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  • PIN 9 PIN 9 Insurers in Run-off

    • PIN 9.1 PIN 9.1 Introduction

      • PIN 9.1.1

        Subject to PIN Rule 9.1.2, chapter applies to all Insurers.


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

      • PIN 9.1.2 PIN 9.1.2

        In the case of an Insurer that is not a DIFC Incorporated Insurer, this chapter applies only in respect of Insurance Business carried on by the Insurer through an establishment in the DIFC.

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

        • PIN 9.1.2 Guidance

          1. This chapter sets out prudential provisions applying to Insurers that cease to carry on Insurance Business, either wholly or in respect of a particular Class of Business. The provisions are also applicable to Cells and Long-Term Insurance Funds of Insurers, but do not (because of the effect of PIN Rule 9.1.2) apply to non-DIFC Insurance Business of Insurers that are not DIFC Incorporated Insurers.
          2. Sections PIN 9.2 and PIN 9.3 set out actions that an Insurer is required to take when it decides to cease to effect or carry out Contracts of Insurance. Sections PIN 9.4, PIN 9.5 and PIN 9.6 give the DFSA specific powers relating to the supervision of such Insurers.

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

      • PIN 9.1.3 PIN 9.1.3

        For the purposes of this chapter, in determining whether an Insurer is effecting Contracts of Insurance, or has ceased effecting Contracts of Insurance, including Contracts of Insurance effected through a Cell or a Long-Term Insurance Fund, Contracts of Insurance effected under a term of an existing Contract of Insurance must be ignored.

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

        • PIN 9.1.3 Guidance

          The effect of PIN Rule 9.1.3 is to disregard, for the purposes of determining whether the chapter applies, Contracts of Insurance that are effected by the Insurer, as a consequence of a term of an existing Contract of Insurance. A contract will normally only be regarded as being effected under a term of an existing contract if the Insurer does not have discretion to decline to effect the new contract, or if it would be unreasonable for the Insurer, having regard to the interests of the policyholder, to decline to effect it.


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

      • PIN 9.1.4

        In this chapter:

        (a) an Insurer in run-off means an Insurer that has ceased to effect Contracts of Insurance in respect of the whole of its Insurance Business (or, in the case of an Insurer that is not a DIFC Incorporated Insurer, the whole of its Insurance Business carried on through an establishment in the DIFC), and a Cell in run-off and a Long-Term Insurance Fund in run-off are construed accordingly; and
        (b) going into run-off or placing Insurance Business into run-off means ceasing to effect Contracts of Insurance, and placing a Cell or a Long-Term Insurance Fund into run-off are construed accordingly.

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

    • PIN 9.2 PIN 9.2 Insurers ceasing to effect contracts of insurance in a class of business

      • PIN 9.2.1

        This section applies to an Insurer that ceases or decides to cease to effect new Contracts of Insurance:

        (a) in a Class of Business in which the Insurer has previously carried on Insurance Business; or
        (b) in respect of a Cell or a Long-Term Insurance Fund, in a Class of Business in which the Insurer has previously carried on Insurance Business through that Cell or Long-Term Insurance Fund.

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

      • PIN 9.2.2

        An Insurer to which this section applies must, within 28 days of a decision to cease to effect new Contracts of Insurance in a Class of Business, notify the DFSA of its decision, in a written notice specifying the following details:

        (a) the effective date of the decision to cease effecting Contracts of Insurance;
        (b) the Class of Business to which the decision relates; and
        (c) where relevant, the Cell or Long-Term Insurance Fund to which the decision relates.

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

      • PIN 9.2.3

        An Insurer which has provided a notice to the DFSA in accordance with PIN Rule 9.2.2 must not effect any Contracts of Insurance in that Class of Business without the written permission of the DFSA. Where the notice referred to in PIN Rule 9.2.2 relates to a Cell or Long-Term Insurance Fund of the Insurer, the restriction set out in this rule applies only to that Cell or Long-Term Insurance Fund.


