The document provides a non-technical overview of solvency margins and requirements for insurance companies in the UAE, emphasizing the importance of compliance with financial regulations. It details minimum capital requirements, solvency capital requirements, and reporting obligations, including the necessity for actuaries to certify financial condition reports. Additionally, the guide underscores the role of actuaries in evaluating the financial health of companies and offers a simplified understanding of the complex regulatory landscape.

1. A non-technical
guide to Solvency
Margin in UAE
JABRAN NOOR, FSA FIA
Executive Director - Actuarial & Risk Management
Tajweez Advisory
tajweezactuarial.com
NON-TECHNICAL GUIDE SERIES

2. Tajweez Actuarial provides a brief synopsis of the
Insurance Regulations in the GCC through the
“Non-Technical Guide Series”
We aim to bring clarity and achieve common
understanding of compliance requirements.
NON-TECHNICAL GUIDE SERIES
Our consultancy services are based around
insightful simplification of complex ideas.
tajweezactuarial.com

3. 2.
3.
1. Solvency Overview
FCR Report Consideration
3
Solvency Reporting Requirements
4. Our Services

4. Financial Regulations for
Insurance and Takaful
Companies issued in 2014.
Companies have to report to
Insurance Authority initially.
Actual implementation have
been deferred to the future.
UNITED ARAB EMIRATES
4

5. Tajweez Advisory CO WLL - Solvency Assessment in UAE - Jabran Noor
Solvency Overview
5
2015
Minimum Capital
Requirement
Minimum Guarantee
Fund
Solvency Capital
Requirement (SCR)
Solvency is the
higher of
2015
Underwriting Risk
Market & Liquidity Risk
Credit Risk
Operational Risk
Risks Covered by SCR

6. Tajweez Advisory CO WLL - Solvency Assessment in UAE - Jabran Noor
Solvency Overview
6
1. What is an absolute Minimum Capital Requirement?
The absolute Minimum Capital Requirement has been fixed at AED 100 million for insurance companies and
AED 250 million for reinsurance companies. This minimum subscribed and paid up capital of the company
should not be less than this amount.
2. What is the Minimum Guarantee Fund?
The Minimum Guarantee Fund is equal to one-third of the Solvency Capital Requirement. Companies whose
Own Capital fall below the Minimum Guarantee Fund are required to submit a recovery plan to achieve
compliance within 3 months, as opposed to 6 months required for achieving Minimum Capital Requirement
or Solvency Capital Requirement.

7. Tajweez Advisory CO WLL - Solvency Assessment in UAE - Jabran Noor
FCR Overview
7
3. What is the Solvency Capital Requirement?
Traditional FCR was only required for long term business (e.g. Life Insurance) in many regulatory regimes.
However, there is a global move towards requiring FCR for all insurance companies i.e. both long term and
short term business (e.g. non-life). The frequency of reporting may however vary between long term and
short term business in some regimes.
4. Why is a FCR needed when companies already disclose position in prudential forms?
FCR is usually prepared by an actuary who provides opinion on the current and future position of the
company. This is frequently done qualitatively, although quantitative approaches are not precluded. The
prudential forms are a static assessment of the current financial position of the company. FCR has a higher
level of disclosure than prudential forms.

8. Tajweez Advisory CO WLL - Solvency Assessment in UAE - Jabran Noor
Solvency Reporting Requirements
8
Solvency Template and related information to be submitted to the Regulator on annual
basis.
Template must be certified by the actuary, external auditor and endorsed by the
Chairman of Board of Directors.
Template has to be submitted within 4 months of fiscal year end.
A Solvency Capital Requirement certified by the Actuary on a quarterly basis has to be
submitted within a period of 45 days from quarter end.
In case of breach of Minimum Fund or Solvency Capital Requirement, Company will
need to report to the regulator immediately with a recovery plan.
Documented Risk Management Policy plus Stress Testing Framework

9. Tajweez Advisory CO WLL - Solvency Assessment in UAE - Jabran Noor 9Tajweez Advisory CO WLL - Solvency Assessment in UAE - Jabran Noor
This visualisation is only indicative of key factors affecting SCR and for educational purpose only.
tajweezactuarial.com

10. Tajweez Advisory CO WLL - Solvency Assessment in UAE - Jabran Noor
Solvency Requirements - Quality of
Funds
10
Basic Own Funds
Ancilliary Own Funds
Grading of Funds
Atleast 100% of the MCR should be
backed by Basic Own Funds
Atleast 100% of the SCR and MGF
should be backed by Basic Own Funds
and 50% of Ancilliary Own Funds
Concept of Admissible Assets apply to
Basic Own Funds

11. Tajweez Advisory CO WLL - Solvency Assessment in UAE - Jabran Noor
FCR Report Considerations
11
Certification of Reserves
Solvency Capital
Underwriting Policies
Investment Strategy
Enterprise Risk Management
Pricing / Premium Adequacy
Reinsurance
Actual Requirements for contents specified in Article 10 of Financial Regulations. Following is a
snapshot of key requirements.
Financial Condition Report to be
submitted when required by Regulator
Certified by Actuary and endorsed by the
Chairman of Board of Directors

12. Tajweez Advisory CO WLL - Solvency Assessment in UAE - Jabran Noor
FCR Report Considerations
12
Financial Condition Report should be an objective assessment of the overall financial
condition of the firm.
Professional standards regarding Financial Condition Reports would provide helpful
It is important for actuary to gain an holistic view of the company before addressing
specific issues e.g. liabilities, reinsurance, pricing etc. Data visualisation and dashboards
may provide insights.
Actuaries should make assessment of the current and future financial position.
Companies should use FCR beyond regulatory compliance. FCR can be used as an
important management tool as well.

13. Tajweez Advisory CO WLL - Solvency Assessment in UAE - Jabran Noor
Our Services
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Appointed Actuary Role
Compliance & Signoff
Dashboards & Visualisation
Risk Assessments
Business overview
Capital Modeling

14. • The guide has been prepared to
describe the regulation in a simple
manner. It is in no means a substitute
to the original regulation.
• No liability is assumed regarding the
accuracy of the information
contained. We welcome your
feedback on any aspect of the report.
• The report should not be reproduced ,
published or disseminated, in part of
full, without explicit permission of
Tajweez Advisory.
• We love exchanging ideas and look
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Information Usage
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15. tajweezactuarial.com
Jabran Noor, FSA FIA
Executive Director -
Actuarial & Risk Management
jabran.noor@tajweez.com
ACTUARIAL
SERVICES
RISK
MANAGEMENT
ANALYTICS
TRAININGS
Our consultancy services are based around
insightful simplification of complex ideas.