• PIN 10 PIN 10 INSURANCE SPECIAL PURPOSE VEHICLES

    • PIN 10.1 PIN 10.1 Application

      • PIN 10.1.1

        This Chapter applies only to Insurers that are Authorised ISPVs.

      • PIN 10.1.2 PIN 10.1.2

        An Authorised ISPV must ensure that at all times its assets are equal to or greater than its liabilities.

        • Guidance

          It is the policy of the Regulator that an Authorised ISPV should be fully funded. The Regulator considers that to be fully funded an ISPV must have actually received the proceeds of the debt issuance or other mechanism by which it is financed. The Regulator would not, for example, authorise an ISPV where part of the financing for its reinsurance liabilities was on a contingent basis, i.e. a stand-by facility or letter of credit.

      • PIN 10.1.3

        The assets of an Authorised ISPV must be held by, or on behalf of:

        (a) the Authorised ISPV; or
        (b) the insurer which cedes to the Authorised ISPV the risks in respect of which the relevant assets are held.

      • PIN 10.1.4

        An Authorised ISPV must develop, implement and maintain a risk management system to address all material risks to which it is subject. In particular, it must have regard to the Guidance on managing investment risk set out in Rule A2.6.

      • PIN 10.1.5

        An Authorised ISPV must include in each of its contracts of reinsurance terms which ensure that its aggregate maximum liability at any time under those contracts of reinsurance does not exceed the amount of its assets at that time.

      • PIN 10.1.6

        An Authorised ISPV must ensure that under the terms of any debt issuance or other financing arrangements used to fund its reinsurance liabilities the rights of the providers of that debt or other financing are fully subordinated to the claims of creditors under its contracts of reinsurance.

      • PIN 10.1.7

        An Authorised ISPV must only enter into contracts or otherwise assume obligations which are necessary for it to give effect to the reinsurance arrangements which represent the special purpose for which it has been established.

      • PIN 10.1.8

        Where the Authorised ISPV is a Cell Company, Rules 10.1.2 to 10.1.7 should be read as applying to each Cell individually.