| 3.1.1 | The value of a group undertaking must be limited to the percentage of the shareholding or other ownership interest of the insurer in the group undertaking, multiplied by the net asset value of the group undertaking. |
| 3.1.2 | If the group undertaking is listed the value in paragraph 3.1.1 may be increased by - |
A multiplied by B
Where-
A - equals the difference between the fair value and the net asset value of the group undertaking, provided that A must be taken as nil if the net asset value is larger than the fair value;
B - equals the lower of 20% or the percentage of the holding by the insurer in the group undertaking.
| 3.1.3 | If a group undertaking is not a regulated financial institution, and its fair value is less than 0,25% of the value of the liabilities of the insurer, it maybe valued at fair value, notwithstanding paragraph 3.1.1. |
| 3.1.4 | If there is more than one group undertaking as contemplated in paragraph 3.1.3, each may be valued at fair value, provided that their combined fair value is not more than 2,5% of the value of the liabilities of the insurer. If their combined fair value is more than 2,5% of the value of the liabilities of the insurer, only so many of them, selected by the insurer, as will have a combined fair value of not more than 2,5% of the value of the liabilities of the insurer, may be valued at fair value. The others must then be valued as required by paragraph 3.1.1. |
| 3.1.5 | If an insurer holds shares in its holding company, the value of those shares must for purposes of valuation be limited to the following: |
| a) | If the holding company is listed - 5% of the value of the Iiabilities of the insurer. |
| b) | If the holding company is not listed -nil. |
| 3.1.6 | Paragraph 3.1.5 applies also where the insurer, directly, or indirectly through a subsidiary or trust, holds shares in its holding company under a share incentive scheme linked to shares in its holding company. |
| 3.1.7 | Paragraph 3.1.5 does not apply where the insurer holds shares in its holding company under a collective investment scheme, an index-based investment scheme or any similar investment scheme that is recognised generally by the international community of institutional investors. |
| 3.1.8 | If an insurer has a cell in another licensed insurer, the value of those shares must for the purposes of valuation be limited to the fair value of the admissible assets held in the cell less the sum of the value of its liabilities and its capital requirement as reported by the insurer (that issued the cell) in respect of that cell. |
| 3.1.9 | If a negative asset value is reported in paragraph 3.1.8 and the shareholders' agreement stated that the insurer that owns the cell is accountable for losses and/or solvency, a liability must be raised for the fun negative net asset value. |
| 3.1.10 | Net asset value of a group undertaking |
| 3.1.10.1 | If the group undertaking is a regulated financial institution |
| a) | The net asset value of the group undertaking is the value of its assets, less the sum of the value of its liabilities and its capital requirement |
| b) | These values must be calculated as required by the regulatory authority concerned. |
| c) | If the group undertaking is a company, and its main business is insurance business, the insurer must, in calculating these values, exclude so much of its capital and reserves as shareholders, other than the insurer, may withdraw in cash when they cease to be shareholders, in terms of the articles of association of, or a contract with, the group undertaking. |
| a) | The net asset value of the group undertaking is the value of its assets, less the value of its liabilities. |
| b) | If the group undertaking carries on most of its business in South Africa, these values must be calculated in accordance with financial reporting standards. |
| c) | If the group undertaking carries on most of its business in another country, these values must be calculated in accordance with accounting standards generally accepted in that country. |
| d) | In calculating these values, the following items must be. excluded, to the extent that, according to the insurer, they can be ascertained with reasonable effort and are material: |
| i) | an amount that remains unpaid after the expiry of a period of 12 months from the date on which they became due and payable; |
| ii) | an amount representing administrative, organisation or business extension expenses incurred directly or indirectly; |
| iii) | an amount representing goodwill or an item of a similar nature; |
| iv) | an amount representing a prepaid expense or a deferred expense; and |
| v) | an amount representing a holding in a subsidiary of the group undertaking in excess of the net asset value, calculated on the same basis as contemplated in this paragraph 3, of the subsidiary. |
