Insurance (prudential standard) determination No. 3 of 2023 (Cth)

Insurance (prudential standard) determination No. 3 of 2023 Prudential Standard GPS 112 Capital Adequacy: Measurement of Capital Insurance Act 1973 I, Helen Rowell, a delegate of APRA: 1. under subsection 32(4) of the Insurance Act 1973 (the Act), revoke Insurance (prudential standard) determination No. 2 of 2019, including Prudential Standard GPS 112 Capital Adequacy: Measurement of Capital made under that Determination; and 2. under subsection 32(1) of the Act determine Prudential Standard GPS 112 Capital Adequacy: Measurement of Capital, in the form set out in the Schedule, which applies to: 3. all general insurers and authorised NOHCs; and 4. a subsidiary of a general insurer or authorised NOHC, where that subsidiary is a parent entity of a Level 2 insurance group. This instrument commences on 1 July 2023. Dated: 24 May 2023 [Signed] Helen Rowell Deputy Chair Interpretation In this instrument: APRA means the Australian Prudential Regulation Authority. authorised NOHC has the meaning given in section 3 of the Act. general insurer has the meaning given in section 11 of the Act. Level 2 insurance group has the meaning given in Prudential Standard GPS 001 Definitions. parent entity has the meaning given in Prudential Standard GPS 001 Definitions. subsidiary has the meaning given in Prudential Standard GPS 001 Definitions. Schedule Prudential Standard GPS 112 Capital Adequacy: Measurement of Capital, comprises the document commencing on the following page. Prudential Standard GPS 112 Capital Adequacy: Measurement of Capital Objectives and key requirements of this Prudential Standard * This Prudential Standard sets out the characteristics that an instrument must have to qualify for inclusion in the capital base of a general insurer or Level 2 insurance group and the various regulatory adjustments to be made to determine the capital base. The ultimate responsibility for ensuring that the capital base of a general insurer or a Level 2 insurance group meets the requirements of this Prudential Standard rests with its Board of directors. The key requirements of this Prudential Standard are that a general insurer or Level 2 insurance group must: * comply with the minimum requirements regarding the size and composition of the capital base; * include in the appropriate category of capital (i.e. Common Equity Tier 1 Capital, Additional Tier 1 Capital or Tier 2 Capital) only those capital instruments that meet the detailed criteria for that category; * ensure all capital instruments are capable of bearing loss; and * make certain regulatory adjustments to capital, mainly from Common Equity Tier 1 Capital, to determine the capital base.