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  • Determination of Capital Available

    • CA-1.2.21

      Every insurance firm must determine its capital available in accordance with this Rule:

      Determination of Insurance Firm's Capital Available
        Tier 1 Capital
        Paid-up ordinary shares (net of treasury shares)
        Share premium reserve
        Perpetual non-cumulative preference shares
        All disclosed reserves brought forward, that are audited and approved by the shareholders, in the form of legal, general and other reserves created by appropriations of retained earnings, excluding fair value reserve
        Unappropriated retained earnings, excluding cumulative unrealised fair value gains, brought forward
        Audited current year's earnings net of unrealised fair value gains and before tax expenses
        Overseas Insurance Firms Only: audited net assets, excluding any unrealised fair value gains and surplus assets in long-term funds.
      (A) Total Tier 1 Capital
        Tier 2 Capital — Upper Level
        Interim net income, excluding any unrealised fair value gains, reviewed by the external auditors in accordance with International Standards on Auditing (ISA)
        Perpetual cumulative preference shares
        Mandatory convertible notes and similar capital instruments
        Perpetual subordinated debt
        Other hybrid (debt/equity) capital instruments of a permanent nature
        Investment fair value reserve (IAS 39) and any unrealised fair value gains included in retained earnings, both discounted to 45%.
      (B) Total Tier 2 Capital — Upper Level
        Tier 2 Capital — Lower Level
        Limited life redeemable preference shares with an original term of at least 5 years.
        Dated subordinated debt with an original term of at least 5 years.
        Any other similar limited life capital instruments with an original term of at least 5 years.
      (C) Total Tier 2 Capital — Lower Level: before excess deduction
      (D) Total Tier 2 Capital (B plus C)
      (E) Excess Tier 2 Capital — Lower Level = (C) − [(A) times 50%)] (if negative, excess is 0)
      (F) = (D) − (E) Total Tier 2 Capital — Lower Tier adjusted
      (G) Excess Tier 2 Capital = (F) − [(A) times 100%)] (if negative, excess is 0)
      (H) = (F) − (G) Total Tier 2 Capital
        Deductions from Capital
        Valuation asset differences
        Inadmissible assets by asset category
        Inadmissible assets in excess of counterparty limits
        Required margins of solvency for branches in other jurisdictions.
        Current year's losses, before any tax expenses
        Dividends paid and declared
        Assets pledged or provided as collateral where there is no offsetting liability.
        Tax expenses
        Other appropriations not included as charges to profit and loss statement (e.g. Directors' remuneration, donations)
        Other
      (I) Total Deductions from Capital
      (A)+(H)−(I) CAPITAL AVAILABLE
      Amended: January 2007

    • CA-1.2.22

      In Paragraph CA-1.2.21, under 'Deductions from Capital' the deductions for:

      (a) Inadmissible assets by asset type; and
      (b) Inadmissible assets in excess of counterparty limits

      only apply to those amounts in respect of assets, other than those assets from linked long-term insurance.

      Amended: January 2007

    • CA-1.2.23

      [This Paragraph was deleted in April 2014.]

      Deleted: April 2014
      Amended: January 2007