Financial Sector (Collection of Data) (reporting standard) determination No. 8 of 2010 GRS 300.0 (2010) Statement of Financial Position (Cth)

Financial Sector (Collection of Data) (reporting standard) determination No. 8 of 2010

Reporting Standard GRS 300.0 (2010) Statement of Financial Position

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 300.0 (2008) Statement of Financial Position  which is in force as at the date of this determination (the old standard); and

• DETERMINE Reporting Standard GRS 300.0 (2010) Statement of Financial Position 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 300.0 (2010) Statement of Financial Position comprises the 70 pages commencing on the next page.

Reporting Standard GRS 300.0 (2010)

Statement of Financial Position

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, information on their financial position.

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 300.0 Statement of Financial Position (Form GRF 300.0) 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

1. Data collected in each version of Form GRF 300.0 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

1. 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

1. An insurer, other than a foreign insurer, must provide APRA with the information required by the version Form GRF 300.0 designated for a ‘Licensed insurer’ for each reporting period.

1. A foreign insurer must provide APRA with the information required by the version of Form GRF 300.0 designated for a ‘Branch Insurer’ for each reporting period. 

Forms and method of submission

1. 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 300.0 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

1. 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 by paragraphs 3 and 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 contain statements of the auditor’s opinions on the matters required by the prudential standards to be dealt with in the certificate.

1. 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)).

1. The information required by paragraph 3 of this reporting standard from an insurer, and paragraph 4 from a foreign insurer, must be provided to APRA by the following times:

(a)in the case of the quarterly information required by 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 required by 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 information required by paragraphs 3 and 4 read with 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).

1. 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

1. 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. 

1. 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

1. 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.

1. If an insurer provides the information required by this reporting standard through an agent under either subparagraphs 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.

1. 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

1. 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.

1. If APRA makes such a variation it must notify insurers of this in writing.

Transition

1. 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

1. 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 applicable, paragraph 7.

1. 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 300.0

Statement of Financial Position

General Overview

Introduction

GRF 300.0 Statement of Financial Position provides APRA with the necessary information on assets, liabilities and capital to undertake an assessment of an insurer’s financial position and performance.

Audit requirements

The form relating to authorised insurance entities and reinsurance entities 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 entities

These instructions apply to:

1. Category C insurers (reference to licensed insurer in the instructions means total operations of the branch, excluding the parent operations). Branch insurers should complete the ‘Branch Insurer’ form GRF 300.0 Statement of Financial Position (B);

1. Authorised insurance entities, including mutual entities (reference to licensed insurer in the form means total operations of the licensed entity). The authorised insurer should completed the ‘Licensed Insurer’ form GRF 300.0 Statement of Financial Position (L); and

1. Authorised reinsurance entities (reference to licensed insurer in the form means total operations of the licensed entity). The authorised reinsurer should complete the ‘Licensed Insurer’ form GRF 300.0 Statement of Financial Position (L).

The scope of reporting is outlined below:

Statement of Financial Position - Amount Inside Australia and Total Amount

Both columns of data on the form must be completed by all insurers. Where all business is inside Australia, use the same figures for both columns.

Inside Australia

Section 28 of the Act requires all general insurers to maintain assets in Australia (excluding goodwill and other amounts excluded by Prudential Standard GPS 120 Assets in Australia (GPS 120)) of a value that equals or exceeds the total amount of the general insurer’s liabilities in Australia. 

Requirement to maintain assets Inside Australia

This requirement is designed to ensure that the total value of assets held within the jurisdictional reach of APRA and the Australian courts is sufficient to meet a general insurer’s Australian liabilities. It assists in the application of subsection 116(3) of the Act, which provides that in the winding up of a general insurer, the assets in Australia shall not be applied in the discharge of its liabilities other than its liabilities in Australia unless all the Australian liabilities have first been discharged.

Assets not included as Assets in Australia

The Act sets out a number of assets and liabilities, which are to be treated as assets or liabilities in Australia.[2] However, the Act does not provide an exhaustive definition. The primary purpose of GPS 120 is to specify certain assets that will not be counted as ‘assets in Australia’ for the purposes of section 28 of the Act.

GPS 120 excludes certain assets which would otherwise fall within the definition of ‘assets in Australia’ under section 28 of the Act but which APRA considers to have doubtful value in the event of an insurer becoming insolvent.

Insurers are required to adhere to the following requirements for completing the asset sections of GRF 300.0 Statement of Financial Position.

Intangibles and certain other assets

[2]           Refer section 116A of the Act

Amounts representing assets that must be deducted from a locally incorporated insurer’s capital base under Prudential Standard GPS 112 Capital Adequacy: Measurement of Capital (GPS 112) are excluded from being assets in Australia.

Chattels and real property

An amount representing a chattel or real property of a locally incorporated insurer is excluded from being an asset in Australia if it is located outside Australia.

Loans and amounts due (including debentures)

An amount representing an asset is excluded from being an asset in Australia if:

Debt assets, not being debt assets held through a Depository

(a)the asset is a debt owed by another person (including, but not limited to, a debenture or a bond), not being an asset that is held through a depository, and:

(i)      the debt is payable outside Australia; or

(ii)      the debt is not recoverable in an Australian court; or

(iii)     the debtor does not reside in Australia; or

(iv)      the debtor is a foreign government or foreign government authority; or

(v)     the debt is not readily transferable in Australia; or

Interests held on Australian Depositories

(b)the asset is an interest held on an Australian Depository, being an interest that derives from, or relates to, an underlying asset that is in the nature of a debt owed by another person, and:

(i)      the underlying asset would be excluded from being an asset in Australia under subparagraph (a) if held directly by the locally-incorporated insurer (rather than through a Depository); and

(ii)      APRA has not determined in writing to waive the exclusion of the asset or a class of assets of which the asset is a member; or

Interests held on Foreign Depositories

(c)the asset is an interest held on a Foreign Depository, being an interest that derives from or relates to an asset in the nature of a debt owed by another person.

Kangaroo Bonds

An interest in a Kangaroo Bond of a locally incorporated insurer is not excluded from being an asset in Australia if all of the conditions listed in paragraph 12 of GPS 120 are complied with.

If a locally incorporated insurer holds an interest in a Kangaroo Bond through a custodian, then certain requirements under paragraphs 16 and 17 of GPS 120 will also have to be complied with in order for the interest in a Kangaroo Bond not to be excluded for being an asset in Australia.

Shares - General

An amount representing an asset of a locally incorporated insurer is excluded from being an asset in Australia if:

Shares, not being shares held through a Depository

(a)the asset is a share, not being a share that is held through a Depository, and:

(i)      the share is not readily transferable[3] in Australia; or

[3]          “Readily transferable” does not imply that there must be a liquid market for the share.  Rather, without limiting the meaning of the phrase at law, it refers to the ability to transfer the share to a willing purchaser free of any procedural or other impediment upon sale of the share.

(ii) the share is not recorded on a register of members kept in Australia under section 169 of the Corporations Act 2001; or

Interests held on Australian Depositories

(b)the asset is an interest held on an Australian Depository, being an interest that derives from, or relates to, a share (underlying share), and:

(i)      the underlying share would be excluded from being an asset in Australia under subparagraph (a) if held directly by the locally-incorporated insurer (rather than through a Depository); and

(ii)      APRA has not determined in writing to waive the exclusion of the asset or an asset of that kind; or

Shares held on Foreign Depositories

(c)the asset is an interest held on a Foreign Depository, being an interest that derives from or relates to a share.

Interests in Special Purpose Vehicles (SPVs)[4]

[4]          Note that this paragraph may apply in relation to a Special Purpose Vehicle (SPV) if the SPV is a trust.

If:

(a)a locally-incorporated insurer holds an interest in an SPV;  and

(b)the SPV holds (whether directly or indirectly) one or more investments, at   least one of which would be excluded from being an asset in Australia if held directly by the insurer (either because it would be excluded under GPS 120 or because it would not otherwise be an asset in Australia within the meaning of paragraph 28(a) of the Act)

then an amount A is excluded from being an asset in Australia, where A is calculated as follows:

A = B/C x D

where:

B means the fair value of any investments held by the SPV that would not be assets in Australia if held directly by the insurer;

C means the fair value of all the interests in the SPV; and

D means the fair value of the interests in the SPV held by the locally incorporated insurer.

For the purposes of the above paragraph, APRA may determine in writing that B has a specified value where APRA is satisfied that application of the formula would not fairly represent the underlying value to the locally incorporated insurer of the investment held by the SPV[5].

[5]          An interest in an SPV that is a subsidiary of a general insurer may also be excluded from being an asset in Australia because of the application of Prudential Standard GPS 120 Assets In Australia (GPS 120) (irrespective of whether the subsidiary is part of the insurer’s Extended Licensed Entity (ELE) or holds foreign assets). Refer to Prudential Standard GPS 114 Capital Adequacy: Investment Risk Capital Charge (GPS 114) for definition of and requirements relating to ELEs. Further, an interest in an SPV that is a trust may be excluded from being an asset in Australia because of the application of GPS 120 Assets in Australia (irrespective of whether the trust is part of the insurer’s ELE or holds foreign assets). 

