AA-4.3A AA-4.3A Role of Actuary in Takaful Firm
AA-4.3A.1
In addition to the requirements under Section AA-4.3, all Family
Takaful firms must submit to the CBB an annual FCR and all GeneralTakaful firms must submit an FCR once every two years from their actuary which must comply with the requirements outlined in this Section as well as in other parts of this Chapter in carrying out their actuarial duties.Added: April 2014Certification of Wakala Fees
AA-4.3A.2
Takaful firms must ensure their actuary certifies the Wakala fees being charged by the shareholder fund to the participants fund(s). The certified Wakala fee must also be approved by the Shari'a Supervisory Board.Added: April 2014AA-4.3A.3
The actuary must ensure that the contributions charged to the participants, must, at a minimum, cover the claims costs and Wakala fees.
Added: April 2014Participants' Fund(s) Underwriting Loss
AA-4.3A.4
Where a participants fund(s) incurs an underwriting loss, the
Takaful firm actuary must provide an explanation which outlines the reasons for such loss and the remedial steps being taken by theTakaful firm to address any deficit in the participants' fund(s).Added: April 2014Distribution of Surplus
AA-4.3A.5
In accordance with Section CA-8.5, any distribution of surplus from a participants' fund(s) must be recommended by the
Takaful firm 's actuary and must be based on a full valuation of liabilities as certified by the actuary and in line with audited financial statements.Added: April 2014Earmarked Assets
AA-4.3A.6
As outlined in Paragraph CA-8.4.4 and Section CA-8.4A,
earmarked assets are an integral component of the solvency and liquidity requirements of aTakaful firm . A separate amount ofearmarked assets must be allocated for each participants' fund, for each reporting period by estimating:(a) The likely impact of adjustments (deductions) of the participants' fund assets as per the admissibility rules (limits) under Chapter CA-4; and(b) The liquidity needs of the participants' fund.Added: April 2014AA-4.3A.7
The computed figure of the
earmarked assets for each participants' fund are allocated to theinsurance business amount of the respective fund to reduce the effect of the admissibility deductions on the participants' funds available capital. As outlined in Chapter CA-4, theinsurance business amount is used in the calculation of the participants' fund available capital to meet the solvency requirements.Added: April 2014AA-4.3A.8
Earmarked assets , and in particular cash and those assets converted to cash, are also used to provide the necessary liquidity to the participants' fund(s) as outlined in Section CA-8.4A and are separately allocated to meet the liquidity needs.Added: April 2014AA-4.3A.9
In light of the critical role of
earmarked assets in assessing solvency and addressing any liquidity shortfall in aTakaful firm , the actuary must carry out quarterly, or more frequently as required, appraisals of the solvency and liquidity status of the participants' fund(s). The actuary must determine and document the level at which the reassessment of earmarked assets is triggered.Added: April 2014AA-4.3A.10
The actuary's appraisals required under Paragraph AA-4.3A.9 are required to determine the impact of the admissibility deductions and liquidity needs in case of a cash deficit and to ensure that the
Takaful firm maintains a sufficient level ofearmarked assets to meet any solvency or liquidity requirements.Added: April 2014AA-4.3A.11
As a follow up to the required appraisals of solvency and liquidity requirements outlined under Paragraph AA-4.3A.9, the actuary must determine if the level of
earmarked assets meets the solvency and liquidity requirements and recommend to theTakaful firm any increase needed to theearmarked assets to comply with these requirements. The actuary's recommendation must also be approved by theTakaful firm 's board of directors.Added: April 2014
