Entire Section

  • PIN A4.2 PIN A4.2 Minimum capital requirement

    • PIN A4.2.1

      Subject to PIN Rule A4.2.2, an Insurer must calculate its Minimum Capital Requirement according to the following applicable formula:

      (a) for an Insurer, other than a Captive Insurer: MCR = DRC + IVRC + OARC + OLRC + CRC + SFAC + URC + RRC + LIRC + AMRC;
      (b) for a Class 1 Captive Insurer: MCR = higher of URC and RRC; and
      (c) for a Class 2 and Class 3 Captive Insurer: MCR = DRC + IVRC + URC + RRC;

      Where the following definitions apply:

      Term Definition
      MCR Insurer's Minimum Capital Requirement;
      DRC Insurer's default risk component;
      IVRC Insurer's investment volatility risk component;
      OARC Insurer's off-balance sheet asset risk component;
      OLRC Insurer's off-balance sheet liability risk component;
      CRC Insurer's concentration risk component;
      SFAC Insurer's size factor adjustment component;
      URC Insurer's underwriting risk component;
      RRC Insurer's reserving risk component;
      LIRC Insurer's Long-Term Insurance risk component; and
      AMRC Insurer's asset management risk component.
      Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]
      [Added] DFSA RMI296/2021 (Made 24th February 2021). [VER17/04-21]

    • PIN A4.2.2

      The methods of calculation of the components referred to in PIN Rule A4.2.1 are set out in sections PIN A4.4, PIN A4.5, PIN A4.6, PIN A4.7, PIN A4.8, PIN A4.9, PIN A4.10, PIN A4.11, PIN A4.12 and PIN A4.13.


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

    • PIN A4.2.3

      An Insurer's Minimum Capital Requirement must always be equal to or higher than:

      (a) in the case of a Class 1 Captive Insurer, $ 150,000;
      (b) in the case of a Class 2 Captive Insurer, $ 500,000 or if a higher amount is specified under PIN Rule A4.2.4, that amount;
      (c) in the case of a Class 3 Captive Insurer, $ 1,000,000; and
      (d) in the case of all other Insurers, $ 10,000,000.
      Derived from DFSA RM06/2004 (Made 16th September 2004). [VER1/09-04]
      [Amended] RM46/2007 (Made 5th July 2007) [VER6/07-07]
      [Amended] DFSA RMI296/2021 (Made 24th February 2021). [VER17/04-21]

    • PIN A4.2.4

      (1) The DFSA may, based on the business and risk profile of a Class 2 Captive Insurer, specify in writing a higher Minimum Capital Requirement than the figure set out in PIN Rule A4.2.3(b), but the amount specified must be less than $1,000,000.
      (2) The DFSA may, in setting a higher amount under (1), take into account factors relating to the nature, size and complexity of the business or operations of the Insurer, including:
      (a) the percentage of Gross Written Premium obtained from Contracts of Insurance that relate to risks arising out of the business or operations of the Group as compared to the total Gross Written Premium;
      (b) the Classes of Business covered in Contracts of Insurance effected by the Captive Insurer;
      (c) the type of Policyholders of Contracts of Insurance effected by the Captive Insurer; and
      (d) risks arising from the nature, size and complexity of the business of the Group, that affect or are likely to affect the Captive Insurer’s activity.
      Derived from DFSA RMI296/2021 (Made 24th February 2021). [VER17/04-21]