PIN A8.7 Guidance

The purpose of the off-balance sheet liability risk component is to require an Insurer to set aside capital to cover the risk that it will be required to perform on a guarantee, letter of credit or other credit substitute that it has entered into. Although such items are not liabilities of the Insurer as at the Solvency Reference Date, they have the capacity to crystallise as liabilities at a subsequent date and therefore to affect the Insurer's capital position. The provisions in this section apply the relevant provisions of PIN section A4.7 to each Long-Term Insurance Fund that an Insurer maintains.

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