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

    • PIN 9.3 PIN 9.3 Run-off plans

      • PIN 9.3.1

        This section applies to:

        (a) Insurers that are in run-off or that maintain Cells or Long-Term Insurance Funds that are in run-off;
        (b) Insurers that go into run-off or that place Cells or Long-Term Insurance Funds into run-off;
        (c) Insurers that make a decision to go into run-off or to place a Cell or Long-Term Insurance Fund into run-off; and
        (d) Insurers whose permission to effect Contracts of Insurance in respect of their entire Insurance Business or in respect of the entire business of a Cell or Long-Term Insurance Fund is withdrawn by the DFSA.

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

      • PIN 9.3.2

        If an Insurer takes a decision to go into run-off or to place a Cell or a Long-Term Insurance Fund into run-off, the Insurer must, at the same time as the notice referred to in PIN Rule 9.2.2, provide the DFSA with a written run-off plan in respect of the Insurance Business being placed into run-off.


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

      • PIN 9.3.3

        If the DFSA withdraws an Insurer's permission to effect Contracts of Insurance in respect of the Insurer's entire Insurance Business or the entire Insurance Business of a Cell or Long-Term Insurance Fund, the Insurer must, within 28 days of the written notice of withdrawal of permission (or, if later, the period specified in that notice), provide the DFSA with a written run-off plan in respect of that Insurance Business.


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

      • PIN 9.3.4

        A run-off plan provided to the DFSA in accordance with this section must cover the period until all liabilities to policyholders relating to the Insurance Business in run-off are met and must include:

        (a) an explanation of how, or to what extent, all liabilities to policyholders will be met in full as they fall due;
        (b) an explanation of how, or to what extent, the Insurer will maintain its compliance with the requirements of PIN chapter 4 until such time as all liabilities to policyholders are met;
        (c) a description, appropriate to the scale and complexity of the Insurer's business, of the Insurer's business strategy;
        (d) financial projections showing, in a form appropriate to the scale and complexity of the Insurer's operations, the forecast financial position of the Insurer as at the end of each reporting period during the period to which the run-off plan relates; and
        (e) an assessment of the sensitivity of the financial position of the Insurer to stress arising from realistic scenarios relevant to the circumstances of the Insurer.

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

      • PIN 9.3.5

        Where an Insurer's Insurance Business in run-off relates to a Cell or a Long-Term Insurance Fund of that Insurer, the run-off plan must deal with the matters set out in PIN Rule 9.3.4 so far as they relate to that Cell or Long-Term Insurance Fund.


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

      • PIN 9.3.6 PIN 9.3.6

        An Insurer that has provided a written run-off plan to the DFSA must monitor the matters contained in the run-off plan and must notify the DFSA promptly and in writing of any significant departure from the run-off plan.

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

        • PIN 9.3.6 Guidance

          An Insurer should decide whether a matter constitutes a significant departure from a run-off plan, having regard to the nature and size of the matter and its materiality relative to the size and complexity of the Insurer and, where relevant, the size and complexity of the Cell or Long-Term Insurance Fund concerned. The following matters will normally be considered as representing a significant departure from a run-off plan:

          a. significant revision of the Insurer's strategy for managing risks, and in particular its strategy for the use of reinsurance;
          b. a significant deterioration in the Insurer's claims experience, financial position or solvency position (the amount by which the Insurer's capital resources, determined in accordance with the provisions of PIN chapter 4 relevant to that Insurer, exceed the applicable minimum capital requirements set out in that chapter); or
          c. any other transaction or circumstance that is likely to have a material effect upon the Insurer's solvency position.

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

      • PIN 9.3.7

        Where an Insurer has notified a matter to the DFSA in accordance with PIN Rule 9.3.6, the DFSA may by notice in writing require the Insurer to provide an amended run-off plan. The Insurer must provide an amended run-off plan within 28 days of receipt of the notice, unless the notice specifies a longer period.


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

    • PIN 9.4 PIN 9.4 Requirements for collateral for insurers in run-off

      • PIN 9.4 Guidance

        This section contains provisions that enable the DFSA to require an Insurer that is in run-off or going into run-off to post collateral assets or make equivalent arrangements by letter of credit, to support the Insurance Liabilities and Minimum Capital Requirements applicable to the Insurer. In considering whether to exercise the powers in this section, the DFSA will have regard to the circumstances of the Insurer and the interests of policyholders.


