3.1 References to Capital Resources

(1) In these PRU(INT) Rules, "Capital Resources" must be calculated as the sum of the following capital elements, subject to deductions listed in (2) below:

1. (a) the ordinary equity share capital of the Authorised Firm, to the extent fully paid up;
2. (b) share premium accounts related to the equity share capital referred in paragraph (a); and
3. (c) any retained earnings and reserves created out of earnings of past periods of the Authorised Firm, and accumulated other comprehensive income, as defined in the International Financial Reporting Standards, to the extent shown in its audited financial statements and accounts.

(2) In determining its Capital Resources, an Authorised Firm must deduct the following items from the sum of the capital elements in (1) above:

1. (a) any interim losses incurred by the Authorised Firm in the current financial year, irrespective of whether or not shown in audited financial statements and accounts;
2. (b) each of the following, to the extent that its value contributes to the sum of the capital elements in (1) above:
3. (i) goodwill and other intangible assets as defined in the International Financial Reporting Standards;

(ii) tangible fixed assets, including equipment and vehicles;

(iii) deferred tax assets that rely on future profitability;

(iv) defined benefit pension fund assets of the Authorised Firm;

1. (v) investments by the Authorised Firm or by any of its Subsidiaries in the Authorised Firm's own shares;

(vi) holdings of equity shares of Affiliates or Related Persons which give rise to a reciprocal cross holding with the Authorised Firm which has the effect of artificially inflating the Capital Resources of the Authorised Firm; and

(vii) holdings of other investments and assets that are not readily realisable into cash; and

1. (c) any amount to be deducted from Capital Resources as directed by the AFSA.

3.2 Minimum Capital Requirement

(1) An Authorised Firm must at all times have and maintain Capital Resources of an amount not less than its Minimum Capital Requirement.

(2) The Minimum Capital Requirement:

1. (a) for an Insurance Intermediary that is not permitted to hold Client Money, is the greater of:
2. (i) USD 7,000 ; and
3. (ii) 2.5 per cent of the annual income of the Insurance Intermediary.
4. (b) for an Insurance Intermediary that is permitted to hold Client Money, is the greater of:
5. (i) USD 13,000; and
6. (ii) 5 per cent of the annual income of the Insurance Intermediary.
7. (c) for an Insurance Manager that is not permitted to hold Client Money, is the greater of
8. (i) USD 7,000 ; and
9. (ii) 2.5 per cent of the annual income of the Insurance Manager.
10. (d) for an Insurance Manager that is permitted to hold Client Money, is the greater of
11. (i) USD 13,000; and
12. (ii) 5 per cent of the annual income of the Insurance Manager.

(3) The "annual income" of an Authorised Firm means the income of the Authorised Firm arising from its Insurance Intermediation or Insurance Management activities, but excluding premiums received from clients which are due to be paid on to the insurance produce provider.

(4) Annual income shall be assessed by reference to the Authorised Firm's most recent annual financial statements or, in the case of an Authorised Firm whose most recent financial statements do not represent a full financial year as an Authorised Firm, by reference to the business plan of the Authorised Firm submitted as part of its application for authorisation as an Authorised Firm.