PIN 4.2.2 Guidance

1. Where an Insurer effects Direct Long-Term Insurance contracts, PIN Rule 4.2.2 implies that the Insurer must also be able to fund and service its Long-Term Insurance Business in the long term.
2. To be able to demonstrate to the DFSA that the Insurer meets the obligation of PIN Rule 4.2.2 on an on-going basis, the DFSA expects the Insurer to develop internal capital models to support the self-assessment of capital adequacy. Those internal capital models should include mechanisms to estimate in a realistic manner the impact on the Insurer's capital position of possible scenarios relevant to the Insurer's business. The results of scenario testing should be communicated to the appropriate levels of management within the Insurer. Insurers should be able to demonstrate to the DFSA that the Insurer has adequate capital resources to withstand external and internal shocks to which they may plausibly be exposed.
3. Compliance with quantitative capital requirements set out in the PIN Module does not guarantee compliance with PIN Rule 4.2.2.
[Added] RM46/2007 (Made 5th July 2007). [VER6/07-07]