Assets held by Custodians

Where a Custodian holds:

(a)the legal title to an asset or assets on bare trust; or

(b)an asset or assets under an agreement of a kind determined, in writing, by APRA for the purposes of GPS 120.

An amount representing an interest in, or in relation to, an asset held by a custodian for a locally incorporated insurer is excluded from being an asset in Australia if:

(a)the custodian does not reside in Australia or the custodian’s obligation to make payments or transfer assets to the locally incorporated insurer may be performed outside Australia; or

(b)the locally incorporated insurer cannot enforce its rights against the custodian in an Australian court; or

(c)the assets of the locally incorporated insurer are not kept distinct and separate from the custodian’s own assets; or

(d)the external custody agreement entered into between the locally incorporated insurer and the custodian is not subject to the laws of a state or territory of Australia; or

(e)the external custody agreement does not provide for liability on the part of the custodian arising from the acts or omissions on the part of the custodian, its agents or sub-custodians; or

(f)the external custody agreement does not describe the process by which the locally incorporated insurer provides authorised instructions to the custodian; or

(g)the external custody agreement does not describe the process by which the custodian provides periodic reports to the locally incorporated insurer; or

(h)the external custody agreement does not provide for flexibility as to the rights and obligations of the parties to enable them to ensure compliance in the event of any changes to APRA’s prudential requirements[6] or other relevant legislation; or

[6]          Prudential requirements include all requirements under the Act, Insurance Regulations 2002, prudential standards, the Financial Sector (Collection of Data) Act 2001, reporting standards, conditions on the insurer’s authorisation and any other requirements imposed by APRA in writing.

1. the asset held by the custodian would be excluded from being an asset in Australia if it were held directly by the locally incorporated insurer (either because it would be excluded under GPS 120 or because it would not otherwise be an asset in Australia within the meaning of paragraph 28(a) of the Act); or

(j)the asset held by the custodian is an interest in, or in relation to, an asset held by a sub-custodian, and the sub-custodian does not reside in Australia or the sub-custodian’s obligation to make payments or transfer assets to the locally incorporated insurer may be performed outside Australia; or

(k)the asset held by the custodian is an interest in, or in relation to, an asset held by a sub-custodian, and the asset held by the sub-custodian would be excluded from being an asset in Australia if it were held directly by the insurer (either because it would be excluded under GPS 120 or because it would not otherwise be an asset in Australia within the meaning of paragraph 28(a) of the Act); or

(l)the custodian has the right to suspend or delay the transfer or realisation of the asset held by the custodian pending sale of any asset outside Australia.

Paragraphs (a) and (j) do not apply to an asset that is real property in Australia[7].

[7]This exception only applies where the locally incorporated insurer has an equitable interest of a proprietary nature in the real property (rather than, for example, a mere equitable interest in due administration of the trust, or a contractual right to be delivered property of an equivalent value).

Interests in Managed Investment Schemes

An amount representing an interest of a locally incorporated insurer in a managed investment scheme is excluded from being an asset in Australia if:

(a)the responsible entity does not reside in Australia;

(b)an agent holds the property of the scheme (scheme property) for the responsible entity and the agent does not reside in Australia;

(c)under the scheme, the responsible entity or agent has the right to suspend or delay the redemption of the unit or investor’s entitlement pending sale of any scheme property outside Australia;

(d)any amounts payable to the locally incorporated insurer under the scheme are payable outside Australia; or

(e)the locally incorporated insurer cannot enforce its rights in relation to the managed investment scheme in an Australian court.

Certain interests in trusts

An amount representing an equitable or a beneficial interest of a locally incorporated insurer in a trust (not being an interest arising where legal title is held by a custodian or an interest in a managed investment scheme) is excluded from being an asset in Australia if:

(a)the trustee does not reside in Australia; or

(b)under the trust deed, the trustee has the right to suspend or delay the redemption of a unit or trust property pending sale of any of the trust’s assets outside Australia; or

(c)amount payable to the locally incorporated insurer under the trust are payable outside Australia; or

(d)the locally incorporated insurer cannot enforce its rights against the trustee in an Australian court.[8]

[8]          This paragraph may apply in relation to an SPV if the SPV is a trust (as well as applying to certain other kinds of trusts).

An amount representing an equitable interest or beneficial interest of a locally incorporated insurer in a trust (not being an interest arising where legal title is held by a custodian) is also excluded from being an asset in Australia if:

(a)the interest is a proprietary interest in a particular asset or particular assets (rather than merely an interest in the due administration of the trust); and

(b)the asset or each asset would not be an asset in Australia if it were held directly by the locally incorporated insurer (either because it would be excluded under GPS 120 or because it would not otherwise be an asset in Australia within the meaning of paragraph 28(a) of the Act).[9]

[9]           This paragraph will apply where, in a practical sense, the insurer might be said to ‘own’ the trust property; e.g. where the insurer can request that the trustee transfer the full legal and beneficial interest in the property to the insurer.  This paragraph will not apply where, for example, the insurer’s rights are merely to receive investment returns, or to request the redemption of units in the trust for cash.  This paragraph generally will not apply to an SPV that is a unit trust.

Other equitable interests

An amount representing an equitable interest of a locally incorporated insurer in an asset (not being an equitable interest in property held under a managed investment scheme, or property held by a custodian, or property otherwise held on trust) is excluded from being an asset in Australia if:

(a)the legal owner of the asset (the legal owner) does not reside in Australia; or

(b)any amount payable by the legal owner to the locally incorporated insurer in respect of the arrangement are payable outside Australia; or

(c)the asset would be an asset in Australia if it were held directly by the locally incorporated insurer (either because it would be excluded under GPS 120 or because it would not otherwise be an asset in Australia within the meaning of paragraph 28(a) of the Act); or

(d)the locally incorporated insurer cannot enforce its rights in relation to the asset in an Australian court.

Category C Insurers

Assets must be held by Category C insurer’s custodian or agent in Australia

An amount representing an asset[10] of a Category C insurer is excluded from being an asset in Australia unless it is held for the Category C insurer by either:

[10]          Except for certain assets as specified under paragraph 24 of GPS 120 (e.g. real property in Australia).

(a)a custodian (in a way set out in GPS 120), where:

(i)the legal title is held in a way specified in paragraph 16(a) or (b) of GPS 120; and

(ii)the conditions in paragraphs 17(a) to (l) of GPS 120 are complied with[11] (subject to paragraphs 36 and 37 of GPS 120); and

[11]          For these purposes, the conditions in paragraphs 17(a) to (l) of GPS 120 are to be treated as having been complied with if they would not operate to exclude the asset from being an asset in Australia if the Category C insurer were a locally incorporated insurer.

(iii)under the external custody agreement, only the agent in Australia of the Category C insurer may give directions (either directly or via a delegated authority to another person as provided for in paragraph 26 of GPS 120) to the custodian permitting or requiring any disposal of assets[12]; or

[12]          The trading of assets in Australia conducted within a custodian arrangement is not considered to be disposal of the assets under this paragraph as long as the assets are not traded for assets that are not assets in Australia. Transfer of assets in Australia outside a custodian arrangement is considered to be a disposal of assets under paragraph 22 of GPS 120.

(b)the Category C insurer’s agent in Australia (on trust for the Category C insurer).

Nothing in the above paragraph (a)(iii) precludes a Category C insurer from requiring a co-signatory, who need not reside in Australia, to also authorise a direction to the custodian permitting or requiring disposal of an asset.  However, where there is a co-signatory, the requirement in the above paragraph (a)(iii) will be taken to be met only if:

(a)the agent in Australia maintains control of the assets in Australia by being the only entity with authority to deal with the custodian directly; and

(b)the requirement for a co-signatory is an arrangement agreed upon between the Category C insurer and the agent in Australia; and

(c)the external custody agreement recognises only the authority of the agent in Australia to give directions to the custodian; and

(d)the agent in Australia does not delegate to the co-signatory its authority to give directions to the custodian; and

(e)the co-signatory:

(i)is appointed by the Category C insurer;

(ii)is not a disqualified person as defined in section 25 of the Act; and

(iii) meets the fitness and propriety criteria for responsible persons under Prudential Standard GPS 520 Fit and Proper (GPS 520).

Paragraph 22 of GPS 120 does not apply to the following assets of a Category C insurer:

a)real property in Australia;

b)premium receivables due to the Category C insurer provided that any premium receivable outstanding for more than six months from the date when the premium receivable became due and payable is excluded from being as asset in Australia; and

c)cash held in the Category C insurer’s bank account in Australia provided that any withdrawal from the bank account requires authorisation by the Category C insurer’s agent in Australia.

For the purposes of paragraph 24(c) of GPS 120, ‘bank account in Australia’ means a bank account maintained with an ‘authorised deposit-taking institution’[13] in Australia under the terms of which deposits are:

[13]         For the avoidance of doubt, this refers to a deposit-taking institution authorised by APRA under the Banking Act 1959 (Banking Act) and includes foreign ADIs as defined in the Banking Act.

