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Life Insurance (prudential standard) determination

No. 13 of 2023

Prudential Standard LPS 600 Statutory Funds

Life Insurance Act 1995

I, Helen Rowell, a delegate of APRA:

    (a)          under subsection 230A(5) of the Life Insurance Act 1995 (the Act) revoke Life Insurance (prudential standard) determination No. 15 of 2012, including Prudential Standard LPS 600 Statutory Funds made under that Determination; and

    (b)          under subsection 230A(1) of the Act determine Prudential Standard LPS 600 Statutory Funds, which applies to all life companies, including friendly societies.

This instrument commences on 1 July 2023.
Dated: 24 May 2023

[Signed]

Helen Rowell
Deputy Chair

Interpretation

In this instrument:

APRA means the Australian Prudential Regulation Authority.

friendly society has the meaning given in section 16C of the Act.

life company has the meaning given in the Schedule to the Act.

Schedule

Prudential Standard LPS 600 Statutory Funds, comprises the document commencing on the following page.

Prudential Standard LPS 600

Statutory Funds
Objectives and key requirements of this Prudential Standard
This Prudential Standard sets out requirements for the operations of statutory funds and any restructure of statutory funds, so that they are fair and equitable for policy owners.
The ultimate responsibility for the operations of a life company's statutory funds and for following the required procedures in the event of restructuring a life company's statutory funds rests with the life company.
The key requirements of this Prudential Standard include:
       * requirements for the operations of statutory funds, including the transfer of policies between statutory funds, use of a single bank account for statutory funds, non-participating benefits, starting amounts, the amount of permissible unsecured borrowings and the distribution of Shareholders' Retained Profits (Australian Participating); and
       * requirements for the restructure of statutory funds including applications, notification of interested persons and documents required to be lodged with APRA.

Table of Contents
Authority
Application and commencement
Interpretation
Restructure of statutory funds
Operational requirements
Non-participating benefits
Starting Amount
Distribution of Shareholders' Retained Profits (Australian Participating)
Unsecured borrowings of a statutory fund
Adjustments and exclusions
Previous exercise of discretion

Forms
Form 1: Restructure of Statutory Funds
Schedule 1 to Form 1

Authority
     1. This Prudential Standard is made under paragraph 230A(1)(a) of the Life Insurance Act 1995 (the Act).

Application and commencement
2.             This Prudential Standard applies to all life companies other than friendly societies registered under the Act.[1]
3.             This Prudential Standard applies to life companies from 1 July 2023.

Interpretation
4.             Unless otherwise defined in this Prudential Standard, expressions in bold are defined in Prudential Standard LPS 001 Definitions.

Restructure of statutory funds

Application for restructure of statutory funds
5.             Restructure of statutory funds is subject to the requirements set out in
section 52 of the Act and in this