Financial Sector (Collection of Data) (reporting standard) determination No. 2 of 2010 GRS 110.0 (2010) Minimum Capital Requirement (Cth)
Financial Sector (Collection of Data) (reporting standard) determination No. 2 of 2010
Reporting Standard GRS 110.0 (2010) Minimum Capital Requirement
Financial Sector (Collection of Data) Act 2001
I, Ian Laughlin, a delegate of APRA, under paragraph 13(1)(a) of the Financial Sector (Collection of Data) Act 2001 (the Act) and subsection 33(3) of the Acts Interpretation Act 1901:
REVOKE Reporting Standard GRS 110.0 (2008) Minimum Capital Requirement which is in force as at the date of this determination (the old standard); and
DETERMINE Reporting Standard GRS 110.0 (2010) Minimum Capital Requirement in the form set out in the Schedule (the new standard), which applies to the financial sector entities referred to in paragraph 2 of the new standard.
Under section 15 of the Act, I DECLARE that the new standard shall begin to apply, and the old standard shall cease to apply, on the date of registration of this instrument on the Federal Register of Legislative Instruments.
Dated 30 July 2010
[Signed]
Ian Laughlin
Member
Interpretation
In this Determination
APRA means the Australian Prudential Regulation Authority.
Federal Register of Legislative Instruments means the register established under section 20 of the Legislative Instruments Act 2003.
Schedule
Reporting Standard GRS 110.0 (2010) Minimum Capital Requirement comprises the 39 pages commencing on the next page.
Reporting Standard GRS 110.0 (2010)
Minimum Capital Requirement
Objective of this reporting standard
This reporting standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001 (the Collection of Data Act). It requires general insurers (insurers), including foreign general insurers operating in Australia through branch operations (foreign insurers), to report to APRA, generally on a quarterly and annual basis, in relation to their Minimum Capital Requirement.
This reporting standard outlines the overall requirements for the provision of this information to APRA. It should be read in conjunction with:
the versions of Form GRF 110.0 Minimum Capital Requirement (Form GRF 110.0) designated for a ‘Licensed Insurer’ and ‘Branch Insurer’ and the associated instructions (which are attached and all form part of this reporting standard); and
any prudential standards referenced in the attached instructions.
Purpose
Data collected in each version of Form GRF 110.0 is used by APRA for the purpose of prudential supervision including assessing an insurer’s compliance with the capital standards.[1]
[1] Reference to capital standards has the same meaning as in Prudential Standards GPS 001 Definitions, where the capital standards refer collectively to prudential standards relating to capital adequacy.
Application and commencement
This reporting standard applies to all insurers for reporting periods ending on or after the date of registration on the Federal Register of Legislative Instruments.
Information required
An insurer, other than a foreign insurer, must provide APRA with the information required by the version of Form GRF 110.0 designated for a ‘Licensed Insurer’ for each reporting period.
A foreign insurer must provide APRA with the information required by the version of Form GRF 110.0 designated for a ‘Branch Insurer’ for each reporting period.
Forms and method of submission
The information required by this reporting standard must be given to APRA either:
(a)in electronic form using the ‘Direct to APRA’ application, applying one of the electronic submission mechanisms under that application; or
(b)by manually completing Form GRF 110.0 on paper and mailing the completed form to APRA’s head office at Level 26, 400 George Street, Sydney, New South Wales.
Where the information is submitted by means of an agent to whom the insurer has outsourced the function of providing the information on the insurer’s behalf, the agent may only provide the information in accordance with subparagraph 5(b) if the agent has contacted APRA and advised that the agent cannot submit the information in electronic form under subparagraph 5(a).
Note: The ‘Direct to APRA’ application software and paper forms may be obtained from APRA.
Reporting periods and due dates
Subject to paragraph 7, an insurer must provide the information required by this reporting standard:
(a)in respect of each quarter based on the financial year (within the meaning of the Corporations Act 2001) of the insurer; and
(b)in respect of each financial year (within the meaning of the Corporations Act 2001) of the insurer.
Note: The annual information required from an insurer by paragraph 3 or 4 read with subparagraph 6(b), together with certain annual information required by other reporting standards, will form part of the insurer’s yearly statutory accounts within the meaning of section 3 of the Insurance Act 1973 (the Insurance Act). This means that the information must be audited in accordance with paragraph 49J(1)(a) of the Insurance Act. Under subsection 49J(3), the auditor must give the insurer a certificate relating to the yearly statutory accounts, and that certificate must contain statements of the auditor’s opinions on the matters required by the prudential standards to be dealt with in the certificate.
APRA may, by notice in writing, change the reporting periods, or specified reporting periods, for a particular insurer to require it to provide the information:
(a)more frequently (if, having regard to the particular circumstances of the insurer, APRA considers it necessary or desirable to obtain information more frequently for the purposes of the prudential supervision of the insurer); or
(b)less frequently (if, having regard to the particular circumstances of the insurer and the extent to which it requires prudential supervision, APRA considers it unnecessary to require the insurer to provide the information as frequently as provided by subparagraph 6(a) or (b)).
The information required by paragraphs 3 and 4 of this reporting standard must be provided to APRA by the following times:
(a)in the case of the quarterly information referred to in subparagraph 6(a) – 20 business days after the end of the reporting period to which the information relates; and
(b)in the case of the annual information referred to in subparagraph 6(b) – 4 months after the end of the reporting period to which the information relates.
Note: Paragraph 49L(1)(a) of the Insurance Act provides that the auditor’s certificate required under subsection 49J(3) of that Act must be lodged with APRA in accordance with the prudential standards. The prudential standards provide that the certificate must be submitted to APRA together with the yearly statutory accounts. Accordingly, the auditor’s certificate relating to the annual information referred to in subparagraph 6(b) must be provided to APRA by the time specified in subparagraph 8(b) of this reporting standard (unless an extension is granted under paragraph 9).
APRA may grant an insurer an extension of a due date in writing, in which case the new due date for the provision of the information will be the date specified in the notice of extension.
Quality control
The information provided by an insurer under this reporting standard must be the product of processes and controls that have been reviewed and tested by the appointed auditor of the insurer. This will require the auditor to review and test the systems, processes and controls supporting the reporting of the information to ensure that they produce accurate data and are otherwise reliable. This review and testing must be done on an annual basis or more frequently if necessary to enable the appointed auditor to form an opinion on the accuracy and reliability of the data.
The information provided by an insurer under this reporting standard must be subject to processes and controls developed by the insurer for the internal review and authorisation of that information. It is the responsibility of the board and senior management of the insurer to ensure that an appropriate set of policies and procedures for the authorisation of data submitted to APRA is in place.
Authorisation
If the officer of an insurer provides the information required by this reporting standard:
(a)under subparagraph 5(a), the officer must digitally sign, authorise and encrypt the information (for which purpose APRA’s certificate authority will issue digital certificates, for use with the ‘Direct to APRA’ application, to officers of the insurer who have authority from the insurer to transmit data to APRA); or
(b)under subparagraph 5(b), the completed form must be signed in accordance with paragraph 14.
