• CIB 10 CIB 10 CAPTIVE INSURERS IN RUN-OFF

    • CIB 10.1 CIB 10.1 General provisions

      • CIB 10.1.1 Terms and concepts relating to run-offs

        (1) For the purposes of this Chapter, in determining whether a Captive Insurer is effecting Contracts of Insurance, or has ceased to effect Contracts of Insurance, including Contracts of Insurance effected through a Captive Cell or Long-Term Insurance Fund, Contracts of Insurance effected under a term of an existing Contract of Insurance shall be disregarded.
        (2) In this Chapter:
        (a) a Captive Insurer in run-off means a Captive Insurer that has ceased to effect Contracts of Insurance in respect of the whole of its Insurance Business, and a Captive Cell in run-off and a Long-Term Insurance Fund in run-off are to be construed accordingly; and
        (b) going into run-off or placing Insurance Business into run-off means ceasing to effect Contracts of Insurance, and placing a Captive Cell or a Long-Term Insurance Fund into run-off are to be construed accordingly.

    • CIB 10.2 CIB 10.2 Notices and run-off plans

      • CIB 10.2.1 Ceasing to effect contracts in a Class of Business

        This Rule 10.2 applies to a Captive Insurer that ceases or decides to cease to effect new Contracts of Insurance:

        (a) in a Class of Business in which the Captive Insurer has previously carried on Insurance Business; or
        (b) in respect of a Captive Cell or Long-Term Insurance Fund, in a Class of Business in which the Captive Insurer has previously carried on Insurance Business through that Captive Cell or Long-Term Insurance Fund.

      • CIB 10.2.2 Notification to the Regulator

        (1) A Captive Insurer to which this Rule 10.2 applies must, within twenty-eight days of deciding to cease to effect new Contracts of Insurance in a Class of Business, notify the Regulator of its decision, in a written notice specifying the following details:
        (a) the effective date of the decision to cease effecting Contracts of Insurance;
        (b) the Class of Business to which the decision relates; and
        (c) where relevant, Captive Cell or Long-Term Insurance Fund to which the decision relates.
        (2) A Captive Insurer which has provided a notice to the Regulator in accordance with Rule 10.2.2(1) must not effect any Contracts of Insurance in that Class of Business without the written permission of the Regulator. Where the notice referred to in Rule 10.2.2(1) relates to a Captive Cell or Long-Term Insurance Fund of the Captive Insurer, the restriction set out in this Rule applies only to that Captive Cell or Long- Term Insurance Fund.

      • CIB 10.2.3 Run-off plan — Captive Insurer decides to go into run-off

        (1) This Rule applies to:
        (a) Captive Insurers that are in run-off or that maintain Captive Cells or Long- Term Insurance Funds that are in run-off;
        (b) Captive Insurers that go into run-off or that place Captive Cells or Long-Term Insurance Funds into run-off;
        (c) Captive Insurers that make a decision to go into run-off or to place a Captive Cell or Long-Term Insurance Fund into run-off; and
        (d) Captive Insurers whose Financial Services Permission to effect Contracts of Insurance in respect of their entire Insurance Business or in respect of the entire business of a Captive Cell or Long-Term Insurance Fund is withdrawn by the Regulator.
        (2) If a Captive Insurer takes a decision to go into run-off or to place a Captive Cell or Long-Term Insurance Fund into run-off, the Captive Insurer must, at the same time as the notice referred to in Rule 10.2.2(1), provide the Regulator with a written run-off plan in respect of the Insurance Business being placed into run-off.

      • CIB 10.2.4 Run-off Plan — Regulator withdraws Captive Insurer's permission

        If the Regulator withdraws a Captive Insurer's permission to effect Contracts of Insurance in respect of the Captive Insurer's entire Insurance Business or the entire Insurance Business of a Captive Cell or Long-Term Insurance Fund, the Captive Insurer must, within twenty-eight days of the written notice of withdrawal of permission (or, if later, the period specified in that notice), provide the Regulator with a written run-off plan in respect of that Insurance Business.

