• Insurance Business Rules 2006 (PINS)

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    Insurance Business Rules 2006 (PINS)
    Background to this Rulebook [Deleted]
    PINS Chapter 1
    General provisions
    PINS Part 1.1 Introductory
    PINS Part 1.2 General
    PINS Part 1.3 Governing Body Certification
    PINS Part 1.4 Prudential returns
    PINS Part 1.5 Restrictions on insurance business
    PINS Chapter 2
    Risk management
    PINS Part 2.1 General
    PINS Part 2.2 Risk management strategy
    PINS Part 2.3 Risk management policy
    PINS Part 2.4 Own risk and solvency assessment
    PINS Chapter 3
    Minimum Capital Requirement
    PINS Part 3.1 Application and Purpose
    PINS Part 3.2 General Requirement
    PINS Part 3.3 Minimum capital requirement
    PINS Part 3.4 Risk-based capital requirement
    PINS Part 3.5 Investment risk requirement
    PINS Part 3.6 Insurance risk requirement
    PINS Part 3.7 Operational risk requirement
    PINS Part 3.8 Internal Modelling
    PINS Part 3.9 Failure to maintain appropriate financial resources or comply with capital requirements
    PINS Chapter 4
    Eligible Capital
    PINS Part 4.1 Application and Purpose
    PINS Part 4.2 Calculation of Eligible Capital
    PINS Part 4.3 Components of Capital: tier 1
    PINS Part 4.4 Components of Capital: tier 2
    PINS Part 4.5 External Opinion on tier 2 capital
    PINS Part 4.6 Deductions from Total of tier 1 and tier 2 capital
    PINS Part 4.7 Limits on the use of Different Forms of Capital
    PINS Part 4.8 Reduction of Eligible Capital
    PINS Part 4.9 Notification
    PINS Chapter 5
    Additional Requirements for Long Term Insurance Business
    PINS Part 5.1 Application and Purpose
    PINS Part 5.2 Establishment of Long Term Insurance Funds
    PINS Part 5.3 Attribution of Contracts to a Long Term Insurance Fund
    PINS Part 5.4 Segregation of Assets and Liabilities
    PINS Part 5.5 Limitation on use of Assets in Long Term Insurance Fund
    PINS Chapter 6
    Additional Requirements for Takaful Entities
    PINS Part 6.1 Application and Purpose
    PINS Part 6.2 Establishment of Takaful Funds
    PINS Part 6.3 Attribution of Contracts to a Takaful Fund
    PINS Part 6.4 Segregation of Takaful Funds
    PINS Part 6.5 Loans from a Takaful Fund
    PINS Part 6.6 Distribution of a Surplus or Funding a Deficit in a Takaful Fund
    PINS Chapter 7 [Deleted]
    Additional Requirements for Protected Cell Companies
    PINS Part 7.1 Application and Purpose [Deleted]
    PINS Part 7.2 General Requirement [Deleted]
    PINS Part 7.3 Eligible Capital for Protected Cell Companies [Deleted]
    PINS Part 7.4 Capital Adjustment to Eligible Capital [Deleted]
    PINS Chapter 8
    Matching and valuing assets and liabilities of insurers
    PINS Part 8.1 General
    PINS Part 8.2 Measuring assets and liabilities
    PINS Part 8.3 Classification of insurance contracts
    PINS Part 8.4 Basic Principles of Recognition and Measurement
    PINS Part 8.5 Discount rate
    PINS Part 8.6 Recognition and Measurement of Insurance Assets and Liabilities in Respect of General Insurance Business
    PINS Part 8.7 Recognition and Measurement of Assets and Liabilities in Respect of Long Term Insurance Business
    PINS Part 8.8 Methods, assumptions and projections
    PINS Chapter 9
    Actuarial reporting
    PINS Part 9.1 Insurers that are required to have approved actuaries
    PINS Part 9.2 Insurers that are not required to have approved actuaries
    PINS Part 9.3 Reporting Requirements Performed by the Actuarial Function [Deleted]
    PINS Part 9.4 Actuarial Reporting Requirements for General Insurance Business [Deleted]
    PINS Part 9.5 Financial Condition Report [Deleted]
    PINS Part 9.6 Independent Actuarial Report [Deleted]
    PINS Part 9.7 Criteria for Reporting Actuary [Deleted]
    PINS Chapter 10
    Insurers that are members of groups
    PINS 10.1.1 Application of ch 10
    PINS 10.1.2 Purpose of ch 10
    PINS 10.1.3 Ch 10 in addition to other Regulatory Authority powers
    PINS 10.1.4 Powers under FSR not affected
    PINS 10.1.5 Group structure
    PINS 10.1.6 Direction regarding capital resources
    PINS 10.1.7 Intra-group transactions
    PINS 10.1.8 Certain transactions to be inquired into by insurer's governing body
    PINS 10.1.9 Directions about certain intra-group matters
    PINS 10.1.10 Notices to provide information about group financial resources
    PINS Chapter 11
    Transfer of Insurance Business
    PINS Part 11.1 Transfer of insurance business — general
    PINS Part 11.2 Scheme Report
    PINS Part 11.3 Notification of Proposed Transfer
    PINS Chapter 12
    Insurers in Run-off
    PINS Part 12.1 Application and Purpose
    PINS Part 12.2 Insurers Ceasing to Effect Contracts of Insurance in a Category
    PINS Part 12.3 Run-off Plans
    PINS Part 12.4 Provisions in Respect of Contracts Relating to Insurance Business in Run-off
    PINS Part 12.5 Limitations on Distributions by QFC Incorporated Insurers in Run-off
    Schedule 1
    Guidance about what should be included in insurer's risk management policy
    PINS Part S1 Credit risk
    PINS Part S2 Balance sheet and market risk
    PINS Part S3 Reserving risk
    PINS Part S4 Insurance risk
    PINS Part S5 Reinsurance risk
    PINS Part S6 Operational risk
    PINS Part S7 Concentration risk
    PINS Part S8 Group risk
    PINS App1 [Deleted]
    Risk Management Policy
    PINS App1 Guidance [Deleted]
    PINS A1.1 Credit Risk [Deleted]
    PINS A1.2 Balance Sheet and Market Risk [Deleted]
    PINS A1.3 Reserving Risk [Deleted]
    PINS A1.4 Insurance and Reinsurance Risk [Deleted]
    PINS A1.5 Operational Risk [Deleted]
    PINS A1.6 Group Risk [Deleted]
    PINS Schedule 2
    Capital
    PINS A2.1 Stress and Scenario Testing
    PINS Schedule 3
    Risk Based Capital Requirement
    PINS Part A3.1 Interpretation
    PINS Part A3.2 Asset risk component
    PINS Part A3.3 [Deleted]
    PINS Part A3.4 Off-Balance Sheet Asset Risk Component
    PINS Part A3.5 Off-Balance Sheet Liability Risk Component
    PINS Part A3.6 [Deleted]
    PINS Part A3.7 Premium risk component
    PINS Part A3.8 Technical provision risk component
    PINS Part A3.9 Long-term insurance risk component
    PINS Part A3.10 Insurance concentration risk component
    PINS App4
    Reporting to Regulatory Authority
    PINS A4.1 Preparation and Submission of Prudential Returns
    PINS Glossary

     

     

    Amended by QFCRA RM/2017-3 (as from 1st April 2017)
    Amended by QFCRA RM/2021-1 (as from 1st July 2021).

     

     

    • Background to this Rulebook [Deleted]

      Deleted by QFCRA RM/2011-4 (as from 1st July 2011).

    • PINS Chapter 1 PINS Chapter 1 General provisions

      Editorial changes (as from 1 January 2015).

      • PINS Part 1.1 PINS Part 1.1 Introductory

        Editorial changes (as from 1 January 2015).

        • PINS 1.1.1 Name of rules

          These rules are the Insurance Business Rules 2006 (or PINS).

          Amended by QFCRA RM/2011-4 (as from 1st July 2011).

        • PINS 1.1.2 Effect of definitions, notes and examples

          (1) A definition in the Glossary also applies to any instructions or document made under these rules.
          (2) A note in or to these rules is explanatory and is not part of these rules. However, examples and guidance are part of these rules.
          (3) An example is not exhaustive, and may extend, but does not limit, the meaning of these rules or the particular provision of these rules to which it relates.

          Note Under FSR, article 17 (4), guidance is indicative of the view of the Regulatory Authority at the time and in the circumstances in which it was given.
          Amended by QFCRA RM/2011-4 (as from 1st July 2011).
          Amended by QFCRA RM/2020-6 (as from 15th October 2020)

        • PINS 1.1.3 PINS 1.1.3 [Deleted]

          Deleted by QFCRA RM/2011-4 (as from 1st July 2011).

          • PINS 1.1.3 Guidance [Deleted]

            Deleted by QFCRA RM/2011-4 (as from 1st July 2011).

      • PINS Part 1.2 PINS Part 1.2 General

        Editorial changes (as from 1 January 2015).

        • Division 1.2.A Division 1.2.A Application

          Inserted by QFCRA RM/2011-4 (as from 1st July 2011).

          • PINS 1.2.1 PINS 1.2.1 Application of PINS

            These rules apply to every QFC insurer (or insurer) except where otherwise provided.

            Note 1   QFC insurer (or insurer) is defined in r 1.2.3.

            Note 2   The prudential requirements of IMEB, and not those of these rules, apply to an authorised firm with an authorisation that permits it to conduct insurance mediation or captive insurance management (or both) and no other business that is or includes a regulated activity.

            Note 4   The prudential requirements of CAPI, and not those of these rules, apply to an authorised firm with an authorisation that permits it to conduct only captive insurance business and no other business that is or includes a regulated activity.

            Note 5   However, the prudential requirements of these rules apply to a QFC insurer with an authorisation that also permits it to conduct insurance mediation, captive insurance management or captive insurance business.

            Amended by QFCRA RM/2013-1 and QFCRA RM/2014-3 (as from 1st January 2015).

            • PINS 1.2.1 Guidance [Deleted]

              Deleted by QFCRA RM/2011-4 (as from 1st July 2011).

        • Division 1.2.B Division 1.2.B Financial resources generally

          Inserted by QFCRA RM/2011-4 (as from 1st July 2011).

          • PINS 1.2.2 PINS 1.2.2 Financial resources — general requirement

            (1) A QFC insurer (other than a QFC captive insurer) must at all times have financial resources of the kinds and amounts required by, and calculated in accordance with, these rules.

            Note QFC insurer (or insurer) is defined in r 1.2.3.

            (2) An insurer must also at all times have additional financial resources that are adequate for the nature, size and complexity of its business to ensure that there is no significant risk that its liabilities cannot be met as they fall due.
            Inserted by QFCRA RM/2011-4 (as from 1st July 2011).

            • PINS 1.2.2 Guidance

              For rule 1.2.2 (2), the insurer's governing body should assess whether the minimum financial resources required by these rules are adequate for the firm's business. Additional financial resources should be maintained by the insurer if its governing body considers that the required minimum financial resources do not adequately reflect the risks of the firm's business.

              Amended by QFCRA RM/2012-5 (as from 1st July 2013).

        • Division 1.2.C Division 1.2.C Key terms and basic concepts

          Inserted by QFCRA RM/2011-4 (as from 1st July 2011).

          • PINS 1.2.3 Who is a QFC insurer (or insurer)?

            A QFC insurer (or insurer) is an authorised firm with an authorisation to conduct insurance business.

            Amended by QFCRA RM/2013-1 (as from 1st January 2015).

          • PINS 1.2.4 What is insurance business?

            Insurance business is the business of conducting either or both of the following regulated activities:

            (a) effecting contracts of insurance;
            (b) carrying out contracts of insurance.

            Note Regulated activity and the regulated activities mentioned in this definition are defined in the glossary.

            Inserted by QFCRA RM/2011-4 (as from 1st July 2011).

          • PINS 1.2.5 Types of insurance business

            (1) General insurance business is insurance business in relation to general insurance contracts.
            (2) Long term insurance business is insurance business in relation to long term insurance contracts.
            Inserted by QFCRA RM/2011-4 (as from 1st July 2011).

          • PINS 1.2.6 Types of insurance contracts

            (1) A general insurance contract is a contract of insurance that is a General Insurance Contract under the Financial Services Regulations, Schedule 3, Part 3, paragraph 10.3.
            (2) A long term insurance contract is a contract of insurance that is a Long Term Insurance Contract under the Financial Services Regulations, Schedule 3, Part 3, paragraph 10.4.
            Editorial changes (as from 1 January 2015).

          • PINS 1.2.7 Takaful insurance concepts

            (1) A takaful entity is:
            (a) an Islamic financial institution that conducts takaful business; or
            (b) a QFC insurer operating an Islamic window.
            (2) Takaful business is the part of insurance business conducted by a takaful entity that is Islamic financial business.

            Note Insurance business is defined in r 1.2.4.
            (3) A takaful fund is a fund established and maintained by a takaful entity under rule 6.2.1 for its takaful business.
            Amended by QFCRA RM/2015-3 (as from 1st January 2016)
            Amended by QFCRA RM/2021-1 (as from 1st July 2021).

          • PINS 1.2.8 PINS categories

            (1) For these rules, general insurance business is divided into 4 PINS categories, as follows:
            (a) PINS category 1 — general insurance business that falls under general insurance category 1 or 2;
            (b) PINS category 2 — general insurance business that falls under general insurance category 3 or 18;
            (c) PINS category 3 — general insurance business that falls under general insurance category 4, 5, 6, 7, 8, 9, 16 or 17;
            (d) PINS category 4 — general insurance business that falls under general insurance category 10, 11, 12, 13, 14 or 15.
            (2) In subrule (1)—

            general insurance category means a category of general insurance set out in FSR, Schedule 3, Part 3, paragraph 10.3.
            Editorial changes (as from 1 January 2015).

      • PINS Part 1.3 PINS Part 1.3 Governing body certification

        Editorial changes (as from 1 January 2015).

        • PINS 1.3.1 Requests for views of insurer's governing body

          (1) The Regulatory Authority may, by written notice given to an insurer, request the governing body of the insurer to give the authority, within a stated reasonable period, its view about—
          (a) the insurer's compliance with any relevant rule or requirement to which the insurer is subject to under QFC law;
          (b) any prudential returns or any other statement or return being true and correct and not false or misleading; or
          (c) any other matter the Regulatory Authority specifies in the request.
          (2) The authorised firm must ensure that the request is complied with.
          (3) The power given by this rule is additional to the Regulatory Authority's other powers.

          Note See eg Financial Services Regulations, art 48 (Powers to obtain documents and information).
          Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

      • PINS Part 1.4 PINS Part 1.4 Prudential returns

        Editorial changes (as from 1 January 2015).

        • PINS 1.4.1 Preparation of prudential returns

          (1) An insurer must prepare the annual, biannual and quarterly prudential returns that it is required to prepare by the Regulatory Authority by written notice published on an approved website.
          (2) The Regulatory Authority may, by notice given to an insurer—
          (a) require the insurer to prepare additional prudential returns; or
          (b) exempt the insurer from the requirement to prepare annual, biannual or quarterly returns or a particular annual, biannual or quarterly return.
          (3) An exemption under subrule (2) (b) may be subject to conditions, restrictions or requirements.
          (4) An insurer given an exemption under subrule (2) (b) must comply with all conditions, restrictions and requirements to which the exemption is subject.
          Amended by QFCRA RM/2012-5 (as from 1st July 2013).

        • PINS 1.4.2 [Deleted]

          [Deleted]

          Deleted by QFCRA RM/2010-04 (as from 1st October 2010)

        • PINS 1.4.3 [Deleted]

          Deleted by QFCRA RMI/2008-2 (as from 1st October 2008).

        • PINS 1.4.4 [Deleted]

          Deleted by QFCRA RMI/2008-2 (as from 1st October 2008).

        • PINS 1.4.5 [Deleted]

          [Deleted]

          Deleted by QFCRA RM/2010-04 (as from 1st October 2010)

        • PINS 1.4.2 Time limit for annual prudential returns of insurers

          An insurer must give an annual prudential return to the Regulatory Authority within 3 months after the day the relevant financial year of the insurer ends.

          Example

          If a financial year of an insurer ends on 31 December in a year, the annual prudential return for the year must be given to the Regulatory Authority before 1 April of the next year.
          Amended by QFCRA RM 2019-1 (as from 28th March 2019).

        • PINS 1.4.3 Time limit for biannual prudential returns of insurers

          (1) An insurer must give a biannual prudential return to the Regulatory Authority within 1 month after the day the relevant standard biannual period ends.
          Example

          If a standard biannual period ends on 30 June in a year, the biannual prudential return for the period must be given to the Regulatory Authority before 1 August in the year.
          (2) In this rule:

          standard biannual period means the 6-month period ending on 30 June or 31 December.
          Amended by QFCRA RM 2019-1 (as from 28th March 2019).

        • PINS 1.4.4 PINS 1.4.4 Time limit for quarterly prudential returns of insurers

          (1) An insurer must give a quarterly prudential return to the Regulatory Authority within 1 month after the day the relevant standard quarter ends.
          Example

          If a standard quarter ends on 31 March in a year, the quarterly prudential return for the period must be given to the Regulatory Authority before 1 May in the year.
          (2) In this rule:

          standard quarter means the 3-month period ending on 31 March, 30 June, 30 September or 31 December.
          Amended by QFCRA RM 2019-1 (as from 28th March 2019).

          • PINS 1.4.8 Guidance [Deleted]

            Deleted by QFCRA RM02/2009 (as from 6th December 2009).

      • PINS Part 1.5 PINS Part 1.5 Restrictions on insurance business

        Editorial changes (as from 1 January 2015).

        • PINS 1.5.1 Certain kinds of insurance business not to be combined

          An insurer must not carry on, in or from the QFC, both long term insurance business and general insurance business unless the general insurance business is restricted to categories 1 (accident) and 2 (sickness).

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 1.5.2 Insurers not to carry on non-insurance business

          (1) An insurer must not carry on any activity other than insurance business unless the activity is directly connected with, or carried on for the purposes of, insurance business.
          (2) For this rule, managing investments is not an activity directly connected with, or carried on for the purposes of, insurance business.

          Guidance

          1. The following activities will normally be considered to be directly connected with, or carried on for the purposes of, insurance business carried on by an insurer:
          a. investing, reinvesting or trading, as investor or rabb ul maal and for the insurer's own account, that of its subsidiary, its holding company or any subsidiary of its holding company but not any other party, in shares, debt instruments, investment accounts, units in collective investment schemes, certificates of mudaraba, certificates of musharaka or other forms of investments that are intended to earn profit or return for the investor;
          b. rendering other services related to insurance business operations including actuarial, risk assessment, loss prevention, safety engineering, data processing, accounting, claims handling, loss assessment, appraisal and collection services;
          c. acting as agent for another insurer in relation to contracts of insurance in which both insurers participate;
          d. establishing subsidiaries or associates engaged or organised to engage exclusively in 1 or more of the businesses mentioned in a. to c.;
          e. insurance mediation.
          2. The Regulatory Authority may give individual guidance on other business activities that may be taken to be directly connected with, or carried on for the purposes of, insurance business carried on by an insurer.
          Amended by QFCRA RM/2015-1 (as from 1st July 2015).

        • PINS 1.5.4 PINS 1.5.4 [Deleted]

          Deleted by QFCRA RM/2015-1 (as from 1st July 2015).

          • PINS 1.5.4 Guidance [Deleted]

            Deleted by QFCRA RM/2015-1 (as from 1st July 2015).

    • PINS Chapter 2 PINS Chapter 2 Risk management

      Guidance for Chapter 2

      1 For the obligations of an insurer’s governing body in relation to risk management, see CTRL, rule 1.2.3.
      2 CTRL, rule 7.1.7 requires an authorised firm (including an insurer) to establish and regularly review its risk management strategy, which must be appropriate to the nature, scale and complexity of its business.
      3 The purposes of Chapter 2 are:
      (a) to identify risks that must be specifically addressed in an insurer's risk management policy; and
      (b) to set out the requirements for an insurer to document its risk management policy through the establishment and maintenance of a risk management strategy.
      4 For further guidance in relation to an insurer's risk management policy, see Schedule 1.
      Editorial changes (as from 1 January 2015).
      Amended by QFCRA RM/2021-1 (as from 1st July 2021)

      • PINS Part 2.1 PINS Part 2.1 General

        Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

        • PINS 2.1.1 PINS 2.1.1 Application of ch 2

          This Chapter applies to every insurer (other than a QFC captive insurer).

          Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

          • PINS 2.1.1 Guidance [deleted]

            Deleted by QFCRA RM/2012-5 (as from 1st July 2013).

        • PINS 2.1.2 Purpose of ch 2

          The purpose of this Chapter is to set out for an insurer:

          (a) the requirements for the insurer's risk management strategy that are in addition to those set out in CTRL;
          (b) the risks that must be specifically addressed in the insurer's risk management policy; and
          (c) the requirement to conduct its own risk and solvency assessment.
          Inserted by QFCRA RM/2013-1 and amended by Editorial changes (as from 1st January 2015).

      • PINS Part 2.2 PINS Part 2.2 Risk management strategy

        Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).
        Amended by QFCRA RM/2021-1 (as from 1st July 2021)

        • PINS 2.2.1 PINS 2.2.1 Additional requirements for insurer's risk management strategy

          An insurer's risk management strategy must:

          (a) address all material financial and non-financial risks to which the insurer is likely to be exposed;
          (b) describe the relationships between the insurer's risk profile, risk tolerance, capital requirements and capital resources;

          Note For this and the following paragraph, see in particular r 2.4.1 (1) and (2) on the insurer's own risk and solvency assessment.
          (c) describe the policies, procedures and controls for monitoring risk;
          (d) be supported by adequate risk management policies and procedures that explain the risks covered, the measurement approaches used and the key assumptions made;
          (e) describe the processes for ensuring that the insurer's reinsurance arrangements are prudently and soundly managed;
          (f) give an overview of the mechanisms for monitoring and ensuring compliance with the minimum capital requirement;
          (g) describe how the insurer will:
          (i) ensure that relevant staff have an awareness of risk issues and the accessibility of the risk management strategy; and
          (ii) instil an appropriate risk culture; and
          (h) describe a whole-of-business approach (business continuity plan) for ensuring that critical business operations can be maintained or recovered in a timely fashion in the event of disruption.

          Note For the other matters that, in the Regulatory Authority's view, should be included in the insurer's risk management policy in relation to business continuity see r 2.3.1 (2) (e) and guidance S6.2 and S6.3.
          Amended by QFCRA RM/2013-1 (as from 1st January 2015).

          • PINS 2.2.1 Guidance [Deleted]

            Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 2.2.2 Approval by governing body

          (1) In giving its approval to an insurer's risk management strategy, or to changes to or deviation from the strategy, the governing body of the insurer must be satisfied that:
          (a) the strategy and any changes to it mitigate and control the risks included in the insurer's risk management policy; and
          (b) the risk management policy is appropriate and gives reasonable assurance that all material risks facing the insurer are prudently and soundly managed having regard to the nature, scale and complexity of the insurer's business.
          Note For the risks that must be included in an insurer’s risk management policy, see rule 2.3.1.
          (2) An insurer must give to the Regulatory Authority a copy of its risk management strategy, and any subsequently amended version of that strategy, within 10 business days after its approval.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).
          Amended by QFCRA RM/2021-1 (as from 1st July 2021)

        • PINS 2.2.3 Intentional deviation not permitted

          (1) An insurer must not intentionally deviate in a material way from its risk management strategy unless:
          (a) the deviation has been approved by its governing body; and
          (b) the insurer has given notice of the proposed deviation to the Regulatory Authority.
          (2) An insurer must notify the Regulatory Authority of any material deviation at least 10 business days before the deviation.
          (3) If necessary, an insurer must amend its risk management strategy after its governing body approves a material change to, or deviation from, the strategy.

          Note CTRL, rule 7.1.7 (4) requires an insurer to keep its risk management strategy up to date and to review it at least annually.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).
          Amended by QFCRA RM/2021-1 (as from 1st July 2021)

      • PINS Part 2.3 PINS Part 2.3 Risk management policy

        Note for pt 2.3

        The risk management policy is part of, and supports, an insurer's risk management strategy; it lists and addresses the risks to which the insurer is likely to be exposed.

        Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

        • PINS 2.3 Guidance [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 2.3.1 Contents of insurer's risk management policy

          (1) An insurer's risk management policy must at a minimum address the following risks:
          (a) credit risk;
          (b) balance sheet and market risk (including investment, asset-liability management, liquidity and derivatives risks);
          (c) reserving risk;
          (d) insurance risk (including underwriting, product design, pricing and claims settlement risks);
          (e) reinsurance risk;
          (f) operational risk (including business continuity, outsourcing, fraud, technology, legal and project management risks);
          (g) concentration risk;
          (h) group risk.
          (2) The insurer's risk management policy must include the following specific policies:
          (a) a policy regarding investment that specifies the nature, role and extent of the insurer's investment activities and how the insurer complies with the investment requirements under these rules;
          (b) a policy regarding asset-liability management that specifies the nature, role and extent of asset-liability management activities and their relationship with product development, pricing and investment management;
          (c) a policy regarding underwriting that specifies the risks to be accepted by the insurer as part of its insurance business, the processes for underwriting, pricing and claims settlement;
          (d) a policy ensuring that any reinsurance contract to which it is a party is finalised (and the material documents supporting the contract are completed):
          (i) before the start of reinsurance cover (the start date); or
          (ii) as soon as possible after the start date (but in no case later than 60 days after the start date);
          (e) a policy regarding procedures for business continuity that enable the insurer to manage any initial disruption of business and to recover critical business operations following such a disruption.
          Note For the other matters that, in the Regulatory Authority's view, should be included in the insurer's risk management policy see sch 1, guidance S2.3 (investment risk), S2.5 (asset-liability management risk), S4.3 (underwriting risk), S5.2 (reinsurance risk) and S6.3 (business continuity risk).
          (3) The policies of the insurer must be appropriate to the nature, scale and complexity of the insurer's business and the risks to which it is exposed.
          (4) The definitions of the various risks must be clearly understood throughout the insurer so that its staff can effectively identify and manage the risks.
          (5) Schedule 1 gives guidance about what, in the Regulatory Authority's view, should be included in the insurer's risk management policy.
          Amended by QFCRA RM/2013-1 (as from 1st January 2015).
          Amended by QFCRA RM/2021-1 (as from 1st July 2021)

        • PINS 2.3.2 [Deleted]

          Deleted by QFCRA RM/2011-2 (as from 1st July 2011).

        • PINS 2.3.3 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 2.3.4 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 2.3.5 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS Part 2.4 PINS Part 2.4 Own risk and solvency assessment

        Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

        • PINS 2.4.1 PINS 2.4.1 What is ORSA?

          (1) Own risk and solvency assessment (ORSA) is a detailed forward-looking examination of:
          (a) the adequacy of an insurer's risk management policies, procedures and controls; and
          (b) the insurer's present and future solvency positions.
          (2) The objectives of ORSA are:
          (a) to assess:
          (i) whether the insurer's own view of its solvency position is adequate given its risk profile and risk tolerance; and
          (ii) whether its solvency position is likely to remain adequate in the foreseeable future;
          (b) to show how the insurer proposes to manage (through capital buffers and other risk-mitigation mechanisms) the material risks to which it is exposed; and
          (c) to identify potential business vulnerabilities.
          Note 1 Because ORSA is part of an insurer's risk management strategy, the insurer must have regard to the other factors included in that strategy, including risk profile, tolerance and exposures, when conducting ORSA. For the same reason, the requirements that apply to risk management strategy (such as approval in r 2.2.2) also apply to ORSA.

          Note 2 ORSA is both a management tool for the insurer's governing body and a supervisory tool to warn the Regulatory Authority of solvency issues.
          (3) In conducting ORSA, the insurer must have regard to:
          (a) its overall solvency needs, including its own view of the adequacy of its capital resources to meet the regulatory capital requirements;
          (b) the actions it has taken to manage the risks to which it is exposed;
          (c) the financial resources needed:
          (i) to manage its business prudently; and
          (ii) to meet the regulatory capital requirements;
          (d) the nature and quality of the capital resources needed, having regard to their loss-absorbing capacity and liquidity;
          (e) the effect on the insurer's solvency position of all reasonably foreseeable and relevant changes in its risk profile (including group-specific risks); and
          (f) its ability to meet its minimum capital requirement and continue in business, and the financial resources needed, over periods longer than those typically used for calculating the regulatory capital requirements.
          Example

          To gauge its ability to continue its business over longer periods, the insurer may use multi-year capital, cash-flow and balance sheet projections
          (4) The insurer must include as part of any quantitative evaluation in ORSA:
          (a) stress tests;
          (b) the occurrence of extreme events to which the insurer is exposed; and
          (c) other unlikely but possible adverse scenarios that would render the insurer's business model unviable.
          Amended by QFCRA RM/2013-1 (as from 1st January 2015).

          • PINS 2.4.1 Guidance

            In addition to the scenarios in the guidance on stress testing in Schedule 2, the insurer is expected to examine its policies, procedures, controls and solvency positions having regard to the following:

            (a) the future adverse development of claims al notified;
            (b) the uncertainty surrounding provisions for claims incurred but not yet reported;
            (c) significant falls in the yields on supporting assets and investments to cover technical provisions;
            (d) significant falls in the value of investments such as listed equity and real estate;
            (e) significant increases in the likelihood of non-recovery of reinsurance contract assets, reinsurance receivables or cash bank deposits;
            (f) the failure of a major counterparty such as a reinsurer, bank or client;
            (g) the failure of an outsourcing partner (for example, a third-party administrator for a medical insurance business);
            (h) significant deterioration in mortality and longevity experience for insurers conducting long-term insurance business.
            Inserted by QFCRA RM/2013-1 and amended by Editorial changes (as from 1st January 2015).

        • PINS 2.4.2 PINS 2.4.2 Who must conduct ORSA?

          (1) An insurer that is a QFC entity must conduct its ORSA annually.

          Note An insurer that is a branch is not required to conduct ORSA.
          (2) The assessment must be appropriate to the nature, scale and complexity of the insurer's business.
          (3) The insurer's ORSA must include its own assessment of the capital resources needed to manage its business prudently and to continue to meet its insurance liabilities as they fall due, despite the existence of adverse scenarios.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

          • PINS 2.4.2 Guidance

            1 The methods for conducting ORSA (and making the report) will differ between insurers, but the methods do not necessarily have to be complex. The methods may range from simple stress tests and scenario analysis in a spreadsheet to more sophisticated economic capital models.
            2 The Regulatory Authority expects the governing body of the insurer to use its own judgement to identify realistic adverse scenarios and to develop the rationale for the assumptions, data and methods used in the assessment.
            3 Insurers are expected:
            (a) to be transparent in their approach to ORSA; and
            (b) to maintain records in a way that would enable a third party with sufficient knowledge to understand the assumptions, methods and conclusions.
            Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 2.4.3 PINS 2.4.3 ORSA report

          (1) After an insurer conducts its ORSA, it must prepare a report that includes a statement that the governing body of the insurer participated in the assessment and approved the report.
          (2) An insurer must prepare a revised ORSA report if there is a change to its risk management strategy, strategic plan or business plan and the change results, or there are reasonable grounds to believe that the change will result, in a material change in the capital adequacy or solvency of the insurer.
          Note If an insurer becomes aware, or has reasonable grounds to believe, that an action would result in a material change in the capital adequacy or solvency of the insurer, it must tell the Regulatory Authority about the matter immediately (see GENE, r 4.1.3).
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

          • PINS 2.4.3 Guidance

            1 The Regulatory Authority will discuss and evaluate the adequacy and prudence of the insurer's ORSA during the supervisory process. In particular, the authority will look into its adequacy when there is a material change in the insurer's risk management strategy, strategic plan or business plan.
            2 If the assumptions or data used in an insurer's ORSA are inaccurate, inadequate or misleading, or if the Regulatory Authority considers that the underlying method is not sufficiently robust, the authority will require the insurer to conduct a new ORSA or to reconsider its report and prepare a revised report (see GENE, r 5.2.2).
            Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

    • PINS Chapter 3 PINS Chapter 3 Minimum capital requirement

      Editorial changes (as from 1 January 2015).

      • PINS Part 3.1 PINS Part 3.1 Application and purpose

        Editorial changes (as from 1 January 2015).

        • PINS 3.1.1 PINS 3.1.1 Application of Chapter 3

          This Chapter applies to every insurer (other than a QFC captive insurer) incorporated in the QFC.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

          • PINS 3.1.1 Guidance

            1. The amount of capital is fundamental to the financial strength of an insurer. It provides a buffer against losses that have not been anticipated and, in the event of problems, enables the insurer to continue operating while those problems are addressed or resolved. In this way, the maintenance of adequate financial resources can engender confidence on the part of policyholders, creditors and the market more generally in the financial soundness and stability of the insurer. An insurer's financial resources must be adequate for the nature, scale and complexity of its business.
            2. The purpose of this Chapter is to require QFC incorporated insurers to meet at all times a minimum capital requirement that is responsive to the risk profile of each insurer and is calculated in accordance with the Rules of this Chapter.

            Note This Chapter does not apply to an insurer authorised to conduct insurance business in or from the QFC as a branch. Such an insurer will be subject to the regulatory capital requirements in the jurisdiction where it is incorporated.

            Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

        • PINS 3.1.2 [Deleted]

          Deleted by QFCRA RM/2011-2 (as from 1st July 2011).

      • PINS Part 3.2 PINS Part 3.2 General requirement

        Editorial changes (as from 1 January 2015).

        • PINS 3.2.1 Insurers' eligible capital

          An insurer must at all times have eligible capital equal to or higher than the amount of its minimum capital requirement as determined by PINS Rule 3.3.1.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 3.2.2 PINS 3.2.2 Insurers to have appropriate systems and controls

          For the purposes of rule 1.2.2 and rule 3.2.1, the Governing Body of an insurer must ensure suitable systems and controls are in place to allow it to identify, manage and monitor the risks associated with the insurer's business activities to ensure the insurer holds capital commensurate with its overall risk profile.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

          • PINS 3.2.2 Guidance

            Rules for determining eligible capital are contained in Chapter 4.

            Editorial changes (as from 1 January 2015).

        • PINS 3.2.3 PINS 3.2.3 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

          • PINS 3.2.3 Guidance [Deleted]

            Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 3.2.4 PINS 3.2.4 Insurers to be able to demonstrate compliance

          An insurer's systems and controls for the purposes of PINS Rule 3.2.2 must allow the insurer to demonstrate to the Regulatory Authority, if at any time it is asked to do so by the Regulatory Authority, the insurer's compliance with rule 1.2.2 and rule 3.2.1.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

          • PINS 3.2.4 Guidance

            As an insurer is required to maintain adequate financial resources at all times, its systems and controls need to enable the governing body to determine and monitor the capital requirements of the insurer and the financial resources it has available, and to identify occurrences where the financial resources fall short of the capital requirements of the insurer, or where they may fall short in the future.

            Amended by QFCRA RM/2012-5 (as from 1st July 2013).

        • PINS 3.2.5 References to particular currencies

          In these rules, the specification of an amount of money in a particular currency is also taken to specify the equivalent sum in any other currency at the relevant time.

          Inserted by QFCRA RM/2015-1 (as from 1st July 2015).

      • PINS Part 3.3 PINS Part 3.3 Minimum capital requirement

        Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

        • PINS 3.3.1 PINS 3.3.1 What is an insurer's MCR?

          The minimum capital requirement or MCR for an insurer is the higher of:

          (a) QR36 million; and
          (b) the insurer's risk-based capital requirement.

          Note 1 The MCR is the lowest acceptable level of eligible capital below which policyholders would be exposed to unacceptable risks if the insurer were allowed to continue to operate.

          Note 2 If the Regulatory Authority considers that a higher MCR is appropriate for an insurer, the authority may impose the higher requirement as a condition to the insurer's authorisation under FSR, art 31.

          Note 3 An insurer will be in breach of r 1.2.2 if the insurer's eligible capital falls below its MCR. Under r 3.9.1 and r 3.9.2, an insurer must inform the Regulatory Authority of any possible breach or actual breach of r 1.2.2.

          Amended by QFCRA RM/2015-1 (as from 1st July 2015).

          • PINS 3.3.1 Guidance [Deleted]

            Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 3.3.2 PINS 3.3.2 Obligations relating to MCR

          (1) An insurer must immediately inform the Regulatory Authority if its eligible capital falls below its MCR.

          Note For the requirements regarding quarterly reporting, see r 1.4.1.
          (2) If an insurer's eligible capital falls below its MCR, the insurer must immediately stop effecting new contracts of insurance.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

          • Guidance on intervention by Regulatory Authority

            1 As soon as the Regulatory Authority becomes aware that an insurer's eligible capital has fallen below its MCR, the authority will confer with the insurer about what needs to be done next.
            2 If the insurer's eligible capital falls below its MCR, the authority will intervene by, for example:
            (a) requiring the insurer to immediately increase its eligible capital;
            (b) suspending the insurer's business;
            (c) placing the insurer's business in run-off; or
            (d) withdrawing the insurer's authorisation.
            Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 3.3.3 Other action not prevented

          Nothing in this Chapter prevents the Regulatory Authority from taking any other action under the FSR or these or any other rules against the insurer in relation to its capital adequacy.

          Note Under FSR, art 31, the Regulatory Authority may take, on its own initiative, action against the insurer. The authority may also take disciplinary action under FSR, pt 9.

          Inserted by QFCRA RM/2013-1 and amended by Editorial changes (as from 1st January 2015).

      • PINS Part 3.4 PINS Part 3.4 Risk-based capital requirement

        Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

        • PINS 3.4.1 What is an insurer's risk-based capital requirement?

          (1) The risk-based capital requirement for an insurer that, under rule 3.8.1 (a), has been approved to use its own internal model to calculate its risk-based capital requirement is the amount calculated using that model.
          (2) The risk-based capital requirement for an insurer that, under rule 3.8.1 (b), has been approved to use its own internal model to replace 1 or more components of its investment, insurance and operational risk requirements is the amount calculated using those components as replaced and the other components of the insurer's investment, insurance and operational risk requirements.
          (3) The risk-based capital requirement for any other insurer is the sum of the insurer's:
          (a) investment risk requirement;
          (b) insurance risk requirement; and
          (c) operational risk requirement.
          Amended by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS Part 3.5 PINS Part 3.5 Investment risk requirement

        Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

        • PINS 3.5.1 What is an insurer's investment risk requirement?

          An insurer's investment risk requirement is the sum of its:

          (a) asset risk component;
          (b) off-balance sheet asset risk component; and
          (c) off-balance sheet liability risk component.

          Note Schedule 3 sets out the method for calculating each component of the investment risk requirement.

          Amended by QFCRA RM/2013-1 (as from 1st January 2015)
          Amended by QFCRA RM/2020-6 (as from 15th October 2020).

      • PINS Part 3.6 PINS Part 3.6 Insurance risk requirement

        Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

        • PINS 3.6 Guidance [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 3.6.1 What is an insurer's insurance risk requirement?

          An insurer's insurance risk requirement is the sum of its:

          (a) premium risk component;
          (b) outstanding claims risk component;
          (c) long-term insurance risk component; and
          (d) insurance concentration risk component.

          Note Schedule 3 sets out the method for calculating each component of the insurance risk requirement.

          Amended by QFCRA RM/2015-1 (as from 1st July 2015)
          Amended by QFCRA RM/2020-6 (as from 15th October 2020).

      • PINS Part 3.7 PINS Part 3.7 Operational risk requirement

        Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

        • PINS 3.7 Guidance [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 3.7.1 What is an insurer's operational risk requirement?

          (1) The amount of an insurer's operational risk requirement (ORR) is 2% of whichever is the higher of:
          (a) the insurer's gross written premiums in the 12 months ending on the solvency reference date; and
          (b) its technical provisions (without deduction for reinsurance) as at the solvency reference date.

          Note Technical provisions must cover all insurance liabilities of the insurer, including outstanding claims liabilities (whether or not reported), future claims (premium liabilities) and any reserves held by the insurer for the purpose of meeting insurance liabilities.
          (2) However, if the amount calculated under subrule (1) is more than the amount of the ceiling calculated by means of the formula in subrule (3), the insurer’s ORR is the amount of the ceiling.
          (3) The formula is:



          where:
          IRR is the insurer’s investment risk requirement.
          InsRR is the insurer’s insurance risk requirement.  
          Amended by QFCRA RM/2015-1 (as from 1st July 2015)
          Amended by QFCRA RM/2020-6 (as from 15th October 2020).

      • PINS Part 3.8 PINS Part 3.8 Internal modelling

        Editorial changes (as from 1 January 2015).

        • PINS 3.8 Guidance

          Insurers around the world use internal models for assessing their capital requirements. From an internal perspective, risk models provide an opportunity for the management to identify and measure risks. It is also possible to quantify the minimum level of capital corresponding to a given risk appetite, which in turn guides capital allocation/management. Risk models offer the advantage of combining all relevant operations of an insurer (e.g. underwriting, investment, pricing, assets, and liabilities) into an integrated model which provides an insight into future operations and capital requirements. They can also be useful for evaluating alternative business strategies and focusing on major risk scenarios, including what might happen if more than 1 thing goes wrong. If the model is well developed, an insurer would have sufficient information for assessing its major risk areas and allocating resources accordingly.

          Editorial changes (as from 1 January 2015).

        • PINS 3.8.1 Approval by Regulatory Authority

          The Regulatory Authority may, by written notice, allow an insurer to use its own internal model:

          (a) to calculate its risk-based capital requirement; or
          (b) to replace a component or components of its investment risk requirement, insurance risk requirement and operational risk requirement.
          Amended by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 3.8.2 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 3.8.3 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS Part 3.9 PINS Part 3.9 Failure to maintain appropriate financial resources or comply with capital requirements

        Editorial changes (as from 1 January 2015).

        • PINS Guidance for pt3.9

          In dealing with a breach, or possible breach, of this Chapter, the Regulatory Authority's primary concern will be the interests of policyholders, both existing and prospective. It recognises that there will be circumstances in which a problem may be resolved quickly, for example by support from a parent entity, without jeopardising the interests of policyholders. In such circumstances, it will be in the interests of all parties for there to be minimum disruption to the insurer's business. The authority's normal approach will be to seek to work cooperatively with insurers to deal with any problems. There will, however, be circumstances in which it is necessary to take firm action to avoid exposing further policyholders to the risk of the insurer's failure, and the authority will not hesitate to take disciplinary action if it considers this necessary.

          Amended by QFCRA RM/2015-1 (as from 1st July 2015).

        • PINS 3.9.1 Possible breach of r 1.2.2 or ch 3

          If an insurer becomes aware, or has reasonable grounds to believe, that it may be, or may be about to be, in breach of rule 1.2.1 or any provision of this Chapter, it must—

          (a) tell the Regulatory Authority orally about the matter immediately, but within 1 business day;
          (b) by notice given to the authority by no later than the next business day
          (i) confirm the oral notification;
          (ii) explain why the insurer considers it may be, or may be about to be, in breach of the provision; and
          (iii) set out the action that the insurer proposes to take to avoid the breach; and
          (c) not make any distribution to its shareholders or members, whether by way of dividends or otherwise, without the authority's written permission.
          Examples — meaning of 'within 1 business day'

          1 If, on a business day, the insurer becomes aware that it may be in breach of this Chapter or rule 1.2.2, the insurer must tell the authority immediately, but on that day
          2 If, on a day that is not a business day, the insurer becomes aware that it may be in breach of this Chapter or rule 1.2.2, the insurer must tell the authority immediately, but by no later than the next business day.
          Editorial changes (as from 1 January 2015).

        • PINS 3.9.2 PINS 3.9.2 Breach of r 1.2.2 or ch 3

          If an insurer becomes aware that it is in breach of rule 1.2.2 or any provision of this Chapter, it must—

          (a) tell the Regulatory Authority orally about the matter immediately, but within 1 business day;
          Examples

          See examples to rule 3.9.1 on the meaning of 'within 1 business day'.
          (b) by notice given to the authority by no later than the next business day
          (i) confirm the oral notification;
          (ii) explain the nature of the breach; and
          (iii) set out the action that the insurer proposes to take about the breach;
          (c) cease effecting contracts of insurance in or from the QFC until the authority gives it written permission to recommence; and
          (d) not make any distribution to its shareholders or members, whether by way of dividends or otherwise, without the authority's written permission.

          Note See also r 4.4.2(1) (b) (i) which prohibits the payment of interest or principal for subordinated debt included as part of the insurer's eligible capital if the insurer is in breach of its minimum capital requirement.

          Editorial changes (as from 1 January 2015).

          • PINS Guidance for pt3.9 [Deleted]

            Deleted by QFCRA RM/2015-1 (as from 1st July 2015).

    • PINS Chapter 4 PINS Chapter 4 Eligible capital

      Editorial changes (as from 1 January 2015).

      • PINS Part 4.1 PINS Part 4.1 Application and purpose

        Editorial changes (as from 1 January 2015).

        • PINS 4.1.1 Application of Chapter 4

          This Chapter applies to every insurer (other than a QFC captive insurer) incorporated in the QFC.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 4.1.2 PINS 4.1.2 [Deleted]

          Deleted by QFCRA RM/2011-2 (as from 1st July 2011).

          • PINS 4.1.2 Guidance

            1. In assessing the adequacy of an insurer's financial resources, attention must be paid not only to the types of events or problems that it might encounter, but also the quality of the support provided by various types of capital instruments.
            2. The purpose of this Chapter is to identify those capital instruments that can be included as eligible capital to meet the insurer's minimum capital requirement. In determining the rules governing whether a capital instrument is adequate for supervisory purposes, the Regulatory Authority has identified the following relevant matters, namely the extent to which each instrument:

            a. provides a permanent and unrestricted commitment of funds;
            b. is freely available to absorb losses from business activities;
            c. does not impose any unavoidable servicing charges against earnings;
            d. ranks behind the claims of policyholders and other creditors in the event of the winding-up of the insurer.
            3. As insurers authorised to conduct insurance business in or from the QFC in the legal form of a branch will be subject to the regulatory capital requirements applicable in their home jurisdiction, the requirements of this Chapter do not apply to branches.
            Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

      • PINS Part 4.2 PINS Part 4.2 Calculation of eligible capital

        Editorial changes (as from 1 January 2015).

        • PINS 4.2.1 PINS 4.2.1 Calculating eligible capital

          (1) An insurer must calculate its eligible capital in accordance with the table in PINS Rule 4.2.2 and the provisions in PINS Parts 4.3 through to 4.7.
          (2) A √ in the table in PINS Rule 4.2.2 denotes that the item is included in the calculation of an insurer's eligible capital, whereas an X denotes that the item is not included.
          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

          • PINS 4.2.1 Guidance

            The Regulatory Authority may recognise forms of capital instruments in addition to those set out in the table in PINS Rule 4.2.2 for inclusion in an insurer's eligible capital where those instruments comply with accepted international standards.

            Amended by QFCRA RM/2012-5 (as from 1st July 2013).

        • PINS 4.2.2 Eligible capital calculation table

          The eligible capital calculation table is as follows:

            Takaful entity All other Insurers
          (A) Tier 1 capital:
          Permanent share capital
          Audited reserves
          Share premium account
          Externally verified interim net profits
          Fund for future appropriations
          Owners' equity in a takaful entity X
          (B) Deductions from tier 1 capital:
          Investments in own shares
          Intangible assets
          Interim net losses
          (C) Tier 1 capital after deductions = A-B
          (D) Upper tier 2 capital:
          Perpetual qualifying hybrid capital instruments
          Fixed dividend ordinary shares
          (E) Lower tier 2 capital
          Subordinated debt
          Fixed term preference shares
          (F) Total tier 1 capital plus tier 2 capital = C+D+E
          (G) Deductions from Total of tier 1 and tier 2 capital:
          Investments in subsidiaries and associates
          Connected lending of a capital nature
          Inadmissible assets
          Amount in any zakah fund X
          (H) Total tier 1 capital plus tier 2 capital after deductions = F-G = Total eligible capital

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

      • PINS Part 4.3 PINS Part 4.3 Components of capital: tier 1

        Editorial changes (as from 1 January 2015).

        • PINS 4.3.1 PINS 4.3.1 Components of tier 1 capital

          For the purposes of the items under line (A) tier 1 capital in the table in PINS Rule 4.2.2:

          (a) Permanent share capital means ordinary paid-up share capital, or equivalent however called, which meets the following conditions:

          (i) it is fully paid up;
          (ii) any dividends in relation to it are non-cumulative;
          (iii) it is available to absorb losses on a going concern basis;
          (iv) it ranks for repayment upon winding up or insolvency after all other debts and liabilities;
          (v) it is undated;
          (vi) the proceeds of an issue of permanent share capital is immediately and fully available to the insurer;
          (vii) the insurer is not obliged to pay any dividends on the shares (except in the form of shares that themselves comply with this rule);
          (viii) the insurer does not have any other obligation or commitment to transfer any economic benefit in relation to that permanent share capital;
          (ix) dividends and other charges on the shares can only be paid out of accumulated realised profits;
          (b) audited reserves are audited accumulated profits retained by the insurer after deduction of tax and dividends, and other reserves created by appropriations of share premiums and similar realised appropriations;
          (c) audited reserves also include capital contributions if —
          (i) the capital contributions satisfy the requirements of paragraph (a); and
          (ii) the insurer told the Regulatory Authority of its intention to include the capital contributions at least 1 month before the day they were included;
          (d) the share premium account records the difference between the nominal value of shares issued and the fair value of the consideration received;
          (e) externally verified interim net profits are interim profits verified by an insurer's external auditor net of tax, anticipated dividends or other appropriations;
          (f) fund for future appropriations means the fund comprising all funds the allocation of which either to policyholders or to shareholders has not been determined by the end of the financial year, or the balance sheet items under international accounting standards which in aggregate represent as nearly as possible that fund;
          (g) owners' equity can only form part of a takaful entity's tier 1 capital if under the constitutional documents of the takaful entity or the terms of the insurance contract or both, participation in the surpluses and losses of the insurance business is limited to the policyholders of the insurer;
          (h) intangible assets include goodwill, capitalised development costs, brand names, trademarks and similar rights and licences; and
          (i) cumulative losses and other negative reserves must be deducted from tier 1 capital.
          Amended by QFCRA RM 2019-1 (as from 28th March 2019).

