Document ID: chunk:federal_register_of_legislation:F2023L00684:body:0:p42
Version: federal_register_of_legislation:F2023L00684
Segment Type: other
Provision Reference: 
Character Range: 106211–109000

2 insurance group may include a portion of the minority interest (calculated in accordance with paragraphs 4 through to 8 of this Attachment) arising from the issue of ordinary shares to third parties by a fully consolidated subsidiary included in the Level 2 insurance group where:
 1. the shares giving rise to the minority interest would, if issued by the parent entity of the Level 2 insurance group, meet the criteria in Attachment A; and
 2. the subsidiary issuing the shares is itself an insurer or an entity undertaking insurance business in a foreign jurisdiction[46] and is subject to equivalent minimum prudential requirements and level of supervision as an insurer.
Where a fully-consolidated subsidiary of a Level 2 insurance group has its own subsidiaries, all calculations must be undertaken in respect of that subsidiary and its subsidiaries as a consolidated group.
The minority interest in Common Equity Tier 1 Capital[47] of a fully consolidated subsidiary that is eligible to be included in the Level 2 insurance group's Common Equity Tier 1 Capital in accordance with paragraph 3 of this Attachment is calculated as:
 1. the total minority interest in Common Equity Tier 1 Capital of the subsidiary that is attributable to third parties; less
 2. the percentage of Common Equity Tier 1 Capital of the subsidiary that is attributable to third parties multiplied by the surplus capital of the subsidiary, where the surplus capital of the subsidiary for this purpose is defined in paragraph 6 of this Attachment.
The surplus capital of the subsidiary referred to in paragraph 5 of this Attachment is the lesser of the following three items:
  *
      +
         1. Common Equity Tier 1 Capital of the subsidiary less 60 per cent of the prescribed capital amount of the subsidiary;
         2. Tier 1 Capital of the subsidiary less 80 per cent of the prescribed capital amount of the subsidiary; and
         3. Total Capital of the subsidiary less the prescribed capital amount of the subsidiary.
For the purposes of paragraph 6 of this Attachment, the calculation of the prescribed capital amount of the subsidiary must be undertaken as though the subsidiary is an insurer subject to the capital standards.
A Level 2 insurance group may elect not to recognise Common Equity Tier 1 Capital issued by a fully consolidated subsidiary to third parties in accordance with paragraph 3 of this Attachment. However, the Level 2 insurance group must continue to include all exposures of those subsidiaries when calculating its prescribed capital amount.

Additional Tier 1 Capital
In addition to paragraph 38 of this Prudential Standard, Additional Tier 1 Capital of a Level 2 insurance group includes instruments issued by a fully consolidated subsidiary of the parent entity of