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

      • PIN 9.4.1

        This section applies only to an Insurer that:

        (a) is in run-off as regards its entire Insurance Business or the entire Insurance Business of a Cell or Long-Term Insurance Fund;
        (b) has provided a notice to the DFSA in accordance with PIN Rule 9.2.2 in respect of its entire Insurance Business or the entire Insurance Business of a Cell or Long-Term Insurance Fund; or
        (c) has received a written notice from the DFSA withdrawing the Insurer's permission to effect Contracts of Insurance in respect of its entire Insurance Business or the entire Insurance Business of a Cell or Long-Term Insurance Fund.

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

      • PIN 9.4.2

        The DFSA may, by written notice (referred to in this chapter as a 'collateral notice') require an Insurer to make available assets:

        (a) of a type and in a manner described in PIN Rule 9.4.6; and
        (b) having a value, determined in accordance with the provisions of PIN chapter 5, of the lower of:
        (i) the amount, if any, specified in the notice; and
        (ii) the amount determined in accordance with PIN Rule 9.4.5.

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

      • PIN 9.4.3

        An Insurer must comply with the requirements of a collateral notice within the period (if any) specified in the notice, or within two months of the date of the notice, whichever is the longer.


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

      • PIN 9.4.4

        The DFSA may at any time, by written notice to the Insurer, vary or revoke a collateral notice issued under PIN Rule 9.4.2.


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

      • PIN 9.4.5 PIN 9.4.5

        The amount referred to in PIN Rule 9.4.2(b)(ii) is calculated as follows:

        (a) in the case of an Insurer that is not a DIFC Incorporated Insurer, the amount of the assets that the Insurer is required by PIN Rule 4.7.2 to make available;
        (b) in the case of a Cell of an Insurer, the sum of the following two amounts:
        (i) the Insurance Liabilities attributable to that Cell; and
        (ii) the Minimum Cellular Capital Requirement applicable to that Cell.
        (c) in the case of a Long-Term Insurance Fund, subject to (e) and (f), the sum of the following two amounts:
        (i) the Insurance Liabilities attributable to that Long-Term Insurance Fund; and
        (ii) the Minimum Fund Capital Requirement applicable to that Long-Term Insurance Fund;
        (d) in the case of an Insurer that is a DIFC Incorporated Insurer and that is not a Protected Cell Company, the sum of the following two amounts:
        (i) the Insurer's Insurance Liabilities; and
        (ii) the Insurer's Minimum Capital Requirement.
        (e) in the case of an Insurer to which (a) and (c) both apply, the amount set out in (a); and
        (f) in the case of an Insurer to which (c) and (d) both apply, the amount set out in (d).
        Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]
        [Amended] RM46/2007 (Made 5th July 2007) [VER6/07-07]

        • PIN 9.4.5 Guidance

          PIN Rule 9.4.5 describes the maximum amount of assets that the DFSA may require to be made available as collateral. The Rule includes provisions to avoid imposing multiple collateral requirements on the same Insurer in respect of the same Insurance Business in run-off.


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

      • PIN 9.4.6

        The assets referred to in PIN Rule 9.4.2 must be made available in one of the following two manners or in a combination of those two manners:

        (a) assets of a type described in PIN Rule 4.7.3 may be deposited with a custodian nominated or approved in writing by the DFSA; or
        (b) a financial institution nominated or approved in writing by the DFSA may issue a confirmed letter of credit in favour of the DFSA, for the amount of the assets required to be made available.

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

      • PIN 9.4.7 PIN 9.4.7

        The terms and conditions of a custody arrangement referred to in PIN Rule 9.4.6(a) or a letter of credit referred to in PIN Rule 9.4.6(b) and any change to those terms and conditions, must be notified to the DFSA, which may within two months of such notification require the Insurer to make any change to the terms and conditions of the arrangement or letter of credit.

