The Securities and Exchange Commission of Pakistan (SECP) has revised net retained exposure limit and collateral requirements for insurance companies. The SECP has issued S.R.O. 345 (I)/2020 Tuesday to amend Credit and Suretyship (Conduct of Business) Rules, 2018. According to the draft amendments issued by the SECP, an insurer's net retained exposure under any type of guarantee/bond issued by the insurer to a party or a group shall not exceed 2.5 percent of the insurer's shareholders' equity as per the latest available audited accounts of the insurer on the date of issuance of a guarantee/bond. Subject to limit prescribed, an insurer shall procure collateral in case of guarantees/bonds of an amount equivalent to at least 10 percent of the sum insured/amount of bond/guarantee. An insurer shall, at all times, ensure that the aggregate net retained exposure on all outstanding and in-force guarantees/bonds, on which these rules apply, shall not exceed the greater of 100 percent or such other percentage as the Commission may notify from time to time through notification, of the insurer's shareholders' equity, the SECP added. Following is the text of the S.R.O. 345 (I)/2020 issued on Monday:- In exercise of the powers conferred by section 83 of the Insurance Ordinance (XXXIX of 2000), read with sub-section (2) of section 167 thereof, the following draft of amendments to the Credit and Suretyship (Conduct of Business) Rules, 2018, is hereby published by the Securities and Exchange Commission of Pakistan for information of all persons likely to be affected thereby and notice is hereby given that objections and suggestions, if any, received to the Securities and Exchange Commission of Pakistan within the thirty days of this notification will be taken into consideration.
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