Insurance (prudential standard) determination No. 8 of 2006 - Prudential Standard GPS 120 - Assets in Australia
Shares - generalShares - general
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Shares - general
- An amount representing an asset is excluded from being an asset in Australia if:
Shares, not being shares held through a depository
(a) the asset is a share, not being a share that is held through a depository, and:
(i) the share is not readily transferable[4] in Australia; or
(ii) the share is not recorded on a register of members kept in Australia under section 169 of the Corporations Act; or
Interests held on Australian depositories
(b) the asset is an interest held on an Australian depository, being an interest that derives from, or relates to, a share (underlying share), and:
(i) the underlying share would be excluded from being an asset in Australia under subparagraph (a) if held directly by the locally incorporated insurer (rather than through a depository); and
(ii) APRA has not determined in writing to waive the exclusion of the asset or an asset of that kind; or
Shares held on foreign depositories
(c) the asset is an interest held on a foreign depository, being an interest that derives from or relates to a share.
Interests in SPVs[5]
- If:
(a) a locally incorporated insurer holds an interest in an SPV; and
(b) the SPV holds (whether directly or indirectly) an investment that would not be an asset in Australia if held directly by the insurer (either because it was excluded under some other part of this Prudential Standard or because it would not otherwise be an asset in Australia within the meaning of paragraph 28(a) of the Act)
then an amount A is excluded from being an asset in Australia, where A is calculated as follows:
A = B/C x D
where:
B means the fair value of the investment held by the SPV that would not be an asset in Australia if held directly by the insurer;
C means the fair value of all the interests in the SPV; and
D means the fair value of the interests in the SPV held by the insurer.
- For the purposes of paragraph 11, APRA may determine in writing that B has a specified value where APRA is satisfied that application of the formula would not fairly represent the underlying value to the insurer of the investment held by the SPV.[6]