9.1.1. Application

PINS 9.1.2 to 9.1.5 apply to an Insurer that is required to have an Approved Actuary. Note: For the Insurers that are required to have an Approved Actuary, see PINS 2.2.2 (Obligation to appoint Approved Individuals to certain roles).

9.1.2. Financial Condition Reports

(1) The Approved Actuary for the Insurer must annually carry out an actuarial investigation to enable him or her to prepare a report about the Insurer’s financial condition (a Financial Condition Report).

(2) The Insurer must ensure that the Approved Actuary is given appropriate access (that is, such access as the actuary reasonably believes to be necessary to prepare the report) to:

• (a) all relevant data, information, reports and staff of the Insurer; and
• (b) so far as possible, any contractor of the Insurer.

(3) The Approved Actuary must prepare, sign and date the report.

(4) The Approved Actuary must give the report to the Insurer sufficiently in advance of the Insurer’s next annual return date to allow the Insurer’s Governing Body a reasonable opportunity to consider and use it in preparing the Insurer’s next annual prudential return.

(5) The Insurer’s Governing Body must give a copy of the report to the AFSA on or before the Insurer’s next annual return date.

(6) In this rule: next annual return date for an Insurer means the date on which it must give its next annual prudential return to the AFSA under PINS 13.1.1 (Obligation to prepare prudential returns).

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 Approved 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 PINS 8.4.1 (Treatment of policy benefits due before Solvency Reference Date) and PINS 8.4.2 (Treatment of net value of future policy benefits);
• (d) for an Insurer to which subrule (5) applies, an assessment of the value of the Insurer’s Insurance Liabilities that fall within PINS 8.3.1 (Treatment of premium liability) and PINS 8.3.2 (Treatment of value of future claims payments), 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 Approved Actuary by the Insurer;
• (iii) how the Approved Actuary assessed the reliability of the data;
• (iv) the model or models used by the Approved 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;
• (h) an assessment of asset and liability management, including the Insurer’s investment strategy;

(i) an assessment of the Insurer’s current and future capital adequacy and adiscussion of its approach to capital management;

• (j) an assessment of the Insurer’s pricing, including the adequacy of its premiums;
• (k) 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;
• (l) 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 its gross outstanding liabilities are attributable to Contracts of Insurance for General Insurance Business in General Insurance Categories 1 (Accident) or 2 (Sickness); or
• (b) more than 20% of its gross outstanding liabilities are attributable to Contracts of Insurance for General Insurance Business in General Insurance Categories 10 (Motor vehicle liability), 11 (Aircraft liability), 12 (Liability of ships), 13 (General liability), 14 (Credit) or 15 (Suretyship).

(6) The Approved 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 AIFC operations but must take into account the financial position of the head office.

9.1.4. AFSA may direct more frequent Financial Condition Reports

(1) The AFSA may direct an Insurer that the Insurer’s Approved Actuary is to prepare a Financial Condition Report more frequently than PINS 9.1.2 (Financial Condition Reports) requires if the AFSA considers it necessary or desirable, for the prudential supervision of the Insurer, to receive such a report more frequently.

(2) An Insurer must comply with a direction under subrule (1).

9.1.5 AFSA may direct special review

(1) The AFSA may direct an Insurer that the Insurer’s Approved Actuary:

• (a) is to carry out a review of matters specified by the AFSA relating to the Insurer’s operations, risk management or financial affairs; and
• (b) is to prepare a report on the basis of that review.

(2) The Insurer must bear the cost of the review.

(3) An Insurer must comply with a direction under subrule (1).

(4) The Insurer’s Approved Actuary must give the report simultaneously to the AFSA and the Insurer within 3 months of the date of the direction, unless the AFSA grants an extension of time in writing.

9.2.1. Application

PINS 9.2.2 to 9.2.5 apply to an Insurer that is not required to have an Approved Actuary. Note: For the Insurers that are required to have an Approved Actuary, see PINS 2.2.2 (Mandatory appointments).

9.2.2. Actuarial reporting requirements for general insurance business

The Governing Body of an Insurer to which this Rule applies:

• (a) must consider annually whether to commission an independent actuary to report on its business; but
• (b) must commission such a report at least once every 3 years.

9.2.3. Qualifications of independent actuary

(1) If an Insurer decides to commission an actuarial report, it must appoint, to prepare the report, an individual who:

• (a) has the qualifications set out in subrule (2); and
• (b) satisfies the criteria set out in subrule (3).

(2) The qualifications are:

• (a) that he or she has appropriate formal qualifications and is a member of a recognised professional body;
• (b) that he or she has at least 5 years’ relevant experience in providing actuarial services to Insurers, either in the AIFC or in other jurisdictions; and
• (c) that the experience is sufficiently recent to ensure that he or she is familiar with current issues in the provision of such services to Insurers.

(3) The criteria are the following:

• (a) that he or she does not exercise any Controlled Function or Designated Function for the Insurer or a related body corporate (except a related body corporate that is a subsidiary of the Insurer);
• (b) that he or she is not:
• (i) an auditor (under section 136(1) of the Companies Regulations for the Insurer;
• (ii) an Employee or Director of an entity of which that auditor is an Employee or Director; nor
• (iii) a partner of that auditor.

9.2.4. Actuarial reports

(1) The actuary who prepares an actuarial report for the purposes of PINS 9.2.2 must sign it.

(2) The Insurer concerned must ensure that the actuary is given appropriate access (that is, such access as the actuary reasonably believes to be necessary to prepare the report) to:

1. (a) all relevant data, information, reports and staff of the Insurer; and
2. (b) so far as possible, any contractor of the Insurer.

(3) The report must give details, for each category of General Insurance Business that the Insurer conducts, of the following matters:

1. (a) recent trends in the business;
2. (b) the actuary’s estimate of the value of the Insurance Liabilities and assets arising in respect of those liabilities, determined in accordance with PINS 8 (Valuation);
3. (c) if the assumptions or the valuation method used for that estimate differ from those adopted for the previous valuation of those assets and liabilities, the effect, as at the date on which the actuary signs the report, of those changes on the value of those liabilities and assets;
4. (d) the adequacy and appropriateness of the data that the Insurer made available to the actuary;
5. (e) the procedures that the actuary used to assess the reliability of that data;
6. (f) the model or models that the actuary used;
7. (g) the assumptions that the actuary used in the valuation process (including, without limitation, assumptions made as to inflation and discount rates, future expense rates and, if relevant, future investment income);
8. (h) how the actuary estimated the variability of the estimate;
9. (i) the nature and findings of sensitivity analyses that the actuary undertook.

(4) The Insurer’s Governing Body must give a copy of the signed report to the AFSA on or before the date on which the Insurer must give its next annual prudential return to the AFSA under PINS 13.1.1 (Obligation to prepare prudential returns).

9.2.5. Additional powers of the AFSA

(1) If at any time the AFSA believes it is necessary that an Insurer to which this Rule applies should obtain an actuarial report relating to the Insurer’s operations, risk management or financial affairs, it may direct the Insurer to do so at the Insurer’s expense.

(2) The Insurer:

• (a) must appoint, to prepare the report, an actuary who has the qualifications, and satisfies the criteria, in PINS 9.2.3 (Qualifications of independent actuary); and
• (b) must notify the AFSA of the name, qualifications and experience of the actuary appointed.

(3) If the AFSA is not satisfied that the actuary appointed by the Insurer has those qualifications or satisfies those criteria, the AFSA may direct the Insurer to appoint an actuary nominated by the AFSA to prepare the report.

(4) The Insurer must submit the report to the AFSA within 3 months of the direction, unless the AFSA allows an extension of time in writing.