8.1.1 What is an Islamic window? If an authorised firm conducts a part (but not the whole) of its business in accordance with Shari’a, the part so conducted is an Islamic window. (2) Takaful business is the part of insurance business conducted by a takaful entity that is Islamic financial business. Note Insurance business is defined in r 1.2.4. (3) A takaful fund is a fund established and maintained by a takaful entity under rule 6.2.1 for its takaful business. 1.2.8 PINS categories (1) For these rules, general insurance business is divided into 4 PINS categories, as follows: (a) PINS category 1—general insurance business that falls under general insurance category 1 or 2; (b) PINS category 2—general insurance business that falls under general insurance category 3 or 18; (c) PINS category 3—general insurance business that falls under general insurance category 4, 5, 6, 7, 8, 9, 16 or 17; (d) PINS category 4—general insurance business that falls under general insurance category 10, 11, 12, 13, 14 or 15. (2) In subrule (1)— general insurance category means a category of general insurance set out in FSR, Schedule 3, Part 3, paragraph 10.3.
Part 3.5 Investment risk requirement 3.5.1 What is an insurer’s investment risk requirement? An insurer’s investment risk requirement is the sum of its: (a) asset risk component; (b) off-balance sheet asset risk component; and (c) off-balance sheet liability risk component. Note Appendix 3 sets out the method for calculating each component of the investment risk requirement.
Part 4.8 Reduction of eligible capital 4.8.1 Tier 1 capital not to be reduced without approval An insurer must not reduce the tier 1 capital component of its eligible capital without the prior approval of the Regulatory Authority. Guidance A reduction of an insurer’s eligible capital includes, but is not limited to: a. share buybacks; b. the redemption, repurchase or early repayment of any eligible capital instruments issued by the insurer or a special purpose vehicle trading in its own shares; or c. where aggregate interest and dividend payments on tier 1 capital exceed the insurer’s after-tax earnings in the year to which they relate (i.e. dividend and interest payments on tier 1 capital wholly or partly funded from retained earnings). 4.8.2 Capital plan to be provided An insurer must provide to the Regulatory Authority when seeking approval for a reduction under rule 4.8.1 a capital plan that has incorporated the effects of the proposed reduction and: (a) demonstrates that the insurer will remain in excess of its minimum capital requirement for 2 years without relying on new capital issues; (b) is consistent with the insurer’s business plan; and (c) takes account of any possible acquisitions, locked-in capital in subsidiaries and the possibility of exceptional losses. 4.8.3 Notice to be given of proposed reduction of tier 2 capital An insurer must notify the Regulatory Authority of its intention to reduce its tier 2 capital at least 6 months before the actual date of the proposed reduction, providing details of how it will meet its minimum capital requirement after the proposed reduction.
member, and the amount of the loan is 3% (or more) of the insurer’s eligible capital; (c) an intra-group reinsurance agreement, or a modification to such an agreement, if the reinsurance premium or change in the insurer’s liabilities is 5% (or more) of the insurer’s eligible capital; (d) a reinsurance agreement, or a modification to such an agreement, involving the transfer of assets from the insurer to a person not related to it, if: (i) there is an agreement or understanding between the insurer and that person that any part of the assets will be transferred to 1 or more other persons related to the insurer; and (ii) the reinsurance premium or change in the insurer’s liabilities is 5% (or more) of the insurer’s eligible capital; (e) an intra-group management agreement, service contract or arrangement. (3) A reference in subrule (2) to an insurer’s eligible capital is a reference to that capital as at the end of the last standard quarter before the relevant transaction. (4) An insurer’s governing body may delegate its responsibility under subrule (1) to the insurer’s senior management if the insurer’s risk management strategy and internal control framework permit the governing body to do so. (5) In this rule: loan includes the extension of credit. standard quarter means each 3-month period ending on 31 March, 30 June, 30 September and 31 December. 10.1.9 Directions about certain intra-group matters (1) The Regulatory Authority may give an insurer a direction in relation to any of the following matters: (a) the insurer’s treatment of intra-group transactions; (b) the insurer’s treatment of risk concentration within the group; (c) supervisory reporting and disclosure of information by the insurer; sharing
(3) In this rule: notifiable contract means— (a) a contract with a person related to the insurer, other than a contract of insurance effected by the insurer before going into run-off; (b) a contract with any person relating to the management of all or any of the insurance business in run-off; (c) a contract with any person for reinsurance of all or any of the insurance business in run-off; or (d) any other contract with a person mentioned in paragraph (b) or (c) or a person related to such a person. 12.4.3 Request for additional information about contract notified under r 12.4.2 (1) The Regulatory Authority may, by written notice given to an insurer that has notified the authority about a contract under rule 12.4.2, require the insurer to give the authority, within a stated reasonable period, additional information about the contract. (2) The insurer must comply with the requirement. (3) The power given by subrule (1) is additional to the Regulatory Authority’s other powers. Note See eg Financial Services Regulations, art 48 (Power to obtain documents and information).