If an insurer provides the information required by this reporting standard through an agent under either subparagraph 5(a) or (b), the agent will not be required to sign or authorise the information. However, the insurer must:
(a)obtain from the agent a paper copy of the completed form as provided to APRA (under either subparagraph 5(a) or (b)); and
(b)cause the paper copy to be signed in accordance with paragraph 14; and
(c)lodge the signed paper copy with APRA by mailing the completed form to APRA’s head office at Level 26, 400 George Street, Sydney, New South Wales, by the relevant due date (unless APRA, in writing, waives the requirement in relation to the insurer to lodge the signed paper copy with APRA).
Note: APRA may, for example, decide to waive the requirement under subparagraph 13(c) where an insurer has undertaken to retain the signed copy of the completed form for an agreed period of time.
If information under this reporting standard is provided in paper form, it must be signed on the front page of the relevant completed form by either:
(a)the Principal Executive Officer of the insurer; or
(b)the Chief Financial Officer of the insurer (whatever his or her official title may be).
Minor alterations to forms and instructions
APRA may make minor variations to the instructions to a form, to clarify their application to the form provided it does not involve changing any substantive requirement in the form or instructions.
If APRA makes such a variation it must notify insurers of this in writing.
Transition
An insurer must report in relation to a reporting period ending prior to 1 July 2010 in accordance with the reporting standard that this reporting standard replaced.
Interpretation
In this reporting standard:
appointed auditor means an auditor appointed under paragraph 39(1)(a) of the Insurance Act;
business days means ordinary business days, exclusive of Saturdays, Sundays and public holidays;
capital standards means the prudential standards which relate to capital adequacy as defined in Prudential Standard GPS 001 Definitions;
foreign insurer means a foreign general insurer within the meaning of the Insurance Act;
Note: A reference to a ‘branch’ or ‘branch operation’ is a reference to the Australian operations of a foreign insurer.
Insurance Act means the Insurance Act 1973;
insurer means a general insurer within the meaning of the Insurance Act;
Note: In the forms and instructions, a reference to an ‘authorised insurer’, ‘authorised insurance entity’ or ‘licensed insurer’ is a reference to an insurer, and a reference to an ‘authorised reinsurance entity’ is a reference to an insurer whose business consists only of undertaking liability by way of reinsurance.
Principal Executive Officer means the principal executive officer of the insurer for the time being, by whatever name called, and whether or not he or she is a member of the governing board of the insurer;
reporting period means a period mentioned in subparagraph 6(a) or (b) or, if appropriate, paragraph 7.
A reference to a prudential standard means the prudential standard made under section 32 of the Insurance Act, mentioned in the reference, as amended from time to time. If the prudential standard has been revoked and replaced, the reference shall be taken to be to the prudential standard that has replaced it.
Reporting Form GRF 110.0 (L)
Minimum Capital Requirement
Instruction Guide
Introduction
GRF 110.0 Minimum Capital Requirement reports the summary of the risk charges, Minimum Capital Requirement (MCR), the capital base, net assets in Australia, and compliance with the capital requirements as prescribed in the ‘capital standards’[2].
[2]The reference to capital standards has the same meaning as in Prudential Standards GPS 001 Definitions, where the capital standards refer collectively to prudential standards relating to capital adequacy.
The individual risk charges and capital base summarised on this form are calculated in other forms. The form will automatically calculate the MCR of the reporting insurer based on the information reported for the individual risk charges. Additionally, information relating to the capital surplus / deficiency and capital ratios will be calculated automatically.
Audit requirements
This form is required to be subject to audit review and testing. The scope and nature of audit testing required is outlined in the applicable Auditing and Assurance Standards Board Guidance Statement issued by the Auditing and Assurance Standards Board.
Information provided in the form in respect of a financial year of an insurer forms part of the insurer’s ‘yearly statutory accounts’ within the meaning of section 3 of the Insurance Act 1973 (the Act). This means that:
the completed form for the financial year must be audited by the Appointed Auditor of the insurer (see paragraph 49J(1)(a) of the Act);
the insurer must make such arrangements as to enable the auditor to do this (subsection 49J(2));
the auditor must give the insurer a certificate relating to the completed form (and other completed forms that are part of the insurer’s yearly statutory accounts), which must contain statements of the auditor’s opinion on the matters required by the prudential standards to be dealt with in the certificate (subsection 49J(3));
the certificate must be lodged with APRA as provided for in the prudential standards (paragraph 49L(1)(a)), namely by the due date for lodging the form in respect of the financial year for the insurer.
Reporting entity
This form is to be completed by:
Authorised insurance entities, including mutual entities (reference to licensed insurer in the form means total operations of the licensed entity); and
Authorised reinsurance entities (reference to licensed insurer in the form means total operations of the licensed entity).
A general insurer must, at all times, maintain a capital base in excess of its Minimum Capital Requirement as required by Prudential Standard GPS 110 Capital Adequacy.
Unit of measurement
The form reports in Australian currency rounded in thousands of dollars (no decimal place). Ratios are expressed to 2 decimal places.
Reporting period
Insurers are required to report the information in the reporting form on a quarterly and annual basis.
The quarterly information is to be completed in respect of each quarter based on the financial year of the insurer, not the calendar year.
The annual information is to be completed in respect of the financial year of the insurer.
The financial information requested in this form is to be reported as at the last day of the reporting period on a financial year to date basis of the insurer.
Reporting lag
This form must be lodged for each of the reporting units within the number of business days after the end of the quarter as set out in Reporting Standard GRS 110.0 Minimum Capital Requirement.
Specific instructions
Category of Insurer
The different categories of insurers are defined in Prudential Standard GPS 001 Definitions. Insurers are required to select the category which best describes their status.
Note: Category C insurers (foreign insurers operating as a foreign branches in Australia) are required to complete the reporting form for branches.
GRF 130.0 Off Balance Sheet Business - Credit Substitutes Provided and Risk Charge
This represents the total capital charge applicable for the credit substitutes provided by the reporting insurer. This amount is calculated in item 14 ‘TOTAL Off balance sheet required risk charge’ in GRF 130.0 Off Balance Sheet Business – Credit Substitutes Provided and Risk Charge. This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
GRF 130.2 Off Balance Sheet Business - Charges Granted and Risk Charge
This represents the total capital charge applicable for the charges and encumbrances granted by the reporting insurer. This amount is calculated in the item titled ‘Adjusted Required Capital Charge’ in GRF 130.2 Off Balance Sheet Business – Charges Granted and Risk Charge. This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
Investment Risk Charge calculated from the following forms:
3.1. GRF 140.0 Investments - Direct Interest Holdings and Risk Charge
This represents the total investment risk charge applicable for the direct interest holdings of the reporting insurer. This amount is calculated in item 7 ‘Total Investment Risk Charge’ in GRF 140.0 Investments - Direct Interest Rate Holdings and Risk Charge. This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
3.2.GRF 140.1 Investments - Direct Equity Holdings and Risk Charge
This represents the total investment risk charge applicable for the direct equity holdings of the reporting insurer. This amount is calculated in item 9 ‘Total investment risk charge’ in GRF 140.1 Investments – Direct Equity Holdings and Risk Charge. This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
3.3.GRF 140.2 Investments - Direct Property Holdings and Risk Charge
This represents the total investment risk charge applicable for the direct property holdings of the reporting insurer. This figure is calculated in column headed ‘Investment Risk Charge’ for line item titled ‘Total direct property investments’ in GRF 140.2 Investments - Direct Property Holdings and Risk Charge. This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
3.4. GRF 140.3 Investments - Loans and Advances and Risk Charge
This represents the total investment risk charge applicable for the loans and advances provided by the reporting insurer. This amount is calculated in item 4 ‘Total Investment Risk Charge’ in GRF 140.3 Investments – Loans and Advances and Risk Charge. This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
3.5. GRF 140.4 Investments - Indirectly Held by Insurer and Risk Charge
This represents the total investment risk charge applicable for assets that are indirectly held by the reporting insurer. This amount is calculated in item 12 ‘Total Investment Risk Charge’ in GRF 140.4 Investments – Indirectly Held by Insurer and Risk Charge. This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
3.6. GRF 300.0 Statement of Financial Position
This represents the total investment risk charge for all applicable assets listed in GRF 300.0 Statement of Financial Position. It excludes assets that are subject to a risk charge under the forms GRF 140.0 – 140.4, GRF 150.0, GRF 301.0 and assets that are deducted from the Capital Base.
