DisclosureDisclosure

Disclosure

40. To improve policyholder and market understanding of the group’s capital adequacy position, a Level 2 insurance group must publish annually the following items:

(a) the amount of eligible Tier 1 capital, with separate disclosure of each of the components specified in GPS 112;

(b) the aggregate amount of any deductions from Tier 1 capital;

(c) the amount of eligible Tier 2 capital, with separate disclosure of each of the components specified in GPS 112;

(d) the aggregate amount of any deductions from Tier 2 capital;

(e) the total capital base of the group derived from the items (a) to (d);

(f) the MCR of the group; and

(g) the capital adequacy multiple of the group (item (e) divided by item (f)).[9]

41. Compliance with paragraph 40 by Level 2 insurance groups does not replace the obligation of Level 1 insurers to comply with the disclosure requirements of GPS 110. However, the parent entity of the Level 2 insurance group may make the disclosures required by GPS 110 on behalf of each Level 1 insurer within the group.

Reductions in capital

42. A Level 2 insurance group must seek APRA’s written approval before making a reduction in its capital. APRA’s approval may be subject to conditions.

43. A reduction in a Level 2 insurance group’s capital includes, but is not limited to:

(a) share buybacks in relation to the parent entity’s shares;

(b) the redemption, repurchase or early repayment of any qualifying Tier 1 and Tier 2 capital instruments issued by the parent entity or an SPV;

(c) trading in the parent entity’s shares or capital instruments (refer to paragraph 29 of GPS 112);

(d) payment of dividends on ordinary shares that exceeds the group’s after-tax earnings, after including any payments on more senior capital instruments issued by the Level 2 insurance group, in the financial year[10] to which they relate; or

(e) dividend or interest payments (whether whole or partial) on Upper Tier 2, Innovative Tier 1 and Non-innovative Residual Tier 1 capital that exceed the group’s after-tax earnings, including any payments made on more senior capital instruments issued by the Level 2 insurance group, calculated before any such payments are applied in the financial year[11] to which they relate.

44. A Level 2 insurance group proposing a capital reduction must provide APRA with a forecast showing the projected future capital position after the proposed capital reductions. The forecast must extend for at least three years.