ADGM Captive Insurance Business Rules (CIB Rulebook)chapter by chapter

Rule 1.3.31.3.3 ADGM incorporation requirement

An insurer not incorporated in ADGM is prohibited from being licensed or operating as a captive insurer under the ADGM framework.

Rules 1.3.1-1.7.21.3-1.7 Classes of Captive Insurance Business

Captive Insurers may only conduct business within their permitted classes, with specific limitations on third-party risks and related business pools.

Rule 2.1.12.1 Financial resources

A Captive Insurer must at all times maintain financial resources of the kinds and amounts required by the rulebook's financial resources requirements.

Rule 2.1.22.1 Financial resources - additional adequacy

A Captive Insurer must maintain at all times additional financial resources adequate to its business nature, size and complexity, so liabilities can be met as they fall due.

Rule 2.1.32.1 Financial resources - systems and controls

Captive insurers must maintain systems and controls to monitor minimum capital and solvency requirements and demonstrate at all times compliance with financial resources requirements.

Rule 2.2.1(1)-(2)2.2 Minimum capital requirement

A captive insurer must at all times hold minimum capital equal to the highest of the base capital, premium risk and technical provision risk component requirements.

Rule 2.2.1(3)2.2 Minimum capital requirement - Regulator direction

The Regulator may, by written notice, direct a captive insurer to hold a minimum capital requirement higher than the Rules otherwise require.

Rule 2.2.22.2 Base capital requirement

Captive Insurers must maintain base capital of $150,000 (Class 1), $250,000 (Class 2), $500,000 (Class 3) or $1 million (Class 4), unless the Regulator sets other amounts.

Rule 2.2.32.2 Premium risk component

A Captive Insurer must calculate its premium risk component as 18% of Net Written Premium up to $5 million plus 16% above that amount.

Rule 2.2.42.2 Technical provision risk component - General Insurance

A Captive Insurer conducting General Insurance Business must calculate its technical provision risk component as 5% of net claims reserve, including any contracts or classes directed by the Regulator.

Rule 2.2.52.2 Technical provision risk component - Long-Term Insurance

A Captive Insurer conducting Long-Term Insurance must calculate its technical provision risk component as 2.5% of policyholder liabilities, using actuarial methods for long-term insurance.

Rule 2.2.62.2 Regulator discretion for Class 2/Class 4 amounts

When setting Class 2 or Class 4 captive insurer amounts, the Regulator considers business nature, size and complexity, third-party risks insured, close linkage to the group, premium share from third parties, and undue risk to cedants or policyholders.

Rule 2.2.7(a)-(b)2.2 Breach notification and distribution restriction

Captive Insurers must orally notify the Regulator within one Business Day of any actual or suspected breach, confirming in writing by the next business day with remedial action.

Rule 2.2.7(c)2.2 Distribution restriction pending Regulator permission

A Captive Insurer must not pay dividends or make any other distribution to shareholders or members after a Chapter 2 breach, without the Regulator's written permission.

Rule 2.3.12.3 Regulatory Return scope and exemptions

The Regulator may require a captive insurer to prepare additional regulatory returns or grant full or partial exemptions, which may carry conditions the insurer must fully comply with.

Rule 2.3.22.3 Annual Regulatory Return preparation

A captive insurer must prepare an annual regulatory return at each reporting period end, including prescribed statements, any supplementary notes, and a statement by directors in the required form.

Rule 2.3.2(4)2.3 Notification of inconsistent liability values (General Insurance)

Captive Insurers must notify the Regulator in writing of reasons and alternative assumptions when Regulatory Returns report General Insurance Liabilities inconsistently with the Actuary's figure.

Rule 2.3.2(5)2.3 Notification of inconsistent liability values (Long-Term Insurance)

A captive insurer whose annual regulatory return reports long-term insurance liabilities inconsistent with the amount under the specified rule must notify the Regulator in writing, giving reasons and alternative assumptions or methods used.

Rule 2.3.42.3 Audit of annual Regulatory Return

Every Captive Insurer's annual Regulatory Return must be audited under International Standards on Auditing, with the auditor reporting in writing to directors and the regulator on compliance, fair presentation and consistency with records.

Rule 2.3.52.3 Global, Cell and Fund Returns

Captive Insurers must complete a Global Return for all financial metrics, while Cell Companies must additionally provide a Cell Return for each Captive Cell.

Rule 2.3.62.3 Content and calculation of Regulatory Returns

Regulatory returns must disclose items per the Regulator's guidelines and prudential reporting systems, and calculated items must use the prescribed calculation unless the Rules or guidelines require otherwise.

