CIB 10.3.2 Regulator may issue collateral notice

Past version: effective from 21/10/2015 - 20/10/2015
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(1) The Regulator may, by written notice (referred to in this Chapteras a 'collateral notice'), require a Captive Insurer to make available assets:
(a) of a type and in a manner described in Rule 10.3.2(5); and
(b) having a value, determined in accordance with the provisions of Chapter 6, of the lower of:
(i) the amount, if any, specified in the notice; and
(ii) the amount determined in accordance with Rule 10.3.2(4).
(2) A Captive Insurer must comply with the requirements of a collateral notice within the period (if any) specified in the notice, or within two months of the date of the notice, whichever is the longer.
(3) The Regulator may at any time, by written notice to the Captive Insurer, vary or revoke a collateral notice issued under Rule 10.3.2(1).
(4) The amount referred to in Rule 10.3.2(1)(b) is calculated as follows:
(a) in the case of a Captive Cell of a Captive Insurer which is an Incorporated Cell Company, the sum of the following two amounts:
(i) the Insurance Liabilities attributable to that Captive Cell; and
(ii) the Minimum Cellular Capital Requirement applicable to that Captive Cell.
(b) in the case of a Long-Term Insurance Fund, subject to Rules 10.3.2(4)(c) and 10.3.2(4)(d), the sum of the following two amounts:
(i) the Insurance Liabilities attributable to that Long-Term Insurance Fund; and
(ii) the Minimum Fund Capital Requirement applicable to that Long-Term Insurance Fund;
(c) in the case of a Captive Insurer that is not an Incorporated Cell Company, the sum of the following two amounts:
(i) the Captive Insurer's Insurance Liabilities; and
(ii) the Captive Insurer's minimum capital requirement as provided for in Rule 2.2.
(d) in the case of a Captive Insurer to which Rules 10.3.2(4)(a) and 10.3.2(4)(c) both apply, the amount set out in 10.3.2(4)(a); and
(e) in the case of a Captive Insurer to which Rules 10.3.2(4)(c) and 10.3.2(4)(d) both apply, the amount set out in Rule 10.3.2(4)(d).
(5) The assets referred to in Rule 10.3.2(1) must be made available in one of or a combination of the two arrangements:
(a) assets of a type described in PIN 4.6.3 may be deposited with a custodian nominated or approved in writing by the Regulator; or
(b) a Person, whose activities are primarily financial in nature and is nominated or approved in writing by the Regulator, may issue a confirmed letter of credit in favour of the Regulator, for the amount of the assets required to be made available.
(6) The terms and conditions of a custody arrangement referred to in Rule 10.3.2(5)(a) or a letter of credit referred to in Rule 10.3.2(5)(b) and any change to those terms and conditions, must be notified to the Regulator, which may within two months of such notification require the Captive Insurer to make any change to the terms and conditions of the arrangement or letter of credit.
(7) The Regulator may, by written notice to a Captive Insurer, require the Captive Insurer to charge in favour of the Regulator part or all of any assets deposited with a custodian in accordance with Rule 10.3.2(5)(a).
(8) The Captive Insurer must reassess, as at the end of March, June, September and December in each year, the amount of the assets that the Captive Insurer is required by a collateral notice to make available, and the amount of assets made available by the Captive Insurer.
(9) The Captive Insurer must report to the Regulator, within two months of the date as at which the reassessment referred to in Rule 10.3.2(8) is performed, the results of that reassessment and details of any action taken or proposed to be taken as a result of that assessment.
(10) If the reassessment referred to in Rule 10.3.2(8) shows that the amount of assets made available is less than the amount that the Captive Insurer is required to make available, the Captive Insurer must, within two months of the effective date of the reassessment, make additional assets available so that the Captive Insurer complies with the requirements of the collateral notice.
(11) If the reassessment shows that the amount of assets made available is more than the amount that the Captive Insurer is required to make available, the Captive Insurer may, with the written consent of the Regulator, remove assets from those made available provided that the Captive Insurer complies with the requirements of the collateral notice after the assets have been removed.