          • PINS 4.3.1 Guidance

            The Regulatory Authority may request an insurer to provide it with a copy of its external auditor's opinion referred to in PINS Rule 4.3.1(e) on whether the interim profits are accurately stated.

            Editorial changes (as from 1 January 2015).

      • PINS Part 4.4 PINS Part 4.4 Components of capital: tier 2

        Editorial changes (as from 1 January 2015).

        • PINS 4.4 Guidance

          1. Tier 2 capital consists of instruments that, to varying degrees, fall short of the quality of tier 1 capital but nonetheless contribute to the overall strength of an insurer. Such instruments include some forms of hybrid capital instruments that have the characteristics of both equity and debt, that is they are structured like debt, but exhibit some of the loss absorption and funding flexibility features of equity.
          2. Tier 2 capital is divided into upper tier 2 capital and lower tier 2 capital. A major distinction between upper tier 2 capital and lower tier 2 capital is that only perpetual instruments may be included in upper tier 2 capital whereas dated instruments are included in lower tier 2 capital.
          Amended by QFCRA RM/2012-5 (as from 1st July 2013).

        • PINS 4.4.1 PINS 4.4.1 Perpetual qualifying hybrid capital instruments

          An insurer may only include perpetual qualifying hybrid capital instruments as part of its upper tier 2 capital if:

          (a) they are unsecured, subordinated and fully paid-up;
          (b) they are perpetual; and
          (c) they are available to absorb losses on a going concern basis.
          Editorial changes (as from 1 January 2015).

          • PINS 4.4.1 Guidance

            A perpetual cumulative preference share is an example of a capital instrument that would meet the criteria of PINS Rule 4.4.1.

            Derived from QFCRA RM01/2006 (as from 1st October 2006)

        • PINS 4.4.2 Subordinated debt

          (1) An insurer must not include subordinated debt as part of its eligible capital unless it meets the following conditions:

          (a) the claims of the subordinated creditors must rank behind those of all unsubordinated creditors;
          (b) no interest or principal may be payable:

          (i) at a time when the insurer is in breach of its minimum capital requirement; or
          (ii) if the payment would mean that the insurer would be in breach of the these rules;
          (c) the only events of default must be non-payment of any interest or principal under the debt agreement or the winding-up of the insurer;
          (d) the remedies available to the subordinated creditor in the event of non-payment in respect of the subordinated debt must be limited to petitioning for the winding up of the insurer or proving for the debt and claiming in the liquidation of the insurer;
          (e) any events of default and any remedy described in paragraph (d) must not prejudice the matters in paragraphs (a) and (b);
          (f) in addition to the requirements about repayment in paragraphs (a) and (b), the subordinated debt must not become due and payable before its stated final maturity date except on an event of default complying with paragraph (c);
          (g) the agreement and the debt are governed by the laws of a jurisdiction
          (i) under which the other conditions mentioned in this subrule can be met; or
          (ii) that is otherwise acceptable, generally or in a particular case, to the Regulatory Authority;
          (h) to the fullest extent permitted under the Rules of the relevant jurisdictions, creditors must waive their right to set off amounts they owe the insurer against subordinated amounts owed to them by the insurer;
          (i) the terms of the subordinated debt must be set out in a written agreement or instrument that contains terms that provide for the conditions set out in paragraphs (a) to (h);
          (j) the debt must be unsecured and fully paid up;
          (k) the insurer has notified the Regulatory Authority that it intends to include subordinated debt as part of its eligible capital and the Regulatory Authority has not advised the insurer in writing within thirty days of the date of the notification that the subordinated debt must not form part of its eligible capital.
          (2) An insurer must not include in its eligible capital subordinated debt issued with step-ups in the first 5 years following the date of issue.
          (3) An insurer may include subordinated debt in its lower tier 2 capital only if:
          (a) it has an original maturity of at least 5 years or is subject to 5 years' notice of repayment; and
          (b) payment of interest or principal is permitted only if after such payment the insurer's eligible capital would be greater than the amount required by PINS Rule 3.2.1.
          Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

        • PINS 4.4.3 Assumed amortisation of subordinated debt

          For the purposes of calculating the amount of subordinated debt that may be included in its eligible capital, an insurer must amortise the principal amount on a straight-line basis by 20% per annum in its final 4 years to maturity.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

      • PINS Part 4.5 PINS Part 4.5 External opinion on tier 2 capital

        Editorial changes (as from 1 January 2015).

        • PINS 4.5.1 Legal opinions on tier 2 capital instruments

          (1) An insurer must obtain a written external legal opinion stating that the requirements in PINS Part 4.4 for any tier 2 capital have been met in relation to any instrument that the insurer is proposing to include as eligible capital.
          (2) An insurer must provide copies of the opinions referred to in subrule (1) to the Regulatory Authority if requested by the Regulatory Authority to do so.
          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

      • PINS Part 4.6 PINS Part 4.6 Deductions from total of tier 1 and tier 2 capital

        Editorial changes (as from 1 January 2015).

        • PINS 4.6.1 Investments in subsidiaries and associates

          An insurer must deduct investments in subsidiaries and associates from the total of tier 1 capital and tier 2 capital.

          Editorial changes (as from 1 January 2015).

        • PINS 4.6.2 PINS 4.6.2 [Deleted]

          Deleted by QFCRA RM/2011-2 (as from 1st July 2011).

          • PINS 4.6.2 Guidance [Deleted]

            Deleted by QFCRA RM/2011-2 (as from 1st July 2011).

        • PINS 4.6.3 PINS 4.6.3 Connected lending of a capital nature

          An insurer must deduct connected lending of a capital nature from the total of tier 1 capital and tier 2 capital.

          Editorial changes (as from 1 January 2015).

          • PINS 4.6.3 Guidance

            The Regulatory Authority regards connected lending of a capital nature to be any lending to a company in the same group as the insurer for activities which that company would find hard to finance from another source, and is typically on a long term basis. Unless there is a genuine ability for the funds to be repaid within a short time, it is generally considered that the loan is of a capital nature.

            Editorial changes (as from 1 January 2015).

        • PINS 4.6.4 PINS 4.6.4 Inadmissible assets

          For the purposes of the table in PINS Rule 4.2.2, inadmissible assets are:

          (a) tangible fixed assets, including inventories, plant and equipment and vehicles;
          (b) deferred acquisition costs;
          (c) deferred tax assets;
          (d) deficiencies of net assets in subsidiaries;
          (e) [Deleted]
          (f) any investment by a subsidiary of the insurer in the insurer's own shares; and
          (g) holdings of other investments which are not readily realisable investments.
          Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

          • PINS 4.6.4 Guidance

            The above assets have been identified as inadmissible assets because:

            a. a sufficiently objective and verifiable basis of valuation does not exist;
            b. their realisability cannot be relied upon with sufficient confidence;
            c. their nature presents unacceptable custody risks; or
            d. the holding of these may give rise to significant liabilities or onerous duties.
            Derived from QFCRA RM01/2006 (as from 1st October 2006)

        • PINS 4.6.5 Amount in any zakah fund

          A takaful entity must deduct any amount held in any zakah fund from the total of tier 1 capital and tier 2 capital.

          Editorial changes (as from 1 January 2015).

      • PINS Part 4.7 PINS Part 4.7 Limits on the use of different forms of capital

        Editorial changes (as from 1 January 2015).

        • PINS 4.7 Guidance

          The table in PINS Rule 4.2.2 describes the following terms that are used in this Part:

          a. 'tier 1 capital' is equal to line A in the table;
          b. 'tier 1 capital (net of deductions)' is equal to line C in the table;
          c. 'tier 2 capital' means the sum of line D and line E in the table;
          d. 'lower tier 2 capital' is equal to line E in the table.
          Editorial changes (as from 1 January 2015).

        • PINS 4.7.1 Instruments not to be included in tier 2 capital — exceeding 100% of tier 1 capital

          A capital instrument is not eligible for inclusion in tier 2 capital to the extent that its inclusion will result in the aggregate amount of tier 2 capital exceeding 100% of eligible tier 1 capital (net of deductions).

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 4.7.2 Instruments not to be included in lower tier 2 capital — exceeding 50% of tier 1 capital

          A capital instrument is not eligible for inclusion in tier 2 capital to the extent that its inclusion will result in the aggregate amount of lower tier 2 capital exceeding 50% of eligible tier 1 capital (net of deductions).

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

      • PINS Part 4.8 PINS Part 4.8 Reduction of eligible capital

        Editorial changes (as from 1 January 2015).

        • PINS 4.8.1 PINS 4.8.1 Tier 1 capital not to be reduced without approval

          An insurer must not reduce the tier 1 capital component of its eligible capital without the prior approval of the Regulatory Authority.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

          • PINS 4.8.1 Guidance

            A reduction of an insurer's eligible capital includes, but is not limited to:

            a. Share buybacks;
            b. the redemption, repurchase or early repayment of any eligible capital instruments issued by the insurer or a special purpose vehicle trading in its own shares; or
            c. where aggregate interest and dividend payments on tier 1 capital exceed the insurer's after-tax earnings in the year to which they relate (i.e. dividend and interest payments on tier 1 capital wholly or partly funded from retained earnings).
            Editorial changes (as from 1 January 2015).

        • PINS 4.8.2 PINS 4.8.2 Capital plan to be provided

          An insurer must provide to the Regulatory Authority when seeking approval for a reduction under PINS Rule 4.8.1 a capital plan that has incorporated the effects of the proposed reduction and:

          (a) demonstrates that the insurer will remain in excess of its minimum capital requirement for 2 years without relying on new capital issues;
          (b) is consistent with the insurer's business plan; and
          (c) takes account of any possible acquisitions, locked-in capital in subsidiaries and the possibility of exceptional losses.
          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

          • PINS 4.8.2 Guidance [Deleted]

            Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 4.8.3 Notice to be given of proposed reduction of tier 2 capital

          An insurer must notify the Regulatory Authority of its intention to reduce its tier 2 capital at least 6 months before the actual date of the proposed reduction, providing details of how it will meet its minimum capital requirement after the proposed reduction.

          Amended by QFCRA RM 2019-1 (as from 28th March 2019).

      • PINS Part 4.9 PINS Part 4.9 Notification

        Editorial changes (as from 1 January 2015).

        • PINS 4.9.1 Dividends and distributions to be reported

          An insurer must report to the Regulatory Authority all dividends and other distributions to shareholders within 15 business days following the declaration of the dividend or distribution.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

    • PINS Chapter 5 PINS Chapter 5 Additional requirements for long term insurance business

      Editorial changes (as from 1 January 2015).

      • PINS Part 5.1 PINS Part 5.1 Application and purpose

        Editorial changes (as from 1 January 2015).

        • PINS 5.1.1 PINS 5.1.1 Application of Chapter 5

          This Chapter applies to all insurers (other than QFC captive insurers) conducting:

          (a) long term insurance business; or
          (b) general insurance business attributed to PINS category 1 under PINS Rule 5.3.2(2).
          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

          • PINS 5.1.1 Guidance

            This Chapter sets out additional requirements in respect of long term insurance business.

            Editorial changes (as from 1 January 2015).

      • PINS Part 5.2 PINS Part 5.2 Establishment of long term insurance funds

        Editorial changes (as from 1 January 2015).

        • PINS 5.2.1 Long term insurance funds to be established

          An insurer conducting long term insurance business must either:

          (a) establish and maintain 1 or more long term insurance funds; or
          (b) notify the Regulatory Authority that the insurer is deemed to constitute a single long term insurance fund.
          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 5.2.2 PINS 5.2.2 [Deleted]

          Deleted by QFCRA RM/2011-2 (as from 1st July 2011).

          • PINS 5.2.2 Guidance [Deleted]

            Deleted by QFCRA RM/2007-01 (as from 1st July 2007).

        • PINS 5.2.3 Treatment of branches

          (1) A branch that is subject to a regulatory requirement in another jurisdiction to arrange its affairs in a manner that is equivalent or substantially equivalent to the requirements of this Part, may make an application to the Regulatory Authority for that arrangement of its affairs to be deemed for the purposes of these rules to constitute a long term insurance fund.
          (2) If the Regulatory Authority approves that application, it must inform the branch in writing, and must state in its notice to the branch the manner in which the arrangement will be deemed for the purpose of these rules to constitute a long term insurance fund.
          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 5.2.4 Insurer deemed to constitute long term insurance fund to be treated as though it had established such fund

          An insurer that is deemed, in accordance with rule 5.2.1 (b), to constitute a single long term insurance fund shall be treated for all purposes relating to these rules as though the insurer had established a long term insurance fund to which all of the assets and liabilities of the insurer are attributed.

          Editorial changes (as from 1 January 2015).

      • PINS Part 5.3 PINS Part 5.3 Attribution of contracts to a long term insurance fund

        Editorial changes (as from 1 January 2015).

        • PINS 5.3.1 Business to be attributed to long term insurance funds

          An insurer must attribute all long term insurance business that it conducts to a long term insurance fund.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 5.3.2 Attribution of general insurance contracts

          (1) Except as allowed for in (2), an insurer may not attribute general insurance contracts to a long term insurance fund.
          (2) An insurer may attribute contracts of insurance in PINS category 1 to a long term insurance fund.
          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

      • PINS Part 5.4 PINS Part 5.4 Segregation of assets and liabilities

        Editorial changes (as from 1 January 2015).

        • PINS 5.4.1 Separate identification of assets, liabilities, revenues and expenses

          An insurer that is required under PINS rule 5.2.1 to establish and maintain 1 or more long term insurance funds, or has attributed contracts of insurance in PINS category 1 to a long term insurance fund under PINS Rule 5.3.2(2), must:

          (a) identify separately in its books and records the assets, liabilities, revenues and expenses attributable to that business; and
          (b) ensure those assets, liabilities, revenues and expenses are recorded separately and accounted for as a long term insurance fund.
          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 5.4.2 Recording of assets, liabilities, revenues and expenses

          An insurer must record all assets, liabilities, revenues and expenses in respect of a contract of insurance that is attributed to a long term insurance fund as assets, liabilities, revenues and expenses of that long term insurance fund.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 5.4.3 PINS 5.4.3 Attribution of assets not al attributed

          An insurer may at any time attribute any of its assets to a long term insurance fund that were not previously attributed to such a long term insurance fund.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

          • PINS 5.4.3 Guidance

            A transaction described in PINS Rule 5.4.3 is sometimes described as a transfer of capital into the long term insurance fund.

            Amended by QFCRA RM/2012-5 (as from 1st July 2013).

        • PINS 5.4.4 Recording of revenues and expenses

          All revenues and expenses arising by way of earnings, revaluation or other change to the assets and liabilities of a long term insurance fund must be recorded as revenues and expenses, or movements in capital, of that long term insurance fund.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 5.4.5 Accounting and other records to be maintained

          An insurer must maintain adequate accounting and other records to identify the contracts and the assets, liabilities, revenues and expenses attributable to the long term insurance fund in accordance with the requirements of Part 5.4.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

      • PINS Part 5.5 PINS Part 5.5 Limitation on use of assets in long term insurance fund

        Editorial changes (as from 1 January 2015).

        • PINS 5.5.1 Application of assets

          An insurer must ensure that, except as provided in PINS Part 5.5, assets that are attributable to a long term insurance fund are applied only for the purposes of the business attributed to the long term insurance fund.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 5.5.2 Assets of long term insurance funds not to be transferred

          An insurer must ensure assets attributable to a long term insurance fund are not transferred so as to be available for other purposes of the insurer except:

          (a) where the transfer constitutes appropriation of a surplus determined in accordance with rule 9.1.3(4)(g), provided that the transfer is performed within 4 months of the reference date of the financial condition report that this determination forms part of;
          (b) where the transfer constitutes a payment of dividend or return of capital, in accordance with PINS Rule 5.5.4;
          (c) where the transfer is made in exchange for other assets at fair value;
          (d) where the transfer constitutes reimbursement of expenditure borne on behalf of the long term insurance fund and in respect of expenses attributable to the long term insurance fund; or
          (e) where the transfer constitutes reattribution of assets attributed to the long term insurance fund in error.
          Amended by QFCRA RM 2019-1 (as from 28th March 2019).

        • PINS 5.5.3 Assets of long term insurance funds not to be distributed

          An insurer must not make any distribution by way of dividend, or return of capital assets attributable to a long term insurance fund, if by doing so that would result in a breach of PINS Chapter 5.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 5.5.4 Payment of dividends by insurers constituting single long term insurance funds

          An insurer that is deemed to constitute a single long term insurance fund may only make a dividend or return of capital where the dividend or return of capital constitutes appropriation of a surplus determined in accordance with rule 9.1.3(4)(g), and:

          (a) if the payment is made within 4 months of the reference date of the actuarial investigation (the financial condition report) determining that surplus, the payment does not cause the total aggregate amount of the dividends or returns of capital made by the insurer since that reference date to exceed the amount of that surplus; or
          (b) if the payment is made more than 4 months after the reference date of the actuarial investigation (the financial condition report) determining that surplus, the payment does not cause the total aggregate amount of the dividends or returns of capital made by the insurer since that reference date to exceed 50% of the amount of that surplus.
          Amended by QFCRA RM 2019-1 (as from 28th March 2019).

        • PINS 5.5.5 Assets not to be lent

          An insurer must not lend or otherwise make available for use for any other purposes of the insurer, or any purposes of any party related to the insurer, assets attributable to a long term insurance fund.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 5.5.6 PINS 5.5.6 Certain reinsurance-like arrangements prohibited

          An insurer may not enter into any arrangement, whether or not described as a contract of reinsurance, whereby a long term insurance fund of the insurer stands in the same relation to the insurer as though the insurer were the reinsurer in a contract of reinsurance in which the long term insurance fund is the cedant.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

          • PINS 5.5.6 Guidance

            PINS Rule 5.5.6 operates to prohibit reinsurance between long term insurance funds of the same insurer, as well as arrangements of the nature of internal contracts of reinsurance where the cession transaction is attributed to a long term insurance fund but the corresponding reinsurance acceptance transaction is not.

            Amended by QFCRA RM/2012-5 (as from 1st July 2013).

    • PINS Chapter 6 PINS Chapter 6 Additional requirements for takaful entities

      Editorial changes (as from 1 January 2015).

      • PINS Part 6.1 PINS Part 6.1 Application and purpose

        Editorial changes (as from 1 January 2015).

        • PINS 6.1.1 PINS 6.1.1 Application of ch 6

          (1) This Chapter applies to a takaful entity.
          (2) In the case of a takaful entity that is not an Islamic financial institution, this Chapter applies only to the part of the entity's business that is Islamic financial business.
          Editorial changes (as from 1 January 2015).

          • PINS 6.1.1 Guidance

            1 A takaful entity is required to comply with the requirements in CTRL, Chapter 9 and any other relevant regulatory requirements.
            2 This Chapter sets out additional requirements applying to takaful entities. A takaful entity must also comply with all the other requirements in these rules relevant to the takaful business it conducts.
            Editorial changes (as from 1 January 2015)
            Amended by QFCRA RM/2021-1 (as from 1st July 2021).

        • PINS 6.1.2 PINS 6.1.2 [Deleted]

          Deleted by QFCRA RM/2012-3 (as from 1st February 2013).

          • PINS 6.1.2 Guidance [Deleted]

            Deleted by QFCRA RM/2012-3 (as from 1st February 2013).

      • PINS Part 6.2 PINS Part 6.2 Establishment of takaful funds

        Editorial changes (as from 1 January 2015).

        • PINS 6.2.1 Takaful funds to be established

          A takaful entity must establish and maintain 1 or more funds (takaful funds) for its takaful business.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

      • PINS Part 6.3 PINS Part 6.3 Attribution of contracts to a takaful fund

        Editorial changes (as from 1 January 2015).

        • PINS 6.3.1 Takaful business to be attributed to takaful funds

          A takaful entity must attribute all takaful business that it conducts to 1 or more takaful funds.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

      • PINS Part 6.4 PINS Part 6.4 Segregation of Takaful Funds

        Editorial changes (as from 1 January 2015).

        • PINS 6.4.1 Books of accounts to be maintained

          A takaful entity must:

          (a) maintain separate books of account in respect of each takaful fund it maintains; and
          (b) maintain any additional books of account required by this Chapter for its takaful business.
          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 6.4.2 Takaful entities — accounting and other records

          A takaful entity must maintain such accounting and other records as are necessary for:

          (a) identifying the assets and liabilities attributed to a takaful fund established and maintained by it under PINS Rule 6.2.1; and
          (b) complying with the requirements of PINS Rule 8.4.2(a).
          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 6.4.3 Allocation of assets to takaful funds

          A takaful entity must ensure the assets allocated to a particular takaful fund are only allocated, apart from the exceptions provided for in PINS Rule 6.4.4, for the purposes of the takaful fund to which it is attributed as required by PINS Rule 6.3.1 and must not be allocated or made available for any other purpose of the takaful entity.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 6.4.4 Allocation of assets to takaful funds — exceptions

          (1) PINS Rule 6.4.3 does not preclude the reimbursement of expenditures borne by the shareholders (in the same or the preceding financial year) in discharging liabilities wholly or partly attributable to a takaful fund.
          (2) PINS Rule 6.4.3 does not apply to the payment of management fees by a takaful fund to the takaful manager even where the manager is the shareholder, provided that the Shari'a supervisory board has approved those fees.
          (3) PINS Rule 6.4.3 does not prevent a takaful entity from exchanging, at fair market value, takaful business assets of any takaful fund for other assets of the insurer including assets held by another takaful fund or the shareholder.
          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 6.4.5 Transactions in assets to be fair

          A takaful entity must have adequate arrangements for ensuring that transactions involving assets of the takaful entity (other than transactions outside its control) do not operate unfairly between a takaful fund established and maintained under PINS Rule 6.2.1 and the shareholder assets of the takaful entity or, in the case where the takaful entity has more than 1 'identified fund', between those funds.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

      • PINS Part 6.5 PINS Part 6.5 Loans from a takaful fund

        Editorial changes (as from 1 January 2015).

        • PINS 6.5.1 Prohibition on making or attributing loans

          A takaful entity must not make or attribute any loans from a takaful fund it maintains to another takaful fund or to any other party, including but not limited to:

          (a) the takaful operator (the shareholder fund);
          (b) a person in a controlled function;
          (c) a participant (policyholder); and
          (d) a controller or person with close links to the takaful entity.
          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

      • PINS Part 6.6 PINS Part 6.6 Distribution of a surplus or funding a deficit in a takaful fund

        Editorial changes (as from 1 January 2015).

        • PINS 6.6 Guidance

          1. Takaful entities by definition are co-operative in nature and, as such, participants (policyholders) are entitled to a return of any surpluses of the takaful funds operated by the takaful entity.
          2. A takaful entity is also required, under CTRL, rule 9.4.4, to disclose in its financial statements all matters set out in AAOIFI 12 and 13, which includes among other matters the basis for treating insurance deficits and surpluses in a takaful fund.
          Amended by QFCRA RM/2015-3 (as from 1st January 2016)
          Amended by QFCRA RM/2021-1 (as from 1st July 2021).

        • PINS 6.6.1 Policies about surpluses and deficits

          (1) Every takaful entity must have a written policy, or subject to PINS Rule 6.6.2, policies, for determining the surplus or deficit arising from its takaful business, the basis of distributing that surplus or deficit between the participants and the shareholders, and the method of transferring any surplus or deficit to the participants.
          (2) The policy or policies must comply with all relevant AAOIFI standards including Financial Accounting Standard No. 13 'Disclosure of Bases for Determining and Allocating Surplus or Deficit in Islamic Insurance Companies'.
          (3) Each policy must be approved by the takaful entity's Shari'a supervisory board.
          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 6.6.2 When 2 or more policies permitted

          More than 1 policy may be developed where the takaful entity offers different categories of takaful business.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 6.6.3 PINS 6.6.3 Copies of policies to be given to Regulatory Authority

          (1) A takaful entity must provide a copy of the policy referred to in PINS Rule 6.6.1 to the Regulatory Authority immediately following its approval by the takaful entity's Shari'a supervisory board, but within 1 business day after the day the approval is given.

          Examples

          See examples to rule 3.9.1 on meaning of 'within 1 business day'.
          (2) A takaful entity must not amend the policy once it has been provided to the Regulatory Authority without the approval of the Shari'a supervisory board and the Regulatory Authority. A revised copy of the policy must be provided to the Regulatory Authority immediately following that approval.
          (3) A takaful entity must ensure that a copy of each policy approved under PINS Rule 6.6.1 or PINS Rule 6.6.3(2) forms part of each and every insurance policy sold by the takaful entity.
          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

          • PINS 6.6.3 Guidance

            In considering whether to approve any changes to a policy under PINS Rule 6.6.3(2), the Regulatory Authority will consider the impact of the proposed amendments on existing policyholders of the takaful entity affected by the proposed amendments.

            Amended by QFCRA RM/2012-5 (as from 1st July 2013).

