Capital base of a health benefits fund

1. The capital base of a health benefits fund is:
   1. the net assets of the health benefits fund; plus/(less)
   2. technical provisions in surplus/(deficit) of those required by HPS 340;[7] less
   3. all regulatory adjustments to the net assets of the health benefits fund required under Attachment B; plus
   4. Tier 2 Capital as defined in paragraph 51.
2. The Tier 2 Capital of a health benefits fund consists of:
   1. instruments that are a liability of that health benefits fund and meet the criteria for inclusion in Tier 2 Capital as set out in Attachment D; less
   2. all holdings by the health benefits fund of the private health insurer’s own Tier 2 Capital instruments.
3. A private health insurer must ensure that, at all times:
   1. the capital base less the Tier 2 Capital in accordance with paragraph 51 of each health benefits fund exceeds 80 per cent of the prescribed capital amount of the health benefits fund;
   2. the capital base of each health benefits fund exceeds the PCR of the fund;
   3. 120 percent of the net assets of each health benefits fund exceeds 80 percent of the prescribed capital amount of the fund; and
   4. the sum of 120 percent of the net assets and the Tier 2 Capital in accordance with paragraph 51 of each health benefits fund exceeds the PCR of the fund.
4. APRA may, by notice in writing to a private health insurer, set a higher percentage for the capital base, net of Tier 2 Capital, for one or more health benefits funds of the private health insurer.