 2007). [VER6/07-07]

    • Financial group capital requirement

      • PIN 8.3.4

        (1) An Insurer must calculate its Financial Group Capital Requirement as 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 Requirement or Minimum Capital Requirement calculated 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 Group includes an entity under (c) of the definition of Financial Group in the GLO Module, that Financial Institution's capital requirement is included on a proportionate basis.
        [Added] RM46/2007 (Made 5th July 2007). [VER6/07-07]

    • Financial group capital resources

      • PIN 8.3.5 PIN 8.3.5

        (1) An Insurer must calculate its Financial Group Capital Resources by 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 Resources of the Financial Group based on the Financial Group's consolidated financial statements; or
        (b) the aggregation method, which is the sum of:
        (i) the Adjusted Capital Resources of the Parent of the Financial Group;
        (ii) subject to (3), the Adjusted Capital Resources calculated in accordance with the PIN Module, or the Capital Resources calculated in accordance with the PIB module, as may be appropriate, of Financial Institutions included in the Financial Group; and
        (iii) subject to (3), the Financial Group's proportionate share of the Adjusted Capital Resources calculated in accordance with the PIN Module, or the Capital Resources calculated in accordance with the PIB Module, as may be appropriate, of Financial Institution participations included in the Financial Group.
        (2) In calculating the Adjusted Capital Resources of a member of the Financial Group or of the Financial Group, an Insurer must 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 Group member in another must not be included.
        [Added] RM46/2007 (Made 5th July 2007). [VER6/07-07]
        [Amended] DFSA RM50/2007 (Made 1st October 2007). [VER7/10-07]

        • PIN 8.3.5 Guidance

          1. The calculation of Financial Group Capital Resources is 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 Resources of Financial Institutions that are Financial Group members in accordance with the PIB Module, an Insurer applies to that member the deductions for illiquid assets and material holdings and Qualifying Holdings set 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.
          [Added] RM46/2007 (Made 5th July 2007). [VER6/07-07]

      • PIN 8.3.6 PIN 8.3.6

        When calculating the Financial Group Capital Resources of a Financial Group, an Insurer must not include Capital Resources or Adjusted Capital Resources (as the case may be) of Subsidiaries or participations to the extent that those Capital Resources or Adjusted Capital Resources:

        (a) exceed the entity requirement in respect of that Subsidiary or participation, calculated in accordance with PIN Rule 8.3.4; and
        (b) are not freely transferable within the Financial Group.
        [Added] RM46/2007 (Made 5th July 2007). [VER6/07-07]

        • PIN 8.3.6 Guidance

          1. Because the Financial Group Capital Requirement set out in PIN Rule 8.3.4 includes capital requirements in respect of Group entities, capital resources may be included in the calculation of Financial Group Capital Resources to 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 Group capital adequacy.
          2. In general, Capital Resources or Adjusted Capital Resources are 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.
          [Added] RM46/2007 (Made 5th July 2007). [VER6/07-07]