Glossary (r 1.1.2) AAOIFI means the Accounting and Auditing Organisation for Islamic Financial Institutions. actuarial function means the controlled function described in CTRL, rule 3.1.11. approved actuary for an insurer means an individual approved by the Regulatory Authority to exercise the actuarial function for the insurer. asset risk component has the meaning given in rule A3.2.1. authorisation means an authorisation granted under FSR, Part 5. authorised firm (or firm) means a person that has been granted an authorisation in accordance with FSR, Part 5. carrying out a contract of insurance means the regulated activity described in the Financial Services Regulations, Schedule 3, Part 2, paragraph 3. Note Regulated activity is defined in this glossary. category of contracts of insurance means a category of such contracts described in FSR, Schedule 3, Part 3, paragraph 10. contract of insurance means the specified product described in FSR, Schedule 3, Part 3, paragraph 10. counterparty means a person with whom an insurer conducts, or intends to conduct, insurance or associated business. CTRL means the Governance and Controlled Functions Rules 2012. effecting a contract of insurance means the regulated activity described in the Financial Services Regulations, Schedule 3, Part 2, paragraph 2. eligible capital has the meaning given by rule 4.2.1. equity investment includes: (a) an equity share; (b) participation in a collective investment scheme (whether or not the underlying investments are themselves equity investments); (c) participation in a joint venture; and (d) a certificate of mudaraba or musharaka. extreme event means an unusual high-impact or catastrophic event the occurrence of which could have a significant effect on an insurer’s solvency.
financial condition report has the meaning given by rule 9.1.2 (1). firm (or authorised firm) means a person that has been granted an authorisation in accordance with FSR, Part 5. FSR means the Financial Services Regulations. general insurance business has the meaning given by rule 1.2.5 (1). general insurance contract has the meaning given by rule 1.2.6 (1). general insurer means an insurer that conducts general insurance business. governing body has the meaning given by CTRL, rule 2.2.1. group risk has the meaning given in Schedule 1, guidance S8.1. insurance business has the meaning given by rule 1.2.4. Note Insurance business has a special meaning in ch 11 (see r 11.1.4). insurance concentration risk component, in relation to an insurer, has the meaning given in rule A3.10.2. insurance liabilities, of an insurer, means liabilities of the insurer arising out of its general insurance business and long-term insurance business. insurance risk requirement has the meaning given in rule 3.6.1. insurer (or QFC insurer) has the meaning given by rule 1.2.3. Note Insurer has a special meaning in ch 11 (see r 11.1.3). internal model, for an insurer, means the model approved by the Regulatory Authority for calculating all or part of the insurer’s capital requirement. Note An approved internal model may be used to replace specified components of the operational, investment and insurance risk requirements of an insurer (see r 3.8.1 (b)). investment-linked insurance means insurance where the benefits under a contract of insurance are wholly or partly determined by reference to: (a) the value of, or the income from, property of any description (whether or not specified in the contracts); or (b) fluctuations in, or in an index of, the value of property of any description (whether or not so specified). investment risk requirement has the meaning given in rule 3.5.1. ISFI means the Islamic Finance Rules 2005. Islamic financial business has the meaning given by ISFI, rule 1.2.1. Islamic financial institution has the meaning given by ISFI, rule 1.2.2.