Entire Section

  • PIN 7 PIN 7 Actuaries

    • PIN 7.1 PIN 7.1 Introduction

      • PIN 7.1 Guidance

        This chapter requires an Insurer to provide the DFSA with a report by an Actuary in respect of its Insurance Liabilities and assets arising in respect of those liabilities (that is, assets which are contingent on the existence and amount of the liabilities, such as reinsurance, salvage and subrogation recoveries). Separate provisions apply in respect of reports on General Insurance Business and Long-Term Insurance Business.


        Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]

    • PIN 7.2 PIN 7.2 The requirement for an actuarial report on general insurance business

      • PIN 7.2.1

        Subject to PIN Rule 7.2.2, this section applies to Insurers conducting General Insurance Business.


        Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]

      • PIN 7.2.2

        Where an Insurer attributes General Insurance Business to a Long-Term Insurance Fund in accordance with PIN Rule 3.3.4, this section does not apply to that business.


        Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]

      • PIN 7.2.3

        (1) An Insurer, other than a Captive Insurer, must provide to the DFSA as at each reporting date a written report relating to its General Insurance Business, prepared by an Actuary who has the qualifications set out in PIN section 7.5.
        (2) Notwithstanding (1), the DFSA may by written notice require a Captive Insurer to provide, for the period specified in the notice, a written report relating to its General Insurance Business, prepared by an Actuary who has the qualifications set out in PIN section 7.5.
        Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]
        [Amended] DFSA RMI296/2021 (Made 24th February 2021). [VER17/04-21]

      • PIN 7.2.4

        This report must provide details in respect of each Class of Business, of:

        (a) significant aspects of the recent experience of the Insurer;
        (b) the Actuary's estimate of the value of General Insurance Liabilities and of assets arising in respect of those liabilities, determined in accordance with PIN chapter 5;
        (c) where there has been a change in the assumptions or in valuation method from that adopted at the previous valuation, the effect of these changes on the General Insurance Liabilities and assets arising in respect of those liabilities, as at the reporting date;
        (d) the adequacy and appropriateness of data made available to the Actuary by the Insurer;
        (e) procedures undertaken by the Actuary to assess the reliability of the data;
        (f) the model or models used by the Actuary;
        (g) the assumptions used by the Actuary in the valuation process including, without limitation, assumptions made as to inflation and discount rates, future expense rates and, where relevant, future investment income;
        (h) the approach taken to estimate the variability of the estimate; and
        (i) the nature and findings of sensitivity analyses undertaken.

        Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]

    • PIN 7.3 PIN 7.3 The requirement for an actuarial investigation of and report on long-term insurance business

      • PIN 7.3.1

        This section applies to Insurers conducting Long-Term Insurance Business, in respect of each Long-Term Insurance Fund maintained or deemed to be maintained by the Insurer.


        Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]

      • PIN 7.3.2

        Every Insurer must arrange for an actuarial investigation of the assets and liabilities of every Long-Term Insurance Fund maintained or deemed to be maintained by it, including a determination of surplus in each such fund, to be performed as at a Reference Date which must be not more than one year later than the date of establishment of the Long-Term Insurance Fund or the previous Reference Date (if later).


        Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]

      • PIN 7.3.3

        An investigation of the type set out in PIN Rule 7.3.2 must in any case be performed as at every reporting date of the Insurer.


        Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]

      • PIN 7.3.4 PIN 7.3.4

        An actuarial investigation under this section must be performed by an Actuary who has the qualifications set out in PIN section 7.5, and must be conducted according to principles approved by the DFSA.

        Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]

        • PIN 7.3.4 Guidance

          Principles set out in professional standards issued by a professional actuarial body that is a full member of the International Actuarial Association will normally be approved by the DFSA for the purposes of PIN Rule 7.3.4, to the extent that they do not conflict with the provisions of this chapter.


          Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]

      • PIN 7.3.5

        When an Insurer arranges for an actuarial investigation under this section, the Insurer must provide to the DFSA a written report prepared by the Actuary conducting the actuarial investigation, not later than four months from the Reference Date of the actuarial investigation.


        Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]

      • PIN 7.3.6 PIN 7.3.6

        This report must provide details of, in respect of each Class of Business:

        (a) the product range;
        (b) any discretionary charges and benefits, options and guarantees, and reversionary bonus entitlements, where such features are included in a product;
        (c) reinsurance arrangements;
        (d) significant aspects of the recent experience of the Insurer, including, where relevant, a commentary on significant deviations of actual experience compared to the assumptions made in the previous valuation;
        (e) the Actuary's estimate of the value of Long-Term Insurance Liabilities, determined in accordance with PIN chapter 5;
        (f) the method and assumptions used by the Actuary in the valuation process, including, where relevant, a commentary on significant differences between the assumptions used and recent actual experience of the Insurer;
        (g) any expense reserves, mismatching reserves and any other special reserves included by the Actuary in the value of the Long-Term Insurance Liabilities, or recommended by the Actuary to be maintained, although not included in the valuation;
        (h) a determination of the value of surplus in the Long-Term Insurance Fund, before any distribution of such surplus;
        (i) a description of the Invested Assets used to determine the risk-adjusted yield on which the discount rate used in the valuation was based;
        (j) the adequacy and appropriateness of data made available to the Actuary by the Insurer;
        (k) procedures undertaken by the Actuary to assess the reliability of the data;
        (l) the model or models used by the Actuary;
        (m) the approach taken to estimate the variability of the estimate;
        (n) the sensitivity analyses undertaken;
        (o) any significant changes to the matters reported on during the period since the previous valuation, including, in the case of the matters referred to in (f), and otherwise, where relevant, an estimate of the effect of these changes on the Long-Term Insurance Liabilities as at the Reference Date; and
        (p) commentary on any other factors affecting the valuation.
        Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]
        [Amended] RM46/2007 (Made 5th July 2007). [VER6/07-07]

        • PIN 7.3.6 Guidance

          1. The assumptions and comparisons referred to in PIN Rule 7.3.6(d) and (f) should cover all significant components of the valuation, including consideration of persistency, mortality, expense levels, and investment returns.
          2. Where the business of the Insurer includes participating Long-Term Insurance Business, it will be necessary for the determination at PIN Rule 7.3.6(h) to deal separately with surplus for the purposes of a decision on allocation of bonuses and surplus for the purposes of determining the capital adequacy of the Fund. For the former of these two purposes, the insurer is identifying the pool, commonly known as surplus, that is available for allocation as bonuses (or equivalent) on participating policies. The allocation then reduces the surplus (note — by convention, this is treated as happening as at the reporting date). By contrast, for the latter of the two purposes, that portion of the remaining surplus that is expected to be allocated eventually to policyholders is also treated as a liability (in PIN Rule 5.6.7), on the grounds that it is not available to absorb losses of the Insurer. For that purpose, declaration of bonuses merely represents a transfer from one recognised liability to another.
          3. Factors that the Actuary should consider for the purposes of PIN Rule 7.3.6(p) may include risks that may vary between the jurisdictions in which business is carried on, as well as generic risks. The former category might include the risk of political unrest, and the latter operational risks such as fraud.
          4. The DFSA may specify additional information to be presented in the Actuary's report. PIN 3.6.1 Guidance indicates that, where the DFSA permits an Insurer to carry on Direct Long-Term Insurance Business with features of a kind described in PIN Rule 3.6.1(1), it may, as a condition of that permission, require additional information to be provided in the Actuary's report. That additional information could include, for example, detail on market-consistent valuations of guarantees or options, and the results of scenario testing.
          [Added] RM46/2007 (Made 5th July 2007). [VER6/07-07]

      • PIN 7.3.7

        Subject to PIN Rule 7.3.8, where an Insurer carries on Direct Long-Term Insurance Business, the report referred to in PIN Rule 7.3.5 must include the information set out in PIN Rule 7.3.6 in respect of such business segregated by the jurisdiction in which it is carried on.

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

      • PIN 7.3.8

        Where business in a jurisdiction is of limited significance, disclosures may, at the discretion of the Actuary, be aggregated for those jurisdictions.

