• 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).