Document ID: chunk:federal_register_of_legislation:F2024L00884:body:0:p19
Version: federal_register_of_legislation:F2024L00884
Segment Type: other
Provision Reference: 
Character Range: 47629–50624

deduction for investments in subsidiaries, joint ventures and associates that are subject to regulatory capital requirements. The amount of the deduction is the lesser of the life company's share of the regulatory capital requirements[21] and the value of the investment that is recorded on the life company's balance sheet after adjustment for any intangible component in accordance with paragraphs 15 and 17 of this Attachment. This deduction must be applied after any deduction for intangibles in the investment in accordance with paragraphs 15 and 17 of this Attachment.
22.         For the purposes of the deduction in paragraph 21 of this Attachment, the regulatory capital requirement of the investment is:
(a)          the prescribed capital amount if the investment is in a life company as defined under the Act; or
(b)          the equivalent amount to the prescribed capital amount if the investment is an entity carrying on life insurance business in a foreign jurisdiction; or
(c)          a comparable regulatory capital requirement as agreed with APRA.[22]
23.         If the investment subject to the deduction in paragraph 21 of this Attachment is a non-operating holding company (NOHC), the life company must 'look-through' the investment to the value and regulatory capital requirements of the entity/entities owned by the NOHC.

Assets under a fixed or floating charge
24.         A life company must deduct all assets of the life company that are under a fixed or floating charge[23], mortgage or other security to the extent of the indebtedness secured on those assets. This deduction may be reduced by the amount of any liability for the charge that is recognised on the life company's balance sheet.

Liability adjustment
25.         A life company must deduct the liability adjustment. This is calculated as the difference between:
(a)          the sum of adjusted policy liabilities and insurance policy payables; and
(b)          the sum of net life contract liabilities and insurance policy receivables;
    together with any tax effects that would result from these adjustments, where:
(c)          'net life contract liabilities' equals the sum of the insurance, reinsurance and investment contract liabilities (net of insurance and reinsurance assets) disclosed in the statutory accounts.
26.         The liability adjustment can be positive or negative. The method of determining the adjusted policy liabilities is specified in Attachment F.

Fair value adjustments
27.         A life company may measure its non-financial assets, short term receivables, and intercompany receivables and payables using the requirements in Australian Accounting Standards rather than fair value.
28.         A life company must deduct the difference between fair value and the reported value of each asset. This deduction can be a negative amount (that is, an addition to Common Equity Tier 1 Capital) if fair value exceeds reported value.
29.         A life company must make any