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

    • PIN 7.4 PIN 7.4 Additional provisions relating to the report

      • PIN 7.4.1

        When appointing an Actuary to prepare a report under PIN section 7.2 or PIN 7.3, an Insurer must ensure that there is an agreement in writing which legally binds the Actuary in accordance with the following provisions:

        (a) the contract must require the Actuary to prepare his report in accordance with the provisions of PIN section 7.2 or PIN 7.3 as the case may be;
        (b) the contract must require the Actuary to prepare the report using assumptions and methods that are, in the opinion of the Actuary, appropriate for the purposes of the report;
        (c) the contract must require the Actuary to deliver the report to the Insurer's directors within such time as to give the directors a reasonable opportunity to consider and use the report in preparing the Insurer's Annual Regulatory Return for the reporting period ended on the reporting date;
        (d) the contract must require and permit the Actuary to address the directors of the Insurer if the Actuary believes that there is a matter relating to the financial position or operations of the Insurer that should be brought to the attention of the directors; and
        (e) the contract must require and permit the Actuary to address the DFSA if the Actuary believes that a matter brought to the attention of the directors of the Insurer is not adequately dealt with by bringing it to the attention of the directors.

        Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]

      • PIN 7.4.2

        An Insurer that has appointed an Actuary to provide a report under section PIN 7.2 or PIN 7.3 must make arrangements to enable the Actuary to undertake his functions, and in particular must:

        (a) keep the Actuary informed of the Insurer's business and other plans;
        (b) ensure that the Actuary is fully informed of the Rules in PIN applicable to the Insurer, as well as any other information that the DFSA has provided to the Insurer that may assist the Actuary in performing his duties; and
        (c) ensure that the Actuary has access at appropriate times to all relevant data and people which the Actuary reasonably believes is necessary to fulfil his obligations to the Insurer in respect of this chapter.

        Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]

      • PIN 7.4.3

        The Insurer must submit the reports referred to in PIN section 7.2 and PIN section 7.3 to the DFSA, at the same time as it submits its Annual Regulatory Return for the reporting period ended on the reporting date.


        Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]

      • PIN 7.4.4

        Where an Insurer is not a DIFC Incorporated Insurer, a report prepared under section PIN 7.2 or PIN 7.3 must deal separately with the DIFC Insurance Business of the Insurer, and the Insurance Business of the Insurer as a whole.


        Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]

      • PIN 7.4.5 PIN 7.4.5

        Abbreviated details may be provided in a report prepared under the requirements of this chapter in respect of a Class of Business that is not material.

        Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]

        • PIN 7.4.5 Guidance

          For the purposes of PIN Rule 7.4.5, a Class of Business that accounts for less than ten per cent of the Insurer's Net Written Premium in the reporting period ended on the reporting date and that accounts for less than ten per cent of the Insurer's Insurance Liabilities as at the reporting date, will normally be considered immaterial.


          Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]

    • PIN 7.5 PIN 7.5 Qualifications of the actuary

      • PIN 7.5.1 PIN 7.5.1

        An Actuary appointed to provide an actuarial report under this chapter must:

        (a) have experience in the determination of liabilities in the Classes of Business dealt with in the actuarial report; and
        (b) have the required skill and experience to perform his functions under the DIFC regulatory system.
        Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]

        • PIN 7.5.1 Guidance

          The Rules do not require an Insurer to use the same Actuary for all reports. An Insurer may provide separate reports, prepared by more than one Actuary, where the Insurer undertakes different Classes of Business, provided that each Actuary is appropriately qualified for the Classes of Business on which he reports. Similarly, an Insurer may appoint different Actuaries, each appropriately qualified, to provide reports in respect of Insurance Business conducted in or in respect of different geographical locations, for example DIFC Insurance Business and other Insurance Business.


          Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]

      • PIN 7.5.2

        An Insurer must notify the DFSA in writing of the name, professional qualifications and relevant experience of each person that the Insurer proposes to appoint to provide an actuarial report under this chapter.


        Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]

      • PIN 7.5.3

        The DFSA may, if it does not believe that the Actuary proposed by the Insurer possesses the qualifications set out in PIN Rule 7.5.1, notify the Insurer in writing that another Actuary must be appointed.


        Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]

      • PIN 7.5.4

        An Insurer must notify the DFSA immediately on the termination or resignation of its Actuary, giving the reasons for such termination or resignation.

        [Added] DFSA RM99/2012 (Made 24th July 2012) [VER12/07-12]