        • PINS 6.6.4 Surplus or deficit to be determined annually

          (1) On an annual basis, every takaful entity must determine any surplus or deficit arising on each separate takaful fund.
          (2) A takaful entity must not distribute a surplus or deficit from a takaful fund it has established and maintains where the takaful business attributed to this takaful fund is long term insurance business until the value of this surplus or deficit has been determined by an approved actuary in accordance with rule 9.1.3(4)(h).
          (3) Any distribution must be performed within 4 months of the reference date of the actuarial investigation referred to in (2).
          Amended by QFCRA RM 2019-1 (as from 28th March 2019).

        • PINS 6.6.5 Reports of distributions of surplus or deficit to Regulatory Authority

          A takaful entity must report to the Regulatory Authority all distributions of profit or surplus (however called or described) to policyholders within 15 business days of the date of declaration of the distribution.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 6.6.6 When distributions not permitted

          A takaful entity must not make any distributions to participants, regardless of the rules governing the takaful entity, if the takaful entity does not, or through the payment of the distribution, would not, meet its minimum capital requirement.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

    • PINS 7 PINS 7 Additional Requirements for Protected Cell Companies [Deleted]

      Deleted by QFCRA RM/2011-2 (as from 1st July 2011).

      • PINS 7.1 PINS 7.1 Application and Purpose [Deleted]

        Deleted by QFCRA RM/2011-2 (as from 1st July 2011).

        • PINS 7.1.1 PINS 7.1.1 [Deleted]

          Deleted by QFCRA RM/2011-2 (as from 1st July 2011).

          • PINS 7.1.1 Guidance [Deleted]

            Deleted by QFCRA RM/2011-2 (as from 1st July 2011).

      • PINS 7.2 PINS 7.2 General Requirement [Deleted]

        Deleted by QFCRA RM/2011-2 (as from 1st July 2011).

        • PINS 7.2.1 [Deleted]

          Deleted by QFCRA RM/2011-2 (as from 1st July 2011).

        • PINS 7.2.2 [Deleted]

          Deleted by QFCRA RM/2011-2 (as from 1st July 2011).

      • PINS 7.3 PINS 7.3 Eligible Capital for Protected Cell Companies [Deleted]

        Deleted by QFCRA RM/2011-2 (as from 1st July 2011).

        • PINS 7.3.1 [Deleted]

          Deleted by QFCRA RM/2011-2 (as from 1st July 2011).

        • PINS 7.3.2 [Deleted]

          Deleted by QFCRA RM/2011-2 (as from 1st July 2011).

      • PINS 7.4 PINS 7.4 Capital Adjustment to Eligible Capital [Deleted]

        Deleted by QFCRA RM/2011-2 (as from 1st July 2011).

        • PINS 7.4.1 PINS 7.4.1 [Deleted]

          Deleted by QFCRA RM/2011-2 (as from 1st July 2011).

          • PINS 7.4.1 Guidance [Deleted]

            Deleted by QFCRA RM/2011-2 (as from 1st July 2011).

        • PINS 7.4.2 [Deleted]

          Deleted by QFCRA RM/2011-2 (as from 1st July 2011).

    • PINS Chapter 8 PINS Chapter 8 Matching and valuing assets and liabilities of insurers

      Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

      • PINS Part 8.1 PINS Part 8.1 General

        Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

        • PINS 8.1.1 PINS 8.1.1 Application of ch 8

          This Chapter applies to every insurer (other than a QFC captive insurer).

          Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

          • PINS 8.1.1 Guidance [Deleted]

            Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 8.1.2 PINS 8.1.2 Purpose of ch 8

          The purpose of this Chapter is to set out rules for:

          (a) matching an insurer's assets with its liabilities;
          (b) the consistent valuation of those assets and liabilities;
          (c) investment concentration limits of insurers that are limited liability companies incorporated under the Companies Regulations 2005; and
          (d) the use of derivatives.
          Inserted by QFCRA RM/2013-1 and amended by Editorial changes (as from 1st January 2015).

          • PINS 8.1.2 Guidance

            This Chapter is not intended to establish a basis of accounting for general purpose financial statements of insurers. It does not prevent an insurer from adopting a method of valuing assets and liabilities that might be considered excessively prudent if used in the insurer's financial statements.

            Inserted by QFCRA RM/2013-1 and amended by Editorial changes (as from 1st January 2015).

        • PINS 8.1.3 Value of insurer's assets to match its insurance liabilities

          (1) An insurer must hold supporting assets of a value at least equal to the amount of its insurance liabilities.
          (2) The assets:
          (a) must have characteristics of safety, yield and marketability that are appropriate to the nature, scale and complexity of the insurer's business;
          (b) must be diversified;
          (c) must be adequately spread; and
          (d) must be of a sufficient amount, and of an appropriate currency and term, to ensure that the cash inflows from the assets meet the expected cash outflows from the insurer's insurance liabilities as they fall due.
          (3) In determining the expected cash outflows for subrule (2) (d), the insurer must take into account any options that exist in the insurer's contracts of insurance.
          (4) This rule does not apply to assets held to cover index-linked liabilities.
          (5) However, this rule applies to assets held to cover the guaranteed portion of any index-linked long-term insurance contract that includes a guarantee of investment performance or some other guaranteed benefit.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 8.1.4 PINS 8.1.4 Asset admissibility and investment criteria

          (1) An insurer may invest in assets and instruments only if the insurer:
          (a) can identify, measure, monitor, manage and report on the risks arising from the assets and instruments; and
          (b) can take those risks into account in the assessment of its solvency needs in accordance with these rules.
          (2) Investments must be made by the insurer in such a way:
          (a) as to ensure the security, quality, liquidity and profitability of its portfolio of assets; and
          (b) as to avoid:
          (i) over-reliance or concentration on a particular asset class, region, issuer or group of issuers; and
          (ii) excessive accumulation of risk in the portfolio.
          (3) Assets and securities that are not admitted to trading on a regulated financial market must be kept to prudent levels.
          (4) Assets held by the insurer to cover technical provisions must be invested:
          (a) as appropriate to the nature and duration of its insurance liabilities;
          (b) in the best interest of all policyholders and beneficiaries; and
          (c) taking into account any policy objectives disclosed by the insurer.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

          • PINS 8.1.4 Guidance

            For investments of assets held by an insurer to cover technical provisions, the Regulatory Authority expects the investments to be made in liquid assets like:

            1 cash and cash-equivalent instruments;
            2 time deposits;
            3 readily tradable securities;
            4 shares in publicly listed companies;
            5 liquid corporate or sovereign bonds.
            Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 8.1.5 Use of derivatives

          (1) An insurer must not use a derivative instrument for speculation or proprietary trading.
          (2) An insurer may use a derivative instrument:
          (a) to mitigate or reduce financial risks;
          (b) for sound hedging; or
          (c) for efficient portfolio management.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 8.1.6 Investment concentration limits for companies

          (1) For an insurer that is a limited liability company incorporated under the Companies Regulations 2005, investments representing a concentration of exposures to single or related counterparties (whether on or off-balance sheet and including intra-group entities) must not exceed whichever is the lesser of the following amounts:
          (a) 20% of the insurer's applicable assets;
          (b) the insurer's eligible capital.
          Example

          An insurer's deposits in the same bank will be subject to the investment concentration limit because it is an exposure to a single counterparty.
          (2) Applicable assets of an insurer means the insurer's total assets less reinsurance receivables, premiums receivables, deferred acquisition costs, fixed assets, intangible assets and other assets that are not held for investment purposes.

          Example

          In calculating the value of applicable assets, items such as deferred tax assets, prepayments, advances and accrued income should be deducted from the insurer's total assets.
          (3) Assets that are excluded from eligible capital in accordance with paragraph (G) of the table in rule 4.2.2 are not subject to the concentration limit.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS Part 8.2 PINS Part 8.2 Measuring assets and liabilities

        Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

        • PINS 8.2.1 Assets may be valued lower

          An insurer may measure the value of an asset at less than the value determined in accordance with this Chapter.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 8.2.2 Liabilities may be valued higher

          An insurer may measure the value of a liability at more than the value determined in accordance with this Chapter.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 8.2.3 Approximation of values

          An insurer may use approximate methods to measure an asset or a liability, where the result obtained by the use of that approximate method would not be materially different from the result obtained by applying a measurement method prescribed in this Chapter.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 8.2.4 PINS 8.2.4 Directions by Regulatory Authority

          Notwithstanding any other provision of this Chapter, the Regulatory Authority may, by written notice, direct an insurer to measure an asset or a liability in accordance with principles specified by the Regulatory Authority in that written notice.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

          • PINS 8.2.4 Guidance

            PINS Rule 8.2.4 may be used where the Regulatory Authority has any concerns over any asset, or class of assets, for example reinsurance assets that may be limited risk transfer arrangements, being counted as an asset at full value.

            Amended by QFCRA RM/2012-5 (as from 1st July 2013).

      • PINS Part 8.3 PINS Part 8.3 Classification of insurance contracts

        Amended by QFCRA RM/2017-3 (as from 1st April 2017).

        • PINS 8.3.1 Classification of contracts

          An insurer must, in its own records, classify all contracts of insurance carried out by it as insurer and all reinsurance contracts entered into by it as cedant, according to the category to which the contracts of insurance relate.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 8.3.2 PINS 8.3.2 Classification of contracts falling into 2 or more categories

          Where a contract of insurance relates to more than 1 category, the insurer must record separately the portions of the contract of insurance that relate to each category, except that immaterial portions need not be separately recorded.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

          • PINS 8.3.2 Guidance

            A portion of a contract of insurance insuring a risk of a category other than the principal category to which the contract relates, will not normally be regarded as material if the interest that it insures is both related and subsidiary to the principal interest or interests insured under the contract, and constitutes less than 10% of the gross written premium under the contract.

            Editorial changes (as from 1 January 2015).

      • PINS Part 8.4 PINS Part 8.4 Basic principles of recognition and measurement

        Editorial changes (as from 1 January 2015).

        • PINS 8.4.1 PINS 8.4.1 Recognition of assets and liabilities

          An insurer must, except where this Chapter provides otherwise, recognise its assets and liabilities in accordance with a basis of accounting set out in PINS Rule 8.4.2, and the values attributed to those assets and liabilities must be measured in accordance with that basis of accounting.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

          • PINS 8.4.1 Guidance

            The exceptions provided in this Chapter relate to the following:

            a. specific Rules in respect of certain assets and liabilities, intended to achieve a regulatory objective not achieved by application of either or both of the bases of accounting set out in PINS Rule 8.4.2;
            b. assets and liabilities that are not dealt with in either or both of the bases of accounting set out in PINS Rule 8.4.2;
            c. the overriding power of the Regulatory Authority, set out in PINS Rule 8.2.4, to require an insurer to adopt a particular measurement for a specific asset or liability.
            Editorial changes (as from 1 January 2015).

        • PINS 8.4.2 Permitted bases of accounting

          An insurer must adopt 1 of the following as the basis of its accounting:

          (a) in the case of a takaful entity, the standards of the AAOIFI;
          (b) in any other case:
          (i) IFRS;
          (ii) UK GAAP or US GAAP; or
          (iii) any other accounting standards or principles prescribed in Rules made by the Regulatory Authority.
          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 8.4.3 Assumptions and methods on which valuations depend

          An insurer must, where the valuation of an asset or liability is dependent upon the adoption of assumptions or the adoption of a calculation method, ensure that any change in the assumptions or methods adopted is reflected immediately in the value attributed to the asset or liability concerned. The recognition of the effects of changes in assumptions or methods may not be deferred to future reporting periods.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 8.4.4 Actuarial principles

          The Regulatory Authority may also specify actuarial principles to be used by an insurer in measuring assets and liabilities.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 8.4.5 Derecognising liabilities

          (1) An insurance liability (or a part of an insurance liability) must not be derecognised until the obligation giving rise to the liability expires or is discharged or cancelled.
          (2) To avoid doubt, if reinsurance covering the liability (or part of the liability) is purchased, the liability must not be derecognised unless the purchase results in the discharge or cancellation of the obligation giving rise to the liability.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS Part 8.5 PINS Part 8.5 Discount rate

        Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

        • PINS 8.5.1 PINS 8.5.1 Calculating liabilities

          In calculating the present value of an insurance liability, the discount rate must be a prudent estimate of the yield expected to be earned by assets of the insurer that are sufficient in value and appropriate in nature to cover the provisions for the liability being discounted.

          Amended by QFCRA RM/2013-1 (as from 1st January 2015).

          • PINS 8.5.1 Guidance

            The Regulatory Authority expects that the insurer, in its approach to estimating a suitable yield for the discount rate, will have adequate regard to the profile of the liabilities (for asset-liability matching purposes) and the quality of the assets backing those liabilities.

            Amended by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS Part 8.6 PINS Part 8.6 Recognition and measurement of insurance assets and liabilities in respect of general insurance business

        Editorial changes (as from 1 January 2015).

        • PINS 8.6.1 Application of Part 8.6

          This Part applies to assets and liabilities in respect of general insurance business.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 8.6.2 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 8.6.3 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 8.6.4 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 8.6.5 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 8.6.6 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 8.6.7 PINS 8.6.7 Treatment of premium liability

          An insurer must recognise as a liability the premium liability, which is the value of future claims payments and associated direct and indirect settlement costs, arising from future events insured under policies that are in force as at the solvency reference date.

          Amended by QFCRA RM/2017-3 (as from 1st April 2017).

          • PINS 8.6.7 Guidance

            The liability referred to in PINS Rule 8.6.7 is commonly represented by insurers as 2 separate provisions, the unearned premium provision and the premium deficiency provision. The sum of the 2 provisions is sometimes referred to as the unexpired risk reserve, though this term is also sometimes used to describe the premium deficiency provision alone.

            Editorial changes (as from 1 January 2015).

        • PINS 8.6.8 PINS 8.6.8 Treatment of value of future claims payments

          An insurer must recognise as a liability the value of future claims payments and associated direct and indirect settlement costs, arising from insured events that have occurred as at the solvency reference date.

          Amended by QFCRA RM/2017-3 (as from 1st April 2017).

          • PINS 8.6.8 Guidance

            The liability referred to in PINS Rule 8.6.8 is commonly referred to as the liability for outstanding claims. Some insurers represent this liability as 3 separate provisions, being the liability in respect of reported claims, the liability in respect of claims incurred but not reported, and the liability in respect of settlement costs, also known as loss adjustment expenses.

            Editorial changes (as from 1 January 2015).

        • PINS 8.6.9 Treatment of expected recoveries

          An insurer must recognise as an asset the value of reinsurance and other recoveries expected to be received in respect of claims referred to in PINS Rule 8.6.7 and PINS Rule 8.6.8.

          Amended by QFCRA RM/2017-3 (as from 1st April 2017).

        • PINS 8.6.10 Valuation of expected future payments

          Where this Part requires an insurer to recognise as a liability the value of expected future payments, that liability must be measured as the net present value of those expected future payments.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 8.6.11 Valuation of expected future receipts

          Where this Part requires an insurer to recognise as an asset the value of expected future receipts, that asset must be measured as the net present value of those expected future receipts.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

      • PINS Part 8.7 PINS Part 8.7 Recognition and measurement of assets and liabilities in respect of long term insurance business

        Editorial changes (as from 1 January 2015).

        • PINS 8.7.1 Application of Part 8.7

          This Part applies to assets and liabilities in respect of long term insurance business.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 8.7.2 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 8.7.3 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 8.7.4 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 8.7.5 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 8.7.6 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 8.7.7 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 8.7.8 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 8.7.9 Treatment of policy benefits due before solvency reference date

          An insurer must recognise as a liability the amount of policy benefits that are due for payment on or before the solvency reference date.

          Amended by QFCRA RM/2017-3 (as from 1st April 2017).

        • PINS 8.7.10 Treatment of net value of future policy benefits

          An insurer must recognise as a liability the net value of future policy benefits under policies that are in force as at the solvency reference date, taking into account all prospective liabilities as determined by the policy conditions for each existing contract, and taking credit for premiums payable after the solvency reference date.

          Amended by QFCRA RM/2017-3 (as from 1st April 2017).

        • PINS 8.7.11 Measuring net value of policy benefits as liability

          In measuring the liability mentioned in rule 8.7.10, the insurer must:

          (a) use actuarial principles;
          (b) provide for all liabilities based on assumptions that meet the general requirements for prudent assumptions in rule 8.8.1 (including appropriate margins for adverse deviation of relevant factors that are sufficient to ensure that there is no significant foreseeable risk that liabilities to policyholders for long-term insurance contracts will not be met as they fall due); and
          (c) take into account:
          (i) all guaranteed policy benefits, including guaranteed surrender values;
          (ii) vested, declared or allotted bonuses to which policyholders are al either collectively or individually contractually entitled;
          (iii) all options available to the policyholder under the terms of the contract;
          (iv) discretionary charges and deductions from policy benefits, in so far as they do not exceed the reasonable expectations of policyholders;
          (v) expenses, including commissions; and
          (vi) any rights under contracts of reinsurance in respect of long term insurance business.
          Amended by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 8.7.12 Valuation of future payments

          Where this Part requires an insurer to recognise as a liability the value of expected future payments, that liability must be measured as the net present value of those expected future payments.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 8.7.13 Valuation of future receipts

          Where this Part requires an insurer to recognise as an asset the value of expected future receipts, that asset must be measured as the net present value of those expected future receipts.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 8.7.14 PINS 8.7.14 Limit of operation of rule 8.7.10

          PINS Rule 8.7.10 does not require an insurer to obtain a valuation by an actuary or actuaries performing the actuarial function of the liability referred to in that Rule, at a solvency reference date other than the insurer's annual reporting date.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

          • PINS 8.7.14 Guidance

            An insurer conducting long term insurance business is required to provide a financial condition report on its insurance liabilities that is prepared by an actuary or actuaries who are performing the actuarial function. The relevant provisions are set out in pt 9.1.

            Amended by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 8.7.15 Negative values for reserves — long-term insurance

          An insurer must not calculate a negative value for its mathematical reserves for a long-term insurance contract unless:

          (a) the calculation is based on assumptions that meet the general requirements for prudent assumptions in rule 8.8.1;
          (b) the contract does not have a guaranteed surrender value at the actuarial valuation date; and
          (c) the total mathematical reserves established by the insurer have a value of at least:
          (i) if the insurer's long-term insurance contracts include linked long-term contracts — the sum of the surrender values of all its linked long-term contracts at the actuarial valuation date; and
          (ii) in any other case — zero.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS Part 8.8 PINS Part 8.8 Methods, assumptions and projections

        Inserted by QFCRA RM/2013-1 and amended by Editorial changes (as from 1st January 2015).

        • PINS 8.8.1 Methods and assumptions that may be used

          In measuring long-term insurance business liabilities, an insurer must use methods and prudent assumptions that:

          (a) are appropriate to the nature, scale and complexity of the insurer's business;
          (b) are made using professional judgement, training and experience;
          (c) are made having regard to reasonably available statistics and other information;
          (d) are neither deliberately overstated nor deliberately understated;
          (e) are consistent from year to year and without arbitrary changes;
          (f) are consistent with the insurer's method of valuing assets;
          (g) include appropriate margins for adverse deviation of relevant factors;
          (h) recognise the distribution of profits or emerging surplus in an appropriate way over the duration of each contract of insurance; and
          (i) are in accordance with generally accepted actuarial practice.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 8.8.2 PINS 8.8.2 Projecting cash flows

          In projecting cash flows in relation to its long-term insurance business, an insurer must take into account the nature of the projections and the factors relevant to its insurance business, including:

          (a) expected investment earnings;
          (b) expected reinsurance recoveries;
          (c) mortality and morbidity;
          (d) expenses;
          (e) options and guarantees; and
          (f) persistency.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

          • PINS 8.8.2 Guidance

            1 Investment earnings — If the cash flow to be valued depends on future investment earnings, the assumption for investment earnings should reflect the expected investment earnings applicable to the assets on which the cash flows depend.
            2 Reinsurance — An insurer should value reinsurance cash flows using methods and assumptions that are at least as prudent as the methods and assumptions used to value the underlying contracts of insurance that have been reinsured.
            3 Mortality and morbidity — Assumptions about mortality and morbidity should use prudent rates of mortality and morbidity that are appropriate to the country or territory of residence of the persons whose life or health are insured.
            4 Expenses — An insurer should make provisions for expenses, implicitly or explicitly, in its mathematical reserves of an amount that is no less that the amount expected, on prudent assumptions, to be incurred in carrying out its long-term insurance contracts.
            5 Options and guarantees — If an insurer establishes its mathematical reserves for a long-term insurance contract, the insurer should include an amount to cover:
            (a) any increase in liabilities that might be the direct result of the policyholder exercising an option under that contract, and
            (b) all vested, declared or allocated bonuses to which policyholders are collectively or individually entitled under their contracts.
            If the surrender value of a contract is guaranteed, the amount of the mathematical reserves for that contract at any time should be at least equal to the value guaranteed at that time.
            6 Persistency — Assumptions about voluntary discontinuance rates in the calculation of the mathematical reserves may be made if the assumptions meet the general requirements for prudent assumptions in rule 8.8.1.
            Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

    • PINS Chapter 9 PINS Chapter 9 Actuarial reporting

      Guidance for Chapter 9

      Insurers that conduct long term insurance business, and certain insurers that conduct general insurance business, are required to appoint an individual to exercise the actuarial function (an approved actuary). An insurer that is required to appoint an approved actuary must have the approved actuary prepare and submit a report, called a financial condition report, in accordance with Part 9.1, to the insurer's governing body and the Regulatory Authority every year. An insurer that is not required to appoint an approved actuary must consider every year whether to obtain an actuarial report in accordance with Part 9.2, and must actually obtain such a report at least every 3 years.

      Note for ch 9

      See also CTRL, Part 6.5, for an insurer's general obligations in relation to its actuarial system.

      Editorial changes (as from 1 January 2015).
      Amended by QFCRA RM/2021-1 (as from 1st July 2021)

      • PINS Part 9.1 PINS Part 9.1 Insurers that are required to have approved actuaries

        Editorial changes (as from 1 January 2015).

        • PINS 9.1.1 Application — pt 9.1

          This Part applies to an insurer that is required to have an approved actuary.

          Note For the insurers that are required to have an approved actuary, see CTRL, rule 6.5.2.

          Editorial changes (as from 1 January 2015).
          Amended by QFCRA RM/2021-1 (as from 1st July 2021)

        • PINS 9.1.2 PINS 9.1.2 Financial condition reports

          (1) The approved actuary for the insurer must annually carry out an actuarial investigation to enable him or her to prepare a report about the insurer's financial condition (a financial condition report).

          Guidance

          An actuarial investigation is a full analysis of individual policy and claims data and other relevant information using actuarial techniques to estimate technical provisions.

          Note Approved actuary is defined in the glossary.
          (2) The insurer must ensure that the actuary is given appropriate access (that is, such access as the actuary reasonably believes to be necessary to prepare the report) to—
          (a) all relevant data, information, reports and staff of the insurer; and
          (b) so far as possible, any contractor of the insurer.
          (3) The actuary must prepare, sign and date the report.
          (4) The actuary must give the report to the insurer sufficiently in advance of the insurer's next annual return date to allow the insurer's governing body a reasonable opportunity to consider and use it in preparing the insurer's next annual prudential return.
          (5) The insurer's governing body must give a copy of the report to the Regulatory Authority on or before the insurer's next annual return date.
          (6) In this rule—

          next annual return date for an insurer means the date on which it must give its next annual prudential return to the Regulatory Authority under rule 1.4.2.
          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

          • PINS 9.1.2 Guidance [deleted]

            Deleted by QFCRA RM/2012-5 (as from 1st July 2013).

        • PINS 9.1.3 PINS 9.1.3 Requirements for financial condition report

          (1) A financial condition report must set out an objective assessment of the overall financial condition of the insurer concerned.
          (2) For an insurer conducting long term insurance business, such a report must include an objective assessment of the financial condition of each long term insurance fund established by the insurer.
          (3) In preparing a financial condition report, an approved actuary must act in accordance with the relevant professional actuarial standards, and must use appropriate actuarial valuation principles, techniques and methodologies.
          (4) The actuary must ensure that the report covers at least the following matters (so far as relevant):
          (a) an overview of the insurer's business;
          (b) an assessment of the insurer's recent experience and profitability, including the experience during the year ending on the valuation date;
          (c) an assessment of the value of the insurer's insurance liabilities that fall within rule 8.7.9 and rule 8.7.10;
          (d) for an insurer to which subrule (5) applies, an assessment of the value of the insurer's insurance liabilities that fall within rule 8.6.7 and rule 8.6.8, using the relevant professional actuarial standards and appropriate actuarial valuation principles, techniques and methodologies;
          (e) an assessment of whether the insurer's past estimates of the liabilities referred to in paragraphs (c) and (d) were adequate, especially if there has been a change in the assumptions or the valuation method from that adopted at the previous valuation;
          (f) an explanation, in relation to the valuation of those liabilities, of—
          (i) the assumptions used in the valuation process;
          (ii) the adequacy and appropriateness of data made available to the actuary by the insurer;
          (iii) how the actuary assessed the reliability of the data;
          (iv) the model or models used by the actuary;
          (v) the approach taken to estimate the variability of the estimate; and
          (vi) the sensitivity analyses undertaken;
          (g) a determination of the value of the surplus in each long term insurance fund established by the insurer;

          Note In relation to the distribution of a surplus, see rr 5.5.2 and 5.5.4.
          (h) in the case of a takaful entity, a determination of the value of any surplus or deficit in each takaful fund established and maintained by the entity, if the takaful business attributed to the fund is long term insurance business;

          Note In relation to the distribution of a surplus, see r 6.6.4 (2).
          (i) an assessment of asset and liability management, including the insurer's investment strategy;
          (j) an assessment of the insurer's current and future capital adequacy and a discussion of its approach to capital management;
          (k) an assessment of the insurer's pricing, including the adequacy of its premiums;
          (l) an assessment of the suitability and adequacy of the insurer's reinsurance arrangements, including the documentation of those arrangements and the existence and impact of any limited risk transfer arrangements;
          (m) an assessment of the suitability and adequacy of the insurer's risk management policy.
          (5) This subrule applies to an insurer if it engages in general insurance business and—
          (a) more than 15% of the insurer's gross outstanding liabilities are attributable to contracts of insurance for general insurance business in PINS category 1; or
          (b) more than 20% of the insurer's gross outstanding liabilities are attributable to contracts of insurance for general insurance business in PINS category 4.
          (6) The actuary—
          (a) must consider the implications and outlook for the insurer of each matter mentioned in subrule (4); and
          (b) if the implications for the insurer are adverse, must make recommendations to address the problem.
          (7) A financial condition report for a branch must be prepared in relation to the insurer's QFC operations, but must take into account the financial position of the head office.
          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

          • PINS 9.1.3 Guidance

            An authorised firm's approved actuary may rely on other expert opinion to address any matter required by a financial condition report which the actuary does not feel qualified to comment on. However, any third party opinion relied on for a financial condition report should be clearly identified in the report.

