{"id":"F2010L01719","name":"Insurance (prudential standard) determination No. 9 of 2010 - Prudential Standard GPS 120 - Assets in Australia","slug":"insurance-prudential-standard-determination-no-9-of-2010-prudential-standard-gps-120-assets-in-austr","collection":"legislative_instrument","jurisdiction":"commonwealth","status":"repealed","isInForce":false,"actNumber":null,"makingDate":null,"administeringDepartment":null,"currentVersion":{"id":153062,"registerId":"commonwealth-F2010L01719-current","compilationNumber":null,"startDate":"2026-04-04","status":"Repealed","reasons":null,"registeredAt":null},"sections":[{"sectionNumber":"Prudential Standard GPS 120","sectionType":"section","heading":"Prudential Standard GPS 120","content":"##### ![](image.001.png)\n\n##### Prudential Standard GPS 120\n\n# Assets in Australia\n\n### Objective and key requirements of this Prudential Standard\n\nThe primary purpose of this Prudential Standard is to specify certain assets that are excluded as from being treated as ‘assets in Australia’ for the purposes of section 28 of the Insurance Act 1973. The assets excluded are those which may not be held by a court to fall within the definition of ‘assets in Australia’ or which APRA considers to have doubtful or no value to policyholders in Australia in the event of a general insurer becoming insolvent.\n\nSection 28 requires all general insurers to maintain assets in Australia (excluding goodwill and other amounts excluded by this Prudential Standard) of a value that equals or exceeds the total amount of the general insurer’s liabilities in 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 liabilities in Australia for the purposes of subsection 116(3) of the Insurance Act 1973.\n\nPrudential Standard GPS 110 Capital Adequacy also requires that a Category C insurer (as defined in Prudential Standard GPS 001 Definitions) operating in Australia as a branch maintain assets in Australia, in excess of its liabilities in Australia of an amount at least equal to its Minimum Capital Requirement. For the Minimum Capital Requirement, refer to Prudential Standard GPS 110 Capital Adequacy.\n\n  \nAuthority\n\n1.  This Prudential Standard is made under section 32 of the Insurance Act 1973 (the Act) for the purposes of paragraph 28(a) of the Act.[\\[1\\]](#_ftn1) It also prescribes certain other matters in relation to Category C insurers.\n\nApplication\n\n2. Paragraphs 9 to 21 apply to all insurers other than Category C insurers. Paragraphs 22 to 34 apply to Category C insurers.[\\[2\\]](#_ftn2) The remaining paragraphs apply to all insurers.\n\n3. This Prudential Standard applies from 1 July 2010 (effective date).\n\n4. Subsection 116A(1) of the Act deems certain reinsurance assets[\\[3\\]](#_ftn3) to be assets in Australia. Subsection 116A(5) of the Act deems certain amounts owed by a person outside Australia to be assets in Australia. In the event of any inconsistency between section 116A of the Act and a provision of this Prudential Standard, section 116A of the Act prevails.\n\nInterpretation\n\n5. Unless otherwise defined in this Prudential Standard, expressions in bold are defined in Prudential Standard GPS 001 Definitions.\n\n6. In this Prudential Standard:\n\nAustraclear means the Central Securities Depository service operated by Austraclear Ltd ACN 002 060 773.\n\nAustralian depository means Austraclear and CHESS and any similar facility in Australia for the holding and trading of securities (whether debt or equity).\n\nCHESS means the service of that name operated by CHESS Depositary Nominees Pty Limited ACN 071 346 506.\n\nClearstream means the International Securities Depository Service of Clearstream International S.A., a company domiciled in Luxembourg.\n\ncustodian means a body corporate that holds property for another person under a contractual arrangement, but excludes a sub-custodian or depository.\n\ndepository means an Australian depository or a foreign depository.\n\nEuroclear means the International Central Securities Depository service of Euroclear Bank SA/NV, a company located in Belgium.\n\nexternal custody agreement means any custody arrangement entered into by an insurer which covers assets being held by a party other than the insurer. This includes both intra-group and fully external custody arrangements.\n\nforeign depository means Euroclear, Clearstream and any similar facility outside Australia for the holding and trading of securities (whether debt or equity).\n\ninterest in a Special Purpose Vehicle (SPV) means:\n\n(a) where the SPV is a company, a share or similar interest; and\n\n(b) where the SPV is a unit trust, a unit or similar interest.\n\nkangaroo bond means a debt security issued for the purposes of the Australian market where the issuer does not reside in Australia.\n\nlocally incorporated insurer means an insurer that is incorporated in Australia or in a State or Territory of Australia, by or under a Commonwealth, State or Territory law. Category A insurers, Category B insurers, Category D insurers and Category E insurers are locally incorporated insurers.\n\nmanaged investment scheme has the meaning as in the Corporations Act 2001 (Corporations Act).\n\nresponsible entity has the meaning as in the Corporations Act.\n\nSPV means:\n\n(a) a subsidiary of an insurer; or\n\n(b) a unit trust in which an insurer has invested\n\nwhere the predominant function of the subsidiary or trust is to hold an investment or investments (whether directly or indirectly) for the insurer (or for the insurer and one or more related bodies corporate of the insurer), but excludes:\n\n(c) a managed investment scheme; and\n\n(d) a trust where the entire interest of the relevant insurer as beneficiary in the trust is a proprietary interest in a particular asset or particular assets (rather than, for example, a mere interest in the due administration of the trust).[\\[4\\]](#_ftn4)\n\nsub-custodian means:\n\n(a) a person to whom a custodian has contractually delegated the task of holding property for a customer of the custodian; and\n\n(b) a person to whom a sub-custodian of the kind referred to in paragraph (a) has contractually delegated the task of holding such property, or to whom that task has been further contractually delegated\n\nbut does not include a depository.\n\n7. APRA may determine, in writing, for the purposes of the definition of SPV, that the predominant function of a subsidiary or unit trust is to hold investments (whether directly or indirectly) for an insurer (or for the insurer and one or more related bodies corporate of the insurer), but a subsidiary or trust may fall within that definition even if APRA does not make such a determination.\n\n8. Where this Prudential Standard refers to an asset (however described) being excluded from being an asset in Australia, an amount corresponding to the asset is taken to be so excluded for the purposes of paragraph 28(a) of the Act.[\\[5\\]](#_ftn5)\n\nLocally incorporated insurers\n\n#### Intangibles and certain other assets\n\n9. Assets that must be deducted from a locally incorporated insurer’s capital base[\\[6\\]](#_ftn6) under Prudential Standard GPS 112 Capital Adequacy: Measurement of Capital (GPS 112) are excluded from being assets in Australia.[\\[7\\]](#_ftn7)\n\n#### Chattels and real property\n\n10. A chattel or real property of a locally incorporated insurer is excluded from being an asset in Australia if it is located outside Australia.\n\n#### Loans and amounts due (including debentures)\n\n11. Subject to subsection 116A(1) and subsection 116A(5) of the Act, an asset of a locally incorporated insurer is excluded from being an asset in Australia if:\n\nDebt assets, not being debt assets held through a depository\n\n(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:\n\n(i) the debt is payable outside Australia; or\n\n(ii) the debt is not recoverable in an Australian court; or\n\n(iii) the debtor does not reside in Australia; or\n\n(iv) the debtor is a foreign government or foreign government authority; or\n\n(v) the debt is not readily transferable in Australia; or\n\nInterests held on Australian depositories\n\n(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:\n\n(i) the underlying asset would be excluded from being an asset in Australia under paragraph (a) if held directly by the locally incorporated insurer (rather than through a depository); and\n\n(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\n\nInterests held on foreign depositories\n\n(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.\n\n12. Paragraph 11 does not exclude an interest of a locally incorporated insurer in a kangaroo bond from being an asset in Australia if all the following conditions are complied with:\n\n(a) the underlying bond is legally owned by Austraclear Ltd or a nominee for Austraclear Ltd and is lodged in the Austraclear system; and\n\n(b) the register recording legal ownership of the underlying bond is kept in Australia; and\n\n(c) the bond is created by a deed poll which is sealed, or deemed by its governing law to be sealed, and the deed poll is governed by Australian law and kept in Australia; and\n\n(d) the debt under the bond is expressed to be payable in Australia except where payment in Australia is prohibited by law (provided that if, at any time, such payment in Australia is prohibited by law, the debt under the bond shall be excluded from being an asset in Australia for so long as that payment is prohibited).\n\nNote: If a locally incorporated insurer holds an interest in a kangaroo bond through a custodian, the requirements of paragraphs 16 and 17 will also have to be complied with in order for the interest in a kangaroo bond not to be excluded from being an asset in Australia.