This figure is automatically entered by the form and represents the sum of the individual investment risk charges calculated under the column heading ‘Investment Risk Charge’ and is reported for item 13 ‘Total assets’ in GRF 300.0 Statement of Financial Position.
GRF 301 Reinsurance Assets and Risk Charge
This figure represents the sum of the individual investment risk charges calculated under the column heading ‘Investment Risk Charge’ and is reported for item 4 ‘Net reinsurance assets’ in GRF 301.0 Reinsurance Assets and Risk Charge. This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
GRF 130.3 Off Balance Sheet Business - Credit Support Received (Investment Risk Charge Reduction)
The investment risk charge may be reduced where the insurer holds certain types of collateral against an asset, or where an asset has been guaranteed, as a means of reducing risk. Accordingly this item represents the ‘rebate’ of the investment risk charge on these assets that is calculated in either GRF 140.0 – GRF 140.4 or GRF 300.0 Statement of Financial Position. The rebate represents the difference between the investment risk capital charge applicable to the value of the eligible collateral or guarantee provided to the insurer and the investment risk capital charge applicable to the asset(s) being supported.
This item is calculated in GRF 130.3 Off Balance Sheet Business - Credit Support Received and represents the sum of ‘Adjustment to Investment Capital Charge’ in ‘Part A - Eligible Collateral Provided to Reporting Insurer’ and ‘Part B - Guarantees or Letter of Credit Provided to Reporting Insurer’.
This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
GRF 150.0 Asset Exposure Concentrations and Risk Charge
This represents the total investment concentration risk charge for exposures listed in GRF 150.0 Asset Exposure Concentrations and Risk Charge. This figure represents the item ‘Net concentration risk charge’ calculated in GRF 150.0 Asset Exposure Concentrations and Risk Charge. This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
GRF 160.0 Derivatives Activity and Risk Charge
This represents the total investment risk charge for derivative exposures listed in GRF 160.0 Derivatives Activity and Risk Charge. This figure represents the item titled ‘Total Derivatives Activity Risk Charge’ in GRF 160.0 Derivatives Activity and Risk Charge. This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
GRF 170.0 Concentration Risk Charge
This represents the total concentration risk charge applicable for the reporting insurer. This figure represents the amount disclosed in item ‘Total concentration risk charge’ in GRF 170.0 Concentration Risk Charge. This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
GRF 210.0 Outstanding Claims Provision - Insurance Risk Charge
This represents the total insurance risk charge applicable in response to the risk that the true value of the net outstanding claims provision (OCP) of an insurer is greater than the value determined under Prudential Standard GPS 310 Audit and Actuarial Reporting and Valuation (GPS 310). This figure represents the ‘TOTAL’ line item under column 11 headed ‘OCP Insurance risk charge’ in the table titled ‘Part 3: Total’ of GRF 210.0 Outstanding Claims Provision - Insurance Risk Charge. This figure is automatically entered by the form into this data field in GRF 110.0 Minimum Capital Requirement.
GRF 210.1 Premium Liabilities - Insurance Risk Charge
This represents the total insurance risk charge applicable in response to the risk that the true value of the net premiums liabilities of an insurer is greater than the value determined under GPS 310. This figure represents the ‘TOTAL’ line item under the column 9 headed ‘Premium Liabilities Insurance Risk Charge’ in the table titled ‘Part 3A: GPS 310 Total’ of GRF 210.1 Premium Liabilities - Insurance Risk Charge. This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
Total variation in capital charges as approved by APRA
Report the variation in capital charges in this item with a brief description (no more than 200 characters) and the amount of each variation which has been approved by APRA. A reduction in risk charges resulting from variations has to be reported as a negative number, while any increase needs to be reported as a positive number.
Where a loan to a related party is on non-commercial terms, a 100% capital factor must apply. The difference between the investment risk charge on the loan in GRF 140.3 Investments – Loans and Advances and Risk Charge and the risk charge with a 100% capital factor must be recorded at this item.
Where an insurer uses the internal model-based (IMB) method to determine the MCR in accordance with Prudential Standard GPS 113 Capital Adequacy: Internal Model-based Method, the difference between the MCR determined using the prescribed method and the IMB method should be reported here. During the first two years of using the IMB method, an insurer’s MCR calculated using the IMB method should be at least 90 per cent of the MCR determined using the prescribed method.
The total variation is calculated automatically by the form.
Minimum Capital Requirement
This item is calculated automatically by the form.
Where an insurer is a Category D or E insurer (i.e. captive insurer), the minimum capital requirement (MCR) is calculated as follows:
If the sum of the MCR is less than or equal to $2 million, the MCR equals $2 million.
If the sum of the MCR is greater than $2 million, the MCR equals the outcome of the calculation shown below.
Where an insurer is in a category other than a Category D or E insurer, the MCR is calculated as follows:
If the sum of the MCR is less than or equal to $5 million, the MCR equals $5 million.
If the sum of the MCR is greater than $5 million, the MCR equals the outcome of the calculation shown below.
The sum of items 1-4 and 6-11 (as reported in GRF 110.0 Minimum Capital Requirement) less item 5 is calculated as:
Add
Item 1: GRF 130.0 Off Balance Sheet Business - Credit Substitutes Provided and Risk Charge;
Item 2: GRF 130.2 Off Balance Sheet Business - Charges Granted and Risk Charge;
Item 3.1: GRF 140.0 Investments - Direct Interest Rate Holdings and Risk Charge
Item 3.2: GRF 140.1 Investments – Direct Equity Holdings and Risk Charge
Item 3.3: GRF 140.2 Investments - Direct Property Holdings and Risk Charge
Item 3.4: GRF 140.3 Investments – Loans and Advances and Risk Charge
Item 3.5: GRF 140.4 Investments – Indirectly Held by Insurer and Risk Charge
Item 3.6: GRF 300.0 Statement of Financial Position
Item 4: GRF 301.0 Reinsurance Assets and Risk Charge;
Item 6: GRF 150.0 Asset Exposure Concentrations and Risk Charge;
Item 7: GRF 160.0 Derivatives Activity and Risk Charge;
Item 8: GRF 170.0 Concentration Risk Charge;
Item 9: GRF 210.0 Outstanding Claims Provision - Insurance Risk Charge;
Item 10: GRF 210.1 Premium Liabilities - Insurance Risk Charge; and
Item 11: Total variation in capital charges as approved by APRA.
