• CAPI Chapter 8 CAPI Chapter 8 Additional requirements for long term insurance business

    • CAPI Part 8.1 CAPI Part 8.1 Preliminary

      • CAPI 8.1.1 Application of chapter 8

        This chapter applies to a firm that is a QFC captive insurer that conducts—

        (a) long term insurance business; or
        (b) general insurance business if the contracts of insurance are general insurance contracts attributed to a long term insurance fund under rule 8.3.2.

        Note 1 Under rule 8.3.2, general insurance contracts that fall within General Insurance Category 1 (Accident) or General Insurance Category 2 (Sickness) in the Financial Services Regulations, schedule 3, part 3, paragraph 10.3 may be attributed to a long term insurance fund.

        Note 2 Long term insurance business, general insurance business, general insurance contracts and long term insurance fund are defined in the glossary.
        Derived from QFCRA RM/2011-1 (as from 1st July 2011)

    • CAPI Part 8.2 CAPI Part 8.2 Establishment of long term insurance fund

      • CAPI 8.2.1 Firm not a protected cell company

        A QFC captive insurer that is not a protected cell company must, before it effects long term insurance contracts—

        (a) establish and maintain 1 or more long term insurance funds; or
        (b) give written notice to the Regulatory Authority that the firm is to be taken to constitute a single long term insurance fund.

        Note Protected cell company is defined in the glossary.

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

      • CAPI 8.2.2 Firm a protected cell company

        A QFC captive insurer that is a protected cell company must, before it effects long term insurance contracts through a cell—

        (a) establish and maintain, for the cell, 1 or more long term insurance funds; or
        (b) give written notice to the Regulatory Authority that the cell is to be taken to constitute a single long term insurance fund.

        Note 1 Under rule 5.1.4, a QFC captive insurer that is a protected cell company must ensure that, when it conducts captive insurance business, each contract of insurance is attributable to a particular cell of the QFC captive insurer.

        Note 2 Cell is defined in the glossary.

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

      • CAPI 8.2.3 Effect of deeming

        (1) A firm that is taken to constitute a single long term insurance fund under rule 8.2.1 (b) is taken to have established a long term insurance fund for the purpose of attributing all of the assets and liabilities of the firm.
        (2) A cell that is taken to constitute a single long term insurance fund under rule 8.2.2 (b) is taken to have established a long term insurance fund for the purpose of attributing all of the assets and liabilities of the cell.
        Derived from QFCRA RM/2011-1 (as from 1st July 2011)

    • CAPI Part 8.3 CAPI Part 8.3 Attribution of contracts to long term insurance fund

      • CAPI 8.3.1 Attribution of all long term insurance contracts

        A firm that is a QFC captive insurer must attribute all long term insurance contracts to a long term insurance fund.

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

      • CAPI 8.3.2 Attribution of general insurance contracts

        A firm that is a QFC captive insurer must not attribute general insurance contracts to a long term insurance fund unless the contracts are general insurance contracts that fall within general insurance category 1 (Accident) or general insurance category 2 (Sickness).

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

    • CAPI Part 8.4 CAPI Part 8.4 Limitation on use of assets in long term insurance fund

      • CAPI 8.4.1 Assets to be used only for contracts attributed

        A firm must ensure that, except as provided in this part, assets attributable to a long term insurance fund are applied only for the purposes of the contracts attributed to the long term insurance fund.

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

      • CAPI 8.4.2 Assets not to be transferred for other purposes

        A firm must ensure that assets attributable to a long term insurance fund are not transferred for other purposes of the firm unless the transfer—

        (a) is a distribution of a surplus following a surplus determination and the transfer is made within 4 months after the reference date of the relevant financial condition report; or
        (b) is a distribution by way of dividend or return of capital, in accordance with rule 8.4.4; or
        (c) is made in exchange for other assets at fair value; or
        (d) is a reimbursement of expenditure borne on behalf of the long term insurance fund for expenses attributable to the long term insurance fund; or
        (e) is a reattribution of assets attributed to the long term insurance fund in error.

        Note Surplus determination, financial condition report and reference date are defined in the glossary.

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

      • CAPI 8.4.3 Distributions must comply with chapter 8

        A firm must not make any distribution by way of dividend, or return of capital assets attributable to a long term insurance fund, if the distribution would be in breach of this chapter.

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

      • CAPI 8.4.4 Distributions by firm or cell deemed to constitute single long term insurance fund

        A firm or a cell that is taken to constitute a single long term insurance fund may only make a distribution by way of dividend or return of capital if—

        (a) the dividend or return of capital is a distribution of a surplus following a surplus determination; and
        (b) the distribution does not cause the aggregate amount of the dividends and returns of capital made by the firm or the cell since the reference date of the relevant financial condition report to exceed—
        (i) if the payment is made within 4 months after that reference date-the amount of the surplus; or
        (ii) if the payment is made more than 4 months after that reference date-50% of the amount of the surplus.

        Note Surplus determination, month and reference date are defined in the glossary.

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

      • CAPI 8.4.5 Assets not to be lent

        A firm must not lend or otherwise make available for any other purposes of the firm (or any party related to the firm) assets attributable to a long term insurance fund.

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

      • CAPI 8.4.6 CAPI 8.4.6 Prohibited arrangements

        A firm must not enter into any arrangement (whether or not described as a contract of reinsurance) under which a long term insurance fund of the firm reinsures risk with another fund maintained by the same firm.

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

        • CAPI 8.4.6 Guidance

          Rule 8.4.6 operates to prohibit reinsurance between long term insurance funds of the same firm, 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.

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