\n\n#### Shares - general\n\n13. An asset of a locally incorporated insurer is excluded from being an asset in Australia if:\n\nShares, not being shares held through a depository\n\n(a) the asset is a share, not being a share that is held through a depository, and:\n\n(i) the share is not readily transferable[\\[8\\]](#_ftn8) in Australia; or\n\n(ii) the share is not recorded on a register of members kept in Australia under section 169 of the Corporations Act; or\n\nInterests held on Australian depositories\n\n(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:\n\n(i) the underlying share would be excluded from being an asset in Australia under paragraph (a) if held directly by the locally incorporated insurer (rather than through a depository); and\n\n(ii) APRA has not determined, in writing, to waive the exclusion of the asset or an asset of that kind; or\n\nShares held on foreign depositories\n\n(c) the asset is an interest held on a foreign depository, being an interest that derives from or relates to a share.\n\nInterests in SPVs[\\[9\\]](#_ftn9)\n\n14. If:\n\n(a) a locally incorporated insurer holds an interest in an SPV; and\n\n(b) the SPV holds (whether directly or indirectly) an investment that would not be an asset in Australia if held directly by the locally incorporated insurer (either because it would be excluded under another provision of this Prudential Standard or because it would not otherwise be an asset in Australia within the meaning of paragraph 28(a) of the Act)\n\nthen an amount A is excluded from being an asset in Australia, where A is calculated as follows:\n\nA = B/C x D\n\nwhere:\n\nB means the fair value of any investments held by the SPV that would not be assets in Australia if held directly by the locally incorporated insurer;\n\nC means the fair value of all the interests in the SPV; and\n\nD means the fair value of the interests in the SPV held by the locally incorporated insurer.\n\n15. For the purposes of paragraph 14, 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.[\\[10\\]](#_ftn10)\n\n#### Assets held by custodians\n\n16. Paragraph 17 applies where a custodian holds:\n\n(a) the legal title to an asset or assets on bare trust; or\n\n(b) an asset or assets under an agreement of a kind determined, in writing, by APRA for the purposes of this paragraph.\n\n17. An asset held by a custodian for a locally incorporated insurer is excluded from being an asset in Australia if:\n\n(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\n\n(b) the locally incorporated insurer cannot enforce its rights against the custodian in an Australian court; or\n\n(c) the assets of the locally incorporated insurer are not kept distinct and separate from the custodian’s own assets; or\n\n(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\n\n(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\n\n(f) the external custody agreement does not describe the process by which the locally incorporated insurer provides authorised instructions to the custodian; or\n\n(g) the external custody agreement does not describe the process by which the custodian provides periodic reports to the locally incorporated insurer; or\n\n(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 or other relevant legislation; or\n\n(i) the asset held by the custodian would not be an asset in Australia if it were held directly by the locally incorporated insurer (either because it would be excluded under another provision of this Prudential Standard or because it would not otherwise be an asset in Australia within the meaning of paragraph 28(a) of the Act); or\n\n(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\n\n(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 not be an asset in Australia if it were held directly by the locally incorporated insurer (either because it would be excluded under another provision of this Prudential Standard or because it would not otherwise be an asset in Australia within the meaning of paragraph 28(a) of the Act); or\n\n(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.\n\nParagraphs (a) and (j) do not apply to an asset that is real property in Australia.[\\[11\\]](#_ftn11)\n\n#### Interests in managed investment schemes\n\n18. An interest of a locally incorporated insurer in a managed investment scheme is excluded from being an asset in Australia if:\n\n(a) the responsible entity does not reside in Australia; or\n\n(b) an agent holds the property of the scheme (scheme property) for the responsible entity and the agent does not reside in Australia; or\n\n(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; or\n\n(d) any amounts payable to the locally incorporated insurer under the scheme are payable outside Australia; or\n\n(e) the locally incorporated insurer cannot enforce its rights in relation to the managed investment scheme in an Australian court.\n\n#### Certain interests in trusts\n\n19. 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:\n\n(a) the trustee does not reside in Australia; or\n\n(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\n\n(c) any amounts payable to the locally incorporated insurer under the trust are payable outside Australia; or\n\n(d) the locally incorporated insurer cannot enforce its rights against the trustee in an Australian court.[\\[12\\]](#_ftn12)\n\n20. An equitable 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:\n\n(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\n\n(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 another provision of this Prudential Standard or because it would not otherwise be an asset in Australia within the meaning of paragraph 28(a) of the Act).[\\[13\\]](#_ftn13)\n\n#### Other equitable interests\n\n21. 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:\n\n(a) the legal owner of the asset (legal owner) does not reside in Australia; or\n\n(b) any amounts payable by the legal owner to the locally incorporated insurer in respect of the arrangement are payable outside Australia; or\n\n(c) the 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 another provision of this Prudential Standard or because it would not otherwise be an asset in Australia within the meaning of paragraph 28(a) of the Act); or\n\n(d) the locally incorporated insurer cannot enforce its rights in relation to the asset in an Australian court.\n\nCategory C insurers\n\n#### Assets must be held by Category C insurer’s custodian or agent in Australia\n\n22. Subject to paragraph 24, an asset of a Category C insurer is excluded from being an asset in Australia unless it is held for the Category C insurer by either:\n\n(a) a custodian where:\n\n(i) the legal title is held a way specified in paragraph 16(a) or (b); and\n\n(ii) the conditions in paragraphs 17(a) to (l) are complied with[\\[14\\]](#_ftn14) (subject to paragraphs 36 and 37); and\n\n(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) to the custodian permitting or requiring any disposal of assets;[\\[15\\]](#_ftn15) or\n\n(b) the Category C insurer’s agent in Australia (on trust for the Category C insurer).\n\n23. Nothing in paragraph 22(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 paragraph 22(a)(iii) will be taken to be met only if:\n\n(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\n\n(b) the requirement for a co-signatory is an arrangement agreed upon between the Category C insurer and the agent in Australia; and\n\n(c) the external custody agreement recognises only the authority of the agent in Australia to give directions to the custodian; and\n\n(d) the agent in Australia does not delegate to the co-signatory its authority to give directions to the custodian; and\n\n(e) the co-signatory:\n\n(i) is appointed by the Category C insurer;\n\n(ii) is not a disqualified person as defined in section 25 of the Act; and\n\n(iii) meets the fitness and propriety criteria for responsible persons under Prudential Standard GPS 520 Fit and Proper.\n\n24. Paragraph 22 does not apply to the following assets of a Category C insurer:\n\na) real property in Australia;\n\nb) 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\n\nc) 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.\n\n25. For the purposes of paragraph 24(c), bank account in Australia means a bank account maintained with an authorised deposit-taking institution[\\[16\\]](#_ftn16) in Australia under the terms of which deposits are:\n\n(a) at call; or\n\n(b) term deposits of no more than six months duration.\n\n26. For the purposes of paragraphs 22 to 25 and 27 to 34, 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)) to one or more persons (delegates) provided that every delegate:\n\na) is an individual who resides in Australia;\n\nb) is not a disqualified person as defined in section 25 of the Act; and\n\nc) meets the fitness and propriety criteria for responsible persons under Prudential Standard GPS 520 Fit and Proper.[\\[17\\]](#_ftn17)\n\nAny reference in this Prudential Standard to authorisation by an agent in Australia includes authorisation by a delegate.\n\n#### Repatriation of assets\n\n27. 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.[\\[18\\]](#_ftn18)\n\n#### Asset revaluation reserves\n\n28. Amounts referred to in paragraph (a) or (b) are excluded from being assets in Australia:\n\n(a) 55 per cent of pre-tax revaluation reserves of each of the following:[\\[19\\]](#_ftn19)\n\n(i) property not held at fair value; and\n\n(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)\n\n(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\n\n(b) 55 per cent of the post-acquisition reserves of the Category C insurer’s associates,[\\[20\\]](#_ftn20) 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).[\\[21\\]](#_ftn21)\n\n#### Assets held through a corporate agent\n\n29. 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:\n\n(a) is necessary for, or reasonably incidental to, the corporate agent’s activities as agent in Australia; or\n\n(b) has been approved by APRA in writing.\n\n30. APRA may give approval under paragraph 29(b) 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.\n\n#### Assets must be of a kind that would not be excluded if held by a locally incorporated insurer\n\n31. An asset held:\n\n(a) for a Category C insurer in accordance with paragraph 22; or\n\n(b) directly by the Category C insurer in accordance with paragraph 24\n\nis 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 would be excluded under a provision of this Prudential Standard or because it would not otherwise be an asset in Australia within the meaning of paragraph 28(a) of the Act).