(a)at call; or

(b)term deposits of no more than six months duration.

For the purposes of paragraphs 22 to 25 and 27 to 34 of GPS 120, an agent in Australia may delegate authority to carry out acts for a Category C insurer (other than holding property on trust for a Category C insurer under paragraph 22(b) of GPS 120) to one or more persons (delegates) provided that every delegate:

a)is an individual who resides in Australia;

b)is not a disqualified person as defined in section 25 of the Act; and

c)meets the fitness and propriety criteria for responsible persons under GPS 520.[14]

Any reference within the instructions to authorisation by an agent in Australia includes authorisation by a delegate.

[14]         This is a requirement under the Act where the agent in Australia is a corporate agent and the delegate is a director or senior manager of the corporate agent.

Repatriation of assets

Any expected repatriation of net assets in Australia by a Category C insurer out of the current year profits of its branch in Australia is excluded from being an asset in Australia.[15]

[15]         Such expected repatriations are akin to expected dividends out of the current year profits of a locally incorporated insurer.

Asset revaluation reserves

Amounts referred to in paragraph (a) or (b) are excluded from being assets in Australia:

(a)55 per cent of pre-tax revaluation reserves of each of the following:[16]

[16]         This amount includes cumulative unrealised 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. 

(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 Prudential Standard 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,[17] 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).[18]

[17]         ‘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.

[18]         This amount includes cumulative unrealised 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

An asset held under an agreement between a Category C insurer and a corporate agent 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 that activity:

a)is necessary for or reasonably incidental to the corporate agent’s activities as agent in Australia; or

b)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.

Assets must be of a kind that would not be excluded if held by a locally incorporated insurer

An amount representing an asset held for (or directly held by) a Category C insurer in accordance with GPS 120 is excluded from being an asset in Australia if it would not be an asset in Australia if it were held by or for a locally-incorporated insurer (either because it was excluded under GPS 120 or because it would not otherwise be an asset in Australia within the meaning of paragraph 28(a) of the Act).[19]

APRA may, where appropriate, exercise any power in the provisions of GPS 120 relating to locally incorporated insurers, as if an asset or assets held by a custodian or agent in Australia for a foreign general insurer defined under subsection 3(1) of the Act were instead held by or for a locally incorporated insurer.

[19]         This means that essentially Category C insurers are in the same position as locally incorporated insurers except they must also comply with the requirements of the provisions of GPS 120 that apply to Category C insurers.

Reinsurance

The Act permits certain reinsurance assets to be regarded as assets in Australia.  For the purposes of the Act, an amount is taken to be an asset in Australia of a general insurer if:

(a)the insurer expects to recover the amount under a contract of reinsurance entered into with a person outside Australia; and

(b)the amount relates to claims in respect of liabilities in Australia of the insurer, whether or not the claims have been paid by the insurer; and

(c)under the terms of the contract, payments by way of reinsurance are to be made in Australia.

Instruction Guide

Introductions

This Instruction Guide is designed to assist in the completion of GRF 300.0 Statement of Financial Position. The instruction guide provides:

• general directions and notes for preparation and lodgement; and

• explanatory notes for specific items.

Definitions

Definitions for data reporting items required by this form have been provided where possible in the instructions under the section headed ‘Specific Instructions’.

Unit of Measurement

GRF 300.0 Statement of Financial Position is to be prepared in thousands of Australian dollars (AUD).  Amounts denominated in foreign currency are to be converted to AUD in accordance with AASB 121 ‘The Effects of Changes in Foreign Exchange Rates’ (AASB 121).

The general requirements of AASB 121 for translation are:

1. Foreign currency monetary items[20] outstanding at the reporting date must be translated at the spot rate[21] at the reporting date.

   [20]          Monetary items are defined to mean units of currency held and assets and liabilities to be received or paid in a fixed or determinable number of units of currency.

   [21]          Spot rate means the exchange rate for immediate delivery.

1. Foreign currency non-monetary items[22] that are measured at historical cost in a foreign currency must be translated using the exchange rate at the date of the transaction.

   [22]          Examples of non-monetary items include amounts prepaid for goods and services (e.g. prepaid rent); goodwill; intangible assets; physical assets; and provisions that are to be settled by the delivery of a non-monetary asset.

1. Foreign currency non-monetary items that are measured at fair value will be translated at the exchange rate at the date when fair value was determined.

Transactions arising under foreign currency derivative contracts at the reporting date must be prepared in accordance with AASB 139 ‘Financial Instruments: Recognition and Measurement’ (AASB 139). However, those foreign currency derivatives that are not within the scope of AASB 139 (e.g. some foreign currency derivatives that are embedded in other contracts) remain within the scope of AASB 121.

For APRA purposes, equity items must be translated using the foreign currency exchange rate at the date of investment or acquisition. Post acquisition changes in equity are required to be translated on the date of the movement.

As foreign currency derivatives are measured at fair value, the currency derivative contracts are translated at the spot rate at the reporting date.

Exchange differences should be recognised in profit and loss in the period which they arise. For foreign currency derivatives, the exchange differences would be recognised immediately in profit and loss if the hedging instrument is a fair value hedge. For derivatives used in a cash flow hedge, the exchange differences should be recognised directly in equity.

The ineffective portion of the exchange differences in all hedges would be recognized in profit and loss.

1. Translation of financial reports of foreign operations.

A foreign operation is defined in AASB 121 as meaning an entity that is a subsidiary, associate, joint venture or branch of a reporting entity, the activities of which are based or conducted in a country or currency other than those of the reporting entity.

·       Exchange differences relating to foreign currency monetary items that form part of the net investment of an entity in a foreign operation, must be recognised as a separate component of equity.

·       Translation of financial reports should otherwise follow the requirements in AASB121.

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 300.0 Statement of Financial Position.

Basis of preparation

Unless stated otherwise, general insurers are requested to follow the Australian accounting standards regarding the definition, recognition and measurement of assets, liabilities and equity items in completing this form, notably AASB 1023 ‘General Insurance Contracts’ (AASB 1023).

Definition of insurance business

Insurers are to follow the definition of insurance business provided in Section 3 of the Act. The Act provides that insurance business means the business of undertaking liability, by way of insurance (including reinsurance), in respect of any loss or damage, including liability to pay damages or compensation, contingent upon the happening of a specified event, and includes any business incidental to insurance business as so defined, but does not include:

(a)life insurance business; or

(b)accident insurance business undertaken solely in connection with life insurance business; or

(c)pecuniary loss insurance business carried on solely in the course of carrying on banking business and for the purposes of that business by the ADI; or

(d)business in relation to the benefit provided by a friendly society or a trade union for its members or their dependants; or

(e)business in relation to the benefits provided for its members or their dependants by an association of employees of employees and other persons that is an organisation under the Fair Work (Registered Organisations) Act 2009; or

(f)business in relation to a scheme or arrangement under which superannuation benefits, pensions or payments to employees or their dependants (and not to any other persons) on retirement, disability or death are provided by an employer or an employer’s employees or both, wholly through an organization established solely for that purpose by the employer or the employer’s employees or by both; or

(g)business in relation to a scheme or arrangement for the provision of benefits consisting of:

(i)the supply of funeral, burial or cremation services, with or without the supply of goods connected with any such service; or

(ii)the payment of money, upon the death of a person, for the purpose of meeting the whole or a part of the expenses of and incidental to the funeral, burial or cremation of that person;

and no other benefits, except benefits incidental to the scheme or arrangement; or

(h)business undertaken by a person, being a carrier, carrier’s agent, forwarding agent, wharfinger, warehouseman or shipping agent, relating only to the person’s liability in respect of goods belonging to another person and in the possession, or under the control, of the first-mentioned person for the purpose of the carriage, storage or sale of those goods; or

1. business undertaken by a person, being an innkeeper or lodging-house keeper, relating only to the person’s liability in respect of goods belonging to another person and in the possession or under the control of a guest at the inn or lodging-house of which the first-mentioned person is the innkeeper or lodging-house keeper or deposited with the innkeeper or lodging-house keeper for safe custody; or

(j)the business of insuring the property of a religious organization where the person carrying on the business does not carry on any other insurance business;

(ja)  health-related business within the meaning of section 131-15 of the Private Health Insurance Act 2007 carried on by a private health insurer within the meaning of that Act through a health benefits fund within the meaning of section 131-10 of that Act;

(k)health insurance business within the meaning of Division 121 of the Private Health Insurance Act 2007, carried on by a private health insurer within the meaning of that Act; or

(l)reinsurance business carried on by:

(i)a body corporate incorporated in a foreign country; or

(ii)an unincorporated body established, under a law of a foreign country, that under that law may sue or be sued, or may hold property in the name of its secretary or of an office holder of the body duly appointed for that purpose;

that is not a general insurer.

Reinsurance

The applicable investment risk charges relating to reinsurance assets are calculated in GRF 301.0 Reinsurance Assets and Risk Charge.