Less
Item 5: GRF 130.3 Off Balance Sheet Business - Credit Support Received.
GRF 120.0 Determination of Capital Base
This represents the total eligible capital base of the insurer. This amount is calculated in item 3 titled ‘Total Capital Base’ in GRF 120.0 Determination of Capital Base. This figure is automatically entered by the form into this data field in GRF 110.0 Minimum Capital Requirement.
Capital Surplus (Deficiency)
This figure represents the value of item 13 titled ‘GRF 120.0 Determination of Capital Base’ less the amount calculated for item 12 titled ‘Minimum Capital Requirement’.
This figure will be calculated automatically by the form.
Solvency Coverage
This figure represents the value of item 13 titled ‘GRF 120.0 Determination of Capital Base’ divided by the value of item 12 titled ‘Minimum Capital Requirement’.
This figure will be calculated automatically by the form.
Capital Adequacy Ratio %
This is another way of looking at the solvency coverage and this figure represents the value of item 12 titled ‘Minimum Capital Requirement’ divided by the value of item 13 titled ‘GRF 120.0 Determination of Capital Base’.
This figure will be calculated automatically by the form.
Adjusted Net Assets in Australia
‘Adjusted Net Assets in Australia’ refers to total assets less assets that are excluded as ‘Assets in Australia’ for the purpose of section 28 of the Act.
Item 17.4 Adjusted Net Assets in Australia is determined from the following:
17.1 Net Assets per form GRF 300.0 Statement of Financial Position
The amount reported in item 17.1 ‘Net Assets per form GRF 300.0: Statement of Financial Position’ on GRF 110.0 Minimum Capital Requirement must equal the value of item 25 titled ‘Net Assets’ under the ‘Amount – Inside Australia’ column on GRF 300.0 Statement of Financial Position.
This figure is automatically entered into this data field in GRF 110.0 Minimum Capital Requirement.
17.2 Net insurance liabilities surplus / (deficit) inside Australia after tax effect
Include in this item the value of net outstanding claims liabilities and net AASB 1023 premiums liabilities that are recognised in GRF 300.0 Statement of Financial Position (GRF 300.0), that are in surplus or deficit of the technical provisions required by GPS 310 (i.e. the net outstanding claims provision reported in GRF 210.0 Outstanding Claims Provision – Insurance Risk Charge and the net premiums liabilities reported in GRF 210.1 Premium Liabilities – Insurance Risk Charge). This should be reported for amounts inside Australia only.
This must be calculated as per the following:
Item 16 of GRF 300.0. Outstanding claims liability (inside Australia amount)
Add
Item 17 of GRF 300.0. Unearned premium liability (inside Australia amount)
Less
Item 2.4.1 of GRF 300.0: Total net amountss recoverable on reinsurance contracts reported in item 2.4, that relate to claims recognised in the calculation of the Outstanding Claims Liability (i.e. other than reinsurance recoveries relating to claims that have been paid) (inside Australia amount)
Item 2.2.2.1 of GRF 300.0: Total net amounts recoverable (other than reinsurance recoveries receivable) that are reported in item 2.2.2 and that relate to claims recognised in the calculation of insurance liabilities that have not been paid - relating to Outstanding Claims Liability (OCL) (inside Australia amount
Item 9 of GRF 300.0. ‘Deferred acquisitions costs’ (inside Australia amount)
Item 8 of GRF 300.0. ‘Deferred reinsurance expense’ (inside Australia amount)
The net value of any other items which form the total of AASB 1023 net premiums liabilities (inside Australia amounts only). This would include:
Deferred reinsurance exchange commission;
Unearned commission revenue; and
Deferred levies and charges.
Add
Item 18 of GRF 300.0. Unexpired risk liability (inside Australia amount)
Less the sum of the outstanding claims provisions net of reinsurance and non reinsurance recoveries as reported in GRF 210.0 per the following:
GRF 210.0 Outstanding Claims Provision and Risk Charge – ‘Total OCP net of Reinsurance Recoveries and Non-reinsurance Recoveries) for all classes of business (inside Australia amount only)
Less the sum of the premiums liabilities net of expected reinsurance and non reinsurance recoveries as reported in GRF 210.1 per the following:
GRF 210.1 Premium Liabilities and Risk Charge - ‘Total PL Net of Non RI Recoveries and Expected Reinsurance Recoveries) for all classes of business. (inside Australia amounts only)
Add
Deferred reinsurance expense for future business not yet written
Include in this item the amount of the total deferred reinsurance expense reported at item 8 on GRF 300.0 that relates to business that has not yet been written and is the amount inside Australia. This amount represents the cover that an insurer has under a particular reinsurance contract which is available for future business written up to the end of the reinsurance contract. Amounts must not be included in this item where the underlying reinsurance arrangement does not comply with the threshold levels of reinsurance documentation set out in GPS 112 or the governing law requirements set out in GPS 230.
Less
Tax effect of net OCP and Premiums liabilities in surplus / deficit in excess of the liability valuation required under GPS 310
Any surplus / deficit of technical provisions must be adjusted for the tax effect (i.e. the corporate tax rate multiplied by the net amount).
17.3 Net assets in Australia (before deductions)
This amount is calculated automatically by the form as follows:
Item 17.1 of GRF 110.0: ‘Net Assets per form GRF 300.0 Statement of Financial Position’
Add:
Item 17.2 of GRF 100.0. ‘Net insurance liabilities surplus / (deficit) inside Australia after tax effect’
Less:
Assets specifically excluded from being considered inside Australia by Prudential Standard GPS 120 Assets in Australia.
17.4.Deductions for assets specifically excluded from being considered inside Australia:
17.4.1. Goodwill
This figure represents the value of the following items from GRF 300.0 Statement of Financial Position;
·Item 12.1 ‘Goodwill’;
Less:
·Item 12.2 ‘Accumulated impairment – Goodwill’;
Plus:
·Item 10.5.1.1 ‘The component of the value of investments in listed equity instruments or units in listed trusts, which represents the value of purchased goodwill (and other intangible assets) in relation to the acquisition of controlled entities’; and
·Item 10.5.2.1 ‘The component of the value of unlisted equity instruments or units in unlisted trusts, which represents the value of purchased goodwill (and other intangible assets) in relation to the acquisition of controlled entities’.
Plus:
The following item from GRF 140.1 Investments – Direct Equity Holdings and Risk Charge (where it includes amounts inside Australia);
·Item 5.1 ‘Total unlisted equities, of which: represents the value of purchased goodwill (and other intangible assets) in relation to the acquisition of controlled entities’
This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
17.4.2Other intangible assets
This figure represents the value of the following items from GRF 300.0 Statement of Financial Position;
·Item 12.3.3 ‘Total identifiable intangible assets’;
Less:
·Item 12.4.3 ‘Total accumulated amortisation and impairment - Identifiable intangible assets’
This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
17.4.3Deferred Tax Assets (net of any Deferred Tax Liabilities)
Disclose the value of deferred tax assets (net of any deferred tax liabilities) recognised in GRF 300.0 Statement of Financial Position.
This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
The amount entered in this field must be either positive or zero, if the result of the netting calculation is a negative, enter zero.