            Inserted by QFCRA RM/2012-5 (as from 1st July 2013).

        • PINS 9.1.4 Regulatory Authority may direct more frequent financial condition reports

          (1) The Regulatory Authority may direct an insurer that the insurer's approved actuary is to prepare a financial condition report more frequently than rule 9.1.2 (1) requires if the Regulatory Authority considers it necessary or desirable, for the prudential supervision of the insurer, to receive such a report more frequently.
          (2) The authority must give such a direction in writing.
          (3) An insurer must comply with a direction under subrule (1).
          Inserted by QFCRA RM/2012-5 (as from 1st July 2013).

        • PINS 9.1.5 Regulatory Authority may direct special review

          (1) The Regulatory Authority may direct an insurer that the insurer's approved actuary—
          (a) is to carry out a review of matters specified by the authority relating to the insurer's operations, risk management or financial affairs; and
          (b) is to prepare a report on the basis of that review.
          (2) The insurer must bear the cost of the review.
          (3) An insurer must comply with a direction under subrule (1).
          (4) The insurer's approved actuary must give the report simultaneously to the Regulatory Authority and the insurer within 3 months of the date of the direction, unless the authority grants an extension of time in writing.
          Inserted by QFCRA RM/2012-5 (as from 1st July 2013).

      • PINS Part 9.2 PINS Part 9.2 Insurers that are not required to have approved actuaries

        Editorial changes (as from 1 January 2015).

        • PINS 9.2.1 Application — pt 9.2

          This Part applies to an insurer that is not required to have an approved actuary.

          Note For the insurers that are required to have an approved actuary, see CTRL, rule 6.5.2.

          Editorial changes (as from 1 January 2015).
          Amended by QFCRA RM/2021-1 (as from 1st July 2021)

        • PINS 9.2.2 Actuarial reporting requirements for general insurance business

          The governing body of an insurer to which this Part applies—

          (a) must consider annually whether to commission an independent actuary to report on its business; but
          (b) must commission such a report at least once every 3 years.
          Editorial changes (as from 1 January 2015).

        • PINS 9.2.3 Qualifications etc of independent actuary

          (1) If an insurer decides to commission an actuarial report, it must appoint, to prepare the report, an individual who—
          (a) has the qualifications set out in subrule (2); and
          (b) satisfies the criteria set out in subrule (3).
          (2) The qualifications are—
          (a) that he or she has appropriate formal qualifications and is a member of a recognised professional body;
          (b) that he or she has at least 5 years' relevant experience in providing actuarial services to insurers, either in the QFC or in other jurisdictions; and
          (c) that the experience is sufficiently recent to ensure that he or she is familiar with current issues in the provision of such services to insurers.
          (3) The criteria are the following:
          (a) that he or she does not exercise the senior executive function, the executive governance function or the non-executive governance function for the insurer or a related body corporate (except a related body corporate that is a subsidiary of the insurer);
          (b) that he or she is not—
          (i) an approved auditor (under the Companies Regulations, article 85 (1), or the Limited Liability Partnerships Regulations, article 37) for the insurer;
          (ii) an employee or director of an entity of which that auditor is an employee or director; nor
          (iii) a partner of that auditor.
          Editorial changes (as from 1 January 2015).

        • PINS 9.2.4 Actuarial reports

          (1) The actuary who prepares an actuarial report for this Part must sign it.
          (2) The insurer concerned must ensure that the actuary is given appropriate access (that is, such access as the actuary reasonably believes to be necessary to prepare the report) to—
          (a) all relevant data, information, reports and staff of the insurer; and
          (b) so far as possible, any contractor of the insurer.
          (3) The report must give details, for each category of general insurance business that the insurer conducts, of the following matters:
          (a) recent trends in the business;
          (b) the actuary's estimate of the value of the insurance liabilities and assets arising in respect of those liabilities, determined in accordance with Chapter 8;
          (c) if the assumptions or the valuation method used for that estimate differ from those adopted for the previous valuation of those assets and liabilities, the effect, as at the date on which the actuary signs the report, of those changes on the value of those liabilities and assets;
          (d) the adequacy and appropriateness of the data that the insurer made available to the actuary;
          (e) the procedures that the actuary used to assess the reliability of that data;
          (f) the model or models that the actuary used;
          (g) the assumptions that the actuary used in the valuation process (including, without limitation, assumptions made as to inflation and discount rates, future expense rates and, if relevant, future investment income);
          (h) how the actuary estimated the variability of the estimate;
          (i) the nature and findings of sensitivity analyses that the actuary undertook.
          (4) The insurer's governing body must give a copy of the signed report to the Regulatory Authority on or before the date on which the insurer must give its next annual prudential return to the authority under rule 1.4.2.
          Editorial changes (as from 1 January 2015).

        • PINS 9.2.5 Additional powers of Regulatory Authority

          (1) If at any time the Regulatory Authority believes it is necessary that an insurer to which this Part applies should obtain an actuarial report relating to the insurer's operations, risk management or financial affairs, it may direct the insurer to do so at the insurer's expense.
          (2) The insurer—
          (a) must appoint, to prepare the report, an actuary who has the qualifications, and satisfies the criteria, in rule 9.2.3; and
          (b) must notify the authority of the name, qualifications and experience of the actuary appointed.
          (3) If the authority is not satisfied that the actuary appointed by the insurer has those qualifications or satisfies those criteria, the authority may direct the insurer to appoint an actuary nominated by the authority to prepare the report.
          (4) The insurer must submit the report to the authority within 3 months of the direction, unless the authority allows an extension of time in writing.
          Editorial changes (as from 1 January 2015).

      • PINS 9.3 PINS 9.3 Reporting Requirements Performed by the Actuarial Function [Deleted]

        Deleted by QFCRA RM/2012-5 (as from 1st July 2013).

        • PINS 9.3 Guidance [Deleted]

          Deleted by QFCRA RM/2012-5 (as from 1st July 2013).

        • PINS 9.3.2 PINS 9.3.2 [Deleted]

          Deleted by QFCRA RM/2012-5 (as from 1st July 2013).

          • PINS 9.3.2 Guidance [Deleted]

            Deleted by QFCRA RM/2012-5 (as from 1st July 2013).

      • PINS 9.4 PINS 9.4 Actuarial Reporting Requirements for General Insurance Business [Deleted]

        Deleted by QFCRA RM/2012-5 (as from 1st July 2013).

      • PINS 9.5 PINS 9.5 Financial Condition Report [Deleted]

        Deleted by QFCRA RM/2012-5 (as from 1st July 2013).

        • PINS 9.5.5 PINS 9.5.5 [Deleted]

          Deleted by QFCRA RM/2012-5 (as from 1st July 2013).

          • PINS 9.5.5 Guidance [Deleted]

            Deleted by QFCRA RM/2012-5 (as from 1st July 2013).

      • PINS 9.6 PINS 9.6 Independent Actuarial Report [Deleted]

        Deleted by QFCRA RM/2012-5 (as from 1st July 2013).

      • PINS 9.7 PINS 9.7 Criteria for Reporting Actuary [Deleted]

        Deleted by QFCRA RM/2012-5 (as from 1st July 2013).

        • PINS 9.7.2 PINS 9.7.2 [Deleted]

          Deleted by QFCRA RM/2012-5 (as from 1st July 2013).

          • PINS 9.7.2 Guidance [Deleted]

            Deleted by QFCRA RM/2012-5 (as from 1st July 2013).

    • PINS Chapter 10 PINS Chapter 10 Insurers that are members of groups

      Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

      • PINS 10.1.1 PINS 10.1.1 Application of ch 10

        This Chapter applies to every insurer (other than a QFC captive insurer) that is a member of a group.

        Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

        • PINS 10.1.1 Guidance [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS 10.1.2 PINS 10.1.2 Purpose of ch 10

        This Chapter imposes additional requirements on an insurer that is a member of a group to ensure that:

        (a) the insurer is capitalised adequately to protect itself against the risks arising from its membership of the group, and is otherwise protected against those risks;
        (b) it can be properly supervised by the Regulatory Authority;
        (c) it provides the authority with information about the structure and financial position of the group; and
        (d) it assesses the effect of, and notifies the authority of, certain transactions within the group.
        Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

        • PINS 10.1.2 Guidance

          1 An insurer is exposed to risks through the relationships that it has with other insurance and non-insurance companies in its group.
          2 An insurer is also subject to reporting requirements in relation to changes in its controllers. Those requirements are set out in GENE. Under GENE, an insurer may also be required to provide reports in relation to any close links it has.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS 10.1.3 Ch 10 in addition to other Regulatory Authority powers

        A power of the Regulatory Authority under this Chapter is in addition to the authority's other powers.

        Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

      • PINS 10.1.4 Powers under FSR not affected

        Nothing in this Chapter affects:

        (a) the Regulatory Authority's powers under FSR, article 31, to take action to protect the interests of an insurer's policyholders or the financial system; or
        (b) its powers under FSR, article 48, to obtain documents and information.
        Inserted by QFCRA RM/2013-1 and amended by Editorial changes (as from 1st January 2015).

      • PINS 10.1.5 PINS 10.1.5 Group structure

        (1) The structure of the insurer's group must be transparent and must not hinder the effective supervision of the insurer.
        (2) The structure and risk profile of the group must not hinder the insurer's stability and solvency.
        (3) The overall governance, high-level controls and reporting lines within the group must be clear so far as they affect the insurer.

        Example

        The insurer must not be subject to material control or influence from another group member that is exercised through informal or undocumented channels.
        (4) There must be clear and certain protocols for the performance of functions for the insurer at the group level.
        Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 10.1.5 Guidance

          The senior management of an insurer that is a member of a group remains responsible for its regulatory compliance, even if parts of it are delegated or outsourced to other group members (see CTRL, Chapter 4).

          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).
          Amended by QFCRA RM/2021-1 (as from 1st July 2021)

      • PINS 10.1.6 Direction regarding capital resources

        (1) If the Regulatory Authority considers that an insurer should hold additional capital (above the amount of capital that the insurer would otherwise be required by these rules to hold) to cover risks arising because of the insurer's group membership, the authority may direct the insurer to increase its capital:
        (a) to an amount; and
        (b) within a period;
        that the authority specifies in the direction.

        Example of when Regulatory Authority might give direction regarding capital resources

        The Regulatory Authority might impose an additional restriction or requirement on an insurer:
        •    if the group is conducting an intra-group transaction that may adversely affect the solvency or financial position of the insurer
        •    if there are risks that arise from the existence of a non-regulated entity within or connected to the group and may adversely affect the solvency position of the insurer
        •    risk transfer or reinsurance arrangements within the group that impose disproportionate risks on the insurer.
        (2) A direction under subrule (1) may specify that the additional capital is to take a particular form.
        (3) An insurer must comply with a direction under subrule (1).
        Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS 10.1.7 Intra-group transactions

        (1) An insurer must ensure that any material transaction with another member of its group:
        (a) is entered into on an 'arm's-length' basis; and
        (b) is on fair and reasonable terms.
        Guidance

        A single transaction or series of connected transactions that constitute a sale, purchase, exchange, loan or extension of credit, investment or guarantee involving 0.5% or less of an insurer's eligible capital as at the end of the last standard quarter (the standard quarters end on 31 March, 30 June, 30 September and 31 December) before the effective date of the transaction would not normally be considered material for the purposes of this rule.
        (2) The insurer must ensure that its books, accounts and records clearly and accurately disclose the nature and details of the transaction, including any accounting information necessary to demonstrate that the terms were fair and reasonable.
        Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS 10.1.8 Certain transactions to be inquired into by insurer's governing body

        (1) An insurer that is incorporated in the QFC must not enter into a transaction of a kind described in subrule (2) unless its governing body is satisfied, after reasonable inquiry, that the transaction does not adversely affect the interests of policyholders.
        (2) The kinds of transaction are the following:
        (a) an intra-group transaction (including a sale, purchase, exchange, loan, guarantee or investment) the amount of which is 3% (or more) of the insurer's eligible capital;
        (b) a loan to a person not related to the insurer, if there is an agreement or understanding that the proceeds of the loan, or a substantial part of those proceeds, will be used to make loans to purchase assets of, or make investments in, another group member, and the amount of the loan is 3% (or more) of the insurer's eligible capital;
        (c) an intra-group reinsurance agreement, or a modification to such an agreement, if the reinsurance premium or change in the insurer's liabilities is 5% (or more) of the insurer's eligible capital;
        (d) a reinsurance agreement, or a modification to such an agreement, involving the transfer of assets from the insurer to a person not related to it, if:
        (i) there is an agreement or understanding between the insurer and that person that any part of the assets will be transferred to 1 or more other persons related to the insurer; and
        (ii) the reinsurance premium or change in the insurer's liabilities is 5% (or more) of the insurer's eligible capital;
        (e) an intra-group management agreement, service contract or cost-sharing arrangement.
        (3) A reference in subrule (2) to an insurer's eligible capital is a reference to that capital as at the end of the last standard quarter before the relevant transaction.
        (4) An insurer's governing body may delegate its responsibility under subrule (1) to the insurer's senior management if the insurer's risk management strategy and internal control framework permit the governing body to do so.
        (5) In this rule:

        loan includes the extension of credit.

        standard quarter means each 3-month period ending on 31 March, 30 June, 30 September and 31 December.
        Inserted by QFCRA RM/2013-1 and amended by Editorial changes (as from 1st January 2015).
        Amended by QFCRA RM/2021-1 (as from 1st July 2021)

      • PINS 10.1.9 Directions about certain intra-group matters

        (1) The Regulatory Authority may give an insurer a direction in relation to any of the following matters:
        (a) the insurer's treatment of intra-group transactions;
        (b) the insurer's treatment of risk concentration within the group;
        (c) supervisory reporting and disclosure of information by the insurer;
        (d) any other matter relevant to the supervision of the insurer.
        Example of when Regulatory Authority might give direction

        The Regulatory Authority might impose an additional restriction or requirement on an insurer:
        •    if the group is conducting an intra-group transaction that may adversely affect the solvency or financial position of the insurer
        •    if there are risks that arise from the existence of a non-regulated entity within or connected to the group and may adversely affect the solvency position of the insurer
        •    risk transfer or reinsurance arrangements within the group that impose disproportionate risks on the insurer.
        (2) An insurer must comply with a direction under subrule (1).
        Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS 10.1.10 Notices to provide information about group financial resources

        (1) The Regulatory Authority may, by written notice, require an insurer to give it, within 90 days or a stated shorter reasonable period, a statement of the consolidated financial position of the insurer's group, made up:
        (a) as at a date specified in the notice, and
        (b) in accordance with principles stated in the notice.
        Guidance

        An insurer would normally be allowed to comply with a notice under rule 10.1.10 by providing a copy of a statement made up in compliance with an equivalent or substantially equivalent regulatory requirement to which the insurer or a subsidiary or associate is subject in another jurisdiction. If the statement is not in English, the insurer must also provide a certified translation of the statement into English (see GENE, r 5.1.2).
        (2) The Regulatory Authority may, by written notice, require an insurer to give it, within 90 days or a stated shorter reasonable period, information about any of the following:
        (a) another entity or other entities in the insurer's group;
        (b) the structure of its group;
        (c) the relationships between entities in its group;
        (d) the procedures and controls to manage group risk in the group;
        (e) any other matter relevant to the supervision of the insurer.
        Example of when Regulatory Authority might require additional information

        The Regulatory Authority might require an insurer to give it additional information:
        •    if the group is conducting an intra-group transaction that may adversely affect the solvency or financial position of the insurer
        •    if there are risks that arise from the existence of a non-regulated entity within or connected to the group and may adversely affect the solvency position of the insurer.
        (3) An insurer must comply with a requirement under subrule (1) or (2).

        Note See FSR, art 48 (Power to obtain documents and information).
        Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS 10.1 Application and Purpose [Deleted]

        Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS 10.2 PINS 10.2 Group Financial Resources [Deleted]

        Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 10.2.1 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 10.2.2 PINS 10.2.2 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

          • PINS 10.2.2 Guidance [Deleted]

            Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 10.2.3 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS 10.3 PINS 10.3 Transactions within a Group [Deleted]

        Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 10.3.1 PINS 10.3.1 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

          • PINS 10.3.1 Guidance [Deleted]

            Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 10.3.2 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS 10.4 PINS 10.4 Significant Transactions other than Group Transactions [Deleted]

        Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 10.4.1 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

    • PINS Chapter 11 PINS Chapter 11 Transfer of insurance business

      Editorial changes (as from 1 January 2015).

      • PINS Part 11.1 PINS Part 11.1 Transfer of insurance business — general

        Editorial changes (as from 1 January 2015).

        • PINS 11.1.1 PINS 11.1.1 Application — ch 11

          This Chapter applies to every QFC insurer (other than a QFC captive insurer).

          Note QFC insurer is defined in r 1.2.3.

          Editorial changes (as from 1 January 2015).

          • PINS 11.1.1 Guidance

            1. A transfer of insurance business, or relevant scheme, is the transfer of all the rights and obligations associated with this business from 1 insurer (the transferor) to another insurer (the transferee). When the transfer is complete, the transferee insurer is augmented by the assets and liabilities (and all future and past incidents attaching to those assets and liabilities) of the transferor insurer so that the policyholders and reinsurers continue to be subject to the same terms and conditions as those originally agreed. A transferor may transfer all its insurance business, or only some (such as a class or classes of insurance business).
            2. Transfers of insurance business can be undertaken for a variety of reasons, including restructuring (for example, exiting a line of business), assisting an QFC insurer in financial difficulty, and protecting policyholders. A relevant scheme does not refer to the ceding (reinsuring) of some or all of its policyholder liabilities to another insurer (reinsurer).
            Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

        • PINS 11.1.2 Purpose — ch 11

          The purpose of this Chapter is to make rules under the Financial Services Regulations, article 103 modifying those regulations, Part 16 (Control of Business Transfers) in relation to the requirements for a relevant scheme.

          Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

        • PINS 11.1.3 Special meaning of insurer in ch 11

          (1) A reference in this Chapter to an insurer includes, but is not limited to, a QFC insurer.
          (2) In this rule:
          QFC insurer means an authorised firm with an authorisation to conduct insurance business.

          Note Insurance business is defined in r 1.2.4.
          Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

        • PINS 11.1.4 Special meaning of insurance business in ch 11

          A reference in this Chapter to insurance business includes, but is not limited to, insurance business as defined in rule 1.2.4.

          Editorial changes (as from 1 January 2015).

      • PINS Part 11.2 PINS Part 11.2 Scheme report

        Editorial changes (as from 1 January 2015).

        • PINS 11.2.1 What scheme reports must include

          (1) The scheme report prepared in accordance with Article 97 of the FSR, must be in written form and include the following matters:
          (a) a rationale for the proposed relevant scheme;
          (b) the terms of the agreement or deed under which the proposed transfer is to be carried out;
          (c) the categories of insurance business to be transferred;
          (d) the amount of technical provisions, premiums, claims incurred and details of assets to be transferred;
          (e) particulars of any other arrangements necessary to give effect to the proposed relevant scheme.
          (2) The scheme report must also include a written actuarial report on the relevant scheme confirming that:
          (a) there will be no materially adverse consequences from the proposed transfer to the policyholders of either the transferor or transferee insurer; and
          (b) the transferor and/or transferee insurer continue to meet, if applicable, their minimum capital requirement after taking the proposed transfer into account.
          (3) The scheme report must also include a summary of the relevant scheme which contains, at a minimum, the following advice for affected policyholders:
          (a) that the insurer proposes to transfer the policyholder's policy or policies to another insurer, on or after a specified date;
          (b) the full name and contact details of the other insurer;
          (c) the effect of the transfer (this explanation may be brief and may, for example, explain that from the date of the transfer all rights and liabilities under the policies will be transferred to the other insurer, so that premiums will have to be paid to, and claims will have to be lodged with, that insurer);
          (d) any action the policyholder will need to take before or as a result of the transfer (for example, any changes in arrangements relating to paying premiums or lodging claims);
          (e) how the relevant scheme compares with possible alternatives;
          (f) if the policyholder does not need to take any action before or as a result of the transfer, notice of such to the policyholder;
          (g) details of the compensation offered to policyholders for any loss of rights or expectations;
          (h) how the policyholder can obtain further information and inspect relevant documents as may be available for public inspection.
          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

      • PINS Part 11.3 PINS Part 11.3 Notification of proposed transfer

        Editorial changes (as from 1 January 2015).

        • PINS 11.3.1 Parties that must ensure notification requirements met

          (1) Whichever party to the relevant scheme is an QFC insurer must ensure that the notification requirements in PINS Rule 11.3.2 are met.
          (2) If both parties to the relevant scheme are QFC insurers, the transferor must ensure that the notification requirements in PINS Rule 11.3.2 are met.
          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 11.3.2 Notices of intention

          (1) The QFC insurer must provide a notice of intention regarding the proposed transfer, which must include, at a minimum, details of the place or places, dates (which must not be for a period less than 30 days) and times that an affected policyholder may obtain a copy of the relevant scheme and any associated documentation.
          (2) The QFC insurer must publish the notice of intention in 2 national papers in the State approved by the Regulatory Authority (1 being in English and 1 in Arabic).
          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 11.3.3 Provision to policyholders of scheme report summary

          The QFC insurer must provide the summary of the scheme report referred to in PINS Rule 11.2.1(3), to every policyholder resident in the State who is affected by the relevant scheme.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

    • PINS Chapter 12 PINS Chapter 12 Insurers in run-off

      Editorial changes (as from 1 January 2015).

      • PINS Part 12.1 PINS Part 12.1 Application and purpose

        Editorial changes (as from 1 January 2015).

        • PINS 12.1.1 Application of Chapter 12

          This Chapter applies to:

          (a) every QFC incorporated insurer (other than a QFC captive insurer); and
          (b) every branch in respect of its QFC insurance business operations.
          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 12.1.2 Meanings of terms relating to run-off

          In this Chapter:

          (a) an insurer in run-off means an insurer that has ceased to effect contracts of insurance in respect of the whole or a category of its insurance business (or, in the case of a branch, the whole or a category of its QFC insurance business), and a takaful fund in run-off and a long term insurance fund in run-off are construed accordingly; and
          (b) going into run-off or placing insurance business into run-off means ceasing to effect contracts of insurance, and placing a takaful fund or a long term insurance fund into run-off are construed accordingly.
          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 12.1.3 PINS 12.1.3 Compliance with Chapter 12 by insurer directed to go into run-off

          An insurer in run-off by virtue of a decision or notice of the Regulatory Authority to the effect that the insurer is to cease to effect contracts of insurance shall comply with this Chapter except to the extent the Regulatory Authority acting under its powers in the FSR directs otherwise.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

          • PINS 12.1.3 Guidance

            1. The purpose of this Chapter is to set out prudential provisions applying to insurers that cease to effect insurance business, either wholly or in respect of a particular category. The provisions are also applicable to Cells, takaful funds and long term insurance funds, but do not (because of the effect of PINS Rule 12.1.2) apply to non-QFC insurance business of a branch.
            2. An insurer may be in run-off because of a decision or notice of the Regulatory Authority under its powers in the FSR requiring an insurer to cease to effect certain contracts of insurance.
            Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

        • PINS 12.1.4 PINS 12.1.4 Certain contracts to be disregarded

          For the purposes of this Chapter, in determining whether an insurer is effecting contracts of insurance, or has ceased to effect contracts of insurance, including contracts of insurance effected through a takaful fund or a long term insurance fund, contracts of insurance effected under a term of an existing contract of insurance will be ignored unless the Regulatory Authority decides otherwise in respect of any particular contract.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

          • PINS 12.1.4 Guidance

            The effect of PINS Rule 12.1.4 is to disregard, for the purposes of determining whether the Chapter applies, contracts of insurance that are effected by the insurer as a consequence of a term of an existing contract of insurance. A contract will normally only be regarded as being effected under a term of an existing contract if the insurer does not have discretion to decline to effect the new contract or if it would be unreasonable for the insurer, having regard to the interests of the policyholder, to decline to effect it.

