8.1.1. Value of Takaful Operator’s assets to match its Takaful Liabilities

(1) A Takaful Operator must hold supporting assets of a value at least equal to the amount of its Takaful liabilities.

(2) Such asset must be of a sufficient amount, and of an appropriate currency and term, to ensure that the cash inflows from the assets meet the expected cash outflows from the Takaful Operator’s Takaful liabilities as they fall due.

8.1.2. Projecting cash flows - treatment of options

In determining the expected cash outflows from its Takaful liabilities for the purposes of TRR 8.1.1, a Takaful Operator must take into account any options that exist in the Takaful Operator’s Takaful Contracts including:

• (a) any unilateral option available to the policyholder to extend a Takaful Contract; and
• (b) any unilateral right available to the Takaful Operator to either cancel or renew a Takaful Contract.

8.1.3 Projecting cash flows - Family Takaful Business

In projecting cash flows in relation to Family Takaful Business for the purposes of TRR 8.1.1, a Takaful Operator carrying on Family Takaful Business must take into account the nature of the projections and the factors relevant to its Family Takaful Business, including:

• (a) expected investment earnings;
• (b) expected reinsurance recoveries;
• (c) mortality and morbidity;
• (d) expenses;
• (e) options and guarantees; and
• (f) persistency.