• CAPI Chapter 6 CAPI Chapter 6 Measurement of value of assets and liabilities

    Notes for chapter 6

    1 This chapter sets out rules for the consistent measurement of the value of assets and liabilities for use in making reports under chapter 7 (Actuarial reporting) and in determining compliance with chapter 2 (Prudential requirements) and chapter 3 (Eligible capital).
    2 This chapter is not intended to establish a basis of accounting for general purpose financial statements of firms. It does not prevent firms from adopting methods or principles of measuring values of assets and liabilities that might be considered excessively prudent if adopted for financial statements.
    Derived from QFCRA RM/2011-1 (as from 1st July 2011)

    • CAPI 6.1.1 CAPI 6.1.1 Classification of contracts

      (1) A firm that is a QFC captive insurer must, in its own records, classify—
      (a) contracts of insurance carried out by it as a captive insurer; and
      (b) contracts of reinsurance entered into by it as cedent;
      according to the category in which the contracts fall.

      Note Cedent and category are defined in the glossary.
      (2) If a contract of insurance is in more than 1 category, a firm must record separately the portions of the contract that relate to each category.
      (3) However, a firm need not record immaterial portions of a contract of insurance separately.
      Derived from QFCRA RM/2011-1 (as from 1st July 2011)

      • CAPI 6.1.1 Guidance

        A portion of a contract of insurance insuring a risk of a category other than the principal category of the contract will not normally be regarded as material if the interest that it insures—

        (a) is both related and subsidiary to the principal interest or interests insured under the contract; and
        (b) constitutes less than 10% of the gross written premium under the contract.
        Derived from QFCRA RM/2011-1 (as from 1st July 2011)

    • CAPI 6.1.2 Accounting standards and principles

      A firm must adopt 1 of the following as the basis of its accounting:

      (a) IFRS;
      (b) UK GAAP;
      (c) US GAAP;
      (d) any other accounting standards or principles prescribed in Rules.
      Derived from QFCRA RM/2011-1 (as from 1st July 2011)

    • CAPI 6.1.3 Firms may use other methods

      (1) A firm may measure the value of an asset at less than the value determined in accordance with this chapter.
      (2) A firm may measure the value of a liability at more than the value determined in accordance with this chapter.
      (3) A firm may use a method that gives approximate values of assets and liabilities if the values obtained using the method would not be materially different from the values that would have been obtained using a method in this chapter.
      Derived from QFCRA RM/2011-1 (as from 1st July 2011)

    • CAPI 6.1.4 Direction by Regulatory Authority

      Despite any other provision in this chapter, the Regulatory Authority may, by written notice, direct a firm to measure the value of an asset or liability using the method or principle in the notice.

      Derived from QFCRA RM/2011-1 (as from 1st July 2011)