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(C2) S1 of Act 52 of 1998 Definitions

(C2) S1 of Act 52 of 1998 Definitions. capital adequacy requirement fair value linked liabilities linked policy market-related policy. (C2) S1 of Act 52 of 1998 (Minimum) Capital Adequacy Requirement. Distributable reserves. Shareholders’ assets. Excess assets. Non-distributable

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(C2) S1 of Act 52 of 1998 Definitions

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  1. (C2) S1 of Act 52 of 1998 Definitions • capital adequacy requirement • fair value • linked liabilities • linked policy • market-related policy

  2. (C2) S1 of Act 52 of 1998 (Minimum) Capital Adequacy Requirement Distributable reserves Shareholders’ assets Excess assets Non-distributable reserves Capital adequacy requirement (CAR) Assets covering liabilities Paid-up capital Minimum CAR Policy liabilities and capital adequacy requirement S29(Sound condition) S30(Cover) S31(Spread) S34(Prohibitions) Schedule 3 S29(Sound condition) S30(Cover) S31(Spread) S34(Prohibitions) Schedule 1 Other liabilities

  3. (C5) S10(h) of Act 52 of 1998Conditions of registration • Assets at their fair value not to be less than liabilities and capital adequacy requirement

  4. (C8(a)) S24(a)(vi) of Act 52 of 1998(C32(a)) S23(a)(vi) of Act 53 of 1998Preference shares, debentures, share capital and share warrants • Reduction of share capital [in terms of sections 83 and 84 of the Companies Act] (without approval of Registrar)

  5. (C9) S26 of Act 52 of 1998(C33) S25 of Act 53 of 1998Limitation on control and certain shareholding or other interest in long‑term insurers • Replace “associates” with “related parties”

  6. (C10) S29(1) of Act 52 of 1998 Maintenance of a financially sound condition • (1)(b): provide for liabilities and capital adequacy requirement • Last sentence: be in a position to meet liabilities and capital adequacy requirement at all times

  7. (C11(a)) S30(1) of Act 52 of 1998Assets • (1)(a): have assets … is not less than … liabilities and capital adequacy requirement • (1)(b): have, in the Republic, assets,… is not less than … liabilities which are to be met in the Republic, and the capital adequacy requirement in respect of those liabilities, when the values of those assets, [and]liabilities and capital adequacy requirement are calculated [by means of- • (i) the method set out in Schedule 2; and • (ii) the financial soundness method]as set out in Schedule 3

  8. (C11(b)) S30(2) of Act 52 of 1998Dividend • A long-term insurer shall not declare or pay a dividend to its shareholders [if, and for so long as,]- • (a) while it fails to comply with subsection (1); • (b) if that has the result that the insurer fails to comply with subsection (1); or • (c)if [the] after such declaration or payment [of the dividend would result in it failing to comply with subsection (1)] the insurer has an aggregate value of assets which is less than the aggregate value of its liabilities, issued share capital and non-distributable reserves

  9. (C12) S31 of Act 52 of 1998 Kinds and spread of assets • (1) … shall, in the Republic, have assets, other than assets in respect of linked liabilities [referred to in section 33(2)]- • (a) which … is not less than the … liabilities which have to be met in the Republic, and minimum capital adequacy requirement, when the values of those assets are calculated by reference to their [market] fair value [as defined in the regulations] and the values of those liabilities, other than the said linked liabilities, and minimum capital adequacy requirement, are calculated [by means of the method] as set out in Schedule [2] 3; and • (c) which have a [market] fair value [, as defined in the regulations,] which when expressed as a percentage of the aggregate value of its liabilities and minimum capital adequacy requirement …, does not exceed the percentage specified in the regulations …

  10. (C13) S33 of Act 52 of 1998Liabilities • (1): Reference to Schedule 3 • (2): Delete subsection

  11. (C14) S34 of Act 52 of 1998 (C34) S33 of Act 53 of 1998 Prohibitions concerning assets and certain liabilities • 34(1)/33(1)(e): include in its assets shares held directly or indirectly in its holding company • 34(2)(a): derivatives designated as an asset in respect of a linked policy [referred to in section 33(2)]

