9.1. Application

Paragraphs 9.2 and 9.3 apply to Long-Term Insurance Business.

9.2. Long-Term Insurance Risk Component

An AIFC-Incorporated Insurer’s Long-Term Insurance Risk Component is the sum of the following amounts, so far as they relate to the Long-Term insurance business of the AIFCIncorporated Insurer:

• (a) 1.25% of the amount of provisions in respect of Long-Term Insurance Business that is [investment-linked insurance, where the contracts are subject to a capital guarantee;]
• (b) 0.5% of the amount of provisions in respect of Long-Term Insurance Business that is investment-linked insurance, where the contracts are not subject to a capital guarantee;
• (c) 3% of the amount of provisions in respect of Long-Term Insurance Business other than business described in paragraphs (a) and (b);
• (d) the amount obtained by multiplying the amount of capital at risk under paragraph 9.3 by 0.1%;
• (e) if the AIFC-Incorporated Insurer issues policies that are contingent on mortality—the amount of anticipated claims cost arising from a 0.5 per thousand increase in the rate of lives insured dying over the following year.

9.3 Capital at risk

(1) Capital at risk of an AIFC-Incorporated Insurer means the total amount of sums assured on Long-Term Insurance Contracts issued by the AIFC-Incorporated Insurer, less:

• (a) the total amount of mathematical reserves for those contracts; and
• (b) any expected reinsurance and non-reinsurance recoveries as at the Solvency Reference Date.

(2) For an annuity, the sum assured must be taken to be the present value of the annuity payments.

(3) The contribution of each contract to capital at risk must be determined separately. If the capital at risk calculated for a contract is less than zero, the capital at risk for that contract is taken to be zero.