“adjusted IFRS value”, in respect of a policyholder fund or the risk policy fund, means an amount, which may not be less than zero, and which must be calculated in accordance with the formula-

I = (L + LIC + DL + PF) – PT– DC + DR

in which formula-

(a)     “I” represents the amount to be determined;

(b)     “L” represents, in respect of policies of the insurer, the aggregate amounts of-

(i)      insurance contract liabilities;

(ii)     investment contract liabilities; and

(iii)    reinsurance contract liabilities,

reduced by-

(aa)   insurance contract assets;

(bb)   reinsurance contract assets, and

(cc)   liability for incurred claims contemplated in paragraph (c),

the amounts of which are determined in accordance with IFRS as annually reported by the insurer to shareholders in the audited annual financial statements: Provided that any amount that is payable to or receivable from a cell owner, referred to in the definition of ‘cell structure’ in section 1 of the Insurance Act, in respect of “third party risks” as defined in that section of that Act, must be disregarded: Provided further that the amount may not be less than zero;

[Paragraph (b) amended by section 32(1)(a) of Act 17 of 2023 effective on 1 January, 2023 and applicable in respect of years of assessment commencing on or after that date]

(c)     “LIC” represents the amount of the liability for incurred claims determined in accordance with IFRS 17 in respect of the policies of the insurer, net of amounts recognised in reinsurance contracts for liabilities for incurred claims, which are determined in accordance with IFRS as annually reported by the insurer to shareholders in the audited annual financial statements, in respect of policies allocated to that fund;

(d)     “DL” represents for a policyholder fund the amount of deferred tax liabilities, determined in accordance with IFRS as annually reported by the insurer to shareholders in the audited annual financial statements, in respect of assets allocated to that policyholder fund;

(e)     “PF” represents the amount calculated in terms of subsection (14) if a phasing-in amount is determined in terms of subsection (15)(a);

(f)      “PT” represents the amount calculated in terms of subsection (14) if a phasing-in amount is determined in terms of subsection (15)(b);

(g)     “DC” represents for a policyholder fund the amount of deferred acquisition costs determined in accordance with IFRS as annually reported by the insurer to shareholders in the audited financial statements; and

(h)     “DR” represents for a policyholder fund the amount of deferred revenue determined in accordance with IFRS as annually reported by the insurer to shareholders in the audited financial statements;

[Definition of “adjusted IFRS value” (insertion by section 47(1)(a) of Act 43 of 2014 deleted by section 101(1)(a) of Act 15 of 2016) inserted by section 50(1)(a) of Act 15 of 2016 and substituted by section 46(1)(a) of Act 17 of 2017 and by section 15(1)(a) of Act 20 of 2022 effective on 1 January, 2023 and applicable in respect of years of assessment commencing on or after that date]

“business” means any long–term insurance business as defined in section 1 of the Long–term Insurance Act;

“insurer” means a company that is licensed under the Insurance Act and is conducting life insurance business as defined in that Act, other than a foreign reinsurer conducting insurance business through a branch in the Republic in terms of section 6 of that Act;

[Definition of “insurer” substituted by section 34(a) of Act 34 of 2019 and by section 22(a) of Act 20 of 2021]

“market value”, in relation to any asset, means-

(a)     the amount which a person having the right freely to dispose of such asset might reasonably expect to obtain from a sale of such asset in the open market; or

(b)     where an asset cannot be sold in the open market, an amount equal to the value at which that asset is recognised in the audited annual financial statements of the insurer;

[Definition of “market value” substituted by section 30 of Act 23 of 2020]

“negative liability”, in respect of a long-term policy, means the amount by which the expected present value of future premiums exceeds the expected present value of future benefits to policyholders and expenses;

[Definition of “negative liability” inserted by section 53(1)(a) of Act 25 of 2015 and substituted by section 46(1)(b) of Act 17 of 2017 deemed effective on 1 July 2018 and applicable in respect of years of assessment ending on or after that date – effective date in terms of section 53(2) of Act 25 of 2015 as substituted by section 108(1) of Act 23 of 2018 and effective date in section 46(2) of Act 17 of 2017 as substituted by section 114(1)(a) of Act 23 of 2018)]

“owner”, in relation to a policy, means the person who is entitled to enforce any benefit provided for in the policy: Provided that where a policy has been –

(a)     ceded or pledged solely for the purpose of providing security for the performance of any obligation, the owner shall be the person who retains the beneficial interest in such policy; or

(b)     reinsured by one insurer with another insurer, the reinsurance policy shall be deemed to be owned by the owner of the insurance policy so insured;

“policy” means a long­term policy as defined in section 1 of the Long­term Insurance Act, other than a policy issued by a foreign reinsurer conducting insurance business through a branch in the Republic in terms of section 6 of the Insurance Act;

[Definition of “policy” substituted by section 34(b) of Act 34 of 2019]

“policyholder fund” means any fund contemplated in subsection (4)(a), (b) or (c);

“risk policy” means-

(a)     any policy issued by the insurer during any year of assessment of that insurer commencing on or after 1 January 2016 under which the benefits payable-

(i)      cannot exceed the amount of premiums receivable, except where all or substantially the whole of the policy benefits are payable due to death, disablement, illness or unemployment and excludes a contract of insurance in terms of which annuities are being paid; or

(ii)     other than benefits payable due to death, disablement, illness or unemployment, cannot exceed the amount of premiums receivable and excludes a contract of insurance in terms of which annuities are being paid; or

[Paragraph (a) substituted by section 50 of Act 15 of 2016 effective on 1 January 2016, applies in respect of years of assessment commencing on or after that date]

(b)     any policy in respect of which an election has been made as contemplated in subsection (13B);

[Definition of “risk policy” inserted by section 47 of Act 43 of 2014 effective on 1 January 2016, substituted by section 53 of Act 25 of 2015 effective on 1 January 2016]