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).