12.3.1 Application

TRR 12.3.2 to 12.3.7 apply to:

• (a) Takaful Operators that go into, or are in, run-off, or that maintain Family Takaful Funds that are in run-off;
• (b) Takaful Operators that make a decision to go into run-off or to place a Family Takaful Fund into run-off; and
• (c) Takaful Operators whose Licence to effect Takaful Contracts in respect of their entire Takaful Business or in respect of the entire business of a Family Takaful Fund is withdrawn by the AFSA.

12.3.2. Takaful Operator voluntarily in run-off to provide run-off plan

If a Takaful Operator decides to go into run-off or to place a Family Takaful Fund into run-off, the Takaful Operator must, at the same time as the notice referred to in TRR 12.2.2, provide the AFSA with a written run-off plan in respect of the Takaful Business being placed into run-off.

12.3.3. Takaful Operator directed to go into run-off to provide run-off plan

If the AFSA withdraws a Takaful Operator’s Licence to effect Takaful Contracts in respect of the Takaful Operator’s whole, or a category of, Takaful Business or the whole, or a category of, Takaful Business of a Family Takaful Fund, the Takaful Operator must, within 28 days after the day the Takaful Operator 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 Takaful Business.

12.3.4. What run-off plans must cover

A Takaful Operator 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 Takaful 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 Takaful Operator 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 Takaful Operator’s business, of the Takaful Operator’s business strategy;

(d) financial projections showing, in a form appropriate to the scale and complexity of the Takaful Operator’s operations, the forecast financial position of the Takaful Operator 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 Takaful Operator to stress arising from realistic scenarios relevant to the circumstances of the Takaful Operator;

(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 a Takaful Operator’s Takaful Business in run-off relates to a Family Takaful Fund of that Takaful Operator, the run-off plan must deal with the matters set out in TRR 12.3.4 so far as they relate to that Family Takaful Fund.

12.3.6. Takaful Operator to monitor run-off plan etc

(1) This rule applies to a Takaful Operator that has given a run-off plan to the AFSA.

(2) The Takaful Operator must monitor the matters provided in the run-off plan.

(3) If there is a significant departure from the run-off plan, the Takaful Operator 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 Takaful Operator to amend run-off plan

(1) Where a Takaful Operator has notified a matter to the AFSA in accordance with TRR 12.3.6, the AFSA may by notice in writing require the Takaful Operator to provide an amended runoff plan.

(2) The Takaful Operator must provide an amended run-off plan within 28 days of receipt of the notice, unless the notice specifies a longer period.