Document ID: chunk:federal_register_of_legislation:F2024L00884:body:0:p15
Version: federal_register_of_legislation:F2024L00884
Segment Type: other
Provision Reference: 
Character Range: 36868–39657

require the life company to provide an independent expert opinion, addressed to APRA by a firm or practitioner of APRA's choice and at the expense of the life company, confirming that the instrument meets all or any criteria applied to Common Equity Tier 1 Capital instruments in this Prudential Standard.
5.             For the purpose of Attachment G to this Prudential Standard, a reference in this Attachment (except in paragraphs 1(b), 1(c), 1(e), 1(g) and 1(h) of this Attachment) to 'paid up ordinary shares' is to be read as a reference to 'paid up mutual equity interests'.

Attachment B - Regulatory adjustments

General rules for regulatory adjustments
     1. In determining the size of regulatory adjustments (i.e. deductions) from a category of a life company's capital base, items must be valued on the same basis as a life company's accounts prepared in accordance with the Collection of Data Act.
2.             For the purposes of deductions to Additional Tier 1 Capital and Tier 2 Capital:
(a)          where the amount of Additional Tier 1 Capital is insufficient to cover the amount of deductions required to be made from this category of capital, the shortfall must be deducted from Common Equity Tier 1 Capital; and
(b)          where the amount of Tier 2 Capital is insufficient to cover the amount of deductions required to be made from this category of capital, the shortfall must be deducted from Additional Tier 1 Capital and, if Additional Tier 1 Capital is insufficient to cover the amount of the deductions required, the remaining amount must be deducted from Common Equity Tier 1 Capital.
3.             Where a capital instrument is required to be deducted and it is not possible to determine whether it should be deducted from Common Equity Tier 1 Capital, Additional Tier 1 Capital or Tier 2 Capital, the deduction must be made from Common Equity Tier 1 Capital. A life company must consult APRA if there is uncertainty about the category of capital against which a deduction must be made.
4.             For the purposes of deducting from the relevant category of the capital base, a life company may net any provisions held against the relevant exposures or holdings, or the relevant non-defaulted exposures or holdings that represent identified losses, before making the necessary deductions from the relevant categories of capital.
5.             A life company must not recognise, for the purpose of measuring its capital adequacy, any transactions (or dealings) which have the aim of offsetting required deductions.

Exception for assets with values linked to the value of liabilities
6.             If policy benefits can be reduced in response to a fall in the value of an asset listed in this Attachment, the asset does not have to be deducted.