            Editorial changes (as from 1 January 2015).

      • PINS Part 12.2 PINS Part 12.2 Insurers ceasing to effect contracts of insurance in a category

        Editorial changes (as from 1 January 2015).

        • PINS 12.2.1 Application of Part 12.2

          This Part applies to an insurer that ceases or decides to cease to effect new or to renew contracts of insurance:

          (a) in a category in which the insurer has previously effected insurance business; or
          (b) in respect of a takaful fund or a long term insurance fund, in a category in which the insurer has previously effected insurance business through that takaful fund or long term insurance fund.
          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 12.2.2 Insurers to give notice of decision to cease business

          An insurer to which this Part applies must, within 28 days of a decision to cease to effect new contracts of insurance in a category, notify the Regulatory Authority of its decision, in a notice specifying the following details:

          (a) the effective date of the decision to cease effecting contracts of insurance;
          (b) the category to which the decision relates;
          (c) where relevant, the takaful fund or long term insurance fund to which the decision relates.
          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 12.2.3 Insurers in run-off not to effect certain contracts

          An insurer who has provided a notice to the Regulatory Authority in accordance with PINS Rule 12.2.2 must not effect any contracts of insurance in that category without the written permission of the Regulatory Authority. Where the notice referred to in PINS Rule 12.2.2 relates to a takaful fund or long term insurance fund of the insurer, the restriction set out in this rule applies only to that takaful fund or long term insurance fund.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

      • PINS Part 12.3 PINS Part 12.3 Run-off plans

        Editorial changes (as from 1 January 2015).

        • PINS 12.3.1 Application of Part 12.3

          This Part applies to:

          (a) Insurers that go into, or are in, run-off, or that maintain takaful funds or long term insurance funds that are in run-off;
          (b) Insurers that make a decision to go into run-off or to place a takaful fund or long term insurance fund into run-off; and
          (c) Insurers whose authorisation to effect contracts of insurance in respect of their entire insurance business or in respect of the entire business of a takaful fund or long term insurance fund is withdrawn by the Regulatory Authority.
          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 12.3.2 Insurer voluntarily in run-off to provide run-off plan

          If an insurer decides to go into run-off or to place a takaful fund or a long term insurance fund into run-off, the insurer must, at the same time as the notice referred to in PINS Rule 12.2.2, provide the Regulatory Authority with a written run-off plan in respect of the insurance business being placed into run-off.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 12.3.3 Insurer directed to go into run-off to provide run-off plan

          If the Regulatory Authority withdraws an insurer's authorisation to effect contracts of insurance in respect of the insurer's whole, or a category of, insurance business or the whole, or a category of, insurance business of a takaful fund or long term insurance fund, the insurer must, within 28 days after the day the insurer is given the written notice of withdrawal of authorisation (or, if later, the period specified in that notice), provide the Regulatory Authority with a written run-off plan in respect of that insurance business.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 12.3.4 What run-off plans must cover

          An insurer must ensure a run-off plan provided to the Regulatory Authority in accordance with this Part covers the period until all liabilities to policyholders relating to the insurance business in run-off are met and includes:

          (a) an explanation of how, or the extent to which, all liabilities to policyholders will be met in full as they fall due;
          (b) an explanation of how, or the extent to which, the insurer will maintain its compliance with the requirements of PINS until such time as all liabilities to policyholders are met;
          (c) a description, appropriate to the scale and complexity of the insurer's business, of the insurer's business strategy;
          (d) financial projections showing, in a form appropriate to the scale and complexity of the insurer's operations, the forecast financial position of the insurer as at the end of each reporting period during the period to which the run-off plan relates;
          (e) an assessment of the sensitivity of the financial position of the insurer to stress arising from realistic scenarios relevant to the circumstances of the insurer;
          (f) details of the planned run-off reinsurance protections and the extent to which the planned reinsurance protections match the run-off realistic scenarios;
          (g) details of the claims handling and reserving strategy; and
          (h) details of the cost of the management of the run-off.
          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 12.3.5 Application of run-off plan to fund

          Where an insurer's insurance business in run-off relates to a takaful fund or a long term insurance fund of that insurer, the run-off plan must deal with the matters set out in PINS Rule 12.3.4 so far as they relate to that takaful fund or long term insurance fund.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS 12.3.6 PINS 12.3.6 Insurer to monitor run-off plan etc

          (1) This rule applies to an insurer that has given a run-off plan to the Regulatory Authority.
          (2) The insurer must monitor the matters provided in the run-off plan.
          (3) If there is a significant departure from the run-off plan, the insurer must tell the Regulatory Authority immediately, but by no later than the second business day after the day the departure happens or starts.
          Amended by QFCRA RM/2012-5 (as from 1st July 2013).

          • PINS 12.3.6 Guidance

            An insurer should decide whether a matter constitutes a significant departure from a run-off plan, having regard to the nature and scale of the matter and its materiality relative to the scale and complexity of the insurer and, where relevant, the scale and complexity of the takaful fund or long term insurance fund concerned. The following matters will normally be considered as representing a significant departure from a run-off plan:

            a. a significant revision of the insurer's strategy for managing risks, and in particular its strategy for the use of reinsurance;
            b. a significant deterioration in the insurer's claims experience, financial position or solvency position (the amount by which the insurer's eligible capital, determined in accordance with the provisions of PINS chapter 4 relevant to that insurer, exceed the insurers minimum capital requirement as calculated by the provisions in PINS chapter 3);
            c. any other transaction or circumstance that is likely to have a material effect upon the insurer's solvency position.
            Amended by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS 12.3.7 Regulatory Authority may direct insurer to amend run-off plan

          Where an insurer has notified a matter to the Regulatory Authority in accordance with PINS Rule 12.3.6, the Regulatory Authority may by notice in writing require the insurer to provide an amended run-off plan. The insurer must provide an amended run-off plan within 28 days of receipt of the notice, unless the notice specifies a longer period.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

      • PINS Part 12.4 PINS Part 12.4 Provisions in respect of contracts relating to insurance business in run-off

        Editorial changes (as from 1 January 2015).

        • PINS 12.4.1 Application — pt 12.4

          This Part applies only to an insurer that:

          (a) is in run-off as regards its entire insurance business or the entire insurance business of a takaful fund or long term insurance fund;
          (b) has provided a notice to the Regulatory Authority in accordance with PINS Rule 12.2.2 in respect of its entire insurance business or the entire insurance business of a takaful fund or long term insurance fund; or
          (c) has received a written notice from the Regulatory Authority withdrawing the insurer's authorisation to effect contracts of insurance in respect of its entire insurance business or the entire insurance business of a takaful fund or long term insurance fund.
          Editorial changes (as from 1 January 2015).

        • PINS 12.4.2 Insurer with business in run-off to notify authority of certain contracts

          (1) An insurer to which this Part applies must—
          (a) within 10 business days after the day its insurance business enters into run-off, tell the Regulatory Authority about the existence and principal features of any notifiable contract that existed at the time the business entered into runoff; and
          (b) within 10 business days after the day it enters into a notifiable contract in relation to its insurance business in runoff, tell the Regulatory Authority about the existence and principal features of the contract.
          (2) To remove any doubt, subrule (1) (b) applies whether or not the insurance business is conducted through a takaful fund or long term insurance fund that is in run-off.
          (3) In this rule:

          notifiable contract means—
          (a) a contract with a person related to the insurer, other than a contract of insurance effected by the insurer before going into run-off;
          (b) a contract with any person relating to the management of all or any of the insurance business in run-off;
          (c) a contract with any person for reinsurance of all or any of the insurance business in run-off; or
          (d) any other contract with a person mentioned in paragraph (b) or (c) or a person related to such a person.
          Editorial changes (as from 1 January 2015).

        • PINS 12.4.3 Request for additional information about contract notified under r 12.4.2

          (1) The Regulatory Authority may, by written notice given to an insurer that has notified the authority about a contract under rule 12.4.2, require the insurer to give the authority, within a stated reasonable period, additional information about the contract.
          (2) The insurer must comply with the requirement.
          (3) The power given by subrule (1) is additional to the Regulatory Authority's other powers.

          Note See eg Financial Services Regulations, art 48 (Power to obtain documents and information).
          Amended by QFCRA RM/2012-5 (as from 1st July 2013).

      • PINS Part 12.5 PINS Part 12.5 Limitations on distributions by QFC incorporated insurers in run-off

        Editorial changes (as from 1 January 2015).

        • PINS 12.5.1 Insurer in run-off not to make distributions

          (1) An insurer incorporated in the QFC in run-off must not make any distribution to shareholders or members of the insurer, whether by way of dividends or otherwise, or any payment of management fees (other than fees payable under a contract notified to the Regulatory Authority in accordance with PINS Rule 12.4.2), without the written consent of the Regulatory Authority.
          (2) Any such distribution or return of capital or payment of management fees must be made within the period, if any, specified in the written notice of consent given by the Regulatory Authority.
          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

    • PINS Schedule 1 PINS Schedule 1 Guidance about what should be included in insurer's risk management policy

      (see r 2.3.1 (5))

      Note for sch 1

      This Schedule sets out in detail what the Regulatory Authority expects to see in an insurer's risk management policy. Each Part deals with a risk that the insurer is required to address under r 2.3.1 by first describing the risk and then stating what, in the authority's view, should be included in the policy in relation to the risk.

      Inserted by QFCRA RM/2013-1 and amended by Editorial changes (as from 1st January 2015).

      • PINS S1 PINS S1 Credit risk

        • PINS S1.1 What is credit risk?

          (1) Credit risk is:
          (a) the risk of default by debtors, borrowers and other counterparties; and
          (b) the risk of the loss of value of assets due to deterioration in their credit quality.
          (2) Credit risk results from financial transactions with debtors, borrowers, securities issuers, brokers, policyholders, reinsurers and guarantors.
          (3) Credit risk includes on-balance-sheet and off-balance-sheet exposures from guarantees, derivative contracts and performance-related obligations to counterparties. It can increase the risk profile of an insurer and can adversely affect the insurer's financial viability.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS S1.2 Risk management policy — credit risk

          (1) An insurer's risk management policy for credit risk should include:
          (a) a mandate setting out the acceptable range, quality and diversification of credit exposures (including those to reinsurers, brokers and policyholders) and investments;
          (b) limits for credit exposures at individual and consolidated levels to:
          (i) single counterparties and groups of related counterparties;
          (ii) intra-group asset exposures to subsidiaries and related entities;
          (iii) single industries; and
          (iv) single regions;
          (c) a process for approving changes in the credit mandate and changes in limit structures;
          (d) a process for approving requests for temporary increases in limits and a process to ensure excesses are brought within the pre-approved limits within a set timeframe;
          (e) a process for reviewing and, if necessary, reducing or cancelling exposures to a particular counterparty if it is known to be experiencing problems;
          (f) a process to monitor and control credit exposures against pre-approved limits;
          (g) a process to review credit exposures (at least annually, but more frequently if there is evidence of a deterioration in credit quality);
          (h) a management information system that is capable of aggregating exposures to any 1 counterparty (or group of related counterparties), asset class, industry or region in a timely manner; and (i) a process of reporting to the governing body and senior management:
          (i) any breaches of limits; and
          (ii) large exposures and other credit risk concentrations.
          (2) Actual and potential credit exposures to reinsurers arising from current or possible future claims should be included in the insurer's risk management policy.
          Inserted by QFCRA RM/2013-1 and amended by Editorial changes (as from 1st January 2015).

      • PINS S2 PINS S2 Balance sheet and market risk

        • PINS S2.1 What is balance sheet and market risk?

          Balance sheet and market risk includes:

          (a) investment risk;
          (b) asset-liability management risk;
          (c) liquidity risk; and
          (d) derivatives risk.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS S2.2 What is investment risk?

          (1) Investment risk is the risk of an adverse movement in the value of an insurer's assets, including off-balance-sheet exposures.
          (2) Investment risk includes:
          (a) equity risk;
          (b) interest rate risk;
          (c) foreign exchange risk;
          (d) credit risk; and
          (e) investment concentration risk.
          (3) Because of the nature of insurance business, there is a close relationship between investment risk and asset-liability management risk.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS S2.3 Risk management policy — investment risk

          (1) An insurer's risk management policy for investment risk should include:
          (a) the insurer's investment objective;
          (b) formulation of an investment strategy, including allowable asset classes, strategic asset allocation, asset allocation ranges, benchmarks, risk limits and target currency exposures and ranges;
          (c) a process for how individual asset classes will be managed, including which of those tasks will be done internally and which will be outsourced to investment managers;
          (d) the responsibilities of individuals and committees within the insurer (such as the investment committee and the asset-liability committee) for deciding and implementing the investment strategy, and for monitoring and controlling investment risk, including reporting lines, decision-making powers and delegations;
          (e) a process for the selection of qualified and competent investment managers;
          (f) limits and other restrictions on the actions of investment managers, whether internal or outsourced, and the means by which compliance with those limits are monitored;
          (g) modelling and stress-testing of the effect of the current and alternative investment strategies on financial outcomes and asset-liability management;
          (h) processes for:
          (i) ensuring the continuing appropriateness of the investment strategy, including the timing and nature of strategy reviews;
          (ii) ensuring the continuing appropriateness of the investment implementation process, including the timing and nature of reviews of investment managers and the manager configuration;
          (iii) monitoring compliance with the investment strategy; and
          (iv) making contingency plans to mitigate the effects of deteriorating investment conditions;
          (i) the segregation of duties; and
          (j) performance monitoring and its role in the oversight and control of the investment process.
          (2) For paragraph (1) (b), the investment strategy should be formulated taking account of the investment objective, the insurer's capital position, the term and currency profile of its expected liabilities, liquidity requirements and the expected returns, volatilities and correlations of asset classes.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS S2.4 What is asset-liability management risk?

          (1) Asset-liability management risk is the risk of an adverse movement in the relative values of assets and liabilities of an insurer due to changes in general market factors, such as interest rates, inflation and, if relevant, foreign exchange rates.
          (2) The expected payment profile of an insurer's liability portfolios is a crucial part of asset-liability management, because it determines the exposure of the portfolios' value to interest rates. Property business, such as household insurance, is typically short-term. Liability business, such as public liability, is typically long-term. The interest rate sensitivity of assets and liabilities is broadly determined by the timing of cash flows, although that will not always be the case (for example, in the case of floating-rate notes or options).
          (3) Assets and liabilities are well managed if their changes in value in response to market movements are highly correlated. If assets and liabilities are not well managed, the possibility of a reduction in asset value that is not offset by a reduction in liability value, or an increase in liability value that is not offset by an increase in asset value, becomes significant.
          (4) Because of the nature of insurance business, there is a close relationship between investment risk and asset-liability management risk.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS S2.5 Risk management policy — asset-liability management risk

          An insurer's risk management policy for investment risk should include details about how:

          (a) the insurer's investment and liability strategies allow interaction between assets and liabilities;
          (b) the correlations between assets and liabilities are taken into account;
          (c) cash outflows to policyholders and other creditors will be met by cash inflows; and
          (d) the valuations of assets and liabilities will change under an appropriate range of scenarios.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS S2.6 What is liquidity risk?

          (1) Liquidity risk is the risk of the insurer not having sufficient cash or liquid assets to meet its cash outflows to policyholders and other creditors as they fall due.
          (2) The nature of insurance activities means that the timing and amount of cash outflows are uncertain. This uncertainty may affect the ability of an insurer to meet its obligations to policyholders or require an insurer to incur additional costs through, for example, raising additional funds at a premium on the market or through the sale of assets.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS S2.7 Risk management policy — liquidity risk

          An insurer's risk management policy for liquidity risk should include:

          (a) consideration of the level of mismatch between expected asset and liability cash flows under normal and stressed operating conditions;
          (b) the liquidity and realisability of assets;
          (c) commitments to meet insurance and other liabilities;
          (d) the uncertainty of the incidence, timing and magnitude of insurance liabilities;
          (e) the level of liquid assets required to be held by the insurer; and
          (f) other sources of funding, including reinsurance, borrowing capacity, lines of credit and intra-group funding.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS S2.8 What is derivatives risk?

          Derivatives risk is the risk from transactions in derivative instruments such as forwards, futures, swaps, options, contracts for differences and other similar instruments.

          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS S2.9 Risk management policy — derivatives risk

          An insurer's risk management policy for derivatives risk should include:

          (a) the insurer's objectives and policies in using derivatives;
          (b) a framework with limits on the use of derivatives consistent with the insurer's risk tolerance;
          (c) appropriate lines of authority and responsibility for transacting derivatives, including trading limits;
          (d) consideration of worst-case scenarios and sensitivity analysis; and
          (e) a process for reporting of scenarios and analysis.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS S3 PINS S3 Reserving risk

        • PINS S3.1 What is reserving risk?

          (1) Reserving risk is the risk that the reserves set aside by the insurer for its insurance liabilities (net of reinsurance and other recoveries for those liabilities) will be inadequate to meet the net amount payable when the insurance liabilities crystallise.
          (2) In this Part, insurance liabilities includes:
          (a) the liability for claims incurred up to the reporting date;
          (b) the premium liability; and
          (c) for long-term insurance business — the net value of future policy benefits and reinsurance recoveries anticipated for those liabilities.
          Inserted by QFCRA RM/2013-1 and amended by Editorial changes (as from 1st January 2015).

        • PINS S3.2 Risk management policy — reserving risk

          (1) An insurer's risk management policy for reserving risk should include:
          (a) a process for the ongoing review and appraisal of the insurance liability valuation framework (including the assumptions made and reinsurance recoveries estimated);
          (b) procedures and controls to ensure that the provision for insurance liabilities is, at all times, sufficient to cover any liabilities that have been incurred, or are yet to be incurred, on contracts of insurance accepted by the insurer, as far as can reasonably be estimated;
          (c) the methods to be applied in estimating the provision for insurance liabilities, including provisions for individual notified incurred claims;
          (d) the methods to be applied in estimating the amount of the asset for reinsurance recoveries that are expected to arise on crystallisation of the gross insurance liabilities (the manner of estimating those assets must be consistent with the manner of estimating the gross liabilities, unless there is a sound justification for doing otherwise);
          (e) procedures and controls to ensure that the selected approaches are applied accurately and consistently;
          (f) procedures to review and monitor, on a regular basis, the out-turn of provisions made in previous years for insurance liabilities (gross and net of reinsurance recoveries);
          (g) procedures to ensure that in-house or external specialists selected have the appropriate level of skill and experience and have available the necessary information to carry out the estimation required;
          (h) suitable controls to ensure that the data used in determining the insurance liabilities are extracted from the underlying records accurately and to the necessary level of detail; and
          (i) scenario testing for several years into the future, particularly for an insurer conducting long-term insurance business.
          (2) For paragraph (1) (a), in conducting a review and appraisal of the insurance liability valuation framework, consideration should be given to emerging pricing and claim payment trends.
          (3) For paragraph (1) (c), in determining a provision estimation method, an insurer may consider alternative approaches before selecting those regarded as most appropriate to the nature of the business.
          (4) For paragraph (1) (h), the level of detail of the data used in determining the insurance liabilities should be sufficient to ensure that the data available covers the whole of the insurer's liabilities and exposures under insurance contracts.
          (5) In addition to the actuarial advice an insurer is required to obtain under Chapter 9, an insurer should consider the use of actuaries or other appropriately qualified and experienced loss reserving specialists to estimate insurance liabilities periodically through the year.
          (6) The insurer should undertake periodic testing of its reserving processes and the level of its reserves, including continual reassessment of assumptions used, and testing the sensitivity of the valuation of insurance liabilities to stress arising from realistic scenarios relevant to the circumstances of the insurer.
          Inserted by QFCRA RM/2013-1 and amended by Editorial changes (as from 1st January 2015).

      • PINS S4 PINS S4 Insurance risk

        • PINS S4.1 What is insurance risk?

          Insurance risk is the risk that inadequate or inappropriate underwriting, product design, pricing and claims settlement will expose an insurer to financial loss and consequent inability to meet its liabilities.

          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS S4.2 What is underwriting risk?

          (1) Underwriting risk is the risk arising from the process by which an insurer determines:
          (a) whether or not to accept a risk; and
          (b) the terms and conditions to be applied, and the premium to be charged, if the risk is accepted.
          (2) Weaknesses in underwriting and in its procedures and controls can expose an insurer to the risk of operational losses that may threaten its solvency position.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS S4.3 Risk management policy — underwriting risk

          An insurer's risk management policy for underwriting risk should include:

          (a) a statement of the insurer's willingness and capacity to accept risk;
          (b) the nature of insurance business that the insurer is to underwrite including:
          (i) classes of insurance;
          (ii) the areas where it conducts business;
          (iii) the types of risks included and excluded; and
          (iv) the criteria for the use of reinsurance in the different classes of insurance;
          (c) details of the formal risk assessment process in the underwriting of insurance, including:
          (i) the criteria used for risk assessment;
          (ii) the methods for monitoring emerging experience; and
          (iii) the methods by which the emerging experience is taken into consideration in the underwriting process;
          (d) the process for setting approval authorities and the limits to those authorities (including controls surrounding delegations given to intermediaries of the insurer);
          (e) risk and aggregate concentration limits; and
          (f) methods for monitoring compliance with policies and procedures regarding underwriting, such as:
          (i) internal audit (but only if it is established that the internal audit function has the appropriate skills and experience to perform such activities);
          (ii) reviews by area heads or portfolio managers;
          (iii) peer review of policies (including details of the staff responsible for undertaking the peer review, the frequency of such reviews and the reporting arrangements for the results); and
          (iv) in the case of reinsurers — audits of ceding companies to ensure that reinsurance assumed is in accordance with contracts in place.
          Inserted by QFCRA RM/2013-1 and amended by Editorial changes (as from 1st January 2015).

        • PINS S4.4 What is product design risk?

          Product design risk, in relation to an insurance product, means the risk arising from:

          (a) the introduction of a new insurance product; or
          (b) the enhancement or variation of an existing insurance product.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS S4.5 Risk management policy — product design risk

          An insurer's risk management policy for product design risk should include:

          (a) the product classes and types of risks in which the insurer chooses to engage;
          (b) setting a business case for new or enhanced products;
          (c) market testing and analysis;
          (d) cost-benefit analysis;
          (e) requirements for limiting risk through measures such as diversification, exclusions and reinsurance (including confirmation that the existing reinsurance will provide protection or new reinsurance protection is being provided);
          (f) processes to ensure that policy documentation is adequately drafted to give legal effect to the proposed level of cover under the product;
          (g) an implementation plan for the product, including milestones;
          (h) clearly defined and appropriate levels of delegation for approval of all material aspects of product design;
          (i) post-implementation review; and
          (j) methods for monitoring compliance with product design policies and procedures.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS S4.6 What is pricing risk?

          Pricing risk, in relation to an insurance product, means the risk arising from inaccurately estimating:

          (a) the claims and other business costs arising from the product; and
          (b) the income from the investment of the premium received for the product.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS S4.7 Risk management policy — pricing risk

          (1) An insurer's risk management policy for pricing risk should include:
          (a) clearly defined and appropriate levels of delegation for approval of all material aspects of pricing;
          (b) a process for the reflection of emerging experience in price adjustments;
          (c) profit-loss analysis, including monitoring the effect of price movements;
          (d) price discounting authorities;
          (e) a process for the insurer's product pricing to respond to competitive and other external environmental pressures;
          (f) a process for monitoring, and the ability to monitor, deviations of actual price from the technical underwriting pricing;
          (g) methods for monitoring compliance with pricing policies and procedures for proposed pricing variations; and
          (h) the relationship between pricing, product development and investment management so that they are appropriately aligned.
          (2) The Regulatory Authority expects insurers to consider doing the following in relation to pricing insurance products:
          (a) incorporating ongoing actuarial review of, and actuarial involvement in, the pricing process;
          (b) undertaking independent reviews of:
          (i) pricing for schemes; and
          (ii) pricing for larger or more complex risks.
          Inserted by QFCRA RM/2013-1 and amended by Editorial changes (as from 1st January 2015).

        • PINS S4.8 What is claims settlement risk?

          (1) Claims settlement risk is the risk arising from the process by which insurers fulfil their contractual obligations to policyholders.
          (2) The claims settlement process is triggered when a loss occurs and a claims notification is made to the insurer. The process begins with verifying the contractual obligation to pay the claim under the policy, and is followed by:
          (a) an assessment of the amount of the liability (including loss adjustment expenses); and
          (b) the prompt and efficient handling of the claim within the terms of the policy.
          (3) Weaknesses in claims settlement and in its procedures and controls can expose an insurer to additional or increased losses that may threaten its solvency position.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS S4.9 Risk management policy — claims settlement risk

          An insurer's risk management policy for claims settlement risk should include:

          (a) clearly defined and appropriate levels of delegation of authority;
          (b) claims settlement procedures and controls, including loss estimation and investigation procedures;
          (c) criteria for accepting or rejecting claims;
          (d) dispute resolution procedures; and
          (e) methods for monitoring compliance with claims settlement procedures, such as:
          (i) internal audit (but only if it is established that the internal audit unit has the appropriate skills and experience to perform such activities);
          (ii) reviews by area heads or portfolio managers;
          (iii) peer review (including details of the staff responsible for undertaking the peer review, the frequency of such reviews and the reporting arrangements for the results);
          (iv) assessments of brokers' procedures and systems to ensure that the quality of information provided to the insurer is of a suitable standard; and
          (v) in the case of reinsurers — audits of ceding companies to ensure that the value of claims paid is in accordance with contracts.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS S5 PINS S5 Reinsurance risk

        • PINS S5.1 What is reinsurance risk?