Fair value measurement of assets

APRA applies the notion of assets backing general insurance liabilities for its regulatory reporting which is consistent with  the classification basis in AASB 1023. The value of the investments reported in this form should be equal to the value of investments deemed to be assets backing insurance liabilities for statutory reporting.

Investments reported in this form that back the entity's general insurance activities must be measured at fair value. The investments must not be valued at cost. Fair value has the same meaning as defined in the AASB 132 ‘Financial Instruments: Presentation’, that is, the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's-length transaction, and is determined as follows:

1. The quoted market price (i.e. bid or ask price) in an active and liquid market; or

1. When there is infrequent activity in a market, and the market is not well established, small volumes are traded relative to the asset or liability to be valued, or a quoted market price is not available – a realistic estimate of fair value on the basis of the results of a valuation technique that makes maximum use of market inputs, and relies as little as possible on entity-specific inputs[23].

Fair value of charged/encumbered assets

If an asset is in any way subject to a charge, covenant, encumbrance, option to purchase or any other arrangement by way of agreement or statute, that restricts the fair value of the asset, the value attached to the asset needs to reflect the existence of these arrangements. For example, if the insurer has agreed to deliver an asset to a purchaser at a price below the arms length value, the value attached to the asset cannot exceed the agreed price.

[23]          See AASB 139 ‘Financial Instruments: Recognition and Measurement’.

Netting

Unless otherwise specifically stated, institutions are allowed to take advantage of netting agreements in relation to disclosure of data items in this form. Institutions are to comply with the requirements for netting outlined in Australian accounting standards AASB 7 ‘Financial Instruments: Disclosures’, AASB 139 ‘Financial Instruments: Recognition and Measurement’ and AASB 132 ‘Financial Instruments: Presentation’.

Term to maturity

Reference to term to maturity refers to residual term to maturity not original term to maturity.

Related party disclosure

Amounts due from, loans to, debentures of, shares in, or units in a trust or body corporate that is related to the insurer are to be disclosed for items of assets and liabilities where indicated in the form. For the purposes of this form, related bodies corporate are to be interpreted consistently with the meaning as in AASB 124 ‘Related Party Disclosures’ (AASB 124).

In accordance with AASB 124, related party means a party that directly or indirectly through one or more intermediaries:

(a)controls, is controlled by or is under common control with, the entity (this includes parents, subsidiaries and fellow subsidiaries);

(b)has significant influence over the entity or has joint control over the entity; or

(c)is an associate (as defined in AASB 128 ‘Investments in Associates’) of the entity; or

(d)is a joint venture in which the entity is a venturer (see AASB 131 ‘Interests in Joint Ventures’); or

(e)is a member of the key management personnel of the entity or its parent; or

(f)is a close member of the family of any individual referred to in (a), (b) or (e); or

(g)is an entity that its controlled, jointly controlled or significantly influenced by, or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (e) or in (f); or

(h)is a post-employment benefit plan for the benefit of the employees of the entity, or of any entity that is a related party of the entity.

Instructions for specific items

Assets

1. Cash and liquid assets

This reporting item should be brought to account at the face value or the gross value of the outstanding balance where appropriate. Interest is taken to GRF 310.0 Statement of Financial Performance when earned.

1.1.   Notes and coins

Include Australian and foreign currency notes and coins of the reporting entity. Notes and coins in transit between any branches or offices of the reporting entity should be reported.  

1.2.   Money at short call

Include deposits available on demand (11am accounts, money market or 24-hour money), that are used by the insurer for daily liquidity/operations. 

Do not include any deposits at call that are held as part of the insurer’s investments. These are to be disclosed as investments in GRF 140.0 Investments – Direct Interest Rate Holdings and Risk Charge.

Do not include bank overdraft balances.

1.3.   Securities purchased under agreements to resell

Treatment is to be consistent with AASB 139.

Where the transferee of the securities effectively receives a lenders rate of return (i.e. the underlying risks and rewards of ownership of the underlying securities is not effectively transferred), these transactions are to be accounted for as collateralised borrowing activities (treating securities borrowing as on balance sheet exposures).

Under this method of accounting, the following treatment is to be applied:

• The asset account termed ‘Securities purchased under agreements to resell’, represents the receivable due from counterparties from whom the securities have been borrowed and with whom cash has been lodged;

• The insurer’s physical security holdings/portfolio recorded on the balance sheet are not affected (i.e. increased or decreased by the securities subject to this agreement); and

• Disclosure of ‘Securities purchased under agreements to resell’ with related parties is in accordance with the related party disclosure as set out earlier in the instruction guide.

1.4.   Total cash and liquid assets

This is automatically calculated by the form and represents the sum of all cash and liquid assets reporting items above (Notes and coins, Money at call and Securities purchased under agreements to resell).

Total cash and liquid assets, which represent:

1.4.1.Notes and coins

Of the total cash and liquid assets, disclose the aggregate balance that represents notes and coins only.  Refer to item 1.1 ‘Notes and coins’ above for detail on notes and coins.

1.4.2.Debt obligation with a counterparty rating Grade of 1 or 2

Of the total cash and liquid assets, disclose the aggregate balance, which represents funds invested with a counterparty that has a rating grade of 1 or 2. Refer to GPS 114 for detail on rating grades.

1.4.3.Debt obligation with a counterparty rating Grade of 3

Of the total cash and liquid assets, disclose the aggregate balance, which represents funds invested with a counterparty that has a rating grade of 3. Refer to GPS 114 for detail on rating grades.

1.4.4.Debt obligation with a counterparty rating Grade of 4 or unrated

Of the total cash and liquid assets, disclose the aggregate balance, which represents funds invested with a counterparty that has a rating grade of 4 or are unrated. Refer to GPS 114 for detail on rating grades.

1.4.5.Debt obligation with a counterparty rating Grade of 5

Of the total cash and liquid assets, disclose the aggregate balance, which represents funds invested with a counterparty that has a rating grade of 5. Refer to GPS 114 for detail on rating grades.

1.4.6.Investments with related parties of the reporting insurer

Of the total cash and liquid assets, disclose the aggregate balance that is held with parties related to the reporting insurer. Related party has the meaning as set out earlier in the instruction guide.

1. Receivables

2.1.   Total investment income receivable

Report the total of investment income that is receivable. Investment income receivable will include items such as interest, dividends, rental income, trusts distributions accrued but not yet received.

Total Investment income receivable from counterparties/assets with rating of:

Total investment income receivable reported above is to be allocated according to the counterparty/asset rating grades set out below and on the form, which are detailed in GPS 114. The investment risk charge will be calculated according to the applicable rating grade.

2.1.1.Commonwealth, State and Territory governments

2.1.2.Grade 1 or 2

2.1.3.Grade 3

2.1.4.Grade 4 or unrated

2.1.5.Grade 5

2.1.6.Listed equities

2.1.7.Other

2.2.   Recoveries other than reinsurance

Claims recoveries may also consist of subrogation, salvage or other recoveries. Where such other recoveries are expected to be made they are to be valued in accordance with AASB 1023  and disclosed here.

2.2.1.Provision for doubtful debts – recoveries other than reinsurance

Where applicable, disclose the value of ‘recoveries other than reinsurance receivable’, where collection/receipt is assessed as doubtful.

2.2.2.Total net recoveries other than reinsurance receivable

This is automatically calculated by the form and represents the value of ‘recoveries other than reinsurance’, net of any associated provision for doubtful debts.

Total net amounts recoverable (other than reinsurance recoveries receivable) that are reported in item 2.2.2 and that do relate to claims recognised in the calculation of insurance liabilities that have not been paid.

2.2.2.1.    Outstanding Claims Liability (OCL)

Of the total value reported in item 2.2.2 for recoveries other than reinsurance, report the value that relates to claims that are recognised in the value reported for the ‘Outstanding Claims Liability’ reported in item 16 of this form. Exclude recoveries that relate to claims that have been paid.

2.2.2.1.1.Input tax credits on OCL included in item 2.2.2.1

Of the amount reported in item 2.2.2.1 for recoveries other than reinsurance recognised in the calculation of the ‘Outstanding Claims Liability’, report the gross value of Input Tax Credits (ITCs) receivable from the Australian Taxation Office.

Net recoveries receivable, as reported in item 2.2.2, that are from counterparties with rating of:

The net value of recoveries other than reinsurance receivable is to be allocated according to the counterparty/asset rating grades of the counterparty from which the recoveries are receivable. The grades are set out below and on the form, which are detailed in GPS 114.  The investment risk charge will be calculated according to the applicable rating grade.

2.2.2.2.    Commonwealth, State and Territory governments

2.2.2.3.    Grade 1 or 2 (redeemable in less than one year)

2.2.2.4.    Grade 1 or 2 (redeemable in more than one year)

2.2.2.5.    Grade 3

2.2.2.6.    Grade 4 or unrated

2.2.2.7.    Grade 5

2.2.2.8.    Other

2.3.   Premiums receivables

Include all premiums that are due to be received. Include unpaid premiums available for collection and premiums not yet available for collection. Unpaid reinsurance premiums are also disclosed here. 

