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5.5. Reduction of Eligible Capital
FINANCIAL SERVICES LEGISLATION
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5.5. Reduction of Eligible Capital

5.5.1. Tier 1 Capital not to be reduced without approval

An AIFC-Incorporated Insurer must not reduce the Tier 1 Capital component of its Eligible Capital without the prior written approval of the AFSA.

5.5.2. Capital plan to be provided

When seeking approval for a reduction of its Tier 1 Capital under PINS 5.5.1 (Tier 1 Capital not to be reduced without approval), an AIFC-Incorporated Insurer must provide to the AFSA a capital plan that has incorporated the effects of the proposed reduction and:

  • (a) demonstrates that the AIFC-Incorporated Insurer will remain in excess of its MCR for 2 years without relying on new capital issues;
  • (b) is consistent with the AIFC-Incorporated Insurer’s business plan; and
  • (c) takes account of any possible acquisitions, locked-in capital in subsidiaries and the possibility of exceptional losses.

5.5.3. Notice to be given of proposed reduction of Tier 2 Capital

An AIFC-Incorporated Insurer must notify the AFSA 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 MCR after the proposed reduction.