17.4.4Surplus in defined benefit superannuation fund
Disclose the value of any surplus, net of deferred tax liabilities, in any defined benefit superannuation fund of which the insurer is an employer-sponsor, unless otherwise approved, in writing, by APRA. Any excluded surplus must reverse any associated deferred tax liability from Tier 1 capital.
The amount reported in GRF 110.0 Minimum Capital Requirement must not be greater than the amount reported in item 6.2 ‘Surplus in defined benefit superannuation fund’ of GRF 300.0 Statement of Financial Position.
Deferred Tax Liabilities should not be counted twice in 17.2.3 above and in this item.
This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
17.4.5Deficit in defined benefit superannuation fund
Report the value of any deficit in a defined benefit superannuation fund of which the insurer is an employer-sponsor and that is not already reflected in Tier 1 capital.
The amount reported in GRF 110.0 Minimum Capital Requirement must only include deficits not already disclosed in item 22.2 ‘Deficit in defined benefit superannuation fund’ of GRF 300.0 Statement of Financial Position).
This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
17.4.6Holdings of own Tier 1 capital instruments
Disclose the value of holdings of own Tier 1 capital instruments of the insurer.
17.4.7Net unrealised fair value gains (losses) from changes in the GI's own credit worthiness
This item only applies to general insurers that have designated their own debt instruments at fair value under the fair value option in AASB 139 Financial Instruments: Recognition and Measurement.
Deduct/(add back) any unrealised fair value gains/(losses) included in Tier 1 capital (before deductions) arising from changes in the reporting general insurer’s own credit worthiness (e.g. reduction in fair value of the general insurer’s outstanding debt due to change in credit rating).
This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
17.4.8Net unrealised gains (losses) on effective cash flow hedges
Disclose the value of cumulative fair value gains and losses on effective cash flow hedges reflected in retained earnings or reserves included in Tier 1 capital that do not offset gains or losses on revaluations in reserves included in Tier 1 capital. Deduct the gains on hedges and add back the losses.
17.4.9Reinsurance assets related to reinsurance contracts that do not meet the reinsurance documentation test
The figure for reinsurance assets relates to reinsurance contracts that do not meet the reinsurance documentation test. This represents the value of item 1.8 plus item 2.4 plus item 3.6 recognised in GRF 301.0 Reinsurance Assets and Risk Charge, to the extent that it is deemed inside Australia. It is possible that the sum of the amounts reported in GRF 301.0 Reinsurance Assets and Risk Charge may not equate to the amount reported in this data field where the asset is deemed not inside Australia.
This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
17.4.10Reinsurance assets receivable under reinsurance contracts that do not meet governing law requirements
Report all reinsurance assets receivable under each reinsurance contract entered into by the insurer incepting on or after 31 December 2008 that do not meet the requirements of paragraph 31 of Prudential Standard GPS 230 Reinsurance Management.
This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement. The amount should represent the value of item 1.9 plus item 2.5 plus item 3.7 recognised in GRF 301.0 Reinsurance Assets and Risk Charge, to the extent that it is deemed inside Australia. It is possible that the sum of the amounts reported in GRF 301.0 Reinsurance Assets and Risk Charge may not equate to the amount reported in this data field where the insurer has reinsurance assets that are deemed not inside Australia.
17.4.11Expected dividends
Report the amount of dividends which are expected, but not declared or paid.
17.4.12Other deductions
Disclose other deductions as required under GPS 112, such as:
·Deficits after adjustments to the revaluation reserve
Disclose deficit after taking into account adjustments in the amount available in the respective revaluation reserves for the following items, to the extent not already accounted for in current year earnings or retained earnings:
· Property not held at fair value;
· Investments in subsidiaries not held at fair value; or
· Investment in associates, including any excess of the share of losses in associates under equity accounting.
·Identified impairment of certain assets
Disclose any identified impairment of an asset where the impairment has not already been taken into account in profit or loss or the impairment has been incorporated in fair value changes captured in an asset revaluation reserve included in Upper Tier 2 capital. This will include the value of any deficit in asset revaluation reserves included in Upper Tier 2 capital after taking into account all adjustments.
·Holdings of own Upper Tier 2 capital instruments
Disclose the value of own holdings of Upper Tier 2 capital instruments.
·Holdings of own Lower Tier 2 capital instruments
Disclose the value of own holdings of Lower Tier 2 capital instruments.
17.4.13Variation in deduction by other adjustments approved by APRA
Include any additions or reduction in deductions that have been approved by APRA.
17.5Assets under a fixed or floating charge, mortgage or other security to the extent of the indebtedness secured by such assets.
Such assets are excluded from being considered inside Australia up to the value of the charge/encumbrance. Where the charge over the assets is only given to support the value of insurance liabilities of the insurer, only the excess of the value of the assets charged/encumbered, over the value of the insurance liabilities, is excluded from being considered inside Australia.
This amount represents the total of all items reported in column headed ‘Excess of Charge Assets over Liabilities Supported’ in GRF 130.2 Off Balance Sheet Business - Charges Granted and Risk Charge.
This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
17.6Adjusted Net Assets in Australia
This amount is calculated automatically by the form.
Reporting Form GRF 110.0 (B)
Minimum Capital Requirement
Instruction Guide
Introduction
GRF 110.0 Minimum Capital Requirement reports the summary of the risk charges, Minimum Capital Requirement (MCR), the capital base, net assets in Australia, and compliance with the capital requirements as prescribed in the ‘capital standards’[3].
[3]The reference to capital standards has the same meaning as in Prudential Standards GPS 001 Definitions, where the capital standards refer collectively to prudential standards relating to capital adequacy.
The individual risk charges and capital base summarised on this form are calculated in other forms. The form will automatically calculate the MCR of the reporting insurer based on the information reported for the individual risk charges. Additionally, information relating to the capital surplus / deficiency and capital ratios will be calculated automatically.
Audit requirements
This form is required to be subject to audit review and testing. The scope and nature of audit testing required is outlined in the applicable Auditing and Assurance Standards Board Guidance Statement issued by the Auditing and Assurance Standards Board.
Information provided in the form in respect of a financial year of an insurer forms part of the insurer’s ‘yearly statutory accounts’ within the meaning of section 3 of the Insurance Act 1973 (the Act). This means that:
the completed form for the financial year must be audited by the Appointed Auditor of the insurer (see paragraph 49J(1)(a) of the Act);
the insurer must make such arrangements as to enable the auditor to do this (subsection 49J(2));
the auditor must give the insurer a certificate relating to the completed form (and other completed forms that are part of the insurer’s yearly statutory accounts), which must contain statements of the auditor’s opinion on the matters required by the prudential standards to be dealt with in the certificate (subsection 49J(3));
the certificate must be lodged with APRA as provided for in the prudential standards (paragraph 49L(1)(a)), namely by the due date for lodging the form in respect of the financial year for the insurer.
Reporting entity
This form is to be completed by a Category C insurer[4] in respect of their Branch operations in Australia (i.e. licensed branch insurer/reinsurer).
[4] Any reference to Category C insurer within the reporting instructions has the same meaning as in Prudential Standards GPS 001 Definitions, where a Category C insurer means a ‘foreign general insurer’ defined under subsection 3(1) of the Act. A Category C insurer is a foreign insurer operating as a foreign branch in Australia and could be a branch of a foreign mutual or shareholder company.