[\\[22\\]](#_ftn22)\n\n32. To facilitate the operation of paragraph 31, APRA may, where appropriate, exercise any power in the provisions of this Prudential Standard relating to locally incorporated insurers, as if an asset or assets held by a custodian or agent in Australia for a Category C insurer were instead held by or for a locally incorporated insurer.\n\n#### Minimum Capital Requirement for Category C insurers\n\n33. As noted in Prudential Standard GPS 110 Capital Adequacy, Category C insurers do not typically have capital instruments of the type specified in GPS 112. Category C insurers are nevertheless required to meet a variant of the Minimum Capital Requirement (MCR). Specifically, Category C insurers are required to maintain assets in Australia, which exceed their liabilities in Australia (adjusted for any surplus or deficit of technical provisions relative to those required by GPS 310) by an amount that is greater than their MCR.\n\n34. An asset will not be counted as an asset in Australia for the purposes of paragraph 33 if this Prudential Standard excludes it from being an asset in Australia for the purposes of paragraph 28(a) of the Act, or it is not otherwise an asset in Australia within the meaning of paragraph 28(a) of the Act.\n\nProvisions applying to all insurers\n\n#### Other cases of foreign assets held through intermediate entities\n\n35. Where:\n\n(a) but for this paragraph, an asset would be treated as an asset in Australia of an insurer; and\n\n(b) that asset relates to an interest (underlying interest) which is held through one or more interposed entities (including, without limitation, trusts or companies, or a combination thereof); and\n\n(c) the underlying interest would not be an asset in Australia (either because it would be excluded under another provision of this Prudential Standard or because it would not otherwise be an asset in Australia within the meaning of paragraph 28(a) of the Act) if the underlying interest were held directly by the insurer (or, in the case of a Category C insurer, if held directly by the Category C insurer’s custodian or agent in Australia)\n\nthen APRA may, having regard to the risk that the proceeds of the underlying interest may not be available in a winding up of the insurer in Australia, determine, in writing, that the amount is excluded from being an asset in Australia.\n\nTransition\n\n36. Where an insurer has in place an external custody agreement that:\n\n(a) pre-dates the effective date of this Prudential Standard; and\n\n(b) cannot be varied without undue difficulty,\n\nit may apply to APRA to have the agreement treated as complying with either or both of paragraphs 17 (a) and (j). APRA may grant approval in writing in respect of such an application and may subject the approval to conditions and limit the period for which the approval applies.\n\n37. Any transitional relief granted under paragraph 15 of Prudential Standard GPS 120 Assets in Australia made on 25 September 2006 continues in effect until the date of expiry specified by APRA when granting the relief, or such other date as APRA may specify in writing.\n\nDeterminations made under previous GPS 120\n\n38. An approval, determination, direction or requirement made by or taken to have been made by APRA under a provision specified in Column 1 of the following table that is in operation immediately prior to the commencement of this Prudential Standard is taken, on and from the effective date, to have been made under the provision of this Prudential Standard specified in the same row of Column 2 of the table.\n\n| Column 1: Provision of Prudential Standard GPS 120 Assets in Australia made on 23 June 2008                                                                                                               | Column 2: Provision of this Prudential Standard |\n| --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------- |\n| Paragraph 7: determine, for the definition of SPV, that the predominant function of a subsidiary or unit trust is to hold investments for an insurer.                                                     | Paragraph 7                                     |\n| Paragraph 11(b)(ii): determine to waive the exclusion of an asset or class of assets from being assets in Australia                                                                                       | Paragraph 11(b)(ii)                             |\n| Paragraph 13(b)(ii): determine to waive the exclusion of an asset or class of assets from being assets in Australia.                                                                                      | Paragraph 13(b)(ii)                             |\n| Paragraph 15: determine specific value for the fair value of an investment held by an SPV.                                                                                                                | Paragraph 15                                    |\n| Paragraph 16(b): determine the kind of agreement under which an asset or class of assets are held by a custodian for the purposes of applying certain requirements relating to assets held by a custodian | Paragraph 16(b)                                 |\n| Paragraph 32: treat an asset held by a custodian or agent in Australia for a foreign insurer as if it were held by or for a locally incorporated insurer.                                                 | Paragraph 32                                    |\n| Paragraph 35: determine that certain assets held through intermediate entities are excluded from being assets inAustralia.                                                                                | Paragraph 35                                    |","sortOrder":0},{"sectionNumber":"Assets in Australia","sectionType":"part","heading":"Assets in Australia","content":"# Assets in Australia\n\n### Objective and key requirements of this Prudential Standard\n\nThe primary purpose of this Prudential Standard is to specify certain assets that are excluded as from being treated as ‘assets in Australia’ for the purposes of section 28 of the Insurance Act 1973. The assets excluded are those which may not be held by a court to fall within the definition of ‘assets in Australia’ or which APRA considers to have doubtful or no value to policyholders in Australia in the event of a general insurer becoming insolvent.\n\nSection 28 requires all general insurers to maintain assets in Australia (excluding goodwill and other amounts excluded by this Prudential Standard) of a value that equals or exceeds the total amount of the general insurer’s liabilities in 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 liabilities in Australia for the purposes of subsection 116(3) of the Insurance Act 1973.\n\nPrudential Standard GPS 110 Capital Adequacy also requires that a Category C insurer (as defined in Prudential Standard GPS 001 Definitions) operating in Australia as a branch maintain assets in Australia, in excess of its liabilities in Australia of an amount at least equal to its Minimum Capital Requirement. For the Minimum Capital Requirement, refer to Prudential Standard GPS 110 Capital Adequacy.\n\n  \nAuthority\n\n1.  This Prudential Standard is made under section 32 of the Insurance Act 1973 (the Act) for the purposes of paragraph 28(a) of the Act.[\\[1\\]](#_ftn1) It also prescribes certain other matters in relation to Category C insurers.\n\nApplication\n\n2. Paragraphs 9 to 21 apply to all insurers other than Category C insurers. Paragraphs 22 to 34 apply to Category C insurers.[\\[2\\]](#_ftn2) The remaining paragraphs apply to all insurers.\n\n3. This Prudential Standard applies from 1 July 2010 (effective date).\n\n4. Subsection 116A(1) of the Act deems certain reinsurance assets[\\[3\\]](#_ftn3) to be assets in Australia. Subsection 116A(5) of the Act deems certain amounts owed by a person outside Australia to be assets in Australia. In the event of any inconsistency between section 116A of the Act and a provision of this Prudential Standard, section 116A of the Act prevails.\n\nInterpretation\n\n5. Unless otherwise defined in this Prudential Standard, expressions in bold are defined in Prudential Standard GPS 001 Definitions.\n\n6. In this Prudential Standard:\n\nAustraclear means the Central Securities Depository service operated by Austraclear Ltd ACN 002 060 773.\n\nAustralian depository means Austraclear and CHESS and any similar facility in Australia for the holding and trading of securities (whether debt or equity).\n\nCHESS means the service of that name operated by CHESS Depositary Nominees Pty Limited ACN 071 346 506.\n\nClearstream means the International Securities Depository Service of Clearstream International S.A., a company domiciled in Luxembourg.\n\ncustodian means a body corporate that holds property for another person under a contractual arrangement, but excludes a sub-custodian or depository.\n\ndepository means an Australian depository or a foreign depository.\n\nEuroclear means the International Central Securities Depository service of Euroclear Bank SA/NV, a company located in Belgium.\n\nexternal custody agreement means any custody arrangement entered into by an insurer which covers assets being held by a party other than the insurer. This includes both intra-group and fully external custody arrangements.\n\nforeign depository means Euroclear, Clearstream and any similar facility outside Australia for the holding and trading of securities (whether debt or equity).\n\ninterest in a Special Purpose Vehicle (SPV) means:\n\n(a) where the SPV is a company, a share or similar interest; and\n\n(b) where the SPV is a unit trust, a unit or similar interest.\n\nkangaroo bond means a debt security issued for the purposes of the Australian market where the issuer does not reside in Australia.