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4.1. The ORSA
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4.1. The ORSA

4.1.1. Obligation to conduct an Own Risk and Solvency Assessment

(1) An AIFC-Incorporated Insurer must:

  • (a) conduct an Own Risk and Solvency Assessment (ORSA) in accordance with PINS 4.1.2 (ORSA – requirements) at least annually; and
  • (b) submit a report to the AFSA on its ORSA (an ORSA Report) in accordance with PINS 4.2.1 (ORSA Report - requirements).

(2) An AIFC-Incorporated Insurer must conduct a fresh ORSA and submit a revised ORSA report to the AFSA if there is a change to its Risk Management Strategy, strategic plan or business plan and the change results, or there are reasonable grounds to believe that the change will result, in a material change in the capital adequacy or solvency of the AIFC -Incorporated Insurer.

4.1.2. ORSA – requirements

(1) In conducting an ORSA, an AIFC-Incorporated Insurer must assess:

  • (a) its overall solvency needs, including its own view of the adequacy of its capital resources to meet the regulatory capital requirements;
  • (b) the actions it has taken to manage the risks to which it is exposed;
  • (c) the financial resources needed:
  • (i) to manage its business prudently; and
  • (ii) to meet the capital adequacy requirements in PINS 5 (Capital adequacy requirements);
  • (d) the nature and quality of the capital resources needed, having regard to their loss-absorbing capacity and liquidity;
  • (e) the effect on the Insurer’s solvency position of all reasonably foreseeable and relevant changes in its risk profile (including group-specific risks); and
  • (f) its ability to meet its Minimum Capital Requirements and Prescribed Capital Requirement and continue in business, and the financial resources needed, over periods longer than those typically used for calculating its capital adequacy requirements under PINS 5 (Capital adequacy requirements).

(2) An AIFC-Incorporated Insurer must include as part of any quantitative evaluation in its ORSA:

  • (a) stress and scenario tests;
  • (b) the occurrence of extreme events to which the Insurer is exposed; and
  • (c) other unlikely but possible adverse scenarios that would render the Insurer’s business model unviable.

(3) The ORSA must be appropriate to the nature, scale and complexity of the AIFCIncorporated Insurer’s business.