A Category C insurer is required to maintain assets in Australia in excess of its liabilities in Australia, of an amount at least equal to its MCR, where the MCR is calculated in accordance with the ‘capital standards’.
Unit of measurement
The form reports in Australian currency rounded in thousands of dollars (no decimal place). Ratios are expressed to 2 decimal places.
Reporting period
Insurers are required to report the information in the reporting form on a quarterly and annual basis.
The quarterly information is to be completed in respect of each quarter based on the financial year of the insurer, not the calendar year.
The annual information is to be completed in respect of the financial year of the insurer.
The financial information requested in this form is to be reported as at the last day of the reporting period on a financial year to date basis of the insurer.
Reporting lag
This form must be lodged for each of the reporting units within the number of business days after the end of the quarter as set out in Reporting Standard GRS 110.0 Minimum Capital Requirement.
Specific instructions
GRF 130.0 Off Balance Sheet Business - Credit Substitutes Provided and Risk Charge
This represents the total capital charge applicable for the credit substitutes provided by the reporting insurer. This amount is calculated in item 14 ‘TOTAL Off balance sheet required risk charge’ in GRF 130.0 Off Balance Sheet Business – Credit Substitutes Provided and Risk Charge. This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
GRF 130.2 Off Balance Sheet Business - Charges Granted and Risk Charge
This represents the total capital charge applicable for the charges and encumbrances granted by the reporting insurer. This amount is calculated in the item titled ‘Adjusted Required Capital Charge’ in GRF 130.2 Off Balance Sheet Business – Charges Granted and Risk Charge. This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
Investment Risk Charge calculated from the following forms:
3.1.GRF 140.0 Investments - Direct Interest Holdings and Risk Charge
This represents the total investment risk charge applicable for the direct interest holdings of the reporting insurer. This amount is calculated in item 7 ‘Total Investment Risk Charge’ in GRF 140.0 Investments - Direct Interest Rate Holdings and Risk Charge. This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
3.2.GRF 140.1 Investments - Direct Equity Holdings and Risk Charge
This represents the total investment risk charge applicable for the direct equity holdings of the reporting insurer. This amount is calculated in item 9 ‘Total Investment Risk Charge’ in GRF 140.1 Investments – Direct Equity Holdings and Risk Charge. This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
3.3.GRF 140.2 Investments - Direct Property Holdings and Risk Charge
This represents the total investment risk charge applicable for the direct property holdings of the reporting insurer. This figure is calculated in column headed ‘Investment Risk Charge’ for line item titled ‘Total direct property investments’ in GRF 140.2 Investments - Direct Property Holdings and Risk Charge. This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
3.4.GRF 140.3 Investments - Loans and Advances and Risk Charge
This represents the total investment risk charge applicable for the loans and advances provided by the reporting insurer. This amount is calculated in item 4 ‘Total Investment Risk Charge’ in GRF 140.3 Investments – Loans and Advances and Risk Charge. This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
3.5.GRF 140.4 Investments – Indirectly Held by Insurer and Risk Charge
This represents the total investment risk charge applicable for assets that are indirectly held by the reporting insurer. This amount is calculated in item 12 ‘Total Investment Risk Charge’ in GRF 140.4 Investments – Indirectly Held by Insurer and Risk Charge. This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
3.6.GRF 300.0 Statement of Financial Position
This represents the total investment risk charge for applicable assets listed in GRF 300.0 Statement of Financial Position reported under ‘Amount – Inside Australia’. It excludes assets that are subject to a risk charge under GRF 140.0 – GRF 140.4, GRF 150.0 Asset Exposure Concentrations and Risk Charge, GRF 301.0 Reinsurance Assets and Risk Charge and assets that are deducted from the Capital Base.
This figure is automatically entered by the form and represents the sum of the individual investment risk charges calculated under the column heading ‘Investment Risk Charge’ and is calculated at item 13 ‘Total assets’ in GRF 300.0 Statement of Financial Position.
GRF 301.0 Reinsurance Assets and Risk Charge
This figure represents the sum of the individual investment risk charges calculated under the column heading ‘Investment Risk Charge’ and is reported for item 4 ‘Net reinsurance assets’ in GRF 301.0 Reinsurance Assets and Risk Charge. This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
GRF 130.3 Off Balance Sheet Business - Credit Support Received (Investment Risk Charge Reduction)
The investment risk charge may be reduced where the insurer holds certain types of collateral against an asset, or where an asset has been guaranteed, as a means of reducing risk. Accordingly this item represents the ‘rebate’ of the investment risk charge on these assets that is calculated in either GRF 140.0 – GRF 140.4 or GRF 300.0 Statement of Financial Position. The rebate represents the difference between the investment risk capital charge applicable to the value of the eligible collateral or guarantee provided to the insurer and the investment risk capital charge applicable to the asset(s) being supported.
This item is calculated in GRF 130.3 Off Balance Sheet Business - Credit Support Received and represents the sum of ‘Adjustment to Investment Capital Charge’ in ‘Part A - Eligible Collateral Provided to Reporting Insurer’ and ‘Part B - Guarantees Provided to Reporting Insurer’.
This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
GRF 150.0 Asset Exposure Concentrations and Risk Charge
This represents the total investment concentration risk charge for exposures listed in GRF 150.0 Asset Exposure Concentrations and Risk Charge. This figure represents the item ‘Net concentration risk charge’ calculated in GRF 150.0 Asset Exposure Concentrations and Risk Charge. This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
GRF 160.0 Derivatives Activity and Risk Charge
This represents the total investment risk charge for derivative exposures listed in GRF 160.0 Derivatives Activity and Risk Charge. This figure represents the item titled ‘Total Derivatives Activity Risk Charge’ in GRF 160.0 Derivatives Activity and Risk Charge. This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
GRF 170.0 Concentration Risk Charge
This represents the total concentration risk charge applicable for the reporting insurer. This figure represents the amount disclosed in item ‘Total Concentration Risk Charge’ in GRF 170.0 Concentration Risk Charge. This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
GRF 210.0 Outstanding Claims Provision - Insurance Risk Charge
This represents the total insurance risk charge applicable in response to the risk that the true value of the net outstanding claims provision (OCP) of an insurer is greater than the value determined under Prudential Standard GPS 310 Audit and Actuarial Reporting and Valuation (GPS 310). This figure represents the ‘TOTAL’ line item under column 11 headed ‘OCP Insurance risk charge’ in the table titled ‘Part 3: Total’ of GRF 210.0 Outstanding Claims Provision - Insurance Risk Charge. This figure is automatically entered by the form into this data field in GRF 110.0 Minimum Capital Requirement.
GRF 210.1 Premium Liabilities - Insurance Risk Charge
This represents the total insurance risk charge applicable in response to the risk that the true value of the net premium liabilities of an insurer is greater than the value determined under GPS 310. This figure represents the ‘TOTAL’ line item under column 11 headed ‘Premium Liabilities Insurance Risk Charge’ in the table titled ‘Part 3A: GPS 310 Total’ of GRF 210.1 Premium Liabilities - Insurance Risk Charge. This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
Total variation in capital charges as approved by APRA
Report the variation in capital charges in this item with a brief description (no more than 200 characters) and the amount of each variation which has been approved by APRA. A reduction in capital charges resulting from variations has to be reported as a negative number while any increase needs to be reported as a positive number.
