Document ID: chunk:federal_register_of_legislation:F2024L01525:body:0:p43
Version: federal_register_of_legislation:F2024L01525
Segment Type: other
Provision Reference: 
Character Range: 115634–118580

mutual equity interests on issue (determined in accordance with paragraph 1(b)(ii) of this Attachment) are eligible for inclusion in Tier 1 Capital and the capital base.

Attachment G – Transitional arrangements
 1.              The transitional arrangements provide an adjustment to increase the capital base and is phased out over a two-year period. This adjustment will apply to the Common Equity Tier 1 Capital of the private health insurer, and the net assets of each fund.
 1.              For the transitional requirements to be effective, a private health insurer must notify APRA by 30 June 2023 and provide the data described in paragraphs 3(a), 3(b) and 3(c) by 30 September 2023 using a template that will be provided by APRA.
 2.              The Transitional Adjustment is:
Where:
 1.           A is the accounting net assets reported to APRA as at 30 June 2023 in HRS 602
 2.           B is the capital base calculated under this standard as at 30 June 2023
 3.           C is the capital base calculated at the most recent reporting date under this standard (prior to the transitional adjustment being applied)
 4.           X is a percentage which reduces over time, as set out in Table 1
 1.              The Transitional Adjustment only applies where it increases the capital base calculated in accordance with this Prudential Standard.

Table 1: Schedule for X in the Transitional Adjustment

Quarter commencing  X
1 July 2023         100.0%
1 October 2023      87.5%
1 January 20242     75.0%
1 April 2024        62.5%
1 July 2024         50.0%
1 October 2024      37.5%
1 January 2025      25.0%
1 April 2025        12.5%

[1]  The net assets of the private health insurer referred to in subparagraphs 14(d), 14(e) and 14(f) is as defined in subparagraph 8(c) but excludes equity components that are classified as Additional Tier 1 Capital.
[2]           This includes, but is not limited to, the future sale or issuance of a capital instrument and the future conversion of an instrument or debt into ordinary shares or mutual equity interests.
[3]        As an example, repackaging may occur where an instrument is not marketed in line with its prudential treatment, or if the transaction documentation suggests to investors that the instrument has attributes of a lower quality component of capital than claimed for prudential treatment.
[4]  Defined as the insurance contract and reinsurance contract liabilities and assets (including accruals for the cost of reinsurance not recognised in the accounts required to cover premiums liabilities) as defined in Australian Accounting Standards in excess of the sum of the outstanding claims liabilities, premiums liabilities, risk equalisation transfers and other insurance liabilities as defined in HPS 340.
[5]  This includes cumulative unrealised gains or losses on effective cash flow hedges as defined in Australian Accounting Standards.
[6]   These vehicles