Rule 2.3.7(1)-(2)2.3 Submission of annual Regulatory Return

Captive Insurers must submit their annual Regulatory Return in writing to the Regulator within four months of the reporting date, using EPRS as instructed.

Rule 2.3.7(3)2.3 Statement by Directors signatories

Captive Insurer's annual Regulatory Return Statement by Directors must be signed pre-submission by the Senior Executive Officer and a second Director who is not the Senior Executive Officer.

Rule 2.3.7(4)2.3 Retention of Statement by Directors and Regulatory Return

Directors must retain signed copies of their Statement and the annual Regulatory Return for at least six years for regulatory inspection.

Rule 2.3.7(5)-(6)2.3 Submission of Auditor and Actuarial reports

A Captive Insurer must submit its Auditor's report and any actuarial report to the Regulator within four months of the reporting date, each signed by its preparer.

Rule 2.3.7(7)2.3 Quarterly Regulatory Return

A captive insurer must submit any quarterly regulatory return required by the Regulator in writing, in the manner and within the time period the Regulator prescribes.

Rule 2.3.7(8)2.3 Correction of inaccurate/incomplete Regulatory Returns

Captive insurers notified by the Regulator within 24 months of submission that a regulatory return is inaccurate or incomplete must correct and re-submit the relevant parts within one month of notification.

Rule 2.3.7(9)2.3 Submission of shareholder/policyholder affairs report

A captive insurer must submit its shareholder or policyholder affairs report with its annual regulatory return, or as soon as practicable afterwards.

Rule 2.3.82.3 Group capital adequacy reporting

A Captive Insurer must comply with the PIN rulebook requirements on reporting group capital adequacy.

Rule 2.3.9(1)-(2), (5)2.3 Form completion standards

Captive insurers' supplementary notes must identify their form, returns must be in English, and each Statement by Directors page must show licence number and reporting period.

Rule 2.3.9(3)2.3 Comparative information requirements

Captive Insurers must present prior-period comparative information where required, construct hypothetical comparatives where needed, and not alter prior comparatives except for interpretation, explained by a Supplementary Note.

Rule 2.3.9(6)2.3 Class of Business / contract-type aggregation thresholds

Captive insurers must present all applicable classes or contract types in class-of-business reporting, but items below 2% of the relevant total may be aggregated with the largest class.

Rule 2.3.9(7)2.3 Intra-entity income netting

Captive Cells or Long-Term Insurance Funds must show intra-entity investment income, interest, dividends, rental and recharged expenses gross across reporting units, netting only when recorded within the same reporting unit.

Rule 2.3.102.3 Statement by Directors content

Directors' statement accompanying the annual regulatory return must confirm preparation under applicable rules, proper accounting records, sound controls, and compliance; untrue statements require a supplementary note explaining why.

Rule 2.4.12.4 Risk management systems

Captive insurers must maintain risk management systems suited to their operations, covering all material risks, with a senior-management-approved written strategy, risk policies and clear managerial responsibilities.

Rule 2.4.22.4 Management of particular risk categories

A captive insurer must maintain a risk management system covering reserving, investment, underwriting, liquidity, credit, fraud, compliance, outsourcing, cyber, reinsurance and climate-related financial risk.

Rule 2.4.32.4 Record-keeping

A Captive Insurer must keep records adequate to meet its obligations under insurance contracts it has effected and to demonstrate compliance with the Rules.

Rule 2.52.5 Restrictions on Captive Insurance Business

A captive insurer must comply with the statutory restrictions on the business it may undertake, including the authorisation requirements under Part 4 of the Financial Services and Markets Regulations.

Rule 3.1.2(1)3.1 Total eligible capital calculation

A captive insurer must calculate total eligible capital from permanent share capital, retained earnings or losses, and permitted letters of credit, less deductions for subsidiary investments, intangible assets, and regulator-directed assets.

Rule 3.1.2(2)-(3)3.1 Regulator adjustments to eligible capital

The Regulator may by written notice allow an instrument to count as eligible capital, direct an asset be deducted from capital, or permit the 50% cap to be exceeded.

Rule 3.1.33.1 Permanent Share Capital qualifying conditions

Permanent Share Capital counts toward eligible capital only if fully paid, undated, non-redeemable, loss-absorbing, pari passu on winding up, with dividends payable at the issuer's option.

