Regulatory AlertsGPS 112 Capital Adequacy: Measurement of Capital
The Australian Prudential Regulation Authority issued Prudential Standard GPS 112 to establish minimum requirements for the size and composition of the capital base for general insurers and Level 2 insurance groups. The standard mandates that regulated institutions classify capital instruments into Common Equity Tier 1, Additional Tier 1, or Tier 2 categories based on strict eligibility criteria and loss-absorption characteristics. It further requires specific regulatory adjustments to determine the capital base and imposes minimum thresholds relative to prescribed capital amounts and prudential capital requirements.
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