  12. (C15) S36(1) of Act 52 of 1998Returns to Registrar • Numbering of first subsection

  13. (C22(a),(b),(c)) Sch 1 to Act 52 of 1998 (C37(a),(b),(c)) Sch 1 to Act 53 of 1998 Kinds of assets • 1.: ‘‘securities” includes bills, bonds, debentures and debenture stock, loan stock, promissory notes, annuities, negotiable certificates of deposit and other financial instruments [of whatever nature] prescribed by the Registrar • 2(b)(i): an over-the-counter instrument, it is capable of being readily closed out and is entered into with a counterparty for which the relevant criteria have been approved by the Registrar subject to such conditions as he or she may determine • 16(1) in the Table: Shares and [debentures] securities issued by a company incorporated in the Republic

  14. (C22(d)) Sch 1 to Act 52 of 1998 (C37(d)) Sch 1 to Act 53 of 1998 Kinds of assets • 16(5)(a) of Table: Listed- • (ii) securities and shares issued by an institution incorporated outside the Republic [, in respect of which the Registrar has recognised the- • (aa) stock exchange outside the Republic; or • (bb) country, other than the Republic, in which the regulated market concerned is situated, • subject to the conditions determined by the Registrar]. • (b) A credit balance in an account with, or a deposit, including a negotiable certificate of deposit or a bill, accepted by, an institution incorporated outside the Republic, [in a country approved by the Registrar,] which would have been a bank in terms of the Banks Act, 1990, if it were incorporated in the Republic

  15. (C22(e)) Sch 1 to Act 52 of 1998 (C37(e)) Sch 1 to Act 53 of 1998 Kinds of assets • 20. Other claims, n.e.s., against- • (c)a body corporate and any stock or shares in a body corporate which is not incorporated and registered in the Republic but which, in the opinion of the Registrar, carries on business in the Republic and which has been approved by the Registrar generally by notice in the Gazette and subject to the conditions determined by the Registrar and specified in the notice

  16. (C23) Sch 2 to Act 52 of 1998Method of calculating of value of assets and liabilities • Repeal of Schedule 2

  17. (C24) Sch 3 to Act 52 of 1998Calculation of values of assets, liabilities and capital adequacy requirement • Schedule 3 replaced by new Schedule 3

  18. (C24) Sch 3 to Act 52 of 1998Calculation of values of assets, liabilities and capital adequacy requirement • Par 1: Definition of ‘‘approved reinsurance policy’’ • Par 2: Calculation of values of assets, liabilities and the capital adequacy requirement • Par 3: Effect of reinsurance • Par 4: Amounts to be disregarded • Par 5: Calculation subject to certain provisions • Par 6: Registrar may reject certain values • Par 7: Valuation of other liabilities

  19. (C32(a)) S23(a)(vi) of Act 53 of 1998Reduction of share capital • Amendment dealt with together with clause 8 (S24(a)(vi) of Long-term Insurance Act)

  20. (C33) S25 of Act 53 of 1998Limitation on control and certain shareholding or other interest in short‑term insurers • Amendment dealt with together with clause 9 (S26 of Long-term Insurance Act)

  21. (C34) S33(1)(e) of Act 53 of 1998Prohibitions concerning assets and certain liabilities • Amendment dealt with together with clause 14 (S34(1)(e) of Long-term Insurance Act)

  22. (C37(a),(b),(c),(d),(e)) Sch 1 to Act 53 of 1998Kinds of assets • Amendment dealt with together with clause 22(a),(b),(c),(d) and (e) (Sch 1 to Long-term Insurance Act)

  23. (C38) Sch 2 to Act 53 of 1998Method of calculation of value of assets and liabilities • Par1(a)(v): an amount representing [a negative liability or] a reinsurance contract in terms of which the short-term insurer concerned is the policyholder, except to the extent that it represents a claim against a reinsurer in terms of an approved reinsurance policy

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