If the unpaid premium is from a reinsurance contract where a legal right of set-off exists, the amount may be included as an amount recoverable under a reinsurance contract, but only if the amount is the balance after set-off against other amounts owing under that contract.  Where no legal right of set-off exists, the unpaid premium from the reinsurance contract is to be shown as an unpaid premium.

All unpaid premiums on such policies are to be disclosed here according to the length of time the premium has been due and the party from whom it was due.  The due date is the date of inception or, for instalment premiums the date from when the instalment is owed.

Unpaid instalment premiums are to be reported as unpaid premiums and are to include all unpaid instalments. If any instalment is due for more than 6 months all the unpaid instalments are to be regarded as over 6 months.

For premium aging purposes, inward reinsurance premiums may be aged from the statement (bordereaux) date.

Disclosures of unpaid premiums for periods that range from  less than 6 months to greater than 12 months are required as follows:

2.3.1.Due in 6 months or less:

Report the premiums which are receivable (e.g. from insurance brokers or other intermediaries) as at the reporting date 6 months or less.

2.3.2.Provision for doubtful debts

Include the value of premiums receivable where collection is considered doubtful (full or partial).

2.3.3.Net amount receivable

This is automatically calculated by the form and represents the value of the premiums receivable in 6 months or less after deducting any associated provision for doubtful debts disclosed.  The net balance is used in the calculation of the applicable investment risk charge.

2.3.4.Due in more than 6 months:

Report the premiums which are receivable (e.g. from insurance brokers or other intermediaries) as at the reporting date in more than 6 months.

2.3.5.Provision for doubtful debts

Include the value of premiums receivable where collection is considered doubtful (full or partial).

2.3.6.Net amount receivable

This is automatically calculated by the form and represents the amount of the premiums receivable in more than 6 months after deducting any associated provision for doubtful debts disclosed.  The net balance is used in the calculation of the applicable investment risk charge.

2.3.7.On unclosed business

Include business written close to the balance date where acceptance of risk is prior to the balance date but there is insufficient information to accurately identify the business.

2.3.8.Provision for doubtful debts

Include the value of premiums receivable where collection is considered doubtful (full or partial).

2.3.9.Net amount receivable

This is automatically calculated by the form and represents the value of the premiums receivable associated with unclosed business after deducting any associated provision for doubtful debts disclosed.  The net balance is used in the calculation of the applicable investment risk charge.

2.3.10.Total net premiums receivables

This is automatically calculated by the form and is the total of net premiums receivables reported in items 2.3.3, 2.3.6 and 2.3.9.

2.3.11.Total net premiums that are receivable from related parties

Disclose the aggregate value of ‘Total net premiums receivable’ that is due from entities related to the reporting insurer. Related party has the meaning as set out earlier in the instruction guide.

2.4.Amounts recoverable from reinsurance contracts on both outstanding claims and paid claims

Disclose the amount of total net reinsurance recoverable on outstanding claims and paid claims (net of provisions for doubtful debts) determined in item 1.3 ‘Net amount recoverable’ of GRF 301.0 Reinsurance Assets and Risk Charge.

Reinsurance recoverables on outstanding claims is the reinsured portion of the OCL to be recovered from reinsurers on settling the OCL. Measurement of the outstanding claims is to be in accordance with the requirements of AASB 1023.  Accordingly estimation of reinsurance recoveries relating to the OCL is to be estimated on a basis similar with the measurement of the claims liabilities to which it relates. 

The amount reported should also include, the amounts due from reinsurers under reinsurance contracts that do not meet the reinsurance documentation test, specified in GPS 112.

The risk charges are calculated under GRF 301.0 Reinsurance Assets and Risk Charges.

2.4.1.Total net amount recoverable on reinsurance contracts reported in item 2.4, that relates to claims recognised in the calculation of the Outstanding Claims Liability (i.e. other than reinsurance recoveries relating to claims that have been paid).

Report the amount of total net reinsurance recoverable reported in item 2.4 ‘Amount recoverable from reinsurance contracts on both outstanding claims and paid claims’, that relates to claims recognised in the calculation of the OCL (i.e. other than reinsurance recoveries relating to claims that have been paid).

This item is mainly used in determining technical provisions in surplus / deficit to the liability valuation under Prudential Standard GPS 310 Audit and Actuarial Reporting and Valuation. 

2.5    Current tax assets

Report the value of current tax assets.

2.6   Other reinsurance assets

Report the amount of total other reinsurance assets (including deposits retained by reinsurers). This should correspond with the amount calculated under item 3.3 ‘Net amounts of other reinsurance assets’ of GRF 301.0 Reinsurance Assets and Risk Charges. 

The risk charges are calculated under GRF 301.0 Reinsurance Assets and Risk Charges.

2.7.      GST receivable

Record the amount of GST that is receivable by the reporting insurer.

2.8.      Other receivables

Report the aggregate value of ‘Other receivables’ other than those disclosed specifically above.

Total other receivables with a counterparty / asset rating of:

Allocate the value of ‘Other receivables’ of the insurer, other than those specifically detailed in the form, amongst the appropriate rating grade associated with counterparty/asset:

2.8.1.     Grade 1 or 2

2.8.2.     Grade 3

2.8.3.     Grade 4 or unrated

2.8.4.     Grade 5

The investment risk charge will be calculated based on the capital factor applicable to the rating grades.

2.9.      Total Receivables

This is automatically calculated by the form and represents the total of all receivables.

1. Investments (related to GRF 140 series of forms)

Disclose the value of investments that are reported in the investment form series listed below:

• GRF 140.0 Investments – Direct Interest Rate Holdings and Risk Charge

• GRF 140.1 Investments – Direct Equity Holdings and Risk Charge

• GRF 140.2 Investments – Direct Property Holdings and Risk Charge

• GRF 140.3 Investments – Loans and Advances and Risk Charge

• GRF 140.4 Investments – Indirectly Held by Insurer and Risk Charge

The aggregate value of investments reported in this form (i.e. item 3), must agree to the aggregate value of investments reported in all the investment specific forms (i.e. GRF 140 series) listed above.

Note: Derivative instruments that are used to hedge investments that are included in the above forms are not to be reported in item 3. The values of derivative instruments are to be separately reported in the relevant items under item 4 ‘Derivative financial instruments (related to GRF 160)’ of this form.

Any changes in the values at which such investments are measured (i.e. foreign exchange gains/ losses and changes in fair value) must be recognised as revenues (or losses) in the GRF 310.0 Statement of Financial Performance and GRF 310.3 Investment and Operating Income and Expense in the reporting period in which the changes occur.

No revaluation reserve shall be recognised in the Statement of Financial Position for such investments.

1. Derivative financial instruments (related to GRF 160)

Include all derivatives consistent with the classification and measurement basis used for derivatives by institutions in accordance with AASB 7, AASB 132 and AASB 139.

4.1.Derivatives at fair value

Derivative financial instruments should be reported at their net fair value in ‘Other Assets’ when favourable to the reporting entity.

Fair values are obtained from quoted market prices, discounted cash flow models and options pricing models.

4.2.Derivatives at cost (where no fair value available)

In exceptional circumstances where fair value cannot be reliably determined then derivative financial instruments should be reported at cost.

4.3.Total derivative financial instruments

This is automatically calculated by the form and represents the sum of derivatives reported at fair value and at cost.

Note: The calculation of the appropriate investment risk charge for derivative exposures is calculated in GRF 160.0 Derivatives Activity and Risk Charge.

1. Deferred tax assets

Deferred tax assets are defined in accordance with AASB 112 ‘Income Taxes’ (AASB 112).

5.1.   Carried forward unused tax losses

Report all deferred tax assets arising out of tax losses in accordance with AASB 112.

5.2.   Attributable to insurance liability provisions

Report all deferred tax assets associated with the outstanding claims liabilities that satisfy the recognition requirements of AASB 112.

5.3.   Other

Report all deferred tax assets other than that disclosed above.

5.4.   Total deferred tax assets

This is automatically calculated by the form and represents the total of items 5.1 to 5.3.

1. Other Assets

6.1.   Prepayments

Reflects payment for services not fully delivered e.g. payments for subscriptions, rental and interest expense.

6.2.   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, consistent with the classification and measurement basis used in AASB 119 ‘Employee Benefits’.

6.3.   Non-current assets and disposal groups classified as held for sale

Include non-current assets and disposal groups classified as held for sale consistent with the classification and measurement used in AASB 5 ‘Non-current Assets Held for Sale and Discontinued Operations’.

6.4.   Other

Report the value of any other asset that has not been disclosed above.

6.5.   Total other assets

This is automatically calculated by the form and represents the sum of all assets reported under ‘Other assets’.

Total other assets excluding surpluses in defined benefit superannuation fund, with a counterparty / asset rating of:

Note:  The surplus in defined benefit superannuation funds is deducted from Tier 1 capital and is therefore excluded from the calculation of the investment risk charge.

