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W 112/2011 PIN — ACWA Power Reinsurance Co Limited

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WAIVER AND MODIFICATION NOTICE

To ACWA Power Reinsurance Co Limited
Address The Gate Precinct Building 2, Level 5, Office 1B, DIFC,
P.O. Box 506770, Dubai, UAE
DFSA Firm Reference No. F001352
Notice No. W112/2011

THE DFSA HEREBY GIVES NOTICE THAT:

1. The Rules specified in Table A herein do not apply to the above mentioned Person.

AND

2. The Rules specified in the left hand column of Table B herein do not apply to the above mentioned Person in the form appearing in the Rulebook but instead apply as modified in the right hand column of the table.

RULES WAIVED

TABLE A
Rulebook Module Rule
PIN Appendix 4 Rule A4.8 (Concentration Risk component)
PIN Appendix 4 Rule A4.9 (Size factor component)

RULES MODIFIED

The Rules specified in the left hand column are modified to the extent shown in the right hand column of the table below. In this table, underlining indicates new text and striking through indicates deleted text, otherwise the Rule remains unaltered. Where a significant number of the paragraphs of the Rule remain un-altered the entire Rule may not be reproduced in the table. In such circumstances the un-altered parts of the Rule will be referred to by the relevant identifying paragraph number or letter, as the case may be.

TABLE B
Rule Modified Text
PIN 7.2.3
(1) Subject to (2), Eevery Insurer must provide to the DFSA as at each reporting date a written report relating to its General Insurance Business, prepared by an Actuary who has the qualifications set out in section 7.5.
(2) An Insurer which is a Class 1 Captive Insurer shall not be required to provide to the DFSA the written report referred to in (1) above in its first two years of operation as an Authorised Firm.
PIN A4.5.1 Subject to Rule A4.5.2, an Insurer must calculate its investment volatility risk component as the sum of the amounts obtained by multiplying the value of each Invested Asset with the relevant percentage applicable to that asset as set out in the following table.

Asset %
(a) All bonds up to 1 year to maturity 1.0
(b) Bonds between 1 and 2 years to maturity 2.0
(c) Bonds between 2 and 5 years to maturity 4.0
(d) Bonds between 5 and 10 years to maturity 6.0
(e) All other bonds 8.0
(f) Equity investments* 15.0
(g) Preference shares 6.0
(h) Land and buildings 18.0
(i) Qualifying intra-group loans 1.0
*Note: Item (f) includes equity shares, participations in collective investment schemes (whether or not the underlying investments are themselves equity investments), participations in joint ventures, and certificates of Mudaraba and Musharaka.
PIN A4.4.1
(1) An Insurer must calculate its default risk component as the sum of the amounts obtained by multiplying the value of each asset of the Insurer with the percentage applicable to that asset, as set out in the tables contained in this Rule and subject to the provisions of Rules A4.4.2, A4.4.5, A4.4.6 and A4.4.7.
(a) Assets that are Invested Assets

  Asset %
(a) Bonds Rated "AAA", issued by a Government or Government Agency 0.0
(b) Bonds not included in (a), Rated "A" or better 0.4
(c) Bond Rated "BBB" 3.3
(d) Bond Rated "BB" 7.5
(e) Bonds Rated "B" 13.7
(f) Bonds Rated "CCC" 20.2
(g) Other Rated Bonds 30.0
(h) Secured Loans – performing 2.0
(i) Secured Loans – non performing 14.0
(j) Loans to Directors of the Insurer or to Directors of related parties, or to the dependent relatives of such Directors 100.0
(k) Unsecured loans to employees (except loans of less than $1,000) 100.0
(l) Other bonds and loans 50.0
(m) Qualifying intra-group loans See Note (1)
(n) Rated money market funds See Note (2)
  Note 1: The percentage for a qualifying intra-group loan is determined by the credit rating of the borrowing company. The loan is to be accorded the same percentage as the equivalent rated bond under (a)-(f).  
  Note 2: A rated money market fund instrument (of 12 months or less duration) is to be accorded the same percentage as the equivalent rated bond under (a)-(f).  
(b) Assets that are not Invested Assets

Asset %
(a) Reinsurance recoverable from:  
      i. reinsurers Rated 'AAA' 0.5
      ii. reinsurers Rated 'AA' 1.2
      iii. reinsurers Rated 'A' 1.9
      iv. reinsurers Rated 'BBB' 4.7
      v. reinsurers Rated 'BB' 9.6
      vi. reinsurers Rated 'B' 23.8
      vii. reinsurers Rated 'CCC' 49.7
      viii. reinsurers Rated 'R' 50.0
      ix. other reinsurers 25.0
(b) Other assets 3.0
(2) For the purposes of this Rule, a Captive Insurer may treat an intra-Group loan as a "qualifying intra-group loan" where the intra-Group loan meets all of the following criteria:
(a) the loan is made to a member of the Insurer's Group;
(b) the loan repayment is for a limited period no longer than 12 months and no automatic rollover is permitted;
(c) the loan attracts a commercial rate of interest;
(d) the loan agreement contains a condition that the loan is repayable immediately on the instruction of the DFSA; and
(e) the loan has been approved by the DFSA for the purposes of this Rule.
(3) An Insurer must ensure that the amounts referred to in (2)(a) are held as cash.

CONDITIONS

None

EFFECTIVE PERIOD

This notice comes into effect on the date of issue of this notice and remains in force for a maximum period of two years or at such a time the firm decides to hold any risk.

INTERPRETATION

The provisions in this notice are to be construed in accordance with GEN section 6.2 as if these provisions are provisions of the Rulebook.

Defined terms are identified in this notice by the capitalisation of the initial letter of a word or of each word in a phrase and are defined in the Glossary (GLO). Unless the context otherwise requires, where capitalisation of the initial letter is not used, an expression has its natural meaning.

THIS NOTICE IS ISSUED UNDER ARTICLE 25 OF THE REGULATORY LAW 2004 BY:

Name : Paul M. Koster
Position : Chief Executive

DATE OF ISSUE:

6 June 2011