Regulatory Alerts2022-05-17
Consultation Paper: Insurance Solvency Standards and NZ IFRS 16 Leases
The Reserve Bank of New Zealand proposes amendments to the insurance sector Solvency Standards to address the recognition of right-of-use assets and lease liabilities under the new NZ IFRS 16 accounting standard. The proposed framework clarifies that tangible right-of-use assets are not deducted from capital and allows them to support corresponding lease liabilities, while subjecting them to specific capital charges for foreign exchange and interest rate risks. These changes aim to align prudential requirements with the accounting treatment where lessees must recognize most leases on their balance sheets, ensuring capital adequacy reflects the associated economic risks.
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