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  • Earmarked 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 a Takaful firm. A separate amount of earmarked 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 2014

    • AA-4.3A.7

      The computed figure of the earmarked assets for each participants' fund are allocated to the insurance 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, the insurance business amount is used in the calculation of the participants' fund available capital to meet the solvency requirements.

      Added: April 2014

    • AA-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 2014

    • AA-4.3A.9

      In light of the critical role of earmarked assets in assessing solvency and addressing any liquidity shortfall in a Takaful 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 2014

    • AA-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 of earmarked assets to meet any solvency or liquidity requirements.

      Added: April 2014

    • AA-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 the Takaful firm any increase needed to the earmarked assets to comply with these requirements. The actuary's recommendation must also be approved by the Takaful firm's board of directors.

      Added: April 2014