(C2) S1 of Act 52 of 1998 Definitions

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
Excess assets
Shareholders 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(Pr
ohibitions) Schedule 3
S29(Sound condition) S30(Cover) S31(Spread) S34(P
rohibitions) 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 1998 Limitation 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