Rule 3.1.43.1 Qualifying letters of credit

Letters of credit count as eligible capital for captive insurers only if they meet prescribed conditions, including irrevocability, ADGM enforceability, bank rating of at least BBB+, and obtaining Regulator permission.

Rule 3.1.4(4)3.1 Notification and remediation on loss of qualifying LC status

A Captive Insurer must immediately notify the Regulator in writing if a letter of credit loses qualifying status, and replace it to keep meeting minimum capital requirements.

Rule 3.1.53.1 Intangible assets deduction

Intangible assets such as goodwill, capitalised development costs, brand names, intellectual property and licences must be deducted from eligible capital at their full balance sheet value.

Rule 3.1.63.1 Asset investment requirements

Captive Insurers must invest assets to ensure security, quality, liquidity and profitability, only in assets whose risks they can identify and manage, and avoid excessive issuer or concentration risk.

Rule 4.2.14.2 Non-cellular eligible capital minimum

A captive insurer operating as a cell company must at all times hold non-cellular eligible capital of at least $50,000.

Rule 4.2.2-4.2.44.2 Recourse agreements to Non-Cellular Assets

Captive cells may count non-cellular assets held under a Regulator-approved recourse agreement toward the $50,000 non-cellular eligible capital requirement, and the Regulator may require aggregated reporting.

Rule 4.34.3 Attribution of Contracts of Insurance to Captive Cells

Captive Insurers operating as cell companies must ensure each contract of insurance written is attributable to a specific captive cell.

Rule 4.6.14.6 Premium risk component for a Captive Cell

Premium risk capital for a captive cell is 18% of Net Written Premium up to $5 million, plus 16% of Net Written Premium above $5 million.

Rule 4.74.7 Technical provision risk component for a Captive Cell (General Insurance)

A captive cell writing general insurance must hold a technical provision risk component of 5% of its net claims reserve, including any contracts the Regulator directs be included.

Rule 4.84.8 Technical provision risk component for a Captive Cell (Long-Term Insurance)

A Captive Cell conducting long-term insurance business must hold a technical provision risk component equal to 2.5% of its attributable policyholder liabilities, calculated using actuarial methods.

Rules 4.4.1-4.5.24.4-4.5 Minimum solvency criterion for active Cells

An active Captive Cell must keep net Cellular Assets of at least $50,000 or the risk-based minimum solvency requirement, whichever is higher, excluding deductible assets.

Rule 5.15.1 Management systems and controls

Captive insurers must comply with the management systems and controls provisions referenced in the general GEN 3 rules.

Rule 5.25.2 Outsourcing of managerial functions

A Captive Insurer may outsource its managerial functions only to a Captive Insurance Manager and no other party, subject to the outsourcing requirements in GEN 3.3.

Rule 6.1.16.1 General valuation requirement

A Captive Insurer must value its assets and liabilities under the valuation chapter, with permitted conservative-valuation options and any valuation direction from the Regulator.

Rule 6.26.2 Classification of contracts by Class of Business

A Captive Insurer must classify all insurance and reinsurance contracts by Class of Business in its own records, separately recording portions of multi-class contracts unless immaterial.

Rule 6.56.5 Valuation systems and controls

A Captive Insurer must maintain systems and controls for prudent, reliable valuation estimates, including documented valuation policies, independent valuation frequency, price timing, adjustments, and guidelines for unobservable inputs.

Rule 6.66.6 Marking to market

A Captive Insurer must mark its Investments to market using readily available independent close-out prices, preferring the more prudent side of bid or offer where possible.

Rule 6.76.7 Independent price verification

A captive insurer must independently verify market prices and model inputs regularly, and apply prudent measures such as valuation adjustments where independent pricing sources are unavailable.

Rule 6.86.8 Valuation adjustments/reserves

A captive insurer must maintain procedures for valuation reserves, consider them when using third-party valuations or marking to model, and periodically review reserve needs for less liquid positions.

Rule 6.9.1-6.9.26.9 Establishment of technical provisions

A Captive Insurer must establish technical provisions for all insurance and reinsurance obligations, equal to best estimate plus risk margin, valued at the amount needed to transfer them.

Rule 6.9.36.9 Technical provisions calculation principles

A Captive Insurer must calculate technical provisions prudently using market and underwriting data, covering all servicing expenses, inflation, policyholder payments including discretionary bonuses, and realistic lapse and surrender assumptions.

Rule 6.9.4-6.9.56.9 Best estimate calculation

Insurers must calculate the best estimate liability as the probability-weighted average of future cash flows, discounted at the prescribed rate, using current credible information, realistic assumptions and gross of reinsurance recoverables.

