Measurement of Assets for the purpose of calculation of the solvency margin shall be as detailed below:

1. Investments in Non-Takaful Subsidiaries and Associates
   
   a) Valuation of investments in Subsidiaries and Associates that are listed securities must be on the closing market quotation or the latest available market quotation (whichever is lower).
   
   b) Valuation of investments in Subsidiaries and Associates that are not listed securities must be at economic or market value. A suitable valuation may be used to arrive at this value, but undertakings shall also consider the risks that arise from holding a balance sheet item, using assumptions that market participants would use in valuing the asset or liability.
   
   c) The International Accounting Standards Board’s (IASBs) International Financial Reporting Standards (IFRS) related to "Fair Value Measurement" accounting is considered a suitable measure for true economic value. This proposes a ‘mark-to-market’ approach or, if not possible, a ‘mark-to-model’ approach for all participations, listed and unlisted, taking into account the guidance given by the IASB related to "The valuation of assets and liabilities for solvency assessment purposes". Where the holding is not material however, a Net Asset Value (NAV) approach may be used.
    
2. Real Estate Investments
   
   a) For Admissible Asset purposes, real estate assets such as land and buildings must be valued at market value as assessed by an independent qualified expert. The Company may elect to use book value where that value is less than market value, however where no proper valuation exists the Authority is to appoint an authorized independent real estate firm at the Company’s expense and use the results of the valuation.
   
   b) The admissibility test is to be applied in total to both land and building in instances where the realizable value of the asset is dependent on both the land and the building.
   
   c) For solvency margin calculation purposes, real estate assets such as land and buildings must be valued on a ‘cash flow’ basis.
    
3. Debt / Government Securities
   
   a) Government securities/bonds (both fixed and variable yield securities) must be valued at:
    
   1. 1) In the case of listed securities, the closing market quotation or the latest available market quotation (whichever is lower);
   
   
   2. 2) In the case of securities which are not transferable, the amount payable on surrender or redemption of such securities as at the date the security is being valued; and
   
   
   3. 3) In any other case, the amount which would reasonably be paid by way of consideration for an immediate transfer or assignment thereof.
   
   b) Debt securities (both fixed and variable yield securities) not covered in subparagraph (a) above must be valued at:
    
   1. 1) In the case of listed securities, the closing market quotation;
   
   
   2. 2) In the case of securities which are not transferable, the amount payable on surrender or redemption of such securities as at the date the security is being valued; and
   
   
   3. 3) In any other case, the amount which would reasonably be paid by way of consideration for an immediate transfer or assignment thereof.
    
4. Equity Shares
   
   a) Valuation of equity shares that are listed securities is based on the closing market quotation or the latest available market quotation (whichever is lower).
   
   b) Valuation of equity shares that are not listed securities must be valued at economic or market value. A suitable valuation may be used to arrive at this value, but undertakings shall also consider the risks that arise from holding such a balance sheet item, using assumptions that market participants would use in valuing the asset or liability.
   
   c) The IFRS related to "Fair Value Measurement" accounting is considered a suitable measure for true economic value. This proposes a ‘mark-to-market’ or, if not possible, a ‘mark-to-model’ approach for all participations, listed and unlisted, taking into account the guidance given by the IASB related to "The valuation of assets and liabilities for solvency assessment purposes". Where the holding is not material however, a Net Asset Value (NAV) approach may be used.
    
5. Traded Derivative Contract
   
   A traded derivative contract that is a listed security, for a share or a debenture must be valued at the closing market quotation, and otherwise at the amount which would reasonably be paid by way of consideration for an immediate transfer or assignment thereof.
    
6. Loans Secured by Insurance Policies Issued by the Company
   Valuation of a loan secured by an insurance policy issued by the Company must be as the amount of the loan but not exceeding the amount payable on a surrender of the policy as at the date the policy is being valued.
    
7. Other Assets
   
   a) Valuation of deposits and current account balances with approved financial institutions must be at their carrying value. The admissible value of these assets is their carrying value.
   
   b) The admissible value of any cash holding is its carrying value.
   
   c) Amounts due under contracts of Takaful and Re-Takaful, including salvage and subrogation rights, must be valued at the amounts that can be expected to be recovered. The exceptions being:
    
   1. 1) Advance commission paid to intermediaries which must be valued at nil, except in case of long term life insurance contracts, where advance commission paid should be valued at carrying value in its first year; and
   
   
   2. 2) Amounts that pertain to a subsidiary or associate of the Company must be valued in accordance with subparagraph (1) above.
   
   
   3. 3) Any debt should be valued depending on the exact nature of the debt and its recoverability. In any event and for all debtors, International Financial Reporting Standards related to the “impairment of assets” should be considered.
   
   d) Qard Hasan shall be treated as receivable and considered in calculation of MCR / SCR / MGF as an unsecured and uncovered loan. It should be written off completely if outstanding for three (3) years. Each year's Qard Hasan should be considered separately.
   
   e) For investments that are not specifically covered above, if the investment is due, or will become due, within twelve months from the date at which the investment is being valued (or would become so due if the company exercised some right), valuation should be based on the amount which can reasonably be expected to be recovered in respect of the investment, taking due account of any security held in respect thereof.
    
8. Total Invested Assets
   
   a) For the purposes of asset valuation regulations, ‛Total Invested Assets’ is defined as the sum of the assets in the categories listed in paragraph (1) of Article (3) of the Basis of Investing the Rights of the Participants – Takaful, in Section (1) of this regulation.
   
   b) The Total Invested Assets for the Property and Liability Takaful business shall be segregated and maintained separately from the Total Invested Assets held for Family Takaful and Fund Accumulation operations.