6.1. How to calculate Off-Balance Sheet Liability Risk Component

(1) An AIFC-Incorporated Insurer must calculate its Off-Balance Sheet Liability Risk Component by applying, to the face value of any credit substitute it has issued (including letters of credit, guarantees and put options serving as guarantees) the asset risk component that would be applied to the obligation or asset over which the credit substitute has been written.

(2) Where the credit substitute is supported by collateral or a guarantee, the provisions of paragraph 4.2 (Effect of guarantee or collateral) may be applied by the AIFC-Incorporated Insurer.