Document ID: chunk:federal_register_of_legislation:F2024L01525:body:0:p2
Version: federal_register_of_legislation:F2024L01525
Segment Type: other
Provision Reference: 
Character Range: 3168–7235

1 Capital.............................................12
Tier 2 Capital......................................................12
Additional Tier 1 or Tier 2 Capital issued overseas by the private health insurer......13
Intra-group capital transactions.......................................13
Holding of capital instruments in group members by other group members.14
Capital base of a health benefits fund.................................15
Capital base of a general fund........................................16
Transition.........................................................16
Attachment A – Criteria for classification as paid-up ordinary shares.......17
Attachment B – Regulatory adjustments...............................20
General rules for regulatory adjustments...............................20
Holdings of own capital instruments...................................20
Regulatory adjustments to Common Equity Tier 1 Capital................21
Cash flow hedge reserve............................................21
Deferred tax assets and deferred tax liabilities..........................21
Gains and losses arising from changes in own creditworthiness...........22
Goodwill and other intangibles.......................................22
Superannuation funds...............................................23
Reinsurance assets.................................................24
Investments in subsidiaries, joint ventures and associates...............24
Assets under a fixed or floating charge................................24
Fair value adjustments..............................................25
Other adjustments..................................................25
Regulatory adjustments to the net assets of a health benefits fund or general fund......25
Attachment C – Criteria for inclusion in Additional Tier 1 Capital..........26
Attachment D – Criteria for inclusion in Tier 2 Capital....................36
Attachment E - Loss absorption at the point of non-viability: Additional Tier 1 and Tier 2 Capital instruments......45
Attachment F – Mutual Equity Interests................................50
Attachment G – Transitional arrangements.............................52

Authority
 1.              This Prudential Standard is made under subsection 92(1) of the Private Health Insurance (Prudential Supervision) Act 2015 (the Act).

Application and commencement
 1.              This Prudential Standard applies to all private health insurers except where expressly noted otherwise.
 2.              A private health insurer must apply this Prudential Standard separately to each of its health benefits funds and its general fund, in addition to the private health insurer as a whole, unless otherwise noted. The term 'private health insurer' refers to the private health insurer as a whole. The term 'fund' refers to each health benefits fund and the general fund, unless otherwise noted.
 3.              This Prudential Standard applies to private health insurers from 1 January 2025.

Interpretation
 1.              Terms that are defined in Prudential Standard CPS 001 Defined terms appear in bold the first time they are used in this Prudential Standard.
 2.              In this Prudential Standard, unless a 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:
         1.           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 contract liabilities and assets reported on the balance sheet under AASB 17 Insurance Contracts; and
         2.           the term 'accounts payables' will be used to refer to claims, reinsurance premiums, reinsurance recoveries, non-reinsurance recoveries and other accounts payable that have been recognised within the insurance and reinsurance contract liabilities and