12.1.1. Application

PINS 12 applies to:

• (a) every AIFC-Incorporated Insurer; and
• (b) every Branch in respect of its AIFC Insurance Business operations.

12.1.2. Meanings of terms relating to run-off

In this Chapter:

• (a) an Insurer in Run-off means an Insurer that has ceased to effect Contracts of Insurance in respect of the whole or a category of its Insurance Business (or, in the case of a Branch, the whole or a category of its AIFC Insurance Business), and a Long-Term Insurance Fund in run-off is 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 Long-Term Insurance Fund into run-off is construed accordingly.

12.1.3. Compliance with PINS 15 by Insurer directed to go into run-off

An Insurer in Run-off by virtue of a decision or notice of the AFSA to the effect that the Insurer is to cease to effect Contracts of Insurance shall comply with PINS 12 except to the extent the AFSA acting under its powers in the FSFR directs otherwise.

12.1.4. Certain contracts to be disregarded

For the purposes of this Chapter, in determining whether an Insurer is effecting Contracts of Insurance or has ceased to effect Contracts of Insurance, including Contracts of Insurance effected through a Long-Term Insurance Fund, Contracts of Insurance effected under a term of an existing Contract of Insurance will be ignored unless the AFSA decides otherwise in respect of any particular contract.

12.2.1. Application

PINS 12.2.2 (Insurers to give notice of decision to cease business) and PINS 12.2.3 (Insurers in run-off not to effect certain contracts) apply to an Insurer that ceases or decides to cease to effect new Contracts of Insurance or to renew Contracts of Insurance:

• (a) in a category in which the Insurer has previously effected Insurance Business; or
• (b) in respect of a Long-Term Insurance Fund, in a category in which the Insurer has previously effected Insurance Business through that Long-Term Insurance Fund.

12.2.2 Insurers to give notice of decision to cease business

An Insurer to which this Rule applies must, within 28 days of a decision to cease to effect new Contracts of Insurance in a category, notify the AFSA of its decision, in a notice specifying the following details:

• (a) the effective date of the decision to cease effecting Contracts of Insurance;
• (b) the category to which the decision relates; and
• (c) where relevant, the Long-Term Insurance Fund to which the decision relates.

12.2.3 Insurers in run-off not to effect certain contracts

(1) An Insurer who has provided a notice to the AFSA in accordance with PINS 12.2.2 must not effect any Contracts of Insurance in that category without the written permission of the AFSA.

(2) Where the notice referred to in PINS 12.2.2 relates to a Long-Term Insurance Fund of the Insurer, the restriction set out in this rule applies only to that Long-Term Insurance Fund.

12.3.1. Application

PINS 12.3.2 to 12.3.7 apply to:

• (a) Insurers that go into, or are in, run-off, or that maintain Long-Term Insurance Funds that are in run-off;
• (b) Insurers that make a decision to go into run-off or to place a Long-Term Insurance Fund into run-off; and
• (c) Insurers whose Licence to effect Contracts of Insurance in respect of their entire Insurance Business or in respect of the entire business of a Long-Term Insurance Fund is withdrawn by the AFSA.

12.3.2. Insurer voluntarily in run-off to provide run-off plan

If an Insurer decides to go into run-off or to place a Long-Term Insurance Fund into run-off, the Insurer must, at the same time as the notice referred to in PINS 12.2.2, provide the AFSA with a written run-off plan in respect of the Insurance Business being placed into run-off.

12.3.3. Insurer directed to go into run-off to provide run-off plan

If the AFSA withdraws an Insurer’s Licence to effect Contracts of Insurance in respect of the Insurer’s whole, or a category of, Insurance Business or the whole, or a category of, Insurance Business of a Long-Term Insurance Fund, the Insurer must, within 28 calendar days after the day the Insurer is given the written notice of withdrawal of its Licence (or, if later, the period specified in that notice), provide the AFSA with a written run-off plan in respect of that Insurance Business.

12.3.4. What run-off plans must cover

An Insurer must ensure a run-off plan provided to the AFSA in accordance with this Part covers the period until all liabilities to policyholders relating to the Insurance Business in run-off are met and includes:

• (a) an explanation of how, or the extent to which, all liabilities to policyholders will be met in full as they fall due;
• (b) an explanation of how, or the extent to which, the Insurer will maintain its compliance with the requirements of these rules until such time as all liabilities to policyholders are met;
• (c) a description, appropriate to the scale and complexity of the Insurer’s business, of the Insurer’s business strategy;
• (d) financial projections showing, in a form appropriate to the scale and complexity of the Insurer’s operations, the forecast financial position of the Insurer as at the end of each reporting period during the period to which the run-off plan relates;
• (e) an assessment of the sensitivity of the financial position of the Insurer to stress arising from realistic scenarios relevant to the circumstances of the Insurer;
• (f) details of the planned run-off reinsurance protections and the extent to which the planned reinsurance protections match the run-off realistic scenarios;
• (g) details of the claims handling and reserving strategy; and
• (h) details of the cost of the management of the run-off.

12.3.5. Application of run-off plan to fund

Where an Insurer’s Insurance Business in run-off relates to a Long-Term Insurance Fund of that Insurer, the run-off plan must deal with the matters set out in PINS 12.3.4 so far as they relate to that Long-Term Insurance Fund.

12.3.6. Insurer to monitor run-off plan etc

(1) This rule applies to an Insurer that has given a run-off plan to the AFSA.

(2) The Insurer must monitor the matters provided in the run-off plan.

(3) If there is a significant departure from the run-off plan, the Insurer must tell the AFSA immediately, but by no later than the second business day after the day the departure happens or starts.

12.3.7. AFSA may direct Insurer to amend run-off plan

(1) Where an Insurer has notified a matter to the AFSA in accordance with PINS 12.3.6, the AFSA may by notice in writing require the Insurer to provide an amended run-off plan.

(2) The Insurer must provide an amended run-off plan within 28 days of receipt of the notice, unless the notice specifies a longer period.

12.4.1. Application

PINS 12.4.2 (Insurer with business in run-off to notify AFSA of certain contracts) applies only to an Insurer that:

• (a) is in run-off as regards its entire Insurance Business or the entire Insurance Business of a Long-Term Insurance Fund;
• (b) has provided a notice to the AFSA in accordance with PINS 12.2.2 (Insurers to give notice of decision to cease business) in respect of its entire Insurance Business or the entire Insurance Business of a Long-Term Insurance Fund; or
• (c) has received a written notice from the AFSA withdrawing the Insurer’s Licence to effect Contracts of Insurance in respect of its entire Insurance Business or the entire Insurance Business of a Long-Term Insurance Fund.

12.4.2. Insurer with business in run-off to notify AFSA of certain contracts

(1) An Insurer to which this rule applies must:

• (a) within 10 business days after the day its Insurance Business enters into run-off, tell the AFSA about the existence and principal features of any notifiable contract that existed at the time the business entered into run-off; and
• (b) within 10 business days after the day it enters into a notifiable contract in relation to its Insurance Business in runoff, tell the AFSA about the existence and principal features of the contract.

(2) To remove any doubt, subrule (1) (b) applies whether or not the Insurance Business is conducted through a Long-Term Insurance Fund that is in run-off.

(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.

12.5.1. Insurer in run-off not to make distributions

(1) An AIFC-Incorporated Insurer in run-off must not make any distribution to shareholders or members of the Insurer, whether by way of dividends or otherwise, or any payment of management fees (other than fees payable under a contract notified to the AFSA in accordance with PINS 12.4.2), without the written consent of the AFSA.

(2) 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 AFSA.