          Reinsurance risk is the risk that the reinsurance cover obtained by the insurer is inadequate.

          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS S5.2 Risk management policy — reinsurance risk

          An insurer's risk management policy for reinsurance risk should include:

          (a) the insurer's objectives (within its risk tolerance) for reinsurance management;
          (b) the process for selection of reinsurance brokers and advisers;
          (c) the processes for prudent and sound selection, management and monitoring of its reinsurance programme;
          (d) managerial responsibilities and controls;
          (e) the methods for determining all aspects of a reinsurance programme, including:
          (i) identification and management of aggregations of risk exposures;
          (ii) selection of probable maximum loss factors;
          (ii) selection of realistic adverse scenarios, return periods and geographical aggregation areas; and
          (iv) identification and management of vertical and horizontal coverage of the programme;
          (f) the process for ensuring that there is accurate and complete reinsurance documentation;
          (g) the selection of participants in reinsurance contracts, including the criteria and procedures to ensure, and monitor, their diversity and creditworthiness;
          (h) the procedures for identifying actual and potential credit exposures to individual reinsurers or groups of connected reinsurers on programmes that are al in place; and
          (i) the processes for entering into a limited risk transfer arrangement.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS S6 PINS S6 Operational risk

        • PINS S6.1 What is operational risk?

          (1) Operational risk is the risk of financial loss resulting from:
          (a) inadequate or failed internal processes, people and systems; or
          (b) external events.
          (2) Operational risk includes:
          (a) business continuity risk;
          (b) technology risk;
          (c) outsourcing risk;
          (d) fraud risk;
          (e) legal risk;
          (f) project management risk; and
          (g) any other risks that the insurer, having regard to its strategic plan and business plan, and the nature, scale and complexity of the insurer's business and operating environment, determines should be included.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS S6.2 What is business continuity risk?

          (1) Business continuity risk is the risk of unexpected financial and non-financial losses (such as loss of data, premises and reputation) due to disruptions in an insurer's critical business operations.
          (2) Disruptions may occur as a result of power failure, denial of access to work areas, fire, fraud, loss of key staff, failure of computer or data system, destruction of major equipment and security breaches arising from technology risk.

          Note CTRL, rule 7.1.7 (3), requires an insurer to include, in its risk management strategy, contingency planning, business continuity, crisis management and fraud management. Under CTRL, rule 3.1.17, an insurer must review its business continuity procedures at least once every 18 months.
          (3) Critical business operations are the business functions, resources and infrastructure that may, if disrupted, have a material impact on the insurer's business functions, reputation, profitability and policyholders.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).
          Amended by QFCRA RM/2021-1 (as from 1st July 2021)

        • PINS S6.3 Risk management policy — business continuity risk

          An insurer's risk management policy for business continuity risk should:

          (a) describe the process for identifying and analysing:
          (i) events that may lead to a disruption in business continuity;
          (ii) the likelihood of those events occurring;
          (iii) the processes most at risk; and
          (iv) the consequences of those events;
          (b) include a plan (business continuity plan or BCP) describing:
          (i) objectives and procedures for crisis management and recovery in order to minimise financial, legal, regulatory, reputational and other material consequences arising from the disruption of its business;
          (ii) procedures to be followed if business continuity problems arise;
          (iii) detailed procedures for carrying out the BCP, including manual processes, the activation of an off-site recovery site (if needed) and the persons responsible for activating the BCP;
          (iv) a communications strategy and contact information for relevant staff, suppliers, regulators, market authorities, major clients, the media and other key staff;
          (v) a schedule of critical systems covered by the BCP and the timeframe for restoring those systems;
          (vi) the pre-assigned responsibilities of staff;
          (vii) procedures for staff awareness and training on all aspects of the BCP; and
          (vii) procedures for regular testing and review of the BCP; and
          (c) procedures for backing up important data on a regular basis and storing the data off site.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS S6.4 What is technology risk?

          (1) Technology risk is risk:
          (a) that arises from the use of communication information technology infrastructure; and
          (b) that generates events that may lead to the disruption or damage of an insurer's information systems or data.
          (2) Technology risk is determined by the type and nature of threats targeting and affecting the insurer's environment. Insurers rely heavily on technologies such as the internet and applications. In a highly interconnected and market-driven world, an insurer should have a reliable, flexible, complete and integrated set of operating processes to deal with technology risks.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS S6.5 Risk management policy — technology risk

          An insurer's risk management policy for technology risk should include:

          (a) information technology policies and procedures to identify, assess, monitor and manage technology risks;
          (b) arrangements for adequate information technology infrastructure that:
          (i) meet its current and projected business requirements (both under normal circumstances and in periods of stress);
          (ii) ensure data and system integrity, security and availability; and

          Example

          The IT infrastructure is able to keep secure, and protect, personal information and data (including financial and medical data) in accordance with the requirements under the Data Protection Regulations 2005 and any other relevant laws.
          (iii) support integrated and comprehensive risk management;
          (c) the use of appropriate technology to manage adequately the financial, medical and personal information held by an insurer;
          (d) procedures and controls on data security to enable it:
          (i) to report, in a timely manner, security breaches to affected customers and to the Regulatory Authority; and
          (ii) to meet other reporting requirements;
          (e) processes to assess the risks associated with major breaches in data security and to mitigate the effects of such breaches on its resources, operations, environment and operations;
          (f) as part of business continuity planning, measures to be taken in case of breaches of data security; and
          (g) measures that ensure that group structures are not used to circumvent prohibitions on the sharing of personal information.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS S6.6 What is outsourcing risk?

          (1) Outsourcing risk is the risk posed to an insurer's business by non-performance, or poor performance, by a service provider of a function transferred to the service provider under a material outsourcing arrangement (within the meaning of CTRL).
          (2) An insurer should not outsource a function if the outsourcing would result in unduly increasing the operational risk of the insurer.

          Note An insurer must assess the risks that a material outsourcing poses to its business (see CTRL, rule 8.2.2 (2) (a)), and the governing body of the insurer must review, at least once every 2 years, the insurer's outsourcing procedures for assessing the feasibility of a proposed outsourcing and the risks that the outsourcing poses to the insurer's business (see CTRL, rule 8.1.3 (4) (a) (i)).
          (3) Financial firms frequently decide to outsource aspects of their operations to other parties, related or not. Outsourcing can bring significant benefits to an insurer in terms of efficiency, cost reduction and risk management. However, the process of implementing outsourcing arrangements and the outsourcing relationship itself may expose an insurer to additional risk. It is therefore important that insurers take care to supervise the conduct of activities that are outsourced.

          Note CTRL, rule 8.2.4 (1) requires an authorised firm to inform the Regulatory Authority before entering into a material outsourcing arrangement.
          (4) The activities of service providers have the ability to undermine the risk management activities of insurers. Insurers should take particular care in the outsourcing of activities such as underwriting and claims settlement, where inappropriate performance of the functions can expose the insurer to serious financial loss, for example through acceptance of inappropriate insurance risks, mis-pricing, failure to obtain appropriate reinsurance cover, or failure to detect invalid claims. These considerations apply to such arrangements as binding authorities and other agencies appointed by insurers.
          (5) Insurers should take care to manage the risk that the sound and prudent management of the insurer's business may be compromised by conflicting incentives in an outsourcing agreement. In particular, insurers should consider whether the remuneration structure creates any perverse incentives. For example, a service provider with underwriting authority may have an incentive to accept poorer quality business if remuneration is based on commission (especially if bonuses are given for volume) but is not affected by the performance of the insurance contracts accepted.
          (6) Intra-group outsourcing may be perceived as subject to lower risks than using service providers from outside a group. However it is not risk-free and an insurer must still assess the associated risks and make appropriate arrangements for their management.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).
          Amended by QFCRA RM/2021-1 (as from 1st July 2021)

        • PINS S6.7 Risk management policy — outsourcing risk

          An insurer's risk management policy for outsourcing risk should include:

          (a) a process for negotiating or assessing outsourcing agreements with service providers;
          (b) the setting and monitoring of authority limits and referral requirements;
          (c) the identification and assessment of performance targets;
          (d) the procedures for evaluation of performance against targets;
          (e) the provisions for remedial action;
          (f) the reporting requirements imposed on the service providers (including content and frequency of reports);
          (g) the ability of the insurer and its external auditors to obtain access to the service providers and their records;
          (h) the protection of intellectual property rights;
          (i) the protection of customers' and the insurer's confidentiality;
          (j) the adequacy of any guarantees, indemnities or insurance cover that a service provider agrees to provide;
          (k) the ability of a service provider to provide continuity of business; and
          (l) the arrangements to change, or terminate, outsourcing agreements.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS S6.8 What is fraud risk?

          (1) Fraud risk means:
          (a) risk from unauthorised activities such as those that breach the controls, procedures, limits or other restrictions in an insurer's policies and procedures and in legal and regulatory requirements; or
          (b) risk associated with:
          (i) a deceptive act or omission intended to gain advantage for the party committing the fraud or other parties; or
          (ii) an intentional act undertaken for personal gain or to tamper with or manipulate the financial or operational aspects of the business.
          (2) Fraud risk exposes an insurer to financial losses if not managed properly.
          (3) Fraud risk can result from:
          (a) internal sources (such as redirection of premiums); and
          (b) external sources (such as fictitious claims).
          (4) Countering fraud is the concern of individual insurers and intermediaries who need to understand, and minimise their vulnerability to, fraud
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS S6.9 Risk management policy — fraud risk

          An insurer's risk management policy for fraud risk should include:

          (a) internal controls and mitigation strategies;
          (b) segregation of duties at an operational level and in relation to functional reporting lines;
          (c) financial accounting controls;
          (d) staff training and awareness; and
          (e) appropriate processes for monitoring compliance with the insurer's procedures, controls, limits or other restrictions (such as those placed on investment managers or those making decisions on underwriting).
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS S6.10 What is legal risk?

          (1) Legal risk is the risk of an insurer being exposed to losses, penalties or reputational damage due to breaches of laws or regulatory obligations, inadequate reinsurance or other contracts, or changes in the laws affecting the insurer.

          Example of inadequate contracts

          Reinsurance contracts that expose the insurer to significant legal risk because:
          (a) the contract is not valid, binding or enforceable;
          (b) the contract does not clearly set out the respective rights and obligations of the parties; or
          (c) a policy document inadequately sets out what exclusions apply.
          (2) Legal risk includes risks arising from:
          (a) fines, penalties or punitive damages from supervisory actions or civil litigation;
          (b) legal costs from litigation; and
          (c) expenses arising from private settlements.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS S6.11 Risk management policy — legal risk

          An insurer's risk management policy for legal risk should include:

          (a) processes for ensuring that documentation is accurate and complete;
          (b) processes to ensure that policies are adequately drafted so that the insurer does not have to pay out for risks not priced into the original premium; and
          (c) procedures and controls for ensuring that the insurer complies with all legal, prudential and other regulatory requirements.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS S6.12 What is project management risk?

          Project management risk is the risk that projects involving an insurer will not achieve the desired objectives or will have a negative effect on the adequacy of resources.

          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS S6.13 Risk management policy — project management risk

          An insurer's risk management policy for project management risk should include:

          (a) a method for the promulgation of project initiatives including:
          (i) setting a business case for the project;
          (ii) cost-benefit analysis of the project; and
          (iii) stakeholder sign-offs;
          (b) clearly defined and appropriate levels of delegation of authority;
          (c) ongoing monitoring of project objectives and timeframes; and
          (d) post-implementation review.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS S7 PINS S7 Concentration risk

        • PINS S7.1 What is concentration risk?

          (1) Concentration risk is the risk of over-reliance on, or excessive exposure to, a type of risk, counterparty, asset class, industry or region as a result of credit, balance sheet and market, reserving, insurance, reinsurance, operational and group risks.
          (2) Concentration risk results from risk exposures with a loss potential that is large enough to threaten the solvency position of an insurer.
          (3) An insurer's exposure to risks should not result in a concentration of risks that could result in losses so large as to threaten its solvency position.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS S7.2 Risk management policy — concentration risk

          An insurer's risk management policy for concentration risk should include:

          (a) identification of large risk exposures;
          (b) a description of the way in which large risk exposures are being managed, controlled and mitigated by the insurer;
          (c) a description of any limits put in place by the insurer to control concentration risk;
          (d) identification of on-balance sheet and off-balance sheet exposures to concentration risk;
          (e) risk management procedures in relation to concentration risk; and
          (f) processes to ensure that the insurer's exposures to large potential losses due to concentration risk are in line with its risk tolerance.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS S8 PINS S8 Group risk

        • PINS S8.1 What is group risk?

          (1) Group risk is the risk of loss to an insurer as a result of its membership of a group or linkages within a group.
          (2) Group membership can be a source of both strength and weakness for an insurer.
          (3) The purpose of requiring an insurer that is a member of a group to include group risk in its risk management policy is to ensure that the insurer takes proper account of the risks arising from its membership.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS S8.2 Risk management policy — group risk

          (1) If an insurer is a branch, or part of a group, the insurer's risk management policy for group risk should:
          (a) include a summary of the group policy objectives and strategies;
          (b) state whether the local risk management strategy is derived wholly or partly from the group-wide risk management strategy;

          Note The governing body of an insurer must know the implications for the insurer of any group-wide risk management strategy (see CTRL, rule 7.1.7 (5)).
          (c) summarise the linkages and significant differences between the local risk management strategy and the group-wide risk management strategy, including differences arising from local business and other conditions;
          (d) outline the procedures and timing for monitoring by, or reporting to, the parent entity or head office;
          (e) describe the approach to reviews of the procedures in paragraph (d);
          (f) include, if applicable, a summary of the group policy objectives and strategies relating to reinsurance;
          (g) summarise the linkages between local and group reinsurance; and
          (h) detail any arrangements relating to the existence of, and accessibility to, intra-group reinsurance.
          (2) If a part of an insurer's risk management policy is controlled by another entity in the group, or by the head office, the risk management policy must describe the arrangement and how it works.
          (3) If the insurer is a branch or is part of an insurance group and the head office or ultimate holding company is outside the QFC, the risk management policy should include a summary of the supervisory arrangements regarding risk management in the jurisdiction where the head office or holding company is located.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).
          Amended by QFCRA RM/2021-1 (as from 1st July 2021)

        • PINS S8.3 Specific obligations of group members

          (1) If an insurer is a member of a group, the insurer's senior management should monitor any functions performed for the insurer at the group level.

          Examples

          •    group risk management
          •    capital planning
          •    liquidity
          •    compliance.
          (2) The insurer's senior management should establish and maintain procedures and controls to identify and monitor the effect on the insurer of its relationship with the other members of the group and the activities of those other members.
          (3) The procedures and controls should include procedures to monitor:
          (a) changes in relationships between group members;
          (b) changes in the activities of group members;
          (c) conflicts of interest arising within the group;
          (d) events in the group, particularly those that might affect the insurer's own regulatory compliance (for example, any failure of control or compliance in another group member);
          (e) the effect on it of:
          (i) its relationship with the other members of the group;
          (ii) its membership in the group; and
          (iii) the activities of the other members of the group; and
          (f) the group's compliance with:
          (i) the supervision requirements applicable to it, including systems for the production of relevant data; and
          (ii) group reporting requirements.
          (4) The insurer should have procedures to insulate it, so far as practicable, from the adverse effects of other group activities (for example, transfer pricing or fronting) or group events that might expose the insurer to risk.

          Examples

          Such procedures could include:
          •    a requirement for transactions within the group to be at arm's length
          •    maintenance of “Chinese walls
          •    development of contingency plans.
          (5) The insurer's senior management should take reasonable steps to ensure that:
          (a) other group members are aware of the insurer's management and reporting obligations in relation to group risk;
          (b) group capital and group risk reporting requirements are complied with; and
          (c) information about the group provided to the Regulatory Authority is accurate, and is provided in a timely manner.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

    • PINS App1 PINS App1 Risk Management Policy [Deleted]

      Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS App1 Guidance [Deleted]

        Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS A1.1 Credit Risk [Deleted]

        Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS A1.2 Balance Sheet and Market Risk [Deleted]

        Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS A1.3 Reserving Risk [Deleted]

        Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS A1.4 Insurance and Reinsurance Risk [Deleted]

        Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS A1.5 Operational Risk [Deleted]

        Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS A1.6 Group Risk [Deleted]

        Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

    • PINS Schedule 2 PINS Schedule 2 Capital

      Editorial changes (as from 1 January 2015).

      • PINS A2.1 PINS A2.1 Stress and Scenario Testing

        • PINS A2.1 Guidance

          1. Stress and scenario testing seeks to anticipate possible losses or risks that might occur or become manifest. In applying them an insurer needs to decide how far forward to forecast and may want to consider the following factors:
          a. how quickly it would be able to identify events or changes in circumstances that might lead to a loss occurring or risk crystallising;
          b. after the event or circumstance has been identified, how quickly and effectively the insurer could act to prevent or mitigate any resulting loss occurring or risk crystallising and to reduce its exposure to any further adverse event or change in circumstance.
          2. For example, the time horizon over which stress and scenario testing would need to be carried out for the risks arising from the holding of investments would depend upon:
          a. the extent to which there is a regular, open and transparent market in those assets, which would allow fluctuations in the value of the investment to be more readily and quickly identified; and
          b. the extent to which the market in those assets is liquid (and would remain liquid in the changed circumstances contemplated in the stress or scenario test) which would allow the insurer, if needed, to sell its holding so as to prevent or reduce its exposure to future price fluctuations.
          3. Insurers should focus on those scenarios and combinations of scenarios that are considered reasonably likely to occur. For this purpose other risks and losses include business risk (i.e. the potential impact of changes in business plans, future activities, and the business or economic environment).
          4. In identifying what realistic combinations of losses or risks might occur or crystallise, an insurer should take into account scenarios in which expected correlations occur and where they might break down.
          5. In identifying scenarios and assessing their impact, an insurer should take into account how changes in circumstances might impact upon:
          a. the nature, scale and mix of future activities; and
          b. the behaviour of counterparties, and of the insurer itself, including the exercise of choices (including options embedded in financial instruments or contracts of insurance).
          6. In determining whether it would have adequate financial resources in the event of each identified adverse scenario, an insurer should:
          a. only include financial resources that could reasonably be relied upon as being available in the circumstances of the identified scenario; and
          b. consider any legal or other restriction on the purposes for which financial resources may be used, including any restriction on the transfer to the QFC of assets held overseas.
          Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

    • PINS Schedule 3 PINS Schedule 3 Risk based capital requirement

      Editorial changes (as from 1 January 2015).

      • PINS App3 Guidance [Deleted]

        Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS Part A3.1 PINS Part A3.1 Interpretation

        Amended by QFCRA RM/2012-5 (as from 1st July 2013).

        • PINS A3.1.1 PINS A3.1.1 Definitions for app 3

          (1) In this Schedule:

          counterparty grade (or grade) has the meaning given by subrule (2).

          invested asset means an asset, right or interest held by an insurer for the primary purpose of generating revenue or for directly providing funds to meet the insurer's cash outflows in the future.
          (2) For this Schedule, the grade of an asset is its grade according to the rating of its counterparty, in accordance with table A3.1.1.
          Editorial changes (as from 1 January 2015).

          • PINS Table A3.1.1 Grade of assets according to counterparty ratings

            Item Rating of counterparty by: Grade of asset
              Standard & Poor's Moody's A.M. Best Fitch  
            1 AAA Aaa A++ AAA 1
            2 AA+
            AA
            AA-
            Aa1
            Aa2
            Aa3
            A+ AA+
            AA
            AA-
            2
            3 A+
            A
            A-
            A1
            A2
            A3
            A
            A-
            A+
            A
            A-
            3
            4 BBB+
            BBB
            BBB-
            Baa1
            Baa2
            Baa3
            B++
            B+
            BBB+
            BBB
            BBB-
            4
            5 BB+ or below Ba1 or below B or below BB+ or below 5


            (3) Unrated assets, exposures and counterparties must be classified as grade 4.
            Amended by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS A3.1.2 Using different credit rating agencies

          (1) An insurer must rely on the ratings issued by the same credit rating agency for determining counterparty grades unless the insurer has good reason to use a different credit rating agency or agencies.

          Examples of good reasons

          1 If the rating agency usually used by the insurer does not issue a solicited credit rating for a particular debt obligation and only 1 other rating agency issues a solicited credit rating for the debt obligation
          2 If the rating agency usually used by the insurer does not issue a solicited credit rating for a particular debt obligation, any credit ratings issued by the other rating agencies in table A3.1.1 must be considered and the procedure in rule A3.1.2 (2) used to determine which rating agency will be used.
          (2) If a counterparty or debt obligation has been rated by more than 1 rating agency and there are 2 or more ratings that lead to different capital charges, the insurer must use the credit rating that results in the highest capital charge.
          (3) An insurer must not use the rating of an agency that is not in table A3.1.1 unless the insurer has the written permission of the Regulatory Authority.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS Part A3.2 PINS Part A3.2 Asset risk component

        Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

        • PINS A3.2 Guidance

          1. Asset risk is the risk of loss if:
          (a) another party fails to perform its financial obligations to the insurer (including failing to perform them in a timely manner); or
          (b) there is an adverse movement in the value of an insurer's invested assets that is not offset by a corresponding movement in the value of liabilities.
          2. Asset risk includes an insurer failing to collect premiums due from customers or a reinsurer failing to fulfil its financial obligation to repay an insurer upon submission of a claim.
          3. The purpose of the asset risk component is to require an insurer to hold capital against these risks and potential unexpected losses. The basic calculation for this component in rule A3.2.1 is modified by additional provisions that permit an insurer to take account of reduced credit risk (for example, where an asset is covered by guarantees or collateral). Invested assets that are linked to liabilities of investment-linked insurance contracts are exempted from the calculation, since there is a direct correlation between the values of the assets and the values of the liabilities to which they are linked.
          Amended by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS A3.2.1 PINS A3.2.1 Asset risk component

          (1) An insurer's asset risk component is the sum of the amounts obtained by multiplying the value of each asset of the insurer, graded according to the counterparty grade of the asset, by the percentage applicable to that asset, under:
          (a) for assets that are not reinsurance assets — table A3.2.1A;
          (b) for assets that are reinsurance assets where the reinsurer is subject to prudential supervision by a subrule (2) regulator — table A3.2.1B; or
          (c) for assets that are reinsurance assets where the reinsurer is not subject to prudential supervision by a subrule (2) regulator — table A3.2.1C.
          (2) A regulator is a subrule (2) regulator if it is located:
          (a) in Qatar;
          (b) in 1 of the member states of the European Union;
          (c) in Australia, Canada, Hong Kong, Iceland, Japan, Norway, Singapore, Switzerland, the United States of America; or
          (d) in any other jurisdiction that is a signatory to the Multilateral Memorandum of Understanding on Cooperation and Information Exchange initiated by the International Association of Insurance Supervisors.
          Note 1 For the list of the member states of the European Union, see http://europa.eu/about-eu/countries/index_en.htm.

          Note 2 For the list of signatories to the Multilateral Memorandum of Understanding on Cooperation and Information Exchange, see http://www.iaisweb.org/MMoU-signatories-605.
          Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

          • PINS Table A3.2.1A Percentage applicable to assets that are not reinsurance assets

            Item Asset %
            1 cash, bank deposits and other cash equivalents

            grade 1 sovereign bonds
            0.50
            2 bonds that mature, or are redeemable, in less than 1 year issued by a counterparty with a rating of grade 1 or 2 (excluding subordinated debt and government debt obligations dealt with anywhere else in this table)

            cash management trusts with a counterparty rating of grade 1 or 2
            1.00
            3 unpaid premiums due 6 months or less previously from a counterparty with a rating of grade 1, 2 or 3

            bonds that mature, or are redeemable, in 1 year or more issued by a counterparty with a rating of grade 1 or 2 (excluding subordinated debt and government debt obligations dealt with anywhere else in this table)
            2.00
            4 unpaid premiums due 6 months or less previously from an unrated counterparty or a counterparty with a rating of grade 4 or 5

            bonds issued by a counterparty with a rating of grade 3 (excluding subordinated debt)

            cash management trusts with a counterparty rating of grade 3

            secured loans
            4.00
            5 unpaid premiums due more than 6 months previously from a counterparty with a rating of grade 1, 2 or 3

            bonds issued by a counterparty with a rating of grade 4 (excluding subordinated debt)

            cash management trusts with a counterparty rating of grade 4
            6.00
            6 unpaid premiums due more than 6 months previously from an unrated counterparty or a counterparty with a rating of grade 4 or 5

            bonds issued by a counterparty with a rating of grade 5 (excluding subordinated debt)

            cash management trusts with a counterparty rating of grade 5

            listed subordinated debt
            8.00
            7 unlisted subordinated debt

            preference shares
            10.00
            8 listed equity investment

            listed trusts
            16.00
            9 direct holdings of real estate

            unlisted equity investment

            unlisted trusts
            20.00
            10 loans to:
            (a) directors of the insurer;
            (b) directors of related parties; or
            (c) dependent relatives of such directors
            unsecured loans to employees (except loans of less than QR3,600)

            assets subject to a fixed or floating charge
            100.00
            11 other non-reinsurance assets not mentioned in this table 20.00

            Note Equity investment is defined in the glossary.

