Document ID: chunk:federal_register_of_legislation:F2024L00884:body:0:p43
Version: federal_register_of_legislation:F2024L00884
Segment Type: other
Provision Reference: 
Character Range: 110517–113523

illiquidity premium if this is used in determining the RFBEL);
(iii)       PRP is policy owners' retained profits (only relevant for life companies that are not friendly societies); and
(iv)        the 'greater of' must be determined at sub-group level if the policy benefits for a sub-group of policies are determined by reference to the performance of particular assets that the life company has allocated to the liabilities for that sub-group.
11.         All amounts must include allowance for bonuses declared as at the reporting date and are net of reinsurance.
12.         The adjusted policy liabilities must be increased if the amount determined using the formula above would be insufficient to meet all guarantees and obligations implied by the promotional material of the company, and policy owners' reasonable benefit expectations based on past company practice.

Liability options and asymmetries
13.         The adjusted policy liabilities must not be less than the mean of the distribution of the potential liability outcomes. If the benefits being valued contain options that may potentially be exercised against the company, or the potential liability outcomes have an adverse asymmetrical distribution, then the adjusted liability must include an appropriate value in respect of those options and/or asymmetries. For this purpose, the benefits being valued must allow for the distribution of all investment fluctuation reserves and policy owners' retained profits.

Friendly societies
14.         Friendly society benefits are neither participating nor non-participating. The adjusted policy liabilities for approved benefit funds where there is a provision for distribution of unallocated surpluses to policy owners are to be valued as if they were participating. The adjusted policy liabilities for approved benefit funds where there is no provision for distribution of unallocated surpluses to policy owners are to be valued as if they were non-participating.
15.         For a friendly society management fund the adjusted policy liabilities are zero.

Attachment G - Mutual Equity Interests
     1. To be classified as a mutual equity interest, an instrument must satisfy all of the criteria in this Attachment and Attachment A to this Prudential Standard, except that paragraphs 1(b), 1(c), 1(e), 1(g) and 1(h) of Attachment A are to be read as follows:
(b)          the mutual equity interest represents a claim against the issuer in liquidation that is subordinate to all claims other than members' rights to residual assets;
(c)          the holder of the mutual equity interest is entitled to a claim on the residual assets of the issuer after all senior claims, including the aggregate subscription price paid for all member shares, have been repaid in liquidation and;
(i)            the holder's claim ranks equally and proportionately with all other mutual equity interests directly issued or created on conversion of Additional Tier 1 Capital or Tier 2 Capital instruments