      • CIB 10.2.5 Period of run-off plan

        (1) A run-off plan provided to the Regulator in accordance with this Rule must cover the run-off period until all liabilities to policyholders relating to the Insurance Business in run-off are met and must include:
        (a) an explanation of how, and to what extent, all liabilities to policyholders will be met in full as they fall due;
        (b) an explanation of how the Captive Insurer will comply with the requirements in Chapter 2 until such time as all liabilities owed to policyholders are met in full;
        (c) a description, appropriate to the size and complexity of the Captive Insurer's business, of the Captive Insurer's business strategy;
        (d) financial projections showing, in a form appropriate to the nature, size, and complexity of the Captive Insurer's operations, the forecast financial position of the Captive Insurer as at the end of each reporting period during the period to which the run-off plan relates; and
        (e) an assessment of the sensitivity of the financial position of the Captive Insurer to stress arising from realistic scenarios relevant to the circumstances of the Captive Insurer.
        (2) Where a Captive Insurer's Insurance Business in run-off relates to a Captive Cell or Long-Term Insurance Fund of that Captive Insurer, the run-off plan must deal with the matters set out in Rule 10.2.5(1) so far as they relate to that Captive Cell or Long-Term Insurance Fund.

      • CIB 10.2.6 Captive Insurers to monitor run-off plan etc

        A Captive Insurer that has provided a written run-off plan to the Regulator must monitor the matters contained in the run-off plan and must notify the Regulator promptly and in writing of any significant departure from the run-off plan.

      • CIB 10.2.7 Amended run-off plan

        Where a Captive Insurer has notified a matter to the Regulator in accordance with Rule 10.2.6, the Regulator may by notice in writing require the Captive Insurer to provide an amended run-off plan. The Captive Insurer must provide an amended run-off plan within twenty-eight days of receipt of the notice, unless the notice specifies a longer period.

    • CIB 10.3 CIB 10.3 Provisions for collateral for Captive Insurers in run-off

      • CIB 10.3.1 Application

        This Rule applies only to a Captive Insurer that:

        (a) is in run-off in relation to its entire Insurance Business or the entire Insurance Business of a Captive Cell or Long-Term Insurance Fund;
        (b) has provided a notice to the Regulator in accordance with Rule 10.2.2 in respect of its entire Insurance Business or the entire Insurance Business of a Captive Cell or Long-Term Insurance Fund; or
        (c) has received a written notice from the Regulator withdrawing its Permission to effect Contracts of Insurance in respect of its entire Insurance Business or the entire Insurance Business of a Captive Cell or Long-Term Insurance Fund.