Rule 6.9.6-6.9.96.9 Risk margin calculation

The risk margin in insurance technical provisions must be calculated separately from the best estimate, reflecting the cost of providing eligible capital equal to the minimum capital requirement, using the regulator's specified cost-of-capital rate.

Rule 6.9.106.9 Replicating portfolio approach

Captive Insurers must value technical provisions based on observable market values of financial instruments without separate best estimate/risk margin calculations.

Rule 6.12.1-6.12.26.12 Discount rates

Captive Insurers must apply discount rates determined under IFRS 17 and disclose in audited financial statements the discount rates used and the methodology for deriving them.

Rule 6.136.13 Transfer of risk to an ISPV

Captive Insurers cannot treat amounts recoverable from an ISPV as assets unless a waiver is obtained from the Regulator.

Rule 6.146.14 Recognition of reinsurance receivables

A Captive Insurer may recognise expected reinsurance receivables only if contracts and risk transfer are enforceable everywhere and the reinsurer is solvent or collateral covers the receivable.

Rules 6.3.1-6.4.26.3-6.4 IFRS recognition, measurement and FVTPL adjustment

A captive insurer must measure assets, liabilities and income under IFRS, adjusting fair-value-designated liabilities by unrealised gains and losses not linked to benchmark interest rate changes.

Rules 6.10.1-6.10.86.10 Recognition and measurement - General Insurance

Captive insurers must recognise general insurance premiums as receivable from the earliest of coverage start, payment due or onerous contract, and measure claims and reinsurance assets under IFRS 17.

Rules 6.11.1-6.11.76.11 Recognition and measurement - Long-Term Insurance

Captive Insurers must recognize long-term insurance reinsurance premiums as receivable at coverage start and calculate liabilities per IFRS 17.

Rule 7.1.1-7.1.27.1 Frequency of actuarial reporting

Captive insurers must prepare an annual actuarial report for long-term business and a report at least every three years for general business, reviewed annually for need.

Rule 7.2.37.2 General Insurance actuarial report content

The General Insurance actuarial report, prepared by a qualified Actuary, must address each Class of Business's experience, liability estimates, assumptions, data adequacy, models, variability and sensitivity analysis.

Rule 7.3.7-7.3.87.3 Jurisdictional segregation of Direct Long-Term Insurance reporting

Captive insurers carrying on direct long-term insurance must segregate Rule 7.3.6 report content by jurisdiction, though the Actuary may aggregate disclosures for jurisdictions of limited significance.

Rule 7.4.17.4 Actuary appointment contract requirements

Captive Insurers must ensure a binding contract with the Actuary for preparing reports, allowing timely submission to directors and addressing concerns if necessary.

Rule 7.4.2-7.4.37.4 Submission of actuarial reports with annual Return

A Captive Insurer must submit its actuarial reports to the Regulator together with its annual Regulatory Return, and may provide abbreviated details for immaterial Classes of Business.

Rule 7.5.17.5 Actuary access to data and information

Captive Insurers must keep appointed Actuaries informed of business plans and provide access to necessary data to fulfill regulatory obligations.

Rule 7.6.17.6 Actuary qualifications and independence

An Actuary providing a captive insurer's actuarial report must have relevant liability experience and must not serve as Chairman, CEO, or in any role creating a significant conflict of interest.

Rule 7.6.2-7.6.37.6 Notification and rejection of proposed Actuary

A Captive Insurer must notify the Regulator in writing of each proposed Actuary's name, qualifications and experience; the Regulator may require replacement if unqualified.

Rules 7.3.2-7.3.67.3 Long-Term Insurance actuarial investigation and report content

A Captive Insurer conducting long-term insurance business must arrange an annual actuarial investigation of its financial condition, reported in writing within four months, covering liabilities and Fund surplus determination.

Rule 8.1.38.1 Regulator discretion to direct Fund establishment

The regulator may, at its sole discretion, direct a captive insurer writing long-term insurance business to establish one or more long-term insurance funds.

Rule 8.28.2 Attribution of contracts to Long-Term Insurance Fund

All long-term insurance contracts must be attributed to a Long-Term Insurance Fund, and general insurance contracts may not be so attributed except Class 1 or Class 2 general contracts.

Rule 8.38.3 Segregation of Fund assets, liabilities and records

A captive insurer must attribute contract assets, liabilities, revenues and expenses to its Long-Term Insurance Fund and keep records segregating each fund's items.