\n\nlocally incorporated insurer means an insurer that is incorporated in Australia or in a State or Territory of Australia, by or under a Commonwealth, State or Territory law. Category A insurers, Category B insurers, Category D insurers and Category E insurers are locally incorporated insurers.\n\nmanaged investment scheme has the meaning as in the Corporations Act 2001 (Corporations Act).\n\nresponsible entity has the meaning as in the Corporations Act.\n\nSPV means:\n\n(a) a subsidiary of an insurer; or\n\n(b) a unit trust in which an insurer has invested\n\nwhere the predominant function of the subsidiary or trust is to hold an investment or investments (whether directly or indirectly) for the insurer (or for the insurer and one or more related bodies corporate of the insurer), but excludes:\n\n(c) a managed investment scheme; and\n\n(d) a trust where the entire interest of the relevant insurer as beneficiary in the trust is a proprietary interest in a particular asset or particular assets (rather than, for example, a mere interest in the due administration of the trust).[\\[4\\]](#_ftn4)\n\nsub-custodian means:\n\n(a) a person to whom a custodian has contractually delegated the task of holding property for a customer of the custodian; and\n\n(b) a person to whom a sub-custodian of the kind referred to in paragraph (a) has contractually delegated the task of holding such property, or to whom that task has been further contractually delegated\n\nbut does not include a depository.\n\n7. APRA may determine, in writing, for the purposes of the definition of SPV, that the predominant function of a subsidiary or unit trust is to hold investments (whether directly or indirectly) for an insurer (or for the insurer and one or more related bodies corporate of the insurer), but a subsidiary or trust may fall within that definition even if APRA does not make such a determination.\n\n8. Where this Prudential Standard refers to an asset (however described) being excluded from being an asset in Australia, an amount corresponding to the asset is taken to be so excluded for the purposes of paragraph 28(a) of the Act.[\\[5\\]](#_ftn5)\n\nLocally incorporated insurers\n\n#### Intangibles and certain other assets\n\n9. Assets that must be deducted from a locally incorporated insurer’s capital base[\\[6\\]](#_ftn6) under Prudential Standard GPS 112 Capital Adequacy: Measurement of Capital (GPS 112) are excluded from being assets in Australia.[\\[7\\]](#_ftn7)\n\n#### Chattels and real property\n\n10. A chattel or real property of a locally incorporated insurer is excluded from being an asset in Australia if it is located outside Australia.\n\n#### Loans and amounts due (including debentures)\n\n11. Subject to subsection 116A(1) and subsection 116A(5) of the Act, an asset of a locally incorporated insurer is excluded from being an asset in Australia if:\n\nDebt assets, not being debt assets held through a depository\n\n(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:\n\n(i) the debt is payable outside Australia; or\n\n(ii) the debt is not recoverable in an Australian court; or\n\n(iii) the debtor does not reside in Australia; or\n\n(iv) the debtor is a foreign government or foreign government authority; or\n\n(v) the debt is not readily transferable in Australia; or\n\nInterests held on Australian depositories\n\n(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:\n\n(i) the underlying asset would be excluded from being an asset in Australia under paragraph (a) if held directly by the locally incorporated insurer (rather than through a depository); and\n\n(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\n\nInterests held on foreign depositories\n\n(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.\n\n12. Paragraph 11 does not exclude an interest of a locally incorporated insurer in a kangaroo bond from being an asset in Australia if all the following conditions are complied with:\n\n(a) the underlying bond is legally owned by Austraclear Ltd or a nominee for Austraclear Ltd and is lodged in the Austraclear system; and\n\n(b) the register recording legal ownership of the underlying bond is kept in Australia; and\n\n(c) the bond is created by a deed poll which is sealed, or deemed by its governing law to be sealed, and the deed poll is governed by Australian law and kept in Australia; and\n\n(d) the debt under the bond is expressed to be payable in Australia except where payment in Australia is prohibited by law (provided that if, at any time, such payment in Australia is prohibited by law, the debt under the bond shall be excluded from being an asset in Australia for so long as that payment is prohibited).\n\nNote: If a locally incorporated insurer holds an interest in a kangaroo bond through a custodian, the requirements of paragraphs 16 and 17 will also have to be complied with in order for the interest in a kangaroo bond not to be excluded from being an asset in Australia.\n\n#### Shares - general\n\n13. An asset of a locally incorporated insurer is excluded from being an asset in Australia if:\n\nShares, not being shares held through a depository\n\n(a) the asset is a share, not being a share that is held through a depository, and:\n\n(i) the share is not readily transferable[\\[8\\]](#_ftn8) in Australia; or\n\n(ii) the share is not recorded on a register of members kept in Australia under section 169 of the Corporations Act; or\n\nInterests held on Australian depositories\n\n(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:\n\n(i) the underlying share would be excluded from being an asset in Australia under paragraph (a) if held directly by the locally incorporated insurer (rather than through a depository); and\n\n(ii) APRA has not determined, in writing, to waive the exclusion of the asset or an asset of that kind; or\n\nShares held on foreign depositories\n\n(c) the asset is an interest held on a foreign depository, being an interest that derives from or relates to a share.\n\nInterests in SPVs[\\[9\\]](#_ftn9)\n\n14. If:\n\n(a) a locally incorporated insurer holds an interest in an SPV; and\n\n(b) the SPV holds (whether directly or indirectly) an investment that would not be an asset in Australia if held directly by the locally incorporated insurer (either because it would be excluded under another provision of this Prudential Standard or because it would not otherwise be an asset in Australia within the meaning of paragraph 28(a) of the Act)\n\nthen an amount A is excluded from being an asset in Australia, where A is calculated as follows:\n\nA = B/C x D\n\nwhere:\n\nB means the fair value of any investments held by the SPV that would not be assets in Australia if held directly by the locally incorporated insurer;\n\nC means the fair value of all the interests in the SPV; and\n\nD means the fair value of the interests in the SPV held by the locally incorporated insurer.\n\n15. For the purposes of paragraph 14, 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.[\\[10\\]](#_ftn10)\n\n#### Assets held by custodians\n\n16. Paragraph 17 applies where a custodian holds:\n\n(a) the legal title to an asset or assets on bare trust; or\n\n(b) an asset or assets under an agreement of a kind determined, in writing, by APRA for the purposes of this paragraph.\n\n17. An asset held by a custodian for a locally incorporated insurer is excluded from being an asset in Australia if:\n\n(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\n\n(b) the locally incorporated insurer cannot enforce its rights against the custodian in an Australian court; or\n\n(c) the assets of the locally incorporated insurer are not kept distinct and separate from the custodian’s own assets; or\n\n(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\n\n(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\n\n(f) the external custody agreement does not describe the process by which the locally incorporated insurer provides authorised instructions to the custodian; or\n\n(g) the external custody agreement does not describe the process by which the custodian provides periodic reports to the locally incorporated insurer; or\n\n(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 or other relevant legislation; or\n\n(i) the asset held by the custodian would not be an asset in Australia if it were held directly by the locally incorporated insurer (either because it would be excluded under another provision of this Prudential Standard or because it would not otherwise be an asset in Australia within the meaning of paragraph 28(a) of the Act); or\n\n(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\n\n(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 not be an asset in Australia if it were held directly by the locally incorporated insurer (either because it would be excluded under another provision of this Prudential Standard or because it would not otherwise be an asset in Australia within the meaning of paragraph 28(a) of the Act); or\n\n(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.\n\nParagraphs (a) and (j) do not apply to an asset that is real property in Australia.[\\[11\\]](#_ftn11)\n\n#### Interests in managed investment schemes\n\n18. An interest of a locally incorporated insurer in a managed investment scheme is excluded from being an asset in Australia if:\n\n(a) the responsible entity does not reside in Australia; or\n\n(b) an agent holds the property of the scheme (scheme property) for the responsible entity and the agent does not reside in Australia; or\n\n(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; or\n\n(d) any amounts payable to the locally incorporated insurer under the scheme are payable outside Australia; or\n\n(e) the locally incorporated insurer cannot enforce its rights in relation to the managed investment scheme in an Australian court.\n\n#### Certain interests in trusts\n\n19. 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:\n\n(a) the trustee does not reside in Australia; or\n\n(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\n\n(c) any amounts payable to the locally incorporated insurer under the trust are payable outside Australia; or\n\n(d) the locally incorporated insurer cannot enforce its rights against the trustee in an Australian court.