CA-1.2.21

Entire section

Custom print

Link

Text Only

Rich Text

Print

Location:

Versions

Jun 30 2007
Jul 01 2007

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