Allocate the value of ‘Other Assets excluding surpluses in defined benefits superannuation funds’ amongst the appropriate rating grade associated with counterparty/asset:

6.5.1.Grade 1 or 2

6.5.2.Grade 3

6.5.3.Grade 4 or unrated

6.5.4.Grade 5

6.5.5.Other

The investment risk charge will be calculated based on the capital factor applicable to the rating grades as detailed in GPS 114.

1. Deferred levies and charges

Deferred levies and charges should be recognised as an asset under AASB 1023 and amortised over the period of the general insurance contract or the period of indemnity for reinsurance business in a manner consistent with the recognition of premium revenue in accordance with AASB 1023.

1. Deferred reinsurance expense

Premiums ceded to reinsurers should be recognised as an expense in GRF 310.1 - Premium Revenue and Reinsurance Expense and deferred in accordance with the pattern of reinsurance service received. This asset must represent the deferral of the premiums over the full term of the reinsurance contract including the full cost of reinsurance coverage used to calculate the Maximum Event Retention under Prudential Standard GPS 116  Capital Adequacy: Concentration Risk Capital Charge. 

The recognition of this asset should include any minimum / deposit premiums paid under excess of loss treaties.

8.1.   Deferred reinsurance expense as reported under AASB 1023

Report the total deferred reinsurance expense that would be reported under AASB 1023. Where there is no difference from item 8 ‘Deferred reinsurance expense’ enter the same number as item 8.  Where the insurer does not ordinarily calculate deferred reinsurance expense under AASB 1023, input zero. This item is a memo item for reconciliation purposes only.

1. Deferred acquisition costs

Deferred acquisition costs (DAC) should be recognised as an asset under AASB 1023 and amortised in accordance with the expected pattern of the incidence of risk under the related general insurance contracts.

9.1. Deferred acquisition costs prior to liability adequacy test write-downs

Report the amount of deferred acquisition costs which existed prior to any liability adequacy test write-downs.

9.2. Liability adequacy test write-downs

Report the amount of any liability adequacy test write-downs that relate to item 9.1 ‘Deferred acquisition costs prior to liability adequacy test write-downs’.

1. Other investments

Do not include investments that constitute assets backing general insurance liabilities. The following specific investment classifications provided refer to strategic investments/acquisitions of the reporting insurer.

10.1.  Parent entity

Report the total amount of equity investments in the parent entity. Parent entity is defined in accordance with AASB 127 ‘Consolidated and Separate Financial Statements’ and refers to the entity which owns the reporting insurer.

10.1.1    Controlled entities 

Report the total amount of equity investments in controlled entities/subsidiaries. This is defined in accordance with AASB 127 ‘Consolidated and Separate Financial Statements’.

10.2.  Associates

Report the total amount of equity investments in associates defined in accordance with AASB 128 ‘Investments in Associates’.

An associate is an entity, including an unincorporated entity such as a partnership, over which the investor has significant influence and that is neither a subsidiary nor an interest in a joint venture.

10.3.  Joint ventures

Report the total amount of interests in joint ventures defined in accordance with AASB 131 ‘Interests in Joint Ventures’.

Joint venture means a contractual arrangement whereby two or more parties undertake an economic activity, which is subject to joint control.

10.4.  Other

Report any other investments not included above.

10.5.  Total other investments

This is automatically calculated by the form and represents the sum of all reporting line items for ‘Other investments’.

Total other investments which constitute holdings of:

10.5.1.Listed equity instruments or units in listed trusts

Of the aggregate value of other investments, report the component that constitutes holdings of, or investments in listed equity instruments or units in listed trusts. The investment risk charge will be calculated based on the capital factor applicable to this asset grade and will be reduced by the risk charge on the amount reported in item 10.5.1.1.

10.5.1.1.The component of the value of investments in listed equity instruments or units in listed trusts, which represents purchased goodwill and other intangible assets in relation to the acquisition of controlled entities (i.e. book value less value of identifiable net tangible assets). (non-branch insurers only)

Note: This item relates only to item 10.1.1 ‘Controlled entities’ of this form and is only applicable for the licensed insurer.

Goodwill and any other intangible assets are to be recognised as specified in paragraph 25 of GPS 112.

Goodwill will be deducted from Total Tier 1 capital in the line items provided on GRF 120.0 Determination of Capital Base for licensed insurers or on GRF 300.0 Statement of Financial Position for branch insurers.

10.5.1.2.The component of the value of investments in listed equity instruments or units in listed trusts, which represents identifiable net tangible assets in relation to the acquisition of controlled entities (i.e. book value less value of purchased goodwill net of impairment losses and identifiable intangible assets). (non-branch insurers only)

Note: This item relates only to item 10.1.1 ‘Controlled entities’ of this form and is only applicable for the licensed insurer.

This represents item 10.5.1 less 10.5.1.1.

10.5.2.Unlisted equity instruments or units in unlisted trusts

Of the aggregate value of other investments, report the component that constitutes holdings of, or investments in unlisted equity instruments or units in unlisted trusts. The investment risk charge will be calculated based on the capital factor applicable to the rating grades and will be reduced by the risk charge on amount reported in item 10.5.2.1.

10.5.2.1.The component of the value of investments in unlisted equity instruments or units in unlisted trusts, which represents purchased goodwill and other intangible assets in relation to the acquisition of controlled entities (i.e. book value less value of identifiable net tangible assets). (non-branch insurers only)

Note: This item relates only to item 10.1.1 ‘Controlled entities’ of this form and is only applicable for the licensed insurer.

Goodwill and any other intangible assets are to be recognised as specified in paragraph 25 of GPS 112.

Goodwill will be deducted from Total Tier 1 capital in the line items provided on GRF 120.0 Determination of Capital Base for licensed insurers or on GRF 300.0 Statement of Financial Position for branch insurers.

10.5.2.2.The component of the value of investments in unlisted equity instruments or units in unlisted trusts, which represents identifiable net tangible assets in relation to the acquisition of controlled entities. (i.e. book value less the value of purchased goodwill net of impairment losses and identifiable intangible assets). (non-branch insurers only)

Note: This item relates only to item 10.1.1 ‘Controlled entities’ of this form and is only applicable for the licensed insurer.

This represents item 10.5.2 less 10.5.2.1.

10.5.3.Other

Of the aggregate value of other investments, report the component that constitutes investments other than holdings of listed or unlisted equity instruments or units in listed or unlisted trusts.

10.5.4.Total other investments -  general insurance entities / businesses

Disclose the value of ‘Other Investments’, which are investments in general insurance entities or entities that carry on general insurance business.

1. Plant and equipment

The reporting of all fixed asset items should be in accordance with applicable Australian accounting standards (mainly AASB 1023). Do not include property acquired or held which is available for sale. These assets are to be disclosed as ‘Investments’ in this form and reported individually in GRF 140.2 Investments – Direct Property Holdings and Risk Charge.

11.1.  Plant and equipment

This includes motor vehicles, office furniture and equipment. Do not include holdings of land and buildings, even if these are for the use and occupation of the insurer. These are to be disclosed in item 3 ‘Investments (related to GRF 140 series of forms)’ in this form and reported individually in GRF 140.2 Investments – Direct Property Holdings. 

11.2.  Accumulated depreciation / impairment

Report total depreciation and impairment for all fixed assets.

11.3.  Total plant and equipment net of depreciation/impairment

This is automatically calculated by the form and represents the gross values of plant and equipment less accumulated depreciation/impairment.

The investment risk charge will be calculated based on the capital factor specified in GPS 114.

1. Intangible assets

Classification of assets as intangible assets must be in compliance with AASB 138 ‘Intangible Assets’.

12.1.  Goodwill

Do not include goodwill associated with the acquisition of controlled entities here. Record the value of goodwill associated with the acquisition of assets, other than a controlled entity/subsidiary. This value should be recognised and measured in accordance with AASB 3 ‘Business Combinations’, AASB 138 ‘Intangible Assets’ and AASB 127 ‘Consolidated and Separate Financial Statements’.

AASB 3 ‘Business Combinations’ provides that goodwill represents the future benefits from unidentifiable assets. Only goodwill which is purchased by the entity can be recognised. Internally generated goodwill by the entity must not be recognised. Goodwill must be recognised as specified in paragraph 25 of GPS 112.

12.2.  Accumulated impairment - Goodwill

Include the total amount of impairment losses of goodwill, over the period from the date of acquisition to the end of the reporting period.

Goodwill of the entity must be tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, in accordance with AASB 136 ‘Impairment of Assets’.

12.3.  Identifiable intangible assets

Intangible assets have been divided into item 12.3.1 ‘Intangible assets with a finite life’ and item 12.3.2 ‘Intangible assets with an indefinite life’.

Record the value of intangible assets other than goodwill in item 12.3.1 or 12.3.2.

12.3.1.Intangible assets with a finite life

12.3.2.Intangible assets with an indefinite life

12.3.3.Total identifiable intangible assets

The total of items 12.3.1 and 12.3.2 is automatically calculated by the form.

