7.6.1. Policies about surpluses and deficits

(1) A Takaful Operator must have a written policy, or subject to rule 7.6.2, policies, for determining the surplus or deficit arising from its Takaful Business, the basis of distributing that surplus or deficit between the participants and the shareholders, and the method of transferring any surplus or deficit to the participants.

(2) The policy or policies must comply with all relevant AAOIFI standards including but not limited to, Financial Accounting Standard No. 13 ‘Disclosure of Bases for Determining and Allocating Surplus or Deficit in Islamic Insurance Companies’.

(3) Each policy must be approved by the Takaful Operator’s Shari’ah Supervisory Board, as defined in Islamic Finance Rules IFR rule 5.1.

7.6.2. When 2 or more policies permitted

A Takaful Operator may develop and/or offer more than one policy at any point in time, where the Takaful Operator conducts different categories of Takaful Business.

7.6.3. Copies of policies to be given to the AFSA

(1) A Takaful Operator must provide a copy of the policy referred to in rule 7.6.1 above to the AFSA immediately following its approval by its Shari’ah Supervisory Board, but within one business day following the day such approval was given.

(2) Any amendments to the policy referred in rule 7.6.1 subsequent to its submission to the AFSA, must be approved by the Shari’ah Supervisory Board of the Takaful Operator. The amended version of the policy must be submitted to the AFSA immediately following that approval.

(3) A Takaful Operator must ensure that a copy of the policy approved under rule 7.6.1 or rule 7.6.3 (2), forms part of every Takaful policy sold it.

Guidance

As part of its process to approve any amendments to a policy under rule 7.6.3(2), the AFSA will consider the impact of the proposed amendments on the rights and obligations of existing policyholders of the Takaful Operator who are affected by those proposed amendments.

7.6.4. Surplus or deficit to be determined annually

(1) On an annual basis, every Takaful Operator must determine any surplus or deficit arising on each Takaful Fund it operates, in a distinct manner.

(2) A Takaful Operator must not distribute a surplus or deficit from any one of the Takaful Funds it operates for Family Takaful Business until the value of the surplus or deficit involved, has been determined by an Approved Actuary in accordance with rule 9.1.3(4)(g).

(3) Any distribution must be performed within 4 months of the reference date of the actuarial investigation referred to in (2).

7.6.5. Reports of distributions of surplus or deficit to the AFSA

A Takaful Operator must report to the AFSA all distributions of profit or surplus (however called or described) to policyholders within 15 business days of the date of declaration of the distribution.

7.6.6. Prohibitions on distributions

A Takaful Operator must not make any distributions to participants, regardless of the Rules governing the Takaful Operator, if it fails to, or because of the payment of the distribution would fail to, meet its Minimum Capital Requirement.