Document ID: chunk:federal_register_of_legislation:F2017L00435:body:0:p3
Version: federal_register_of_legislation:F2017L00435
Segment Type: other
Provision Reference: 
Character Range: 5509–8686

judgment;

       (b)          the operation, accounting and other practices and reinsurance arrangements of the insurance market conducted by Lloyd's;

       (c)          the provision made for:

            (i)                 management of the fund if the fund is placed under judicial trusteeship or is wound up or dissolved under the Act; and

            (ii)               payment of claims if the fund is wound up or dissolved under the Act;

       (d)          whether the fund is established under Australian law and subject to Australian law and the jurisdiction of Australian courts;

       (e)          arrangements for custody and investment of the fund's assets; and

       (f)           any other matter that APRA considers relevant.

13.         Without limiting the terms of a trust deed for a security trust fund, it may include terms that deal with the following matters:

       (a)          making payment, without final judgment, of a claim in Australia under a contract of insurance covered by the fund;

       (b)          periodic release of assets representing amounts more than the funding needed by the fund;

       (c)          releasing investment income derived from fund assets; and

       (d)          suspending payment, in whole or part, of a final judgment or claim if:

            (i)                 the obligations of Equitas Reinsurance Limited are suspended in whole or part; and

            (ii)               the suspension cannot affect the operation of a scheme for winding up or dissolution of the fund.

Approval of trustees
14.         A trustee of a security trust fund must be approved by APRA.

15.         Before approving a trustee of a security trust fund, APRA must be satisfied that:

       (a)          the trustee is a qualified corporation;

       (b)          the trustee can perform the duties of a trustee of a security trust fund in a proper manner; and

       (c)          the sum of the amount of a bank guarantee, if any, in respect of the trustee's duties as trustee and the value of the net tangible assets of the trustee is at least $5 million.

16.         For subparagraph 15(c), a guarantee must be:

       (a)          given by a bank;

       (b)          given in a form approved by APRA; and

       (c)          subject to a condition that it cannot be revoked unless APRA approves.

Funding
17.         The assets of a security trust fund must:

       (a)          be assets in Australia;

       (b)          be unencumbered, except for fees and expenses of:

            (i)                 the trustee in accordance with the trust deed; or

            (ii)               investment transactions on ordinary commercial terms; and

       (c)          have a value that meets the funding requirement mentioned in Attachment B for the trust.

18.         For paragraph 17, an asset must be valued in accordance with the Lloyd's Security Trust Fund Rules.

Information
   19.        Lloyd's must ensure the trustee of a security trust fund is given enough information to allow the trustee to operate the trust according to its terms and the requirements