12.4.  Accumulated amortisation and impairment - Identifiable intangible assets

Include the total amount of amortisation and impairment losses of identifiable intangible assets, over the period from the date of acquisition to the end of the reporting period, in item 12.4.1 or 12.4.2.

12.4.1.Accumulated amortisation - Intangible assets with a finite life

12.4.2.Accumulated impairment - Intangible assets with an indefinite life

12.4.3.Total accumulated amortisation and impairment - Identifiable intangible assets

The total of items 12.4.1 and 12.4.2 is automatically calculated by the form.

12.5.  Intangible Assets after amortisation and impairment

This amount is automatically calculated by the form.  It represents the total of item 12.1 ‘Goodwill’ less item 12.2 ‘Accumulated impairment – Goodwill’ and item 12.3.3 ‘Total identifiable intangible assets’ less item 12.4.3 ‘Total accumulated amortisation and impairment – identifiable Intangible assets’.

1. Total Assets

Sum of total assets is automatically calculated by the form.

Liabilities

1. Creditors and accruals

14.1.  GST payable

Report the value of GST that is payable by the reporting insurer.

14.2.  Creditors and accruals

Include the total of creditors and accruals, including account payables. Do not include overdrafts here, these should be disclosed as ‘Borrowings’.

14.3.  Total creditors and accruals

The total of items 14.1 ‘GST payable’ and 14.2 ‘Creditors and accruals’ is automatically calculated by the form.

14.3.1.Total creditors and accruals payable to related parties

Include the total of creditors and accruals that are payable to related entities on the insurer. Related entity has the meaning as set out earlier in the instruction guide.

1. Amounts due on reinsurance contracts

Include the net amount payable by the insurer to reinsurers or retrocessionaires where a legal right of set-off exists. This reflects the current working balance due for settlement. Include premiums payable but not yet due for payment under the terms of the reinsurance contracts and deposits withheld from reinsurers which should correspond to the recognition of DRE under item 8 and represent the total premium payable under reinsurance contracts. Include items such as the reinsurer’s portion of recoveries and salvage and commissions due to reinsurers.

15.1Amounts due on reinsurance contracts which are payable to related parties

Include the total of amounts due on reinsurance contracts that are payable to related parties of the insurer. Related party has the meaning as set out earlier in the instruction guide.

1. Outstanding claims liability

Outstanding claims liabilities relate to all claims incurred prior to the valuation date, whether or not they have been reported to the insurer.  The value of the outstanding claims liabilities must include an amount in respect of the expenses that the insurer expects to incur in settling these claims.

The amount reported is to be that amount provided by the insurer as calculated in accordance with AASB 1023.

Note: The amount of OCL provided in GRF 300.0 Statement of Financial Position  may be different to the amount of outstanding claims provision (OCP) reported in GRF 210.0 Outstanding Claims Provision - Insurance Risk Charge.

Any surplus or deficit of net OCL provided for in GRF 300.0 Statement of Financial Position above that amount required by Prudential Standard GPS 310 Audit and Actuarial Reporting and Valuation will be added back to or deducted from Tier 1 capital in GRF 120.0 Determination of Capital Base (or GRF 110.0 Minimum Capital Requirement for Category C insurers) for the purposes of calculating capital adequacy/solvency.

The OCL must be stated without deducting reinsurance and other recoveries (these are disclosed as reinsurance receivables).

The liability is in respect of both direct business and inward reinsurance business and must take into account unpaid reported claims, claims incurred but not reported , adjustments for claims development and claims incurred but not enough reported; and costs including the direct and indirect claims settlement costs that the insurer expects to incur in settling its outstanding claims.

16.1Total outstanding claims liability which is associated with claims / settlements in a currency other than the Australian currency.

Report the amount of claims that have been recognised in the OCL, that are ultimately going to be settled or paid in a currency other than the Australian currency.

1. Unearned premium liability

Report the unearned premium liability recognised in accordance with AASB 1023 that represents the component of premium revenue that is unearned. Premium should be earned in accordance with the pattern of the incidence of risk expected under the general insurance contract.

1. Unexpired risk liability

Report any unexpired risk liability recognised in accordance with AASB 1023 as a result of liability adequacy test failures.

1. Borrowings

Include

• Securities sold under agreements to repurchase;

• Subordinated loans (unless included as loan capital at item 24 below);

• Intra-group loans;

• Treasury related borrowings from banks;

• Promissory notes; and

• Commercial papers.

19.1. Securities sold under agreements to repurchase

Treatment is to be consistent with AASB 139.

Where the transferee of the securities effectively receives a lenders rate of return (i.e. the underlying risks and rewards of ownership of the underlying securities is not effectively transferred), these transactions are to be accounted for as collateralised borrowing activities (treating securities borrowing as on balance sheet exposures).

Under this method of accounting, the following treatment is to be applied:

• The liability account termed ‘Securities sold under agreements to repurchase’, represents the payable due to counterparties with whom the securities have been transferred (lent) and from whom cash has been lodged.

• The insurer’s physical security holdings/portfolio recorded on the balance sheet are not affected (i.e. decreased by the securities subject to this agreement).

19.2.Finance lease liability

Report the value of any finance lease liability.

19.3.Overdraft

Any bank overdraft taken out by the insurer is to be disclosed along with any bank trading account credit balances.

19.4.Securities Issued (e.g. Promissory notes / commercial paper)

Report all borrowings by the reporting entity in the form of commercial paper, promissory notes and other forms of securities issued by the insurer.  Classification is to be consistent with Australian accounting standards.

19.5.Term loans:

19.5.1.   Term loans with variable interest rate

Report all borrowings by the reporting entity in the form of variable interest rate short-term and long-term loans.  A loan is considered to be short-term if its residual term to maturity is 12 months or less.

19.5.2.   Term loans with fixed interest rate

Report all borrowings by the reporting entity in the form of fixed interest rate short-term and long-term loans.  A loan is considered to be short-term if its residual term to maturity is of 12 months or less.

19.6.  Total borrowings

This is automatically calculated by the form and represents the sum of all items listed under item 19 ‘Borrowings’.

Total borrowings which are:

19.6.1.Payable to the Parent Entity

Of the total amount reported for item 19 ‘Borrowings’ identify the component that is payable or due to the Parent Entity of the insurer.

19.6.1.1.Payable to controlled entities

Of the total amount reported for item 19 ‘Borrowings’ identify the component that is payable to controlled entities of the parent insurer.

19.6.2.Payable to other related parties

Of the total amount reported for item 19 ‘Borrowings’ identify the component that is payable to other related entities of the insurer not separately disclosed above. Related entity has the meaning as set out earlier in the instruction guide.

19.6.3.Secured against assets of the insurer

Of the total amount reported for item 19 ‘Borrowings’ identify the component that is secured against assets of the insurer. 

19.6.4.Denominated in a currency other than Australian currency

Of the total amount reported for item 19 ‘Borrowings’ identify the component that is denominated in a currency other than the Australian currency. 

1. Income tax liability

20.1.Current tax liability

This is defined, measured and recognised in accordance with AASB 112 ‘Income Taxes’. This item should be reported net of current tax assets.

20.2.Deferred tax liability

This is defined, measured and recognised in accordance with AASB 112 ‘Income Taxes’.

20.3.Total income tax liability

Sum of the current and deferred income tax liability items is automatically calculated by the form.

1. Provisions

21.1.Dividends

A provision for dividends is the allowance that the reporting entity has made in terms of the obligation for declared dividends.

21.2.Employee entitlements

This includes provisions for long service leave, annual leave, staff housing loan benefits, health fund subsidy and other employee entitlements. The value of employee entitlements should be measured and recognised in accordance with the requirements of AASB 119 ‘Employee Benefits’.

21.3.  Restructuring costs

Report all provisions raised for the restructuring of an organisation, including:

• Severance, termination and redundancy payments; and

• Integration costs.

21.4.  Other

Report all other provisions not identified above.

21.5.  Total provisions

This is automatically calculated by the form and represents the sum of all items listed under item 21 ‘Provisions’ reported by the insurer.

1. Other liabilities

22.1.  Derivative financial instruments

Include all derivatives consistent with the classification and measurement basis used for derivatives by institutions in accordance with AASB 7, AASB 132 and AASB 139.

22.1.1.Derivatives at fair value

Derivative financial instruments should be reported at their net fair value in ‘Other liabilities’ when unfavourable to the reporting entity.

Fair values are obtained from quoted market prices, discounted cash flow models and options pricing models.

22.1.2.Derivatives at cost

In exceptional circumstances where fair value cannot be reliably determined then derivative financial instruments should be reported at cost.

22.1.3.Total derivative financial instruments

This is automatically calculated by the form and represents the sum of derivatives reported at cost and at fair value.

22.2.Deficit in defined benefit superannuation fund

Disclose the value of any deficit in a defined benefit superannuation fund of which the insurer is an employer-sponsor, consistent with the classification and measurement basis used in AASB 119 ‘Employee Benefits’.