            Amended by QFCRA RM/2015-1 (as from 1st July 2015).

          • PINS Table A3.2.1B Percentage applicable to reinsurance assets — reinsurer supervised by subrule (2) regulator

            Item Asset %
            1 reinsurance assets due from reinsurers with a counterparty rating of grade 1 1.00
            2 reinsurance assets due from reinsurers with a counterparty rating of grade 2 2.00
            3 reinsurance assets due from reinsurers with a counterparty rating of grade 3 4.00
            4 reinsurance assets due from reinsurers with a counterparty rating of grade 4 6.00
            5 reinsurance assets due from reinsurers with a counterparty rating of grade 5 8.00


            Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

          • PINS Table A3.2.1C Percentage applicable to reinsurance assets — reinsurer not by supervised by subrule (2) regulator

            Item Asset %
            1 reinsurance assets due from reinsurers with a counterparty rating of grade 1 1.20
            2 reinsurance assets due from reinsurers with a counterparty rating of grade 2 2.40
            3 reinsurance assets due from reinsurers with a counterparty rating of grade 3 4.80
            4 reinsurance assets due from reinsurers with a counterparty rating of grade 4 7.20
            5 reinsurance assets due from reinsurers with a counterparty rating of grade 5 9.60

            Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS A3.2.2 Effect of guarantee or collateral

          (1) Assets that have been explicitly, unconditionally and irrevocably guaranteed for their remaining term to maturity by a guarantor with a counterparty rating in Grades 1, 2 or 3 who is not a related party to the insurer may be assigned the asset risk charge that would apply to a debt instrument issued from the guarantor.
          (2) Where an insurer holds collateral against an asset, and this collateral takes the form of a charge, mortgage or other security interest in, or over, cash, or any debt security whose issuer has a counterparty rating of Grades 1, 2 or 3, the insurer may apply the asset risk charge relevant to the collateral (instead of applying the asset risk charge that would otherwise apply to the asset).
          (3) The provisions in subrules (1) and (2) above apply only to so much of the asset that is covered by the guarantee or the collateral.
          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS A3.2.3 Assets subject to mortgage or charge

          (1) Subject to PINS Rule A3.2.3(2), assets of the insurer that are under a fixed or floating charge, mortgage or other security are subject to an asset risk charge of 100% to the extent of the indebtedness secured on those assets. This would replace the asset risk charge that would otherwise apply to the secured assets.
          (2) Where the security supports an insurer's insurance liabilities, the asset risk charge of 100% is applicable only to the amount by which the market value of the charged assets exceeds the insurer's supported liabilities.
          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS A3.2.4 Excluded assets

          An insurer need not include an amount in the asset risk charge for any asset excluded from eligible capital in accordance with the table in rule 4.2.2.

          Amended by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS A3.3 PINS A3.3 Volatility Risk Component [Deleted]

        Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS A3.3 Guidance [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS A3.3.1 Calculation of volatility risk component [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS Part A3.4 PINS Part A3.4 Off-balance sheet asset risk component

        Editorial changes (as from 1 January 2015).

        • PINS A3.4 Guidance

          An insurer may be exposed to various investment risks through transactions or dealings other than those reflected in its balance sheet. The purpose of the off-balance sheet asset risk component is to require an insurer to hold capital to cover the risk of default and deterioration in value of exposures that the insurer has because it is party to a derivative contract.

          Amended by QFCRA RM/2011-4 (as from 1st July 2011).

        • PINS A3.4.1 When off-balance sheet asset risk component must be calculated

          An insurer must calculate an off-balance sheet asset risk component, if the insurer is, as of the solvency reference date, a party to a derivative contract, including a forward, future, swap, option or other similar contract, but not:

          (a) a put option serving as a guarantee;
          (b) a foreign exchange contract which has an original maturity of 14 calendar days or less; or
          (c) an instrument traded on a futures or options exchange which is subject to daily mark-to-market and margin payments.
          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS A3.4.2 How to calculate off-balance sheet asset risk component

          An insurer must calculate its off-balance sheet asset risk component as the sum of the amounts obtained by applying the calculations set out in PINS Rule A3.4.3 in respect of each derivative contract entered into by the insurer that meets the description in PINS Rule A3.4.1.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS A3.4.3 Amount of off-balance sheet asset risk component for derivative contract

          To calculate the amount of the off-balance sheet asset risk component, the asset equivalent value of each derivative (as determined in rule A3.4.4) is multiplied by the asset risk component as though the asset equivalent value were a debt obligation due from the derivative counterparty.

          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

        • PINS A3.4.4 Asset equivalent value

          (1) The asset equivalent value is the current mark-to-market exposure of the derivative (where positive) and a potential exposure add-on.
          (2) The potential exposure add-on is determined by multiplying the notional principal amount of the derivative in accordance with the following table, according to the nature and residual maturity of the derivative.

          Residual maturity Interest rate contracts Foreign exchange & gold contracts Equity contracts Precious metal contracts (except gold) Other contracts
          Less than 1 year Nil 1.0% 6.0% 7.0% 10.0%
          1 year to less than 5 years 0.5% 5.0% 8.0% 7.0% 12.0%
          5 years or more 1.5% 7.5% 10.0% 8.0% 15.0%


          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

      • PINS Part A3.5 PINS Part A3.5 Off-balance sheet liability risk component

        Editorial changes (as from 1 January 2015).

        • PINS A3.5 Guidance

          1. An insurer may be exposed to various investment risks through transactions or dealings other than those reflected in its balance sheet. The purpose of the off-balance sheet liability risk component is to require an insurer to hold capital to cover the risk that it will be required to perform on a guarantee, letter of credit of other credit substitute that it has entered into should the guaranteed party default or fail to deliver. 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.
          2. Credit substitutes do not include contracts of insurance for credit and surety insurance business.
          Amended by QFCRA RM/2012-5 (as from 1st July 2013).

        • PINS A3.5.1 How to calculate off-balance sheet liability risk component

          (1) An insurer must calculate its off-balance sheet liability risk component by applying, to the face value of any credit substitute it has issued (including letters of credit, guarantees and put options serving as guarantees) the asset risk component that would be applied to the obligation or asset over which the credit substitute has been written.
          (2) Where the credit substitute is supported by collateral or a guarantee, the provisions of PINS Rule A3.2.2(1) and PINS A3.2.2(2) may be applied by the insurer.
          Amended by QFCRA RM/2015-3 (as from 1st January 2016).

      • PINS A3.6 PINS A3.6 Concentration Risk Component [Deleted]

        Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS A3.6 Guidance [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS A3.6.1 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS A3.6.2 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS A3.6.3 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS A3.6.4 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS Part A3.7 PINS Part A3.7 Premium risk component

        Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

        • PINS A3.7 Guidance

          An insurer may be exposed to the risk that the cost of future claims in respect of general insurance business will exceed the cost implicit in the premiums being charged. The purpose of the premium risk component is to require an insurer to hold capital against this risk in accordance with the calculations set out in rule A3.7.1. The basic calculation model in rule A3.7.1 applies different factors to the premium in respect of each PINS category, based on the different perceived risk of variability associated with each.

          Amended by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS A3.7.1 Application of pt A3.7

          This Part applies to general insurance business.

          Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

        • PINS A3.7.2 PINS A3.7.2 Premium risk component

          (1) An insurer's premium risk component is the sum of the amounts obtained by multiplying the insurer's net premium liability that falls within each PINS category by the percentage applicable to that liability under table A3.7.2.
          Amended by QFCRA RM/2013-1 (as from 1st January 2015).

          • PINS Table A3.7.2 Percentage factor — premium risk component

            Item PINS Category Direct insurance % Reinsurance: proportional % Reinsurance: non-proportional %
            1 PINS category 1 16 18 21
            2 PINS category 2 13 15 18
            3 PINS category 3 16 18 21
            4 PINS category 4 21 23 26
            (2) In this rule:

            net premium liability means premium liability less any expected reinsurance and non-reinsurance recoveries in respect of that premium liability as at the solvency reference date.

            Note Premium liability is defined in r 8.6.7 and solvency reference date is defined in the glossary.
            Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS A3.7.3 Insurer may apply for different percentages

          (1) The Regulatory Authority may, on application of an insurer conducting business in PINS category 1, give written consent to the use of percentages other than those in table A3.7.2 if the authority is satisfied that:
          (a) adequate mortality and morbidity information exists in respect of that business; and
          (b) the information provides a reasonable basis for reliance on actuarial principles.
          (2) The percentages that may be used must be those stated in the notice but may not be lower than:
          (a) 12% in the case of direct insurance and proportional reinsurance; and
          (b) 16% in the case of non-proportional reinsurance.
          Amended by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS A3.7.4 Certain contracts not included

          (1) If an insurer underwrites contracts of insurance in PINS category 1 that are long-term insurance contracts, the insurer need not calculate a premium risk component in respect of those contracts.
          (2) For contracts of insurance in PINS category 1 that are long-term insurance contracts, the insurer must calculate a long-term insurance risk component.
          Amended by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS A3.7.5 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS A3.7.6 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS A3.7.7 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS A3.7.8 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS A3.7.9 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS A3.7.10 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS Part A3.8 PINS Part A3.8 Outstanding claims risk component

        Amended by QFCRA RM/2015-1 (as from 1st July 2015).

        • PINS A3.8 Guidance

          An insurer may be exposed to the risk that the cost of claims in respect of general insurance business will exceed the amounts recorded as liabilities in the insurer's balance sheet. The purpose of the outstanding claims risk component is to require an insurer to hold capital against this risk in accordance with the calculations set out in rule A3.8.2. This calculation only applies to liabilities in respect of outstanding claims (premium liabilities addressed in the premium risk component in Part A3.7).

          Amended by QFCRA RM/2015-1 (as from 1st July 2015).

        • PINS A3.8.1 Application of pt A3.8

          This Part applies to general insurance business.

          Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

        • PINS A3.8.2 PINS A3.8.2 Outstanding claims risk component

          (1) An insurer's outstanding claims risk component is the sum of the amounts obtained by multiplying the insurer's net liability for outstanding claims that falls within each PINS category by the percentage applicable to that liability under table A3.8.2.
          Amended by QFCRA RM/2015-1 (as from 1st July 2015).

          • PINS Table A3.8.2 Percentage factor — outstanding claims risk component

            Item PINS Category Direct insurance % Reinsurance: proportional % Reinsurance: non-proportional %
            1 PINS category 1 11 12 14
            2 PINS category 2 9 10 12
            3 PINS category 3 11 12 14
            4 PINS category 4 14 15 17
            (2) In this rule:

            net liability for outstanding claims means the liability in respect of future claims referred in rule 8.6.8, less any expected reinsurance and non-reinsurance recoveries in respect of that liability as at the solvency reference date.

            Note Solvency reference date is defined in the glossary.
            Amended by QFCRA RM/2015-1 (as from 1st July 2015).

        • PINS A3.8.3 Insurer may apply for different percentages

          (1) The Regulatory Authority may, by written notice, allow the insurer to use percentages other than those in table A3.8.2 if the authority is satisfied that:
          (a) adequate mortality and morbidity information exists in respect of that business; and
          (b) the information provides a reasonable basis for reliance on actuarial principles.
          (2) The percentages that may be used must be those stated in the notice but may not be lower than 8%.
          Amended by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS A3.8.4 Certain contracts not included

          (1) If an insurer underwrites contracts of insurance in PINS category 1 that are long-term insurance contracts, the insurer need not calculate an outstanding claims risk component in respect of those contracts.
          (2) For contracts of insurance in PINS category 1 that are long-term insurance contracts, the insurer must calculate a long-term insurance risk component.
          Amended by QFCRA RM/2015-1 (as from 1st July 2015).

        • PINS A3.8.5 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS A3.8.6 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS Part A3.9 PINS Part A3.9 Long-term insurance risk component

        Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

        • PINS A3.9 Guidance

          The purpose of the long-term insurance risk component is to require an insurer to set aside capital to address the risk that the net present value of future policy benefits will vary from the amounts recorded as long-term insurance liabilities in the insurer's balance sheet.

          Amended by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS A3.9.1 Application of pt A3.9

          This Part applies to long-term insurance business.

          Amended by QFCRA RM/2013-1 and Editorial changes (as from 1st January 2015).

        • PINS A3.9.2 Long-term insurance risk component

          An insurer's long-term insurance risk component is the sum of the following amounts, so far as they relate to the long-term insurance business of the insurer:

          (a) 1.25% of the amount of provisions in respect of long-term insurance business that is investment-linked insurance, where the contracts are subject to a capital guarantee;
          (b) 0.5% of the amount of provisions in respect of long-term insurance business that is investment-linked insurance, where the contracts are not subject to a capital guarantee;
          (c) 3% of the amount of provisions in respect of long-term insurance business other than business described in paragraphs (a) and (b);
          (d) the amount obtained by multiplying the amount of capital at risk under rule A3.9.3 by 0.1%;
          (e) if the insurer issues policies that are contingent on mortality — the amount of anticipated claims cost arising from a 0.5 per thousand increase in the rate of lives insured dying over the following year.
          Amended by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS A3.9.3 Capital at risk

          (1) Capital at risk of an insurer means the total amount of sums assured on long-term insurance contracts issued by the insurer, less:
          (a) the total amount of mathematical reserves for those contracts; and
          (b) any expected reinsurance and non-reinsurance recoveries as at the solvency reference date.
          (2) For an annuity, the sum assured must be taken to be the present value of the annuity payments.
          (3) The contribution of each contract to capital at risk must be determined separately. If the capital at risk calculated for a contract is less than zero, the capital at risk for that contract is taken to be zero.
          Amended by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS A3.9.4 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS A3.9.5 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

        • PINS A3.9.6 [Deleted]

          Deleted by QFCRA RM/2013-1 (as from 1st January 2015).

      • PINS Part A3.10 PINS Part A3.10 Insurance concentration risk component

        Inserted by QFCRA RM/2013-1 and amended by Editorial changes (as from 1st January 2015).

        • PINS A3.10.1 PINS A3.10.1 Application of pt A3.10

          This Part applies to general insurance business.

          Note For a QFC insurer that carries on long-term insurance business, the capital charge relating to possible insurance concentration risk is included in the long-term insurance risk component in Part A3.9.

          Inserted by QFCRA RM/2013-1 and amended by Editorial changes (as from 1st January 2015).

          • PINS A3.10.1 Guidance

            1 An insurer is exposed to the possibility of very large losses arising from its portfolio as a result of exposures to extreme events such as natural catastrophes, man-made disasters and other non-natural perils. While such events occur rarely, their financial impact on an insurer can be significant and can result in insolvency.
            2 The insurance concentration risk component is calculated as the insurer's maximum event retention (after taking into account acceptable reinsurance recoveries) plus the cost of 1 reinstatement of those reinsurance arrangements if the reinstatement reinsurance cover has not been pre-paid by the insurer.
            3. Specialist insurers, such as providers of medical indemnity, may not necessarily be exposed to large losses due to the aggregation of claims linked to a single catastrophe-type event like a pandemic. However, these insurers may still be exposed to insurance concentration risks and large losses arising from groups of claims relating to a common dependent source. For example, a medical insurer covering thousands of lives through a company scheme may face a large number of claims arising from employees' class action relating to a faulty medical procedure.
            Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

        • A3.10.2 Insurance concentration risk component

          (1) The insurance concentration risk component for an insurer is:
          MER + CoR (if any) − RP (if any)
          where:

          MER has the meaning given in rule A3.10.3.

          CoR or cost of reinstatement, in relation to an extreme event, means:
          (a) the rate that an insurer has, under contract, agreed to pay the reinsurer concerned to reinstate the reinsurance cover relating to the extreme event; or
          (b) if the insurer has not agreed on the rate for the reinsurance cover — the insurer's estimate of the cost of reinstating that cover based on current reinsurance market conditions (but no less than the original rate of reinsurance cover).
          RP or reinstatement premiums, for an insurer that also writes reinsurance, means the amount of inward reinstatement premiums from cedants in respect of catastrophe reinsurance cover if the insurer has a binding netting arrangement with the cedant.
          (2) An insurer must seek advice from its approved actuary about estimating its MER if the insurer:
          (a) issues policies that do not have a maximum amount insured;
          (b) insures risks in multiple lines of business; or
          (c) has a complex portfolio of insurance risks.
          Amended by QFCRA RM/2015-1 (as from 1st July 2015).

        • PINS A3.10.3 Maximum event retention

          (1) MER or maximum event retention, in relation to an extreme event, is the maximum amount of loss to which the insurer will be exposed due to an accumulation of exposures, after netting out any potential reinsurance recoveries.

          Guidance

          An insurer should at a minimum calculate an MER that relates to an accumulation of exposures to a single extreme event. However, the Regulatory Authority may require an insurer with a complex portfolio of insurance risks to use a whole-of-portfolio estimation approach.
          (2) In calculating its MER, an insurer must:
          (a) set the amount based on the accumulation of exposures of the insurer to a single extreme event;
          (b) assume a return period of 1 in 250 years (or greater), where the return period is the expected average period within which the extreme event will re-occur; and
          (c) take into account:
          (i) its risk profile and risk tolerance;
          (ii) its claims history (using available internal and external data);
          (iii) the capital resources available to it;
          (iv) its current and future solvency needs;
          (v) its reinsurance programme;
          (vi) the classes of insurance business underwritten by it; and
          (vii) the areas where it conducts business.
          (3) If an insurer is exposed to more than 1 extreme event, its MER is the largest of the MERs calculated by the insurer for those events.
          (4) Despite anything in this rule, the Regulatory Authority may require the insurer to make adjustments in calculating its MER.
          Inserted by QFCRA RM/2013-1 (as from 1st January 2015).

    • PINS App4 PINS App4 Reporting to Regulatory Authority [Deleted]

      Deleted by QFCRA RMI/2008-2 (as from 1st October 2008).

      • PINS A4.1 PINS A4.1 Preparation and Submission of Prudential Returns [Deleted]

        Deleted by QFCRA RMI/2008-2 (as from 1st October 2008).

        • PINS A4.1 Guidance [Deleted]

          Deleted by QFCRA RMI/2008-2 (as from 1st October 2008).

        • PINS A4.1.1 [Deleted]

          Deleted by QFCRA RMI/2008-2 (as from 1st October 2008).

        • PINS A4.1.2 [Deleted]

          Deleted by QFCRA RMI/2008-2 (as from 1st October 2008).

    • PINS Glossary

      (r 1.1.2)

      AAOIFI means the Accounting and Auditing Organisation for Islamic Financial Institutions.

      actuarial function means the function described in CTRL, rule 1.2.15.

      approved actuary for an insurer means an individual approved by the Regulatory Authority to exercise the actuarial function for the insurer.

      asset risk component has the meaning given in rule A3.2.1.

      authorisation means an authorisation granted under FSR, Part 5.

      authorised firm (or firm) means a person that has been granted an authorisation in accordance with FSR, Part 5.

      carrying out a contract of insurance means the regulated activity described in the Financial Services Regulations, Schedule 3, Part 2, paragraph 3.

      Note Regulated activity is defined in this glossary.

      category of contracts of insurance means a category of such contracts described in FSR, Schedule 3, Part 3, paragraph 10.

      contract of insurance means the specified product described in FSR, Schedule 3, Part 3, paragraph 10.

      counterparty means a person with whom an insurer conducts, or intends to conduct, insurance or associated business.

      CTRL means the Governance and Controlled Functions Rules 2020.

      effecting a contract of insurance means the regulated activity described in the Financial Services Regulations, Schedule 3, Part 2, paragraph 2.

      eligible capital has the meaning given by rule 4.2.1.

      equity investment includes:

      (a) an equity share;
      (b) participation in a collective investment scheme (whether or not the underlying investments are themselves equity investments);
      (c) participation in a joint venture; and
      (d) a certificate of mudaraba or musharaka.

      extreme event means an unusual high-impact or catastrophic event the occurrence of which could have a significant effect on an insurer's solvency.

      financial condition report has the meaning given by rule 9.1.2 (1).

      firm (or authorised firm) means a person that has been granted an authorisation in accordance with FSR, Part 5.

      FSR means the Financial Services Regulations.

      general insurance business has the meaning given by rule 1.2.5 (1).

      general insurance contract has the meaning given by rule 1.2.6 (1).

      general insurer means an insurer that conducts general insurance business.

      governing body has the meaning given by CTRL, rule 1.2.1.

      group risk has the meaning given in Schedule 1, guidance S8.1.

      insurance business has the meaning given by rule 1.2.4.

      Note Insurance business has a special meaning in ch 11 (see r 11.1.4).

      insurance concentration risk component, in relation to an insurer, has the meaning given in rule A3.10.2.

      insurance liabilities, of an insurer, means liabilities of the insurer arising out of its general insurance business and long-term insurance business.

      insurance risk requirement has the meaning given in rule 3.6.1.

      insurer (or QFC insurer) has the meaning given by rule 1.2.3.

      Note Insurer has a special meaning in ch 11 (see r 11.1.3).

      internal model, for an insurer, means the model approved by the Regulatory Authority for calculating all or part of the insurer's risk-based capital requirement.

      Note An approved internal model may be used to replace specified components of the operational, investment and insurance risk requirements of an insurer (see r 3.8.1 (b)).

      investment-linked insurance means insurance where the benefits under a contract of insurance are wholly or partly determined by reference to:

      (a) the value of, or the income from, property of any description (whether or not specified in the contracts); or
      (b) fluctuations in, or in an index of, the value of property of any description (whether or not so specified).

      investment risk requirement has the meaning given in rule 3.5.1.

      Islamic financial business has the meaning given by CTRL, rule 9.1.2.

      Islamic financial institution means an authorised firm whose authorisation incudes a condition that the whole of the firm’s business must be conducted in accordance with Shari’a.

      long term insurance business has the meaning given by rule 1.2.5 (2).

      long term insurance contract has the meaning given by rule 1.2.6 (2).

      long term insurance fund means a fund established by an insurer for the purposes of Chapter 5.

      long-term insurance risk component has the meaning given in rule A3.9.2.

      lower tier 2 capital means capital that is lower tier 2 capital under the table in rule 4.2.2.

      MCR means minimum capital requirement.

      minimum capital requirement (MCR) has the meaning given in rule 3.3.1.

      month means calendar month — that is, the period beginning at the start of any day of one of the 12 named months of the year and ending:

      (a) at the end of the day before the corresponding day of the next named month; or
      (b) if there is no corresponding day — at the end of the last day of the next named month.

      owners' equity, for a takaful entity, means the amount of the entity's assets, less its liabilities, that are not attributed to a takaful fund of the entity.

      Note Takaful entity and takaful fund are defined in r 1.2.7.

      PINS category (whether or not followed by a number) has the meaning given by rule 1.2.8.

      policy benefit means an amount payable under a contract of insurance as a result of the occurrence of an event insured against under the contract.

      premium liability has the meaning given in rule 8.6.7.

      profit equalisation reserve, for a takaful entity, means the amount appropriated out of the mudaraba income, before allocating the mudarib's share, to maintain a certain level of investment returns for investment account holders and to increase owners' equity.

      QFC means Qatar Financial Centre.

      QFC captive insurer means an authorised firm that has an authorisation for captive insurance business under CAPI.

      QFC insurer (or insurer) has the meaning given by rule 1.2.3.

      Note Insurer has a special meaning in ch 11 (see r 11.1.3).

      reference date for a financial condition report means the date on which the actuary who prepared the report signed it.

      Regulatory Authority means the Regulatory Authority of the QFC.

      regulated activity means an activity that is a regulated activity under the Financial Services Regulations.

      relevant scheme has the meaning given in FSR, article 94 (4).

      risk-based capital requirement has the meaning give in rule 3.4.1.

      risk management strategy, of an insurer, means the document described in Part 2.2.

      scheme report means the report that, under FSR, art 97, must accompany a relevant scheme.

      senior management, of an insurer, has the meaning given in CTRL, rule 4.1.1.

      senior manager of an insurer means an individual employed by the insurer or a member of the insurer's group who is responsible, alone or with others, for managing and supervising 1 or more elements of the insurer's business.

      solvency reference date for an insurer means a date at which the insurer's compliance with the capital adequacy requirements of these rules is assessed.

      takaful business has the meaning given by rule 1.2.7 (2).

      takaful entity has the meaning given by rule 1.2.7 (1).

      takaful fund has the meaning given by rule 1.2.7 (3).

      tier 1 capital means capital that is tier 1 capital under the table in rule 4.2.2.

      tier 2 capital means capital that is upper tier 2 capital or lower tier 2 capital under the table in rule 4.2.2.

      upper tier 2 capital means capital that is upper tier 2 capital under the table in rule 4.2.2.

      Amended by QFCRA RM 2019-1 (as from 28th March 2019)
      Amended by QFCRA RM/2021-1 (as from 1st July 2021).