(1) The basic own funds of an insurance undertaking or reinsurance undertaking shall consist of the following items:
(a) the excess of assets over liabilities, valued in accordance with Chapters 1 and 2 of this Part;
(b) subordinated liabilities.
(2) The excess amount referred to in paragraph (1)(a) shall be reduced by the amount of own shares held by the insurance undertaking or reinsurance undertaking.