Where a loan to a related party is on non-commercial terms, a 100% capital factor must apply. The difference between the investment risk charge on the loan in GRF 140.3 Investments – Loans and Advances and Risk Charge and the risk charge with a 100% capital factor must be recorded at this item.
Where an insurer uses the internal model-based (IMB) method to determine the MCR in accordance with Prudential Standard GPS 113 Capital Adequacy: Internal Model-based Method, the difference between the MCR determined using the prescribed method and the IMB method should be reported here. During the first two years of using the IMB method, an insurer’s MCR calculated using the IMB method should be at least 90 per cent of the MCR determined using the prescribed method.
The total variation is calculated automatically by the form.
Minimum Capital Requirement
This item is calculated automatically by the form.
It represents the sum of the items 1-4 and 6-11 (as reported in GRF 110.0 Minimum Capital Requirement) less item 5 and is calculated as:
Add
Item 1: GRF 130.0 Off Balance Sheet Business - Credit Substitutes Provided and Risk Charge;
Item 2: GRF 130.2 Off Balance Sheet Business - Charges Granted and Risk Charge;
Item 3.1: GRF 140.0 Investments - Direct Interest Rate Holdings and Risk Charge
Item 3.2: GRF 140.1 Investments – Direct Equity Holdings and Risk Charge
Item 3.3: GRF 140.2 Investments - Direct Property Holdings and Risk Charge
Item 3.4: GRF 140.3 Investments – Loans and Advances and Risk Charge
Item 3.5: GRF 140.4 Investments – Indirectly Held by Insurer and Risk Charge
Item 3.6: GRF 300.0 Statement of Financial Position (Branch Insurer)
Item 4: GRF 301.0 Reinsurance Assets and Risk Charge;
Item 6: GRF 150.0 Asset Exposure Concentrations and Risk Charge;
Item 7: GRF 160.0 Derivatives Activity and Risk Charge;
Item 8: GRF 170.0 Concentration Risk Charge;
Item 9: GRF 210.0 Outstanding Claims Provision - Insurance Risk Charge;
Item 10: GRF 210.1 Premium Liabilities - Insurance Risk Charge; and
Item 11: Total variation in capital charges as approved by APRA.
Less
Item 5: GRF 130.3 Off Balance Sheet Business - Credit Support Received
Regardless of the outcome of the method used for determining the MCR, a Category C insurer’s MCR cannot be less than $5 million.
Adjusted Net Assets in Australia
‘Adjusted Net Assets in Australia’ refer to total assets less assets that are excluded as ‘Assets in Australia’ for the purpose of section 28 of the Act.
Adjusted Net Assets in Australia are determined from the following:
13.1.Assets in Australia per form GRF 300.0 Statement of Financial Position
The amount reported in item 13.1 ‘Assets in Australia per form GRF 300.0: Statement of Financial Position’ on GRF 110.0 Minimum Capital Requirement must equal the value of item 13 titled ‘Total assets’ under the ‘Amount – Inside Australia’ column on GRF 300.0 Statement of Financial Position.
This figure will be automatically entered by the form into this reporting item in GRF 110.0 Minimum Capital Requirement.
13.2.Liabilities in Australia per from GRF 300.0 Statement of Financial Position
The amount reported in item 13.2 ‘Liabilities in Australia per form GRF 300.0: Statement of Financial Position’ on GRF 110.0 Minimum Capital Requirement must equal the value of item 24 titled ‘Total liabilities’ under the ‘Amount – Inside Australia’ column on GRF 300.0 Statement of Financial Position.
This figure will be automatically entered by the form into this reporting item in GRF 110.0 Minimum Capital Requirement.
13.3.OCP surplus / deficit per form GRF 300.0 Statement of Financial Position (B)
The figure for this data item must agree with the value calculated in item 29.1 OCP surplus / deficit under the ‘Amount-Inside Australia’ column on GRF 300.0 Statement of Financial Position.
This figure will be automatically entered by the form in this reporting item in GRF 110.0 Minimum Capital Requirement.
13.4.Total premium liabilities surplus / deficit, inside Australia per form GRF 300.0 Statement of Financial Position (B)
The figure for this data item must agree with the value calculated in item 29.2.3 Total premiums liabilities surplus / (deficit) under the ‘Amount-Inside Australia’ column on GRF 300.0 Statement of Financial Position.
This figure will be automatically entered by the form in this reporting item in GRF 110.0 Minimum Capital Requirement.
13.5.Tax effect of net OCP and PL surplus / deficit (items 13.2 and 13.3) per form GRF 300.0 Statement of Financial Position (B)
The figure for this data item must agree with the value calculated in item 29.3 Tax effect of net OCP and Premiums liabilities surplus / deficit under the ‘Amount-Inside Australia’ column on GRF 300.0 Statement of Financial Position. This figure will be automatically entered by the form in this reporting item in GRF 110.0 Minimum Capital Requirement.
13.6.Net surplus / deficit relating to insurance liabilities
This item is calculated automatically by the form and represents item 13.3, plus item 13.4 less item 13.5.
13.7.Liabilities in Australia net of surplus / deficit relating to insurance liabilities
The item is calculated automatically by the form and represents item 13.2 less item 13.6.
13.8.Net assets in Australia (before deductions)
This item is calculated automatically by the form and represents item 13.1 less item 13.7.
13.9.Deductions for assets specifically excluded from being considered inside Australia
These amounts are specifically excluded from being considered inside Australia by GPS 120 Assets in Australia (GPS 120).
13.9.1. Goodwill
This figure represents the value of the following items from GRF 300.0 Statement of Financial Position.
·Item 12.1 ‘Goodwill’;
Less:
·Item 12.2 ‘Accumulated impairment – Goodwill’;
Add:
The following item from GRF 140.1 Investments – Direct Equity Holdings and Risk Charge (where it includes amounts inside Australia);
·Item 5.1 ‘Total unlisted equities- Direct holdings, of which: represents the value of purchased goodwill (and other intangible assets) in relation to the acquisition of controlled entities’
This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
13.9.2. Other intangible assets
This figure represents the value of the following items from GRF 300.0 Statement of Financial Position:
·Item 12.3.3 ‘Total identifiable intangible assets’;
Less:
·Item 12.4.3 ‘Total accumulated amortisation and impairment - Identifiable intangible assets’
This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
13.9.3. Deferred Tax Assets (net of any Deferred Tax Liabilities).
Disclose the value of deferred tax assets (net of any deferred tax liabilities) recognised in GRF 300.0 Statement of Financial Position.
This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
The amount entered in this field must be either positive or zero, if the result of the netting calculation is a negative, enter zero.
13.9.4. Surplus in defined benefit superannuation fund
Disclose the value of any surplus, net of deferred tax liabilities, in any defined benefit superannuation fund of which the insurer is an employer-sponsor, unless otherwise approved, in writing, by APRA. Any excluded surplus must reverse any associated deferred tax liability from Tier 1 capital.
The amount reported in GRF 110.0 Minimum Capital Requirement must not be greater than the amount reported in item 6.2 ‘Surplus in defined benefit superannuation fund’ of GRF 300.0 Statement of Financial Position.