Rule 8.4.1-8.4.28.4 Restrictions on use and transfer of Fund assets

Assets of a Long-Term Insurance Fund may only be used for the Fund's business, with five permitted exceptions: surplus appropriation, dividends, fair-value exchanges, expense reimbursement and error correction.

Rule 8.4.3-8.4.48.4 Distribution restrictions from Long-Term Insurance Funds

Long-Term Insurance Fund assets may not be distributed as dividends or capital returns, except limited surplus appropriations capped at full surplus within four months or 50% thereafter.

Rule 8.4.58.4 Prohibition on lending Fund assets

Assets attributable to a Long-Term Insurance Fund must not be lent or made available for other purposes of the Captive Insurer or any related party.

Rule 8.4.68.4 Prohibited reinsurance-like arrangements

A Captive Insurer may not enter any arrangement, however labelled, in which a Long-Term Insurance Fund effectively acts as cedant to the Captive Insurer as reinsurer.

Rule 8.5.18.5 Prohibited Direct Long-Term Insurance contract features

Captive insurers must not issue direct long-term insurance contracts with guaranteed investment components, guaranteed annuity options, or vesting bonuses unless the Regulator grants permission.

Rule 8.5.2-8.5.48.5 Permission request and grant for prohibited features

Insurers seeking permission for a Direct Long-Term Insurance contract with a prohibited feature must submit a written request with terms, pricing methodology and risk approach, and comply with conditions.

Rule 8.5.58.5 Supervision of Direct Long-Term Insurance business by jurisdiction

A Captive Insurer conducting Direct Long-Term Insurance Business must adequately supervise that business in each jurisdiction where it is undertaken.

Rules 8.1-8.1.28.1 Establishment of Long-Term Insurance Funds

Captive Insurers and Captive Cells attributing long-term insurance business must separately record its assets, liabilities, revenues and expenses, and either establish long-term insurance funds or notify the Regulator of a single fund.

Rule 9.19.1 Business transfer compliance

A captive insurer must comply with the business transfer provisions of the Financial Services and Markets Regulation.

Rule 10.2.210.2 Notification of decision to cease effecting contracts

Captive insurers ceasing new contracts in a class of business must notify the regulator in writing within 28 days and not write further contracts without written permission.

Rule 10.2.310.2 Run-off plan on entering run-off

Captive Insurers must submit a written run-off plan to the Regulator when entering run-off.

Rule 10.2.410.2 Run-off plan on Regulator withdrawal of permission

A Captive Insurer must submit a written run-off plan to the Regulator within 28 days if permission to effect contracts is withdrawn.

Rule 10.2.510.2 Run-off plan content and duration

Run-off plans must cover the full run-off period until policyholder liabilities are met, with projections, business strategy, and stress-tested sensitivity assessments against realistic scenarios.

Rule 10.2.6-10.2.710.2 Monitoring and amending the run-off plan

Captive Insurers must monitor their run-off plans, notify the Regulator of significant changes, and amend the plan within 28 days if directed.

Rule 10.3.2(1)-(3)10.3 Collateral notice requirements

The Regulator may require a Captive Insurer in run-off to make available prescribed collateral assets equal to the lower of the notified amount or calculated amount.

Rule 10.3.2(4)10.3 Collateral amount calculation

The collateral amount for a captive cell, fund or non-cell company equals insurance liabilities plus the applicable minimum capital requirement, with precedence rules for overlapping bases.

Rule 10.3.2(5)-(7)10.3 Collateral arrangement type and notification of terms

Collateral must be held through a regulator-approved custodian or a confirmed letter of credit in the regulator's favour, with arrangement terms notified to the regulator, which may require changes.

Rule 10.3.2(8)-(11)10.3 Quarterly reassessment and reporting of collateral

A captive insurer under a collateral notice must reassess its required and actual collateral quarterly and report results and actions to the Regulator within two months.

Rule 10.3.310.3 Notification of run-off-related contracts

A Captive Insurer in run-off must notify the Regulator in writing of run-off-related contracts with related parties, management or reinsurance arrangements, and provide further information on request.

Rule 10.410.4 Restrictions on distributions during run-off

Run-off Captive Insurers may not make distributions, capital returns or management fee payments without Regulator's written consent, and must pay within the consent notice period.

Rule 2.3.7(4)-retRecord Retention — Original signed hard copy of the Statement by Directors, plus a copy of the annu

Firms must keep the original signed hard copy of the Statement by Directors and a copy of the annual regulatory return submitted via EPRS for at least six years.