PIN 4.2.2 PIN 4.2.2
Insurermust always have capital resources that are, in the opinion of its directors formed on reasonable assumptions, adequate for the conduct of its business, taking into consideration the size of the Insurerand the mix and complexity of its business.
Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]
PIN 4.2.2 Guidance1. Where an
Insurereffects Direct Long-Term Insurancecontracts, PIN Rule 4.2.2 implies that the Insurermust also be able to fund and service its Long-Term Insurance Businessin the long term.2. To be able to demonstrate to the DFSAthat the Insurermeets the obligation of PIN Rule 4.2.2 on an on-going basis, the DFSAexpects the Insurerto develop internal capital models to support the self-assessment of capital adequacy. Those internal capital models should include mechanisms to estimate in a realistic manner the impact on the Insurer'scapital position of possible scenarios relevant to the Insurer'sbusiness. The results of scenario testing should be communicated to the appropriate levels of management within the Insurer. Insurersshould be able to demonstrate to the DFSAthat the Insurerhas adequate capital resources to withstand external and internal shocks to which they may plausibly be exposed.3. Compliance with quantitative capital requirements set out in the PIN Module does not guarantee compliance with PIN Rule 4.2.2.[Added] RM46/2007 (Made 5th July 2007). [VER6/07-07]