Pursuant to sections 237 and 238 of the Insurance (Prudential Supervision) Act 2010, His Excellency the Governor-General, acting on the advice and with the consent of the Executive Council, and on the advice of the Minister of Finance given in accordance with a recommendation of the Reserve Bank of New Zealand, makes the following regulations.

Regulations

1 Title

These regulations are the Insurance (Prudential Supervision) Amendment Regulations 2014.

2 Commencement

These regulations come into force on 1 April 2014.

3 Principal regulations

These regulations amend the Insurance (Prudential Supervision) Regulations 2010 (the principal regulations).

4 Regulation 3 amended (Interpretation)

(1) In regulation 3, revoke the definitions of exempt company, generally accepted accounting practice, qualified auditor, reporting entity, and statement of financial performance.
(2) In regulation 3, insert in their appropriate alphabetical order:
“generally accepted accounting practice—

“(a) has the same meaning as in section 8 of the Financial Reporting Act 2013 (unless paragraph (b) applies); or

“(b) means generally accepted accounting practice within the meaning of section 3 of the Financial Reporting Act 1993 if the insurer is required to prepare financial statements in accordance with that practice
“qualified auditor means,—

“(a) if the insurer is incorporated or registered under an Act that provides for the appointment of an auditor and the insurer is not an overseas company, an auditor appointed in accordance with the provisions of that Act; or

“(b) if the insurer is an overseas company or is an insurer that is not incorporated or registered under an Act that provides for the appointment of an auditor, a qualified auditor within the meaning of section 35 of the Financial Reporting Act 2013; or

“(c) if the insurer is a public entity under the Public Audit Act 2001, the Auditor-General
“relevant financial statements, in relation to an insurer, means financial statements for the insurer, or for a group of which the insurer is a member, that comply with—

“(a) generally accepted accounting practice; or

“(b) in the case of an overseas insurer, the financial reporting requirements of the insurer's home jurisdiction”.

5 Regulation 9 amended (Exemptions relating to licence requirements)

(1) Replace regulation 9(2) with:
- “(2) The annual gross premium income of an insurer is,—
  
  “(a) in the case of subclause (1)(a), its gross premium income derived from life policies for the immediately preceding accounting period (before the deduction of any reinsurance premiums) as disclosed in the financial information that is prepared and provided to the Bank in accordance with regulation 10(a) to (c):
  
  “(b) in the case of subclause (1)(b), its gross premium income for the immediately preceding accounting period (before the deduction of any reinsurance premiums) as disclosed in the financial information that is prepared and provided to the Bank in accordance with regulation 10(a) to (c).”
(2) In regulation 9, example, delete “(as stated in its statement of financial performance)”.

6 Regulation 10 amended (Conditions of exemptions relating to licence requirements)

(1) Replace regulation 10(a) and (b) with:
- “(a) the financial information that discloses the annual gross premium income of the insurer under regulation 9(2) (for the immediately preceding accounting period) must—
  
  “(i) state that information to the best of the insurer's knowledge; and
  
  “(ii) be prepared so as to take into account—
  
  “(A) information contained in relevant financial statements for that period (if any); and
  
  “(B) the insurer's accounting records; and
  
  “(iii) give a true and fair view of the matters to which it relates; and
- “(b) that financial information is audited, or otherwise reviewed, to the Bank's satisfaction by a qualified auditor; and”.
(2) Replace regulation 10(c)(ii) with:
- “(ii) a copy of the financial information referred to in paragraph (a) together with the qualified auditor's report on that information.”

7 Regulation 11 amended (Exemptions relating to ongoing requirements)

(1) Replace regulation 11(1)(b) with:
- “(b) from being—
  
  “(i) an FMC reporting entity for the purposes of the Financial Markets Conduct Act 2013 by virtue of section 451(h) of that Act; and
  
  “(ii) an issuer for the purposes of the Financial Reporting Act 1993 by virtue of section 4(1)(da) of that Act.”
(2) Replace regulation 11(2) with:
- “(2) The annual gross premium income of an insurer in relation to an accounting period (the relevant period) is,—
  
  “(a) in the case of subclause (1)(a)(iii), its gross premium income derived from life policies for the immediately preceding accounting period (before the deduction of any reinsurance premiums) as disclosed in the financial information that is prepared and provided to the Bank in accordance with regulation 12(a) to (c):
  
  “(b) in any other case, its gross premium income for the immediately preceding accounting period (before the deduction of any reinsurance premiums) as disclosed in the financial information that is prepared and provided to the Bank in accordance with regulation 12(a) to (c).”
(3) In regulation 11, example, delete “(as stated in its statement of financial performance)”.

8 Regulation 12 amended (Conditions of ongoing exemptions)

Replace regulation 12(a) to (c) with:
- “(a) the financial information that discloses the annual gross premium income of the insurer under regulation 11(2) (for the immediately preceding accounting period) must—
  
  “(i) state that information to the best of the insurer's knowledge; and
  
  “(ii) be prepared so as to take into account—
  
  “(A) information contained in relevant financial statements for that period (if any); and
  
  “(B) the insurer's accounting records; and
  
  “(iii) give a true and fair view of the matters to which it relates; and
- “(b) that financial information is audited, or otherwise reviewed, to the Bank's satisfaction by a qualified auditor; and
- “(c) the insurer must provide to the Bank a copy of that financial information, together with the qualified auditor's report on that information, within 4 months after the balance date of the insurer for the immediately preceding accounting period; and”.

9 Regulation 13 amended (Exemption ceases to apply after $1.5 million limit is exceeded)

(1) In regulation 13(1)(a), delete “as specified in any previous statement of financial performance of the insurer”.

(2) In regulation 13(1)(b), delete “as specified in any preceding statement of financial performance of the insurer”.
(3) After regulation 13(1), insert:
- “(1A) An insurer's gross premium income must be determined by taking into account—
  
  “(a) information contained in relevant financial statements for that period (if any); and
  
  “(b) the insurer's accounting records.”

10 Regulation 19 amended (Recording of restricted investments)

In regulation 19(4), replace “section 7 of the Financial Reporting Act 1993” with “section 41 of the Financial Reporting Act 2013”.

Michael Webster,
for Clerk of the Executive Council.

Explanatory note

This note is not part of the regulations, but is intended to indicate their general effect.

These regulations, which come into force on 1 April 2014, make amendments to the Insurance (Prudential Supervision) Regulations 2010 to take into account certain provisions of the Financial Reporting Act 2013 (and associated financial markets legislation) coming into force on that date.

The amendments relate to the provisions in the regulations that concern exemptions for small insurers and, in particular, the manner in which the annual gross premium income of an insurer is determined. The amendments replace certain financial reporting concepts with concepts that are consistent with the Financial Reporting Act 2013 (and associated financial markets legislation). For example, references to a statement of financial performance have been replaced with references to financial information that is prepared so as to take into account relevant financial statements and accounting records.

Issued under the authority of the Legislation Act 2012.

Date of notification in Gazette: 27 February 2014.

These regulations are administered by the Reserve Bank of New Zealand.

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Insurance (Prudential Supervision) Amendment Regulations 2014