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PIN A4.12.8

An Insurer who carries on Direct Long-Term Insurance Business through a branch located outside the DIFC must calculate the Direct Long-Term Insurance Business element of its Long-Term Insurance risk component as the aggregate of the following, in respect of those contracts:

(a) the following proportions of provisions in respect of Long-Term Insurance Business:
(i) in the case of Class I, Class II, and Class VI, 4%;
(ii) in the case of Class III and Class VII, where the Insurer bears investment risk, 4%; and
(iii) in the case of Class III, where the Insurer bears no investment risk but the allocation to cover management expenses is fixed for more than five years, 1%;
(b) in the case of all contracts where the Insurer bears a death risk under the contract, the following percentage of capital at risk, subject to a maximum reduction for reinsurance of 50%:
(i) where the contract is term assurance of not more than three years, 0.1%;
(ii) where the contract is term assurance of between three and five years, 0.15%; and
(iii) in all other cases, 0.3%;
(c) in the case of Class III, where the Insurer bears no investment risk and the allocation to cover management expenses is not fixed for more than five years, 25% of the Insurer's net administrative expenses in the past financial year pertaining to such business;
(d) in the case of Class IV, the higher of:
(i) 18% of Gross Written Premium, reducing to 16% for the amount of Gross Written Premium in excess of $50 million, and subject to a maximum reduction for reinsurance of 50%; and
(ii) 26% of the average gross claims incurred over the three preceding financial years, reducing to 23% for the amount of that average in excess of $35 million, and subject to a maximum reduction for reinsurance of 50%; and
(e) in the case of Class V, 1% of the assets of the tontine;
[Added] RM46/2007 (Made 5th July 2007) [VER6/07-07]