Entire Section

  • PIN 8 PIN 8 Consolidated Supervision

    • PIN 8.1 PIN 8.1 Introduction

      • PIN 8.1.1 PIN 8.1.1

        This chapter applies to all Insurers, except for PIN Rule 8.5.1 which applies only to DIFC Incorporated Insurers.

        Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]
        [Amended] RM46/2007 (Made 5th July 2007). [VER6/07-07]

        • PIN 8.1.1 Guidance

          1. Group membership may be a source of both strength and weakness to an Insurer. The purpose of Group Risk requirements is to ensure that an Insurer takes proper account of the risks related to the Insurer's membership of a Group. The Group Risk requirements form a key part of the DFSA's overall approach to prudential supervision.
          2. An Insurer is subject to separate reporting requirements in respect of changes in its Controllers. Those requirements are set out in chapter 11 of GEN. It may be also be required to provide reports in respect of any Close Links it possesses.

          Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]
          [Amended] RM46/2007 (Made 5th July 2007). [VER6/07-07]
          [Amended] DFSA GM8/2011 (Made 28th April 2011). [VER11/02-11]

      • PIN 8.1.2 PIN 8.1.2

        (1) If an Insurer is a member of a Financial Group and the DFSA considers it necessary to extend the scope of the Financial Group to include entities outside of the Financial Group to ensure appropriate Financial Group supervision, an Insurer must also include in the scope of the Financial Group any entity the DFSA may direct the Insurer in writing to include.
        (2) An Insurer may, for the purposes of this section, exclude from its Financial Group, any entity the inclusion of which would be misleading or inappropriate for the purposes of Financial Group supervision, provided the Insurer has obtained the DFSA's prior written approval to do so.
        (3) An Insurer must provide to the DFSA, where requested, information regarding other Group entities, the Group structure and the systems and controls in place to manage Group Risk.
        Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]
        [Amended] RM46/2007 (Made 5th July 2007). [VER6/07-07]

        • PIN 8.1.2 Guidance

          If more than one member of the same Group is subject to an obligation to provide information in respect of a position of the Group, one or more of those Authorised Firms may make application to the DFSA for an appropriate waiver or modification of these Rules.

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

      • PIN 8.1.3

        In this chapter, a series of connected transactions between an Insurer and a Related party, or between an Insurer and parties who are Related to each other, is deemed to constitute a single transaction.


        Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]
        [Deleted] RM46/2007 (Made 5th July 2007). [VER6/07-07]

    • PIN 8.2 PIN 8.2 Adequacy of capital resources of the group

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

      • PIN 8.2.1

        The DFSA may, by written notice, require an Insurer to provide the DFSA with a statement of the consolidated financial position of any Group of which the Insurer is a member, made up as at a date specified by the DFSA in that notice and in accordance with principles stated by the DFSA in the notice.


        Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]
        [Deleted] RM46/2007 (Made 5th July 2007). [VER6/07-07]

      • PIN 8.2.2 PIN 8.2.2

        An Insurer receiving a notice under PIN Rule 8.2.1 shall have not less than three months to comply with the notice.

        Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]
        [Deleted] RM46/2007 (Made 5th July 2007). [VER6/07-07]

  • PIN 8.2.2 Guidance

    An Insurer will normally be permitted to comply with a notice given under PIN Rule 8.2.1 by presenting a copy of a statement, relating to the Group specified in the notice, made up in compliance with an equivalent or substantially equivalent regulatory requirement to which the Insurer or a Subsidiary or Associate of the Insurer is subject in a jurisdiction other than the DIFC. If that statement is not in English, the Insurer will be required to provide a certified translation of the statement into English.


    Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]
    [Deleted] RM46/2007 (Made 5th July 2007). [VER6/07-07]

  • PIN 8.2 PIN 8.2 Systems and controls requirements

    • PIN 8.2.1 PIN 8.2.1

      If an Insurer is a member of a Group, it must establish and maintain systems and controls for the purpose of:

      (a) monitoring the effect on the Insurer of:
      (i) its relationship with other members of its Group;
      (ii) its membership in its Group; and
      (iii) the activities of other members of its Group; and
      (b) monitoring compliance with Financial Group supervision requirements below, including systems for the production of relevant data:
      (i) monitoring funding within the Financial Group; and
      (ii) monitoring compliance with Financial Group reporting requirements.
      [Added] RM46/2007 (Made 5th July 2007). [VER6/07-07]

      • PIN 8.2.1 Guidance

        1. For the purposes of the above requirement, an Insurer may take into account its position within its Group, the materiality of the risk to which it is exposed because of its membership of the Group, and the access that it has to the systems and controls of other members of its Group and any information produced by them or by Associates. For example, it would be reasonable for a small Insurer within a larger Group to place some reliance on its Parent to ensure that appropriate systems and controls are in place.
        2. An Insurer may also consider together Groups whose Parents are all members of the same Group, except for any Group of which the Insurer is the Parent. An Insurer that is itself the Parent of a Group must give specific consideration to the risks to which it is exposed as the Parent. The DFSA will not otherwise however normally expect an Insurer to apply the provisions of this Rule to sub-Groups of a single Group.
        [Added] RM46/2007 (Made 5th July 2007). [VER6/07-07]

  • 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]

  • PIN 8.4 PIN 8.4 Transactions within a group

    • PIN 8.4.1 PIN 8.4.1

      This section applies to all Insurers in respect of all transactions that are material.

      Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]
      [Amended] RM46/2007 (Made 5th July 2007). [VER6/07-07]

      • PIN 8.4.1 Guidance

        A single transaction or series of connected transactions that constitute a sale, purchase, exchange, loan or extension of credit, investment or guarantee involving one-half of one percent (0.5%) or less of surplus as at the end of the reporting period immediately preceding the effective date of the transaction will not normally be considered material for the purposes of this section.


        Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]
        [Amended] RM46/2007 (Made 5th July 2007). [VER6/07-07]

    • PIN 8.4.2

      Transactions entered into by an Insurer with Related entities must comply with the following conditions:

      (a) the terms of the transactions must be fair and reasonable; and
      (b) the books, accounts and records of the Insurer must clearly and accurately disclose the nature and details of the transactions including any accounting information necessary to support the fairness and reasonableness of the terms and conditions of the transactions.

      Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]
      [Amended] RM46/2007 (Made 5th July 2007). [VER6/07-07]

  • PIN 8.5 PIN 8.5 Significant transactions other than group transactions

    • PIN 8.5.1

      (1) A DIFC Incorporated Insurer must not enter into a transaction of the type described in this Rule unless the directors of the Insurer are satisfied following reasonable enquiry that the transaction does not adversely affect the interests of policyholders. The transactions to be considered are:
      (a) a sale, purchase, exchange, loan or extension of credit, guarantee or investment where the counterparty is a Person Related to the Insurer and the amount of the transaction equals or exceeds three per cent of the Insurer's surplus as at the end of the reporting period immediately preceding the transaction;
      (b) a loan or extension of credit to any Person who is not Related to the Insurer, where the Insurer makes the loan or extension of credit with the agreement or understanding that the proceeds of the transaction, in whole or in substantial part, are to be used to make loans or extensions of credit to purchase assets of, or to make investments in, any Related party of the Insurer making the loans or extensions of credit, where the amount of the transaction equals or exceeds three per cent of the Insurer's surplus as at the end of the reporting period immediately preceding the transaction;
      (c) a reinsurance agreement or modification to a reinsurance agreement in which the reinsurance premium or a change in the Insurers liabilities equals or exceeds five per cent of the Insurer's surplus;
      (d) a reinsurance agreement or modification to a reinsurance agreement involving the transfer of assets from an Insurer to a Person not Related to the Insurer, if an agreement or understanding exists between the Insurer and that Person that any portion of the assets will be transferred to one or more other Persons Related to the Insurer and the reinsurance premium or a change in the Insurers liabilities equals or exceeds five per cent of the Insurer's surplus; and
      (e) any management agreement, service contract or cost-sharing arrangement.
      (2) For the purposes of (1), 'surplus' means:
      (a) in the case of an Insurer that is not a Protected Cell Company, the Insurer's Adjusted Capital Resources; and
      (b) in the case of an Insurer that is a Protected Cell Company, the Insurer's Adjusted Cellular Capital Resources in respect of the Cell to which the transaction relates, where the transaction relates to a Cell, and otherwise the Insurer's Adjusted Non-Cellular Capital Resources.
      Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]
      [Amended] RM46/2007 (Made 5th July 2007). [VER6/07-07]

    • PIN 8.5.2

      An Insurer must report to the DFSA all dividends and other distributions to shareholders within 21 days following the declaration of the dividend or distribution.


      Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]
      [Amended] DFSA RM42/2007 (Made 15th February 2007). [VER4/02-07]
      [Amended] RM46/2007 (Made 5th July 2007). [VER6/07-07]

    • PIN 8.5.3

      An Insurer that is a Takaful Insurer must report to the DFSA all distributions of profit or surplus (however called or described) to policyholders within 21 days of the date of declaration of the distribution.


      Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]
      [Amended] DFSA RM42/2007 (Made 15th February 2007). [VER4/02-07]
      [Amended] RM46/2007 (Made 5th July 2007). [VER6/07-07]

    • PIN 8.5.4

      An Insurer must notify the DFSA in writing within 30 days if the Insurer makes an investment in a body corporate to which it is Related, if the total investment in the Related body corporate by the Insurer and other bodies corporate to which the Insurer is Related exceeds ten per cent of the body corporate's paid-up capital or voting rights.


      Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]
      [Amended] RM46/2007 (Made 5th July 2007). [VER6/07-07]