“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]

“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, that does not relate to a policy, 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 and by section 25(1)(a) of Act 42 of 2024 deemed to have come into operation 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]

“risk policy fund” means the fund contemplated in subsection 4(e);

[Definition of ‘risk policy fund’ inserted by section 47 of Act 43 of 2014 effective on 1 January 2016]