Deferred Tax Liabilities should not be counted twice in item 13.9.3 above and in this item.
This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
13.9.5.Deficit in defined benefit superannuation fund
Report the value of any deficit in a defined benefit superannuation fund of which the insurer is an employer-sponsor and that is not already reflected in Tier 1 capital.
The amount reported in GRF 110.0 Minimum Capital Requirement must only include deficits not already disclosed in item 22.2 ‘Deficit in defined benefit superannuation fund’ of GRF 300.0 Statement of Financial Position.
This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
13.9.6.Net unrealised fair value gains (losses) from changes in the GI's own credit worthiness
Deduct/(add back) any unrealised fair value gains/(losses) arising from changes in the reporting GI’s own credit worthiness (e.g. reduction in fair value of the GI’s outstanding debt due to change in credit rating).
This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
13.9.7.Net unrealised gains (losses) on effective cash flow hedges
Disclose the value of cumulative fair value gains and losses on effective cash flow hedges reflected in retained earnings or reserves included in Tier 1 capital that do not offset gains or losses on revaluations in reserves included in Tier 1 capital. Deduct the gains on hedges and add back the losses.
13.9.8.Reinsurance assets related to reinsurance contracts that do not meet the reinsurance documentation test
The figure for reinsurance assets related to reinsurance contracts that do not meet the reinsurance documentation test represents the value of item 1.8 plus item 2.4 plus item 3.6 recognised in GRF 301.0 Reinsurance Assets and Risk Charge.
This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
13.9.9. Reinsurance assets receivable under reinsurance contracts that do not meet governing law requirements
Report all reinsurance assets receivable under each reinsurance contract entered into by the insurer incepting on or after 31 December 2008 that do not meet the requirements of paragraph 31 of Prudential Standard GPS 230 Reinsurance Management.
This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement. The amount should represent the value of item 1.9 plus item 2.5 plus item 3.7 recognised in GRF 301.0 Reinsurance Assets and Risk Charge, to the extent that it is deemed inside Australia.
13.9.10. Expected dividends / head office transfers
Report the amount of dividends / head office transfers which are expected, but not declared or paid.
13.9.11. Other deductions
Disclose other deductions as required under GPS 112 and GPS 120, such as:
·Expected repatriation of assets
Report the amount of any expected repatriation of net assets in Australia by a Category C insurer out of the current year profits of its branch in Australia.[5]
[5]Such expected repatriations are akin to expected dividends out of the current year profits of a locally incorporated insurer.
Note: Report only the amount which is not already provided for under provision for dividends in item 21.1 ‘Dividends’ of GRF 300.0 Statement of Financial Position.
·Deficits after adjustments to the revaluation reserve
Disclose the amount calculated of the following:
(a)55 per cent of pre-tax revaluation reserves of each of the following:[6]
[6]This amount includes cumulative unrealised gains and losses on effective cash flow hedges. Where a revaluation is calculated net of hedges, the amount of hedges concerned must be excluded from assets in Australia, that is, the gains or losses on hedges must be deducted from or added back to assets in Australia.
(i) Property not held at fair value; and
(ii) Investments of the Category C insurer in subsidiaries not held at fair value, other than subsidiaries that APRA deems part of an Extended Licensed Entity (ELE) (refer to GPS 114 Capital Adequacy: Investment Risk Capital Charge (GPS 114))
(the amount recognised must be net of any fair value gains and losses and any gains or losses on hedges offsetting revaluations included in reserves); and
(b)55 per cent of the post-acquisition reserves of the Category C insurer’s associates[7], which includes, under equity accounting, the Category C insurer’s share of undistributed profits, plus any share of asset revaluations in associates or any other revaluation of investments in associates (the amount recognised must be net of fair value gains and losses and any gains or losses on hedges offsetting revaluations of investments in associates included in reserves).[8]
[7] ‘Associates’ is a reference to associates as defined in the Australian Accounting Standards issued by the Australian Accounting Standards Board and is to be read as also applying to joint ventures.
[8] This amount includes cumulative unrealized gains or losses on effective cash flow hedges. Where a revaluation is calculated net of hedges, the amount of hedges concerned must be excluded from assets in Australia, that is, the gains or losses on hedges must be deducted from or added back to assets in Australia.
· Assets held through a corporate agent
Record the value of the assets held under an agreement between a Category C insurer and a corporate agent, where it is excluded from being an asset in Australia if the corporate agent engages in any business or commercial activity other than activities in its capacity as agent in Australia, unless:
a) that activity is necessary or reasonably incidental to the corporate agent’s activities as agent in Australia; or
b) that activity has been approved by APRA in writing.
APRA may give approval under paragraph 29(b) of GPS 120 if satisfied that the corporate agent’s conduct of that business or activity will not prejudice the efficient and proper discharge of the corporate agent’s duties as an agent in Australia.
· Identified impairment of certain assets
Disclose any identified impairment of an asset where the impairment has not already been taken into account in profit or loss or the impairment has been incorporated in fair value changes captured in an asset revaluation reserve included in Upper Tier 2 capital. This will include the value of any deficit in asset revaluation reserves included in Upper Tier 2 capital after taking into account all adjustments.
·Holdings of own Upper Tier 2 capital instruments
Disclose the value of own holdings of Upper Tier 2 capital instruments.
·Holdings of own Lower Tier 2 capital instruments
Disclose the value of own holdings of Lower Tier 2 capital instruments.
13.9.12. Variation in deduction by other adjustments approved by APRA
Include any additions or reduction in deductions that have been approved by APRA.
13.10.Assets under a fixed or floating charge, mortgage or other security to the extent of the indebtedness secured by such assets.
Such assets are excluded from being considered inside Australia up to the value of the charge/encumbrance. Where the charge over the assets is only given to support the value of insurance liabilities of the insurer, only the excess of the value of the assets charged/encumbered, over the value of the insurance liabilities, is excluded from being considered inside Australia.
This amount represents the total of all items reported in column 9 headed ‘Excess of Charge Assets over Liabilities Supported’ in GRF 130.2 Off Balance Sheet Business - Charges Granted and Risk Charge.
This figure needs to be manually entered into this data field in GRF 110.0 Minimum Capital Requirement.
13.11.Adjusted Net Assets in Australia
This amount is calculated automatically by the form and represents Item 13.8 ‘Net assets in Australia (before deductions)’ less items 13.9.1 to 13.9.12 less item 13.10 ‘Assets under a fixed or floating charge, mortgage or other security to the extent of the indebtedness secured by such assets’.
Capital Surplus (Deficiency)
This figure represents the value of item 13.11 ‘Adjusted Net Assets in Australia’ less the amount calculated for item 12 ‘Minimum Capital Requirement’.
This figure will be calculated automatically by the form.
Solvency Coverage
This figure represents the value of item 13.11 ‘Adjusted Net Assets in Australia’ divided by the amount calculated for item 12 ‘Minimum Capital Requirement’.
This figure will be calculated automatically by the form.
Capital Adequacy Ratio %
This is another way of looking at the solvency coverage and represents the value of item 12 ‘Minimum Capital Requirement’ divided by the value of item 13.11 ‘Adjusted Net Assets in Australia’.
This figure will be calculated automatically by the form.
0
0
0