[\\[12\\]](#_ftn12)\n\n20. An equitable 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:\n\n(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\n\n(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 another provision of this Prudential Standard or because it would not otherwise be an asset in Australia within the meaning of paragraph 28(a) of the Act).[\\[13\\]](#_ftn13)\n\n#### Other equitable interests\n\n21. 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:\n\n(a) the legal owner of the asset (legal owner) does not reside in Australia; or\n\n(b) any amounts payable by the legal owner to the locally incorporated insurer in respect of the arrangement are payable outside Australia; or\n\n(c) the 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 another provision of this Prudential Standard or because it would not otherwise be an asset in Australia within the meaning of paragraph 28(a) of the Act); or\n\n(d) the locally incorporated insurer cannot enforce its rights in relation to the asset in an Australian court.\n\nCategory C insurers\n\n#### Assets must be held by Category C insurer’s custodian or agent in Australia\n\n22. Subject to paragraph 24, an asset of a Category C insurer is excluded from being an asset in Australia unless it is held for the Category C insurer by either:\n\n(a) a custodian where:\n\n(i) the legal title is held a way specified in paragraph 16(a) or (b); and\n\n(ii) the conditions in paragraphs 17(a) to (l) are complied with[\\[14\\]](#_ftn14) (subject to paragraphs 36 and 37); and\n\n(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) to the custodian permitting or requiring any disposal of assets;[\\[15\\]](#_ftn15) or\n\n(b) the Category C insurer’s agent in Australia (on trust for the Category C insurer).\n\n23. Nothing in paragraph 22(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 paragraph 22(a)(iii) will be taken to be met only if:\n\n(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\n\n(b) the requirement for a co-signatory is an arrangement agreed upon between the Category C insurer and the agent in Australia; and\n\n(c) the external custody agreement recognises only the authority of the agent in Australia to give directions to the custodian; and\n\n(d) the agent in Australia does not delegate to the co-signatory its authority to give directions to the custodian; and\n\n(e) the co-signatory:\n\n(i) is appointed by the Category C insurer;\n\n(ii) is not a disqualified person as defined in section 25 of the Act; and\n\n(iii) meets the fitness and propriety criteria for responsible persons under Prudential Standard GPS 520 Fit and Proper.\n\n24. Paragraph 22 does not apply to the following assets of a Category C insurer:\n\na) real property in Australia;\n\nb) 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\n\nc) 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.\n\n25. For the purposes of paragraph 24(c), bank account in Australia means a bank account maintained with an authorised deposit-taking institution[\\[16\\]](#_ftn16) in Australia under the terms of which deposits are:\n\n(a) at call; or\n\n(b) term deposits of no more than six months duration.\n\n26. For the purposes of paragraphs 22 to 25 and 27 to 34, 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)) to one or more persons (delegates) provided that every delegate:\n\na) is an individual who resides in Australia;\n\nb) is not a disqualified person as defined in section 25 of the Act; and\n\nc) meets the fitness and propriety criteria for responsible persons under Prudential Standard GPS 520 Fit and Proper.[\\[17\\]](#_ftn17)\n\nAny reference in this Prudential Standard to authorisation by an agent in Australia includes authorisation by a delegate.\n\n#### Repatriation of assets\n\n27. 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.[\\[18\\]](#_ftn18)\n\n#### Asset revaluation reserves\n\n28. Amounts referred to in paragraph (a) or (b) are excluded from being assets in Australia:\n\n(a) 55 per cent of pre-tax revaluation reserves of each of the following:[\\[19\\]](#_ftn19)\n\n(i) property not held at fair value; and\n\n(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)\n\n(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\n\n(b) 55 per cent of the post-acquisition reserves of the Category C insurer’s associates,[\\[20\\]](#_ftn20) 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).[\\[21\\]](#_ftn21)\n\n#### Assets held through a corporate agent\n\n29. 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:\n\n(a) is necessary for, or reasonably incidental to, the corporate agent’s activities as agent in Australia; or\n\n(b) has been approved by APRA in writing.\n\n30. APRA may give approval under paragraph 29(b) 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.\n\n#### Assets must be of a kind that would not be excluded if held by a locally incorporated insurer\n\n31. An asset held:\n\n(a) for a Category C insurer in accordance with paragraph 22; or\n\n(b) directly by the Category C insurer in accordance with paragraph 24\n\nis 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 would be excluded under a provision of this Prudential Standard or because it would not otherwise be an asset in Australia within the meaning of paragraph 28(a) of the Act).[\\[22\\]](#_ftn22)\n\n32. To facilitate the operation of paragraph 31, APRA may, where appropriate, exercise any power in the provisions of this Prudential Standard relating to locally incorporated insurers, as if an asset or assets held by a custodian or agent in Australia for a Category C insurer were instead held by or for a locally incorporated insurer.\n\n#### Minimum Capital Requirement for Category C insurers\n\n33. As noted in Prudential Standard GPS 110 Capital Adequacy, Category C insurers do not typically have capital instruments of the type specified in GPS 112. Category C insurers are nevertheless required to meet a variant of the Minimum Capital Requirement (MCR). Specifically, Category C insurers are required to maintain assets in Australia, which exceed their liabilities in Australia (adjusted for any surplus or deficit of technical provisions relative to those required by GPS 310) by an amount that is greater than their MCR.\n\n34. An asset will not be counted as an asset in Australia for the purposes of paragraph 33 if this Prudential Standard excludes it from being an asset in Australia for the purposes of paragraph 28(a) of the Act, or it is not otherwise an asset in Australia within the meaning of paragraph 28(a) of the Act.\n\nProvisions applying to all insurers\n\n#### Other cases of foreign assets held through intermediate entities\n\n35. Where:\n\n(a) but for this paragraph, an asset would be treated as an asset in Australia of an insurer; and\n\n(b) that asset relates to an interest (underlying interest) which is held through one or more interposed entities (including, without limitation, trusts or companies, or a combination thereof); and\n\n(c) the underlying interest would not be an asset in Australia (either because it would be excluded under another provision of this Prudential Standard or because it would not otherwise be an asset in Australia within the meaning of paragraph 28(a) of the Act) if the underlying interest were held directly by the insurer (or, in the case of a Category C insurer, if held directly by the Category C insurer’s custodian or agent in Australia)\n\nthen APRA may, having regard to the risk that the proceeds of the underlying interest may not be available in a winding up of the insurer in Australia, determine, in writing, that the amount is excluded from being an asset in Australia.\n\nTransition\n\n36. Where an insurer has in place an external custody agreement that:\n\n(a) pre-dates the effective date of this Prudential Standard; and\n\n(b) cannot be varied without undue difficulty,\n\nit may apply to APRA to have the agreement treated as complying with either or both of paragraphs 17 (a) and (j). APRA may grant approval in writing in respect of such an application and may subject the approval to conditions and limit the period for which the approval applies.\n\n37. Any transitional relief granted under paragraph 15 of Prudential Standard GPS 120 Assets in Australia made on 25 September 2006 continues in effect until the date of expiry specified by APRA when granting the relief, or such other date as APRA may specify in writing.\n\nDeterminations made under previous GPS 120\n\n38. An approval, determination, direction or requirement made by or taken to have been made by APRA under a provision specified in Column 1 of the following table that is in operation immediately prior to the commencement of this Prudential Standard is taken, on and from the effective date, to have been made under the provision of this Prudential Standard specified in the same row of Column 2 of the table.\n\n| Column 1: Provision of Prudential Standard GPS 120 Assets in Australia made on 23 June 2008                                                                                                               | Column 2: Provision of this Prudential Standard |\n| --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------- |\n| Paragraph 7: determine, for the definition of SPV, that the predominant function of a subsidiary or unit trust is to hold investments for an insurer.                                                     | Paragraph 7                                     |\n| Paragraph 11(b)(ii): determine to waive the exclusion of an asset or class of assets from being assets in Australia                                                                                       | Paragraph 11(b)(ii)                             |\n| Paragraph 13(b)(ii): determine to waive the exclusion of an asset or class of assets from being assets in Australia.                                                                                      | Paragraph 13(b)(ii)                             |\n| Paragraph 15: determine specific value for the fair value of an investment held by an SPV.                                                                                                                | Paragraph 15                                    |\n| Paragraph 16(b): determine the kind of agreement under which an asset or class of assets are held by a custodian for the purposes of applying certain requirements relating to assets held by a custodian | Paragraph 16(b)                                 |\n| Paragraph 32: treat an asset held by a custodian or agent in Australia for a foreign insurer as if it were held by or for a locally incorporated insurer.                                                 | Paragraph 32                                    |\n| Paragraph 35: determine that certain assets held through intermediate entities are excluded from being assets inAustralia.                                                                                | Paragraph 35                                    |","sortOrder":1},{"sectionNumber":"Objective and key requirements of this P","sectionType":"division","heading":"Objective and key requirements of this Prudential Standard","content":"### Objective and key requirements of this Prudential Standard\n\nThe primary purpose of this Prudential Standard is to specify certain assets that are excluded as from being treated as ‘assets in Australia’ for the purposes of section 28 of the Insurance Act 1973. The assets excluded are those which may not be held by a court to fall within the definition of ‘assets in Australia’ or which APRA considers to have doubtful or no value to policyholders in Australia in the event of a general insurer becoming insolvent.\n\nSection 28 requires all general insurers to maintain assets in Australia (excluding goodwill and other amounts excluded by this Prudential Standard) of a value that equals or exceeds the total amount of the general insurer’s liabilities in 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 liabilities in Australia for the purposes of subsection 116(3) of the Insurance Act 1973.\n\nPrudential Standard GPS 110 Capital Adequacy also requires that a Category C insurer (as defined in Prudential Standard GPS 001 Definitions) operating in Australia as a branch maintain assets in Australia, in excess of its liabilities in Australia of an amount at least equal to its Minimum Capital Requirement. For the Minimum Capital Requirement, refer to Prudential Standard GPS 110 Capital Adequacy.","sortOrder":2},{"sectionNumber":"Intangibles and certain other assets","sectionType":"subdivision","heading":"Intangibles and certain other assets","content":"#### Intangibles and certain other assets\n\n9. Assets that must be deducted from a locally incorporated insurer’s capital base[\\[6\\]](#_ftn6) under Prudential Standard GPS 112 Capital Adequacy: Measurement of Capital (GPS 112) are excluded from being assets in Australia.[\\[7\\]](#_ftn7)","sortOrder":3},{"sectionNumber":"Chattels and real property","sectionType":"subdivision","heading":"Chattels and real property","content":"#### Chattels and real property\n\n10. A chattel or real property of a locally incorporated insurer is excluded from being an asset in Australia if it is located outside Australia.","sortOrder":4},{"sectionNumber":"Loans and amounts due (including debentu","sectionType":"subdivision","heading":"Loans and amounts due (including debentures)","content":"#### Loans and amounts due (including debentures)\n\n11. Subject to subsection 116A(1) and subsection 116A(5) of the Act, an asset of a locally incorporated insurer is excluded from being an asset in Australia if:\n\nDebt assets, not being debt assets held through a depository\n\n(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:\n\n(i) the debt is payable outside Australia; or\n\n(ii) the debt is not recoverable in an Australian court; or\n\n(iii) the debtor does not reside in Australia; or\n\n(iv) the debtor is a foreign government or foreign government authority; or\n\n(v) the debt is not readily transferable in Australia; or\n\nInterests held on Australian depositories\n\n(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:\n\n(i) the underlying asset would be excluded from being an asset in Australia under paragraph (a) if held directly by the locally incorporated insurer (rather than through a depository); and\n\n(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\n\nInterests held on foreign depositories\n\n(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.\n\n12. Paragraph 11 does not exclude an interest of a locally incorporated insurer in a kangaroo bond from being an asset in Australia if all the following conditions are complied with:\n\n(a) the underlying bond is legally owned by Austraclear Ltd or a nominee for Austraclear Ltd and is lodged in the Austraclear system; and\n\n(b) the register recording legal ownership of the underlying bond is kept in Australia; and\n\n(c) the bond is created by a deed poll which is sealed, or deemed by its governing law to be sealed, and the deed poll is governed by Australian law and kept in Australia; and\n\n(d) the debt under the bond is expressed to be payable in Australia except where payment in Australia is prohibited by law (provided that if, at any time, such payment in Australia is prohibited by law, the debt under the bond shall be excluded from being an asset in Australia for so long as that payment is prohibited).\n\nNote: If a locally incorporated insurer holds an interest in a kangaroo bond through a custodian, the requirements of paragraphs 16 and 17 will also have to be complied with in order for the interest in a kangaroo bond not to be excluded from being an asset in Australia.","sortOrder":5},{"sectionNumber":"Shares - general","sectionType":"subdivision","heading":"Shares - general","content":"#### Shares - general\n\n13. An asset of a locally incorporated insurer is excluded from being an asset in Australia if:\n\nShares, not being shares held through a depository\n\n(a) the asset is a share, not being a share that is held through a depository, and:\n\n(i) the share is not readily transferable[\\[8\\]](#_ftn8) in Australia; or\n\n(ii) the share is not recorded on a register of members kept in Australia under section 169 of the Corporations Act; or\n\nInterests held on Australian depositories\n\n(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:\n\n(i) the underlying share would be excluded from being an asset in Australia under paragraph (a) if held directly by the locally incorporated insurer (rather than through a depository); and\n\n(ii) APRA has not determined, in writing, to waive the exclusion of the asset or an asset of that kind; or\n\nShares held on foreign depositories\n\n(c) the asset is an interest held on a foreign depository, being an interest that derives from or relates to a share.\n\nInterests in SPVs[\\[9\\]](#_ftn9)\n\n14. If:\n\n(a) a locally incorporated insurer holds an interest in an SPV; and\n\n(b) the SPV holds (whether directly or indirectly) an investment that would not be an asset in Australia if held directly by the locally incorporated insurer (either because it would be excluded under another provision of this Prudential Standard or because it would not otherwise be an asset in Australia within the meaning of paragraph 28(a) of the Act)\n\nthen an amount A is excluded from being an asset in Australia, where A is calculated as follows:\n\nA = B/C x D\n\nwhere:\n\nB means the fair value of any investments held by the SPV that would not be assets in Australia if held directly by the locally incorporated insurer;\n\nC means the fair value of all the interests in the SPV; and\n\nD means the fair value of the interests in the SPV held by the locally incorporated insurer.\n\n15. For the purposes of paragraph 14, 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.[\\[10\\]](#_ftn10)","sortOrder":6},{"sectionNumber":"Assets held by custodians","sectionType":"subdivision","heading":"Assets held by custodians","content":"#### Assets held by custodians\n\n16. Paragraph 17 applies where a custodian holds:\n\n(a) the legal title to an asset or assets on bare trust; or\n\n(b) an asset or assets under an agreement of a kind determined, in writing, by APRA for the purposes of this paragraph.\n\n17. An asset held by a custodian for a locally incorporated insurer is excluded from being an asset in Australia if:\n\n(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\n\n(b) the locally incorporated insurer cannot enforce its rights against the custodian in an Australian court; or\n\n(c) the assets of the locally incorporated insurer are not kept distinct and separate from the custodian’s own assets; or\n\n(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\n\n(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\n\n(f) the external custody agreement does not describe the process by which the locally incorporated insurer provides authorised instructions to the custodian; or\n\n(g) the external custody agreement does not describe the process by which the custodian provides periodic reports to the locally incorporated insurer; or\n\n(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 or other relevant legislation; or\n\n(i) the asset held by the custodian would not be an asset in Australia if it were held directly by the locally incorporated insurer (either because it would be excluded under another provision of this Prudential Standard or because it would not otherwise be an asset in Australia within the meaning of paragraph 28(a) of the Act); or\n\n(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\n\n(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 not be an asset in Australia if it were held directly by the locally incorporated insurer (either because it would be excluded under another provision of this Prudential Standard or because it would not otherwise be an asset in Australia within the meaning of paragraph 28(a) of the Act); or\n\n(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.