22.3.  Liabilities included in disposal groups classified as held for sale

Include liabilities included in disposal groups classified as held for sale consistent with the classification and measurement used in AASB 5 ‘Non-current Assets Held for Sale and Discontinued Operations’.

22.4.Other liabilities

Record other current liabilities that are not able to be classified into the specific categories listed on the form. This would include any deferred commission income.

22.5.Total other liabilities

This is automatically calculated by the form and represents the total of item 22.1 ‘Derivative financial instruments’, item 22.2 ‘Deficit in defined benefit superannuation plans’, item 22.3 ‘Liabilities included in disposal groups classified as held for sale’ and item 22.4 ‘Other liabilities’.

1. Loan capital and hybrid securities

Report the value of all loan capital and hybrid securities that have been issued by the insurer and have a residual term to maturity of more than one year. Classification is to be consistent with AASB 7, and AASB 132.

23.1     Loan capital

As a guide, this item may include:

• subordinated loans of a residual maturity of more than one year (unless already included at item 19 ‘Borrowings’ above).

23.2     Hybrid securities

As a guide, this item may include:

• converting preference shares; and

• convertible notes.

23.3Total loan capital and hybrid securities

This is automatically calculated by the form and represents the total of all loan capital and hybrid securities items listed above.

Total loan capital and hybrid securities which are:

23.3.1.   Payable to parent entity

Of the total amount reported for loan capital and hybrid securities identify the component that is payable or due to the parent entity(s) of the insurer.

23.3.1.1.    Payable to controlled entities

Of the total amount reported for loan capital and hybrid securities identify the component that is payable to controlled entities of the parent entity.

23.3.2.Payable to other related parties

Of the total amount reported for loan capital and hybrid securities identify the component that is payable to other related parties of the insurer not separately disclosed above. Related party has the meaning as set out earlier in this instruction guide.

23.3.3.Secured against assets of the insurer

Of the total amount reported for loan capital and hybrid securities identify the component that is secured against assets of the insurer.

23.3.4.Denominated in a currency other than Australian currency

Of the total amount reported for loan capital and hybrid securities identify the component that is denominated in a currency other than the Australian currency.

1. Total liabilities

Total liabilities are automatically calculated by the form.

1. Net assets

This is automatically calculated by the form and represents total assets less total liabilities.

(Note: When reporting on 'Amount – Inside Australia’, the ‘Net Assets’ may not necessarily balance with the total for ‘Shareholders’ Equity’. This situation may arise where not all assets, liabilities and reserves are inside Australia.

Shareholders’ equity

1. Share capital

26.1.  Ordinary shares

Report ordinary share capital issued by the insurer. This item is only to be completed for Licensed insurers.

26.2.  Preference shares

Report the preference share capital issued by the insurer.  Preference shares have a priority over dividend payments and to the assets of the reporting company. This item is only to be completed for Licensed insurers.

26.3.  Other

Include any other form of share capital not included above that satisfy the requirements of AASB 7, AASB 132 to be disclosed as equity. This item is only to be completed for Licensed insurers.

26.4.  Total share capital

This is automatically calculated by the form and represents the total of items 26.1 – 26.3. This item is only to be completed for Licensed insurers.

1. Reserves (item 26 for Branch insurers)

27.1.  General reserve (26.1 (B))

This is derived from revenue profits and is mostly available for dividend payment.

27.2.  Capital profits reserve (26.2 (B))

A capital profits reserve represents the realised value of revaluations associated with an asset or class of assets that have been disposed of. These assets have been subject to the fair value basis of measurement and revaluations accounted for in accordance with Australian accounting standards. Due to the disposal of these assets, the balance of the Asset Revaluation Reserve associated with these assets has been transferred to a capital profits reserve.

27.3.  Foreign Currency Translation Reserve (26.3 (B))

Include the exchange rate differences arising on translation of assets and liabilities in accordance with AASB 121.

27.4.  Cash flow hedge reserve (26.4 (B))

Include here the effective portion of the gain or loss on the cash flow hedging instrument as required by AASB 139, AASB 132 and AASB 7.

27.5.  Share-based payments reserve (26.5 (B))

Include here the equity settled share-based payments reserve amounts as required by AASB 2 ‘Share-based Payment’.

27.6.  Other reserves (26.6 (B))

Include all reserves not separately identified above. Report dividend reinvestment plan reserve in this reporting item.

27.7.  Asset revaluation reserve (26.7 (B)):

Note: If the insurer does not use either the revaluation method under AASB 116 ‘Property, Plant and Equipment’ or other revaluation criteria to value assets that are not deemed to constitute assets backing general insurance liabilities, then these items are not applicable to the insurer. Only complete these if the insurer uses these accounts for its financial reporting.

Report the asset revaluation reserve related to

27.7.1.Property (26.7.1 (B))

27.7.2.Plant and equipment (26.7.2 (B))

27.7.3.Intangibles revaluation surplus (26.7.3 (B))

27.7.4.Investment in controlled entities ((L) only)

27.7.5.Investments in associates / share of associates ARR (26.7.4 (B))

27.7.6.Relating to non-current assets or disposal groups held for sale (26.7.5 (B))

27.7.7.     Other (26.7.6 (B))

27.7.8.     Total Asset revaluation reserve (26.7.7 (B))

This is automatically calculated by the form and represents the sum of all items under 27.7 (26.7 (B)) ‘Asset revaluation reserve’.

27.8.  Total Reserves (26.8 (B))

This is automatically calculated by the form and represents the total of all items listed under item 27 (26(B)) ‘Reserves’.

1. Retained profits (27 (B))

28.1.  Retained profits or accumulated losses at the end of the period (27.1 (B))

Represents the sum of opening balance of retained profits or accumulated losses at the beginning of the period plus current profit or loss after tax for the reporting period and after any transfers to or from reserves.

1. Total ((B) only)

This is automatically calculated by the form and represents the sum of ‘Total Reserves’ and ‘Retained profits’.

1. Total shareholders’ equity attributable to shareholders of the company ((L) only)

This is automatically calculated by the form.  For the licensed entity, this represents the sum of item 26.4 ‘Total share capital’, item 27.8 ‘Total Reserves’ and item 28.1 ‘Retained profits or accumulated losses at the end of the period’.  

1. Additional disclosure required for minimum capital requirement calculation (Branches only):

29.1.OCP surplus / (deficit)

Include in this item the value of net outstanding claims 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).  Both inside Australia and Total amounts should be reported.

This must be calculated on a net basis as per the following:

The net outstanding claims liabilities reported in GRF 300.0:

• Item 16 of GRF 300.0. Outstanding claims liability

Less

• Item 2.4.1 of GRF 300.0: Total net amounts recoverable on reinsurance contracts reported in item 2.4, that relate to claims recognised in the calculation of the OCL (i.e. other than reinsurance recoveries relating to claims that have been paid);

Less

• 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 the insurance liabilities that have not been paid - relating to Outstanding Claims Liability (OCL) -

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 "Net" OCP’ (net of Reinsurance Recoveries and Non-reinsurance Recoveries) for all classes of business

This result is reported in item 29.1. OCP surplus / (deficit).

29.2.Premium liabilities surplus / deficit calculation:

29.2.1 Premium liabilities surplus / deficit

Include in this item the value of 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 premiums liabilities reported in GRF 210.1 Premium Liabilities – Insurance Risk Charge).  Both inside Australia and Total amounts should be reported.

This must be calculated on a net basis as per the following:

Sum of the net AASB 1023 premiums liabilities reported in GRF 300.0:

• Item 17 of GRF 300.0. Unearned premium liability

Less

• Item 9 of GRF 300.0. ‘Deferred acquisitions costs’

• Item 8 of GRF 300.0. ‘Deferred reinsurance expense’

Add

• Item 18. Unexpired risk liability

Less

The net value of any other items which form the total of AASB 1023 net premiums liabilities. This would include:

• Deferred reinsurance exchange commission;

• Unearned commission revenue; and

• Deferred levies and charges.

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 - ‘PL Net of Non RI Recoveries and Expected RI Recoveries’ for all classes of business.

29.2.2 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 that relates to business that has not yet been written. 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.

29.3Tax effect of net OCP and Premiums liabilities surplus / deficit

Any surplus / deficit of technical provisions must be adjusted for the tax effect (i.e. the corporate tax rate multiplied by the net amount).

Note: this requirement is not mandating the recognition of a deferred tax asset in GRF 300.0 Statement of Financial Position. This adjustment is required purely for prudential capital purposes to derive the accounting after tax cost to capital of creating the excess insurance provision.

The recording of the tax effect is not required where the surplus / deficit of technical provisions  has been included in the recognition of a deferred tax asset associated with the recognition of insurance liabilities in GRF 300.0 Statement of Financial Position. Deducting the tax effect in this case would constitute double counting, as deferred tax assets are deducted from Net Assets inside Australia.

29.4.Net surplus deficit relating to insurance liabilities

This is automatically calculated by the form and represents the sum of items 29.1 29.2.1 and 29.2.2 less item 29.3.