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in respect of their entire Insurance Business or in respect of the entire business of a Long-Term Insurance Fund is withdrawn by the AFSA.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.