\n\nParagraphs (a) and (j) do not apply to an asset that is real property in Australia.[\\[11\\]](#_ftn11)","sortOrder":7},{"sectionNumber":"Interests in managed investment schemes","sectionType":"subdivision","heading":"Interests in managed investment schemes","content":"#### Interests in managed investment schemes\n\n18. An interest of a locally incorporated insurer in a managed investment scheme is excluded from being an asset in Australia if:\n\n(a) the responsible entity does not reside in Australia; or\n\n(b) an agent holds the property of the scheme (scheme property) for the responsible entity and the agent does not reside in Australia; or\n\n(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; or\n\n(d) any amounts payable to the locally incorporated insurer under the scheme are payable outside Australia; or\n\n(e) the locally incorporated insurer cannot enforce its rights in relation to the managed investment scheme in an Australian court.","sortOrder":8},{"sectionNumber":"Certain interests in trusts","sectionType":"subdivision","heading":"Certain interests in trusts","content":"#### Certain interests in trusts\n\n19. 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:\n\n(a) the trustee does not reside in Australia; or\n\n(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\n\n(c) any amounts payable to the locally incorporated insurer under the trust are payable outside Australia; or\n\n(d) the locally incorporated insurer cannot enforce its rights against the trustee in an Australian court.[\\[12\\]](#_ftn12)\n\n20. An equitable 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:\n\n(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\n\n(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 another provision of this Prudential Standard or because it would not otherwise be an asset in Australia within the meaning of paragraph 28(a) of the Act).[\\[13\\]](#_ftn13)","sortOrder":9},{"sectionNumber":"Other equitable interests","sectionType":"subdivision","heading":"Other equitable interests","content":"#### Other equitable interests\n\n21. 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:\n\n(a) the legal owner of the asset (legal owner) does not reside in Australia; or\n\n(b) any amounts payable by the legal owner to the locally incorporated insurer in respect of the arrangement are payable outside Australia; or\n\n(c) the 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 another provision of this Prudential Standard or because it would not otherwise be an asset in Australia within the meaning of paragraph 28(a) of the Act); or\n\n(d) the locally incorporated insurer cannot enforce its rights in relation to the asset in an Australian court.\n\nCategory C insurers","sortOrder":10},{"sectionNumber":"Assets must be held by Category C insure","sectionType":"subdivision","heading":"Assets must be held by Category C insurer’s custodian or agent in Australia","content":"#### Assets must be held by Category C insurer’s custodian or agent in Australia\n\n22. Subject to paragraph 24, an asset of a Category C insurer is excluded from being an asset in Australia unless it is held for the Category C insurer by either:\n\n(a) a custodian where:\n\n(i) the legal title is held a way specified in paragraph 16(a) or (b); and\n\n(ii) the conditions in paragraphs 17(a) to (l) are complied with[\\[14\\]](#_ftn14) (subject to paragraphs 36 and 37); and\n\n(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) to the custodian permitting or requiring any disposal of assets;[\\[15\\]](#_ftn15) or\n\n(b) the Category C insurer’s agent in Australia (on trust for the Category C insurer).\n\n23. Nothing in paragraph 22(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 paragraph 22(a)(iii) will be taken to be met only if:\n\n(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\n\n(b) the requirement for a co-signatory is an arrangement agreed upon between the Category C insurer and the agent in Australia; and\n\n(c) the external custody agreement recognises only the authority of the agent in Australia to give directions to the custodian; and\n\n(d) the agent in Australia does not delegate to the co-signatory its authority to give directions to the custodian; and\n\n(e) the co-signatory:\n\n(i) is appointed by the Category C insurer;\n\n(ii) is not a disqualified person as defined in section 25 of the Act; and\n\n(iii) meets the fitness and propriety criteria for responsible persons under Prudential Standard GPS 520 Fit and Proper.\n\n24. Paragraph 22 does not apply to the following assets of a Category C insurer:\n\na) real property in Australia;\n\nb) 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\n\nc) 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.\n\n25. For the purposes of paragraph 24(c), bank account in Australia means a bank account maintained with an authorised deposit-taking institution[\\[16\\]](#_ftn16) in Australia under the terms of which deposits are:\n\n(a) at call; or\n\n(b) term deposits of no more than six months duration.\n\n26. For the purposes of paragraphs 22 to 25 and 27 to 34, 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)) to one or more persons (delegates) provided that every delegate:\n\na) is an individual who resides in Australia;\n\nb) is not a disqualified person as defined in section 25 of the Act; and\n\nc) meets the fitness and propriety criteria for responsible persons under Prudential Standard GPS 520 Fit and Proper.[\\[17\\]](#_ftn17)\n\nAny reference in this Prudential Standard to authorisation by an agent in Australia includes authorisation by a delegate.","sortOrder":11},{"sectionNumber":"Repatriation of assets","sectionType":"subdivision","heading":"Repatriation of assets","content":"#### Repatriation of assets\n\n27. 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.[\\[18\\]](#_ftn18)","sortOrder":12},{"sectionNumber":"Asset revaluation reserves","sectionType":"subdivision","heading":"Asset revaluation reserves","content":"#### Asset revaluation reserves\n\n28. Amounts referred to in paragraph (a) or (b) are excluded from being assets in Australia:\n\n(a) 55 per cent of pre-tax revaluation reserves of each of the following:[\\[19\\]](#_ftn19)\n\n(i) property not held at fair value; and\n\n(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)\n\n(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\n\n(b) 55 per cent of the post-acquisition reserves of the Category C insurer’s associates,[\\[20\\]](#_ftn20) 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).[\\[21\\]](#_ftn21)","sortOrder":13},{"sectionNumber":"Assets held through a corporate agent","sectionType":"subdivision","heading":"Assets held through a corporate agent","content":"#### Assets held through a corporate agent\n\n29. 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:\n\n(a) is necessary for, or reasonably incidental to, the corporate agent’s activities as agent in Australia; or\n\n(b) has been approved by APRA in writing.\n\n30. APRA may give approval under paragraph 29(b) 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.","sortOrder":14},{"sectionNumber":"Assets must be of a kind that would not ","sectionType":"subdivision","heading":"Assets must be of a kind that would not be excluded if held by a locally incorporated insurer","content":"#### Assets must be of a kind that would not be excluded if held by a locally incorporated insurer\n\n31. An asset held:\n\n(a) for a Category C insurer in accordance with paragraph 22; or\n\n(b) directly by the Category C insurer in accordance with paragraph 24\n\nis 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 would be excluded under a provision of this Prudential Standard or because it would not otherwise be an asset in Australia within the meaning of paragraph 28(a) of the Act).[\\[22\\]](#_ftn22)\n\n32. To facilitate the operation of paragraph 31, APRA may, where appropriate, exercise any power in the provisions of this Prudential Standard relating to locally incorporated insurers, as if an asset or assets held by a custodian or agent in Australia for a Category C insurer were instead held by or for a locally incorporated insurer.","sortOrder":15},{"sectionNumber":"Minimum Capital Requirement for Category","sectionType":"subdivision","heading":"Minimum Capital Requirement for Category C insurers","content":"#### Minimum Capital Requirement for Category C insurers\n\n33. As noted in Prudential Standard GPS 110 Capital Adequacy, Category C insurers do not typically have capital instruments of the type specified in GPS 112. Category C insurers are nevertheless required to meet a variant of the Minimum Capital Requirement (MCR). Specifically, Category C insurers are required to maintain assets in Australia, which exceed their liabilities in Australia (adjusted for any surplus or deficit of technical provisions relative to those required by GPS 310) by an amount that is greater than their MCR.\n\n34. An asset will not be counted as an asset in Australia for the purposes of paragraph 33 if this Prudential Standard excludes it from being an asset in Australia for the purposes of paragraph 28(a) of the Act, or it is not otherwise an asset in Australia within the meaning of paragraph 28(a) of the Act.\n\nProvisions applying to all insurers","sortOrder":16},{"sectionNumber":"Other cases of foreign assets held throu","sectionType":"subdivision","heading":"Other cases of foreign assets held through intermediate entities","content":"#### Other cases of foreign assets held through intermediate entities\n\n35. Where:\n\n(a) but for this paragraph, an asset would be treated as an asset in Australia of an insurer; and\n\n(b) that asset relates to an interest (underlying interest) which is held through one or more interposed entities (including, without limitation, trusts or companies, or a combination thereof); and\n\n(c) the underlying interest would not be an asset in Australia (either because it would be excluded under another provision of this Prudential Standard or because it would not otherwise be an asset in Australia within the meaning of paragraph 28(a) of the Act) if the underlying interest were held directly by the insurer (or, in the case of a Category C insurer, if held directly by the Category C insurer’s custodian or agent in Australia)\n\nthen APRA may, having regard to the risk that the proceeds of the underlying interest may not be available in a winding up of the insurer in Australia, determine, in writing, that the amount is excluded from being an asset in Australia.