• CAPI Part 7.2 CAPI Part 7.2 Financial condition reports

    • CAPI 7.2.1 Purpose and standards of financial condition reports

      (1) A financial condition report for a firm that is a QFC captive insurer must give—
      (a) an objective assessment of the overall financial condition of the firm; and
      (b) if the firm conducts long term insurance business — an objective assessment of the financial condition of each long term insurance fund established by the firm.

      Note Long term insurance business and long term insurance fund are defined in the glossary.
      (2) In preparing a financial condition report, a reporting actuary must have regard to the relevant professional standards.
      Derived from QFCRA RM/2011-1 (as from 1st July 2011)

    • CAPI 7.2.2 What must be included in financial condition reports?

      (1) A financial condition report must include, at a minimum—
      (a) the business overview described in subrule (2); and
      (b) an assessment of the suitability and adequacy of the firm's risk management policy; and
      (c) an assessment of the firm's experience and profitability for the year ending on the valuation date; and
      (d) an assessment of the value of the firm's insurance liabilities; and
      (e) an assessment of the adequacy of past estimates of the value of insurance liabilities, especially if there has been a change in the assumption or in the valuation method used by the firm since the last valuation; and
      (f) an explanation of the following matters relating to the valuation of insurance liabilities:
      (i) the assumptions used in the valuation process, including assumptions about inflation and discount rates, future expense rates and, if relevant, future investment income;
      (ii) the adequacy and appropriateness of data made available to the reporting actuary by the firm;
      (iii) the procedures undertaken by the reporting actuary to assess the reliability of the data;
      (iv) the model or models used by the reporting actuary;
      (v) the approach taken to estimate the variability of the estimate;
      (vi) the sensitivity analyses undertaken; and
      (g) if the firm conducts long term insurance business — a determination of the value of surplus (the surplus determination) in each long term insurance fund established by the firm.

      Note A surplus determination is required before any distribution of surplus is made under rule 8.4.2 (Assets not to be transferred for other purposes) or rule 8.4.4 (Distributions by firm or cell deemed to constitute single long term insurance fund).
      (2) For subrule (1) (a), the business overview must—
      (a) describe how the firm operates, including reinsurance arrangements made by the firm; and
      (b) state whether the reporting actuary considers the reinsurance arrangements suitable and adequate and the reasons why the reporting actuary considers them to be so; and
      (c) describe the documentation for reinsurance arrangements; and
      (d) state whether the firm has limited risk transfer arrangements and, if it has, describe the impact of the arrangements; and
      (e) comment on the pricing of the firm's products, including the adequacy of premiums; and
      (f) include any other general matter that is relevant to, and that gives a general understanding of, the firm's business.
      Derived from QFCRA RM/2011-1 (as from 1st July 2011)

    • CAPI 7.2.3 Consideration of outlook and future implications

      (1) A reporting actuary must consider the outlook and any future implications for a matter required, under rule 7.2.2, to be in the financial condition report (a relevant matter).
      (2) If the outlook or future implication of a relevant matter is adverse, the reporting actuary must propose recommendations to address the matter.
      (3) A reporting actuary may rely on expert opinion if the actuary feels unqualified to comment on a relevant matter.
      (4) Any expert opinion relied on by the actuary must be identified as such in the financial condition report.
      Derived from QFCRA RM/2011-1 (as from 1st July 2011)

    • CAPI 7.2.4 Time for giving report

      (1) A reporting actuary must give the financial condition report to the firm within such time as to give the governing body of the firm reasonable opportunity to—
      (a) consider and use the financial condition report in preparing the firm's annual returns; and
      (b) give the financial condition report to the Regulatory Authority in accordance with subrule (2).
      (2) A financial condition report for a firm must be given to the Regulatory Authority within 3 months after the day the relevant financial year of the firm ends.
      Amended by QFCRA RM 2019-1 (as from 28th March 2019).