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  • 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]