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CA-1.2.21

Every insurance firmG must determine its capital availableG in accordance with this Rule:

Determination of Insurance Firm's Capital Available
  Tier 1 Capital
  Paid-up ordinary shares (net of treasury shares)
  Share premium reserve
  Perpetual non-cumulative preference shares
  All disclosed reserves brought forward, that are audited and approved by the shareholdersG , in the form of legal, general and other reserves created by appropriations of retained earnings, excluding fair value reserve
  Unappropriated retained earnings, excluding cumulative unrealised fair value gains, brought forward
  Audited current year's earnings net of unrealised fair value gains and before tax expenses
  Overseas Insurance FirmsG Only: audited net assets, excluding any unrealised fair value gains and surplus assetsG in long-term funds.
(A) Total Tier 1 Capital
  Tier 2 Capital — Upper Level
  Interim net income, excluding any unrealised fair value gains, reviewed by the external auditorsG in accordance with International Standards on Auditing (ISA)
  Perpetual cumulative preference shares
  Mandatory convertible notes and similar capital instruments
  Perpetual subordinated debtG
  Other hybrid (debt/equity) capital instruments of a permanent nature
  Investment fair value reserve (IAS 39) and any unrealised fair value gains included in retained earnings, both discounted to 45%.
(B) Total Tier 2 Capital — Upper Level
  Tier 2 Capital — Lower Level
  Limited life redeemable preference shares with an original termG of at least 5 years.
  Dated subordinated debtG with an original termG of at least 5 years.
  Any other similar limited life capital instruments with an original termG of at least 5 years.
(C) Total Tier 2 Capital — Lower Level: before excess deduction
(D) Total Tier 2 Capital (B plus C)
(E) Excess Tier 2 Capital — Lower Level = (C) − [(A) times 50%)] (if negative, excess is 0)
(F) = (D) − (E) Total Tier 2 Capital — Lower Tier adjusted
(G) Excess Tier 2 Capital = (F) − [(A) times 100%)] (if negative, excess is 0)
(H) = (F) − (G) Total Tier 2 Capital
  Deductions from Capital
  Valuation asset differences
  Inadmissible assets by asset category
  Inadmissible assets in excess of counterparty limitsG
  Required margins of solvency for branchesG in other jurisdictions.
  Current year's losses, before any tax expenses
  Dividends paid and declared
  Assets pledged or provided as collateral where there is no offsetting liability.
  Tax expenses
  Other appropriations not included as charges to profit and loss statement (e.g. Directors' remuneration, donations)
  Other
(I) Total Deductions from Capital
(A)+(H)−(I) CAPITAL AVAILABLE
Amended: January 2007
 Versions
(2 Versions)
 
Up to Jun 30 2007Jul 1 2007 onwards
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