PINS 4.4 Guidance
1. Tier 2 capital consists of instruments that, to varying degrees, fall short of the quality of tier 1 capital but nonetheless contribute to the overall strength of an insurer. Such instruments include some forms of hybrid capital instruments that have the characteristics of both equity and debt, that is they are structured like debt, but exhibit some of the loss absorption and funding flexibility features of equity.
2. Tier 2 capital is divided into upper tier 2 capital and lower tier 2 capital. A major distinction between upper tier 2 capital and lower tier 2 capital is that only perpetual instruments may be included in upper tier 2 capital whereas dated instruments are included in lower tier 2 capital.
|Amended by QFCRA RM/2012-5 (as from 1st July 2013).|