Document ID: chunk:federal_register_of_legislation:F2023L00684:body:0:p2
Version: federal_register_of_legislation:F2023L00684
Segment Type: other
Provision Reference: 
Character Range: 2646–5524

Capital, to determine the capital base.

Table of Contents
Authority 3
Application and commencement 3
Level 2 insurance groups 3
Interpretation 3
Definitions 4
Capital base 5
Common Equity Tier 1 Capital 8
Additional Tier 1 Capital 11
Tier 2 Capital 12
Additional Tier 1 or Tier 2 Capital issued overseas by the regulated institution 12
Intra-group capital transactions 13
Holding of capital instruments in group members by other group members 13
Adjustments and exclusions 14
Previous exercise of discretion 14
Attachment A – Criteria for classification as paid up ordinary shares 15
Attachment B – Regulatory adjustments 18
Attachment C – Criteria for inclusion in additional Tier 1 Capital 24
Attachment D – Criteria for inclusion in Tier 2 Capital 34
Attachment E – Loss absorption at the point of non-viability: Additional Tier 1 and Tier 2 Capital instruments 43
Attachment F – Level 2 insurance groups 48
Attachment G – Mutual Equity Interests 53

Authority
 1. This Prudential Standard is made under section 32 of the Insurance Act 1973 (the Act).

Application and commencement
 1. Subject to paragraph 3, this Prudential Standard applies to each:
     1. general insurer authorised under the Act (insurer); and
     2. Level 2 insurance group as defined in Prudential Standard GPS 001 Definitions (GPS 001).
Where a requirement applies to a Level 2 insurance group, the requirement is imposed on the parent entity of the Level 2 insurance group
 1. Category C insurers are not subject to this Prudential Standard. As outlined in Prudential Standard GPS 110 Capital Adequacy (GPS 110), a different measure of capital adequacy applies to Category C insurers. This reflects the nature of a Category C insurer's Australian balance sheet, which does not generally include separately identifiable capital instruments.
 2. This Prudential Standard applies to insurers and Level 2 insurance groups (regulated institutions) from 1 July 2023.

Level 2 insurance groups
 1. Certain adjustments to the measurement of capital outlined in this Prudential Standard apply to Level 2 insurance groups. These adjustments are set out in Attachment F.

Interpretation
 1. Terms that are defined in GPS 001 appear in bold the first time they are used in this Prudential Standard.
 2. Where this Prudential Standard provides for APRA to exercise a power or discretion, this power or discretion is to be exercised in writing. In this Prudential Standard, unless the contrary intention appears, a reference to an Act, Regulations, Prudential Standard, Australian Accounting Standard is a reference to the instrument as in force from time to time.
 3. Unless otherwise indicated:
 4. The term 'accounts receivables' will be used to refer to premiums, reinsurance recoveries, non-reinsurance recoveries and other accounts receivable that have been recognised within the insurance and reinsurance