Starting amount for overseas policy owneStarting amount for overseas policy owners’ retained profits

Starting amount for overseas policy owners’ retained profits

40. For the purposes of the definition of “overseas policy owners’ retained profits” in subsection 61(1) of the Act, the starting amount is the initial starting amount under Part 1 plus the IFRS starting amount adjustment under Part 2:

Part 1

The initial starting amount is the lower of the following amounts:

(a) the sum of:

(i) such part of the aggregate retained profits of the category of business of the statutory fund representing overseas participating business as:

(A) the life company determines; and

(B) can be allocated to overseas policy owners’ retained profits on a basis that is not inconsistent with:

(1) the life company’s constitution; or

(2) any foreign regulatory requirements applying to the life company; and

(C) is not less than the amount of profits that is required to be allocated to overseas policy owners’ retained profits by:

(1) the life company’s constitution; or

(2) any foreign regulatory requirements applying to the life company; and

(ii) such part of the aggregate retained profits of the category of business of the statutory fund representing non-participating business as the life company determines;

(b) an amount that:

(i) in the appointed actuary’s reasonable opinion:

(A) is consistent with the history and structure of the business of the statutory fund; and

(B) secures the reasonable benefit expectations of the policy owners in relation to the overseas participating business of the statutory fund; and

(C) is to be taken as the initial starting amount; and

(ii) is approved in writing by APRA for the purposes of this Prudential Standard.

Part 2

The IFRS starting amount adjustment is the greater of:

(a) such part of the IFRS change in net assets of the category of business of the statutory fund representing overseas participating business as:

(i) the life company determines; and

(ii) can be allocated to overseas policy owners’ retained profits on a basis that is not inconsistent with:

(A) the life company’s constitution; or

(B) any foreign regulatory requirements applying to the life company; and

(iii) is not less than the amount of profit (represented by the change in net assets) that is required to be allocated to overseas policy owners’ retained profits by:

(A) the life company’s constitution; or

(B) any foreign regulatory requirements applying to the life company; and