Reductions in capital base

1. A private health insurer must obtain APRA’s written approval prior to making any planned reduction in its capital base.
2. A reduction in a private health insurer’s capital base includes:
   1. a share buyback or the redemption, repurchase or repayment of any qualifying Common Equity Tier 1 Capital, Additional Tier 1 Capital and Tier 2 Capital instruments issued by the company;
   2. trading in the private health insurer’s own shares or capital instruments outside of any arrangement agreed upon with APRA in accordance with HPS 112; and
   3. the aggregate amount of dividend payments on ordinary shares that exceeds a private health insurer’s after-tax earnings (as reported to APRA in the private health insurer’s statutory accounts) after taking into account any payments on more senior capital instruments, in the financial year[4] to which they relate.
3. A private health insurer proposing a capital reduction must provide APRA with a forecast showing the projected future capital position (including PCR) after the proposed capital reductions. The forecast should extend for at least two years.
4. A private health insurer must satisfy APRA that its capital base will remain adequate for its future needs after a proposed reduction.