\n\nTransition\n\n36. Where an insurer has in place an external custody agreement that:\n\n(a) pre-dates the effective date of this Prudential Standard; and\n\n(b) cannot be varied without undue difficulty,\n\nit may apply to APRA to have the agreement treated as complying with either or both of paragraphs 17 (a) and (j). APRA may grant approval in writing in respect of such an application and may subject the approval to conditions and limit the period for which the approval applies.\n\n37. Any transitional relief granted under paragraph 15 of Prudential Standard GPS 120 Assets in Australia made on 25 September 2006 continues in effect until the date of expiry specified by APRA when granting the relief, or such other date as APRA may specify in writing.\n\nDeterminations made under previous GPS 120\n\n38. An approval, determination, direction or requirement made by or taken to have been made by APRA under a provision specified in Column 1 of the following table that is in operation immediately prior to the commencement of this Prudential Standard is taken, on and from the effective date, to have been made under the provision of this Prudential Standard specified in the same row of Column 2 of the table.\n\n| Column 1: Provision of Prudential Standard GPS 120 Assets in Australia made on 23 June 2008                                                                                                               | Column 2: Provision of this Prudential Standard |\n| --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------- |\n| Paragraph 7: determine, for the definition of SPV, that the predominant function of a subsidiary or unit trust is to hold investments for an insurer.                                                     | Paragraph 7                                     |\n| Paragraph 11(b)(ii): determine to waive the exclusion of an asset or class of assets from being assets in Australia                                                                                       | Paragraph 11(b)(ii)                             |\n| Paragraph 13(b)(ii): determine to waive the exclusion of an asset or class of assets from being assets in Australia.                                                                                      | Paragraph 13(b)(ii)                             |\n| Paragraph 15: determine specific value for the fair value of an investment held by an SPV.                                                                                                                | Paragraph 15                                    |\n| Paragraph 16(b): determine the kind of agreement under which an asset or class of assets are held by a custodian for the purposes of applying certain requirements relating to assets held by a custodian | Paragraph 16(b)                                 |\n| Paragraph 32: treat an asset held by a custodian or agent in Australia for a foreign insurer as if it were held by or for a locally incorporated insurer.                                                 | Paragraph 32                                    |\n| Paragraph 35: determine that certain assets held through intermediate entities are excluded from being assets inAustralia.                                                                                | Paragraph 35                                    |","sortOrder":17}],"analysis":{"flash_summary":{"complexity_score":8,"scope_assessment":{"changed":false,"description":"The Standard continues the stated primary purpose of specifying assets excluded from counting as 'assets in Australia' for paragraph 28(a) of the Insurance Act (para 1). It preserves prior determinations and transitional relief (paras 36–38) and keeps the same coverage while clarifying Category C branch treatments (paras 22–34). No material expansion of subject‑matter scope is expressed within the text; instead it refines exclusions, custodial requirements and APRA’s decision powers."},"complexity_factors":["Large number of distinct asset categories with bespoke rules (debt, shares, kangaroo bonds, SPV interests, managed schemes, trusts, equitable interests) — paras 11–21, 12–20.","Detailed custodial and external custody agreement requirements creating multiple compliance checkpoints (segregation, enforceability, law, reporting, liability, instruction processes, suspension rights) — paras 16–17.","Special regime and extra conditions for offshore branches (Category C insurers) including custody/agent-only holding rules, delegation limits, co-signatory rules and bank account rules — paras 22–26, 29–31.","Quantitative allocation formula for SPV exposures (A = B/C × D) and APRA discretion to specify values where formula is not representative — paras 14–15.","Cross-references and interaction with other prudential standards and the Insurance Act (GPS 110, GPS 112, GPS 114, GPS 310, GPS 520 and s116A of the Act) requiring integrated compliance across regimes — paras 3, 9, 33, 4.","APRA’s broad discretion to waive exclusions, determine treatment of interposed entities, and approve transitional relief increases interpretative uncertainty for firms — paras 7, 11(b)(ii), 13(b)(ii), 15, 32, 35, 36–38.","Multiple legal tests tied to recoverability and enforceability in Australian courts (residence of counterparty, law governing documents, register location, payment locus) which require legal and operational verification — paras 11, 12, 13, 17, 18–21.","Transitional arrangements carrying forward prior determinations and approvals, requiring record‑keeping and potential time‑limited relief monitoring — paras 36–38.","Operational implications for custody chains and sub‑custodians (including residency and obligation performance tests) potentially forcing chain reorganisation — paras 16–17, 17(j)–(k).","Prescriptive exclusions that can reduce recognised Australian assets and therefore raise capital or repatriation pressures on insurers (affects balance sheet management and investment decisions) — paras 8, 28, 33–34."],"plain_english_summary":"This Prudential Standard sets out which assets insurers cannot count as “assets in Australia” under section 28 of the Insurance Act 1973. It lists categories (offshore real property, certain debts, shares, SPV interests, custodial and trust arrangements, revaluation reserves and more) and the conditions under which APRA will treat assets as excluded. Insurers must adjust custody, reporting and capital calculations accordingly; APRA may grant waivers and transitional approvals and therefore decides when an asset qualifies."},"kimi_summary":{"_metrics":{"model":"kimi-k2.5","source":"moonshot-realtime","completionTokens":2694},"content_quality":"ok","complexity_score":8,"scope_assessment":{"changed":false,"description":"This version maintains the existing scope of defining 'assets in Australia' for prudential supervision purposes under section 28 of the Insurance Act 1973. It continues the framework from the 2008 predecessor instrument (as evidenced by the continuity table in paragraph 38) without expanding into new regulatory areas."},"complexity_factors":["16 defined terms in section 6 including complex financial infrastructure concepts (custodian, sub-custodian, depository, SPV, kangaroo bond, external custody agreement)","Dual regulatory regimes with divergent rules: paragraphs 9-21 apply to locally incorporated insurers while paragraphs 22-34 apply specifically to Category C foreign branch insurers","Mathematical apportionment formula in paragraph 14 (A = B/C x D) for calculating excluded amounts related to Special Purpose Vehicle investments","12 separate exclusion conditions for custodian-held assets in paragraph 17 requiring cumulative compliance","Extensive cross-referencing to 6 other Prudential Standards (GPS 001, GPS 110, GPS 112, GPS 114, GPS 310, GPS 520) and multiple sections of the Insurance Act 1973","Multi-layered look-through provisions applying to assets held through chains of intermediate entities (depositories, custodians, sub-custodians, SPVs, trusts)","Nested exceptions creating complex conditional logic (e.g., paragraph 12 creates an exception to paragraph 11 for kangaroo bonds, subject to further conditions in paragraphs 16-17)"],"plain_english_summary":"This Prudential Standard defines what qualifies as an “asset in Australia” for insurers, distinguishing assets APRA can rely on to meet Australian liabilities. It affects locally incorporated insurers and foreign branches, excluding many overseas, intangible, or otherwise inaccessible assets while allowing narrow exceptions (e.g., Australian-law, Austraclear bonds). The rule ensures recoverable, court-accessible assets are available to protect Australian policyholders if an insurer fails."}},"importantCases":[],"_links":{"self":"/api/acts/insurance-prudential-standard-determination-no-9-of-2010-prudential-standard-gps-120-assets-in-austr","history":"/api/acts/insurance-prudential-standard-determination-no-9-of-2010-prudential-standard-gps-120-assets-in-austr/history","analysis":"/api/acts/insurance-prudential-standard-determination-no-9-of-2010-prudential-standard-gps-120-assets-in-austr/analysis","conflicts":"/api/acts/insurance-prudential-standard-determination-no-9-of-2010-prudential-standard-gps-120-assets-in-austr/conflicts","importantCases":"/api/acts/insurance-prudential-standard-determination-no-9-of-2010-prudential-standard-gps-120-assets-in-austr/important-cases","documents":"/api/acts/insurance-prudential-standard-determination-no-9-of-2010-prudential-standard-gps-120-assets-in-austr/documents"}}