Document ID: chunk:federal_register_of_legislation:F2024L01525:body:0:p5
Version: federal_register_of_legislation:F2024L01525
Segment Type: other
Provision Reference: 
Character Range: 12598–15483

of capital in a particular category of its capital base if that item, when considered in conjunction with other related transactions that affect its overall economic substance, could be reasonably considered not to satisfy the requirements of this Prudential Standard for that category of the capital base.
 5.          A private health insurer must not include a capital instrument in a category of the capital base based on a future event,[2] until such time as:
         1.           the future event occurs, and
         2.           the proceeds have been irrevocably received by the private health insurer.
 6.          APRA may require a private health insurer to:
         1.           exclude from its capital base any item included as a component of capital that in APRA's opinion is not a genuine contribution to the financial strength of the private health insurer; or
         2.           reallocate to a lower category of the capital base any component of capital that in APRA's opinion does not satisfy the requirements of this Prudential Standard for the category of the capital base to which it was originally allocated.
 7.          A capital instrument is not eligible for inclusion in a category of the capital base if the nature or complexity of its terms, its location of issue, or its structure raises concerns over whether the instrument fully, and unequivocally, satisfies the requirements for the category of the capital base in this Prudential Standard.
 8.          A private health insurer must not include a capital instrument that involves the use of a special purpose vehicle (SPV), or a stapled security structure consisting of the issue of a preference share and a stapled instrument of another form, in its regulatory capital.
 9.          A private health insurer must not include a capital instrument in its capital base if the capital instrument has features that hinder recapitalisation of the private health insurer, or any other members of the group to which the private health insurer belongs. This includes features that require the private health insurer or any other members of the group, to compensate investors if a new instrument is issued at a lower price during a specified timeframe.
10.          A capital instrument is not eligible for inclusion in the capital base if it contains any terms that could inhibit the private health insurer's ability to be managed in a sound and prudent manner, particularly in times of financial difficulty, or restrict APRA's ability in its role as a prudential regulator to resolve any problems encountered by the private health insurer.
11.          A capital instrument is not eligible for inclusion in the capital base if it includes any 'repackaging' arrangements that have the effect of compromising the quality of capital raised.[3]
12.          A private health insurer must, and must ensure