PIN 10 PIN 10 Insurance Special Purpose Vehicles
PIN 10.1 PIN 10.1 Application
This chapter applies only to
Insurersthat are Authorised ISPVs.
PIN 10.1.2 PIN 10.1.2
Authorised ISPVmust ensure that at all times its assets are equal to or greater than its liabilities.
PIN 10.1.2 Guidance
It is the policy of the
DFSAthat an Authorised ISPVshould be fully funded. The DFSAconsiders that to be fully funded an ISPVmust have actually received the proceeds of the debt issuance or other mechanism by which it is financed. The DFSAwould not, for example, authorise an ISPVwhere part of the financing for its reinsurance liabilities was on a contingent basis, i.e. a stand by facility or letter of credit.
The assets of an
Authorised ISPVmust be held by, or on behalf of:(a) the Authorised ISPV; or(b) the insurer which cedes to the Authorised ISPVthe risks in respect of which the relevant assets are held.
PIN 10.1.4 PIN 10.1.4
Authorised ISPVmust develop, implement and maintain a risk management system to address all material risks to which it is subject. In particular, it must have regard to the Guidanceon managing investment risk set out in section A.2.6.
PIN 10.1.4 Guidance
In developing, implementing and maintaining a risk management system as required under PIN Rule 10.1.4 an
Authorised ISPVshould have proper regard to the Guidanceon investment risk set out in section A2.6.
Authorised ISPVmust include in each of its contracts of reinsurance terms which ensure that its aggregate maximum liability at any time under those contracts of reinsurance does not exceed the amount of its assets at that time.
Authorised ISPVmust ensure that under the terms of any debt issuance or other financing arrangements used to fund its reinsurance liabilities the rights of the providers of that debt or other financing are fully subordinated to the claims of creditors under its contracts of reinsurance.
Authorised ISPVmust only enter into contracts or otherwise assume obligations which are necessary for it to give effect to the reinsurance arrangements which represent the special purpose for which it has been established.