      • CIB 10.3.2 Regulator may issue collateral notice

        (1) The Regulator may, by written notice (referred to in this Chapteras a 'collateral notice'), require a Captive Insurer to make available assets:
        (a) of a type and in a manner described in Rule 10.3.2(5); and
        (b) having a value, determined in accordance with the provisions of Chapter 6, of the lower of:
        (i) the amount, if any, specified in the notice; and
        (ii) the amount determined in accordance with Rule 10.3.2(4).
        (2) A Captive Insurer must comply with the requirements of a collateral notice within the period (if any) specified in the notice, or within two months of the date of the notice, whichever is the longer.
        (3) The Regulator may at any time, by written notice to the Captive Insurer, vary or revoke a collateral notice issued under Rule 10.3.2(1).
        (4) The amount referred to in Rule 10.3.2(1)(b) is calculated as follows:
        (a) in the case of a Captive Cell of a Captive Insurer which is an Incorporated Cell Company, the sum of the following two amounts:
        (i) the Insurance Liabilities attributable to that Captive Cell; and
        (ii) the Minimum Cellular Capital Requirement applicable to that Captive Cell.
        (b) in the case of a Long-Term Insurance Fund, subject to Rules 10.3.2(4)(c) and 10.3.2(4)(d), the sum of the following two amounts:
        (i) the Insurance Liabilities attributable to that Long-Term Insurance Fund; and
        (ii) the Minimum Fund Capital Requirement applicable to that Long-Term Insurance Fund;
        (c) in the case of a Captive Insurer that is not an Incorporated Cell Company, the sum of the following two amounts:
        (i) the Captive Insurer's Insurance Liabilities; and
        (ii) the Captive Insurer's minimum capital requirement as provided for in Rule 2.2.
        (d) in the case of a Captive Insurer to which Rules 10.3.2(4)(a) and 10.3.2(4)(c) both apply, the amount set out in 10.3.2(4)(a); and
        (e) in the case of a Captive Insurer to which Rules 10.3.2(4)(c) and 10.3.2(4)(d) both apply, the amount set out in Rule 10.3.2(4)(d).
        (5) The assets referred to in Rule 10.3.2(1) must be made available in one of or a combination of the two arrangements:
        (a) assets of a type described in PIN 4.6.3 may be deposited with a custodian nominated or approved in writing by the Regulator; or
        (b) a Person, whose activities are primarily financial in nature and is nominated or approved in writing by the Regulator, may issue a confirmed letter of credit in favour of the Regulator, for the amount of the assets required to be made available.
        (6) The terms and conditions of a custody arrangement referred to in Rule 10.3.2(5)(a) or a letter of credit referred to in Rule 10.3.2(5)(b) and any change to those terms and conditions, must be notified to the Regulator, which may within two months of such notification require the Captive Insurer to make any change to the terms and conditions of the arrangement or letter of credit.
        (7) The Regulator may, by written notice to a Captive Insurer, require the Captive Insurer to charge in favour of the Regulator part or all of any assets deposited with a custodian in accordance with Rule 10.3.2(5)(a).
        (8) The Captive Insurer must reassess, as at the end of March, June, September and December in each year, the amount of the assets that the Captive Insurer is required by a collateral notice to make available, and the amount of assets made available by the Captive Insurer.
        (9) The Captive Insurer must report to the Regulator, within two months of the date as at which the reassessment referred to in Rule 10.3.2(8) is performed, the results of that reassessment and details of any action taken or proposed to be taken as a result of that assessment.
        (10) If the reassessment referred to in Rule 10.3.2(8) shows that the amount of assets made available is less than the amount that the Captive Insurer is required to make available, the Captive Insurer must, within two months of the effective date of the reassessment, make additional assets available so that the Captive Insurer complies with the requirements of the collateral notice.
        (11) If the reassessment shows that the amount of assets made available is more than the amount that the Captive Insurer is required to make available, the Captive Insurer may, with the written consent of the Regulator, remove assets from those made available provided that the Captive Insurer complies with the requirements of the collateral notice after the assets have been removed.

      • CIB 10.3.3 Captive Insurers in run-off must notify Regulator of certain contracts

        (1) This Rule applies to any Captive Insurer referred to in Rule 10.3.1.
        (2) A Captive Insurer to which this Rule applies must inform the Regulator in writing of the existence and principal features of any contract which it enters into in respect of its Insurance Business in run-off, including Insurance Business carried on through a Captive Cell or a Long-Term Insurance Fund that is in run-off, or that is in existence at the time the Captive Insurer places that Insurance Business into run-off, and that is of any of the following types:
        (a) contracts, other than Contracts of Insurance effected by the Captive Insurer prior to going into run-off, with parties that are Related to the Captive Insurer;
        (b) contracts relating to the management of the Insurance Business in run-off, and any other contracts with the same counterparty or parties Related to that counterparty; or
        (c) contracts for reinsurance of the Insurance Business that is in run-off, and any other contracts with the same counterparty or parties Related to that counterparty.

      • CIB 10.3.4 Regulator may request additional information

        The Regulator may by written notice require a Captive Insurer to provide additional information as specified in that notice in respect of any contract notified to the Regulator in accordance with Rule 10.3.3(2).

    • CIB 10.4 Limitations on distributions by ADGM Captive Insurers in run-off

      No Captive Insurer that is in run-off may make any distribution of profits or surplus however called or described, or return of capital, or any payment of management fees (other than fees payable under a contract notified to the Regulator in accordance with Rule 10.3.3(2) without the written consent of the Regulator. Any such distribution or return of capital or payment of management fees must be made within the period, if any, specified in the written notice of consent given by the Regulator.