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W 128/09 PIN — Dubai Holding Insurance Services PCC Limited

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WAIVER AND MODIFICATION NOTICE

To Dubai Holding Insurance Services PCC Limited
Address c/o Marsh Management Services (Dubai) Limited
Level 13 Al Gurg Tower, Riggat Al Buteen, Deira, Dubai, UAE
DFSA Firm Reference No. F000774
Notice No. W128/2009

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 Rules PIN A6.9.1 and PIN A6.9.2

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 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) Bonds Rated 'BBB' 3.3
(d) Bonds 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 and Rule A6.8.1, an intra-group loan is a "qualifying intra-group loan" where it meets all of the following criteria:
(a) the loan is made to a member of the Insurer's Group;
(b) the loan does not involve the $50,000 Minimum Non-Cellular Capital Requirement under Rules A6.2.4 or the $50,000 Minimum Cellular Capital Requirement under Rule A6.2.5;
(c) the loan repayment is for a limited period no longer than 12 months and no automatic rollover is permitted;
(d) the loan attracts a commercial rate of interest;
(e) the loan agreement contains a condition that the loan is repayable immediately on the instruction of the DFSA; and
(f) the loan has been approved by the DFSA for the purposes of this Rule.
(3) An Insurer must ensure that it holds the amounts referred to in (2)(a) as cash.
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) Rated money market instruments 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 A6.2.2

Subject to Rules A6.2.4, A6.2.5, and A6.2.6, an Insurer must calculate its Minimum Segmental Capital Requirement according to the formula:

MSCR = DRC + IVRC + OARC + OLRC + CRC + SFAC + URC + RRC + LIRC + AMRC where:

Term Definition
MSCR Insurer's Minimum Segmental Capital Requirement;
DRC Insurer's default risk component in respect of that segment;
IVRC Insurer's investment volatility risk component in respect of that segment;
OARC Insurer's off-balance sheet asset risk component in respect of that segment;
OLRC Insurer's off-balance sheet liability risk component in respect of that segment;
CRC Insurer's concentration risk component in respect of that segment;
SFAC Insurer's size factor adjustment component in respect of that segment;
URC Insurer's underwriting risk component in respect of that segment;
RRC Insurer's reserving risk component in respect of that segment;
LIRC Insurer's Long-Term Insurance risk component in respect of that segment;
AMRC Insurer's asset management risk component in respect of that segment.
PIN A6.8.1 An Insurer is required to calculate a concentration risk component in respect of a segment if the segment has, as at the Solvency Reference Date, an investment exposure to a single counterparty or group of Related counterparties, or to a single property, that exceeds 10% of the adjusted segmental capital resources except to the extent that the investment exposure is:
(a) a qualifying intra-group loan under Rule 4.4.1(2); or
(b) cash held with a bank that is regulated by a central bank or other Financial Services Regulator

CONDITIONS

None

EFFECTIVE PERIOD

This notice comes into effect on the date of issue of this notice and remains in force until further notice.

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 WAS ISSUED UNDER ARTICLE 25 OF THE REGULATORY LAW 2004 BY:

Name : Ian Johnston
Position : Deputy Chief Executive

DATE OF ISSUE:

28-June-2009