PIN App9 PIN App9 Calculation of DIFC Business Risk Capital Requirement
PIN A9.1 PIN A9.1 Purpose and general provisions
PIN A9.1.1 PIN A9.1.1
This appendix applies to all
Insurersto which PIN section 4.7 applies.
PIN A9.1.1 Guidance1. This appendix sets out the manner in which an
Insurerthat is not a DIFC Incorporated Insureris required to calculate its DIFC Business Risk Capital Requirement. The basis of calculation is analogous to the basis of calculation of elements of the Minimum Capital Requirementfor Insurersthat are not Protected Cell Companies, as set out in PIN App4.2. The DIFC Business Risk Capital Requirementis calculated with reference to the insurance activities of the Insurer, carried out through its establishment in the DIFC, without deduction for reinsurances.
PIN A9.2 PIN A9.2 DIFC business risk capital requirement
Insurermust calculate its DIFC Business Risk Capital Requirementas the sum of the Insurer's DIFCunderwriting risk component, the Insurer's DIFCreserving risk component and the Insurer's DIFC Long-Term Insurancerisk component.
In calculating the
DIFC Business Risk Capital Requirement:(a) no account must be taken of Contracts of Insuranceeffected by the Insurer, other than through an establishment in the DIFC; and(b) no account must be taken of contracts of reinsurance entered into by the Insureras cedant, regardless of where those contracts of reinsurance were entered into.
PIN A9.3 PIN A9.3 DIFC underwriting risk component
PIN A9.3 Guidance
DIFCunderwriting risk component requires an Insurerto demonstrate the availability of capital to address the risk that the cost of claims on Contracts of Insuranceentered into as Insurerthrough an establishment in the DIFCwill vary from the cost implicit in the premiums being charged.
PIN A9.4 PIN A9.4 DIFC reserving risk component
PIN A9.4 Guidance
DIFCreserving risk component requires an Insurerto demonstrate the availability of capital to address the risk that the cost of claims in respect of contracts entered into as Insurerthrough an establishment in the DIFCwill vary from the amounts recorded as liabilities in the Insurer'sbalance sheet.