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

        • PIN 9.4.7 Guidance

          The terms and conditions of an arrangement or letter of credit will normally be expected to include provisions having the following effect:

          a. the arrangement or letter of credit is not revocable or cancellable at the option of the Insurer, and contains no provision for automatic cancellation on the insolvency of the Insurer;
          b. the DFSA has the right to apply assets deposited, or to draw upon the letter of credit, for the purpose of meeting Insurance Liabilities of the Insurer and any expenses incidental to that activity;
          c. in the case of a custody arrangement, the Insurer is prohibited from applying, directly or indirectly, the assets deposited, except in the following manners:
          i. in settlement of Insurance Liabilities of the Insurer that are in respect of the Insurance Business that is in run-off;
          ii. in exchange for fair value, for other assets of a type described in PIN Rule 4.7.3 and deposited with the same custodian under the same conditions;
          iii. in consideration for the transfer to another Insurer of Insurance Liabilities of the Insurer that are in respect of the Insurance Business that is, or has been placed into, run-off;
          iv. withdrawal from the custody of the custodian for deposit with a different custodian approved by the DFSA;
          v. withdrawal from the custody of the custodian in accordance with PIN Rule 9.4.12; or
          vi. withdrawal from the custody of the custodian in accordance with a written notice issued by the DFSA revoking or varying the collateral notice; and
          d. in the case of a letter of credit, the amount of the letter of credit may be reduced only:
          i. in order to achieve, in accordance with PIN Rule 9.4.12 a reduction in the amount of assets made available by the Insurer; or
          ii. in accordance with a written notice issued by the DFSA revoking or varying the collateral notice.

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

      • PIN 9.4.8

        The DFSA may, by written notice to an Insurer, require the Insurer to charge in favour of the DFSA part or all of any assets deposited with a custodian in accordance with PIN Rule 9.4.6(a).


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

      • PIN 9.4.9

        The Insurer must reassess, as at the end of March, June, September and December in each year, the amount of the assets that the Insurer is required by a collateral notice to make available, and the amount of assets made available by the Insurer.


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

      • PIN 9.4.10

        The Insurer must report to the DFSA, within two months of the date as at which the reassessment referred to in PIN Rule 9.4.9 is performed, the results of that reassessment and details of any action taken or proposed to be taken as a result of that assessment.


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

      • PIN 9.4.11

        If the reassessment referred to in PIN Rule 9.4.9 shows that the amount of assets made available is less than the amount that the Insurer is required to make available, the Insurer must, within two months of the effective date of the reassessment, make additional assets available so that the Insurer complies with the requirements of the collateral notice.


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

      • PIN 9.4.12

        If the reassessment shows that the amount of assets made available is more than the amount that the Insurer is required to make available, the Insurer may, with the written consent of the DFSA, remove assets from those made available provided that the Insurer complies with the requirements of the collateral notice after the assets have been removed.


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

    • PIN 9.5 PIN 9.5 Provisions in respect of contracts relating to insurance business in run-off

      • PIN 9.5.1

        This section applies to any Insurer referred to in PIN Rule 9.4.1.


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

      • PIN 9.5.2

        An Insurer to which this section applies must inform the DFSA in writing of the existence and principal features of any contract which it enters into in respect of its Insurance Business in run-off, including Insurance Business carried on through a Cell or a Long-Term Insurance Fund that is in run-off, or that is in existence at the time the Insurer places that Insurance Business into run-off, and that is of any of the following types:

        (a) contracts, other than Contracts of Insurance effected by the Insurer prior to going into run-off, with parties that are Related to the Insurer;
        (b) contracts relating to the management of the Insurance Business in run-off, and any other contracts with the same counterparty or parties Related to that counterparty; or
        (c) contracts for reinsurance of the Insurance Business that is in run-off, and any other contracts with the same counterparty or parties Related to that counterparty.

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

      • PIN 9.5.3

        The DFSA may by written notice require an Insurer to provide additional information as specified in that notice in respect of any contract notified to the DFSA in accordance with PIN Rule 9.5.2


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

    • PIN 9.6 PIN 9.6 Limitations on distributions by DIFC incorporated insurers in run-off

      • PIN 9.6.1

        No DIFC Incorporated Insurer that is in run-off may make any distribution of profits or surplus however called or described, or return of capital, or any payment of management fees (other than fees payable under a contract notified to the DFSA in accordance with PIN Rule 9.5.2), without the written consent of the DFSA. Any such distribution or return of capital or payment of management fees must be made within the period, if any, specified in the written notice of consent given by the DFSA.


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