The solvency template developed by the Authority shall be based on the following principles:
The Solvency Capital Requirement shall be calculated on the presumption that the Company will pursue its business as a going concern.
The Solvency Capital Requirement shall be calibrated so as to ensure that all quantifiable risks to which each Company is exposed are taken into account. It shall cover existing business, as well as the new business expected to be written over the following twelve (12) months. It shall correspond to the Value-at-Risk of the Basic Own Funds of a Company subject to a confidence level of 99.5% over a one year period.
The Solvency Capital Requirement should cover the following risks:
Underwriting risk;
Market and Liquidity (Investment) risk
Credit risk; and
Operational risk.
The Company is required to calculate their Solvency Margin based on the solvency template developed, and amended from time to time, by the Authority.
The Solvency Capital Requirement shall be calculated as follows:
At the UAE level only for branches of foreign insurance and reinsurance Companies;
At the group level for local insurance and reinsurance Companies having branches or subsidiaries outside the UAE; and
At the UAE level only for all other insurance and reinsurance Companies.
For the purpose of solvency reporting, the Authority may:
Determine the nature, scope and format of the information required for solvency, based on certain frequencies as follows:
On an annual basis;
On a quarterly basis;
Upon occurrence of predefined events; and
During enquiries regarding the situation of the Company.
Obtain any information regarding contracts which are held by intermediaries or regarding contracts which are entered into with third parties; and