Civic Solvency Standard August 2013 (incorporating amendments to December 2014) FINAL

Ref #5951675 v1.1 Solvency Standard for Civic Assurance Financial Policy Prudential Supervision Department August 2013 (incorporates amendments to December 2014) REVOKED

2 Ref #5951675 v1.1

1. Introduction 1.1. Authority
2. This solvency standard is made under Section 55 of the Insurance (Prudential Supervision) Act 2010 (“the Act”).
3. Once issued by the Bank, this solvency standard becomes a regulation under the Act (refer Section 233(1)). 1.2. Deleted
4. Deleted
5. Deleted
6. Deleted 1.3. Application
7. This solvency standard applies only to the New Zealand Local Government Insurance Corporation Limited (“Civic Assurance”) and only if Civic Assurance is required by a condition of licence to maintain a Solvency Margin in accordance with this solvency standard.
8. Section 5 of this solvency standard applies to the actuary appointed by Civic Assurance in accordance with Section 76 of the Act. 1.4. Previous Versions
9. None. 1.5. Effective Date
10. This solvency standard is effective from the date that the solvency standard is issued by the Bank under section 55 of the Act. 1.6 Requirements
11. This solvency standard incorporates the Solvency Standard for Non-life Insurance Business in Run-off, as issued in April 2012 and all subsequent amendments, except as follows:
12. Paragraphs 1 to 9 of the Solvency Standard for Non-life Insurance Business in Run-off are replaced with paragraphs 1 to 9 above.
13. The following paragraph is included as paragraph number 26A: Specific LAPP Policy comprises the following two documents: the specific policy titled “LAPP Insurance Policy from Civic Assurance” dated 30 June 2010 and a supplementary document titled “LAPP Insurance REVOKED

3 Ref #5951675 v1.1 Policy from Civic Dated 30 June 2010” dated 20 September 2012. Note that the New Zealand Local Government Insurance Corporation Limited is trading as Civic Assurance and LAPP is the New Zealand Local Authority Protection Programme Disaster Fund. 13. The following paragraph is included as paragraph number 106A: For reinsurance recoverable assets clearly identified to the Specific LAPP Policy (refer to paragraph 26A), the Reinsurance Recovery Risk Capital Charge is calculated by multiplying the reinsurance recoverable asset amount(s) clearly identified to the Specific LAPP Policy by a Reinsurance Risk Capital Factor of 2%, irrespective of the Counterparty Grade of the reinsurer(s). 14. Paragraph number 107 is deleted and replaced with the following paragraph: For all other reinsurance recoverable assets of the New Zealand Local Government Insurance Corporation Limited, the Reinsurance Recovery Risk Capital Charge is the sum across all reinsurers of the reinsurance recovery asset in respect of each reinsurer multiplied by the Reinsurance Risk Capital Factor determined from Table 4. The reinsurer counterparty grade must be determined in accordance with Section 3.5. Standard Ends REVOKED

4 Ref #5951675 v1.1 Website http://rbnz.govt.nz/finstab/insurance/ Email insurance@rbnz.govt.nz Telephone +64 471 3591 Mail Reserve Bank of New Zealand Prudential Supervision – Financial Policy PO Box 2498 WELLINGTON 6140 4 REVOKED