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PFN PIN 6.6 Guidance

1. This form summarises the capital adequacy position of the Insurer so far as concerns the reporting unit for which it is prepared (Global, Cell, or Fund).
2. The same form is used for all types of Return, although in the calculation of the Capital Requirements applicable to different Insurers and to their Cells and Long-Term Insurance Funds, different terminology is used. The terms on the face of the form need to be replaced with the specific equivalent terms from the relevant section (as set out in section 6.16), depending on the nature of the Insurer and the type of Return. This section contains the necessary Rules to give legal effect to this concept.
3. This form lists a number of adjustments to arrive at the figure to be compared to the minimum Capital Requirement applicable to the reporting unit. The purpose of these adjustments is to remove significant anomalies that may arise due to the flexibility available to Insurers in selecting their accounting bases. Therefore, not all of these adjustments will be applicable to all Insurers. An item must not be added to the base capital figure if it is already included in the base capital figure because of the accounting basis adopted.
4. The effect of the Rules on the Return of a Takaful Insurer is to exclude from equity any element of equity that is not available to participate in the surpluses or deficits of the Insurance Business of the Takaful Insurer, either directly or by loan to the Insurance Fund. Loans that have been made from the Owners’ Equity to the Insurance Fund are included in base capital without restriction, while amounts that are available for loan are treated as hybrid capital.

Derived from DFSA RM11/2004 (Made 16th September 2004). [VER1/09-04]