Reporting Form GRF 110.0

Minimum Capital Requirement

Instruction Guide

Introduction

This form reports the summary of the individual required prudential risk/capital charges (and investment risk charge rebates), the net assets in Australia, capital base, Minimum Capital Requirement (MCR) and whether the reporting insurer has complied with the MCR as required by GPS 110 Capital Adequacy for General Insurers.

The individual risk charges and capital base summarised on this form are calculated in other forms. The investment risk applicable for GRF 160.0 Derivatives Activity and Risk Charge and GRF 300.0 Statement of Financial Position are required to be manually entered and all others will be automatically updated by the D2A application. In addition, this form will automatically calculate the MCR of the reporting insurer (as required by GPS 110 Capital Adequacy for General Insurers) and the insurer’s excess/deficiency of capital and capital ratios.

Audit requirements

This form is required to be subject to audit review and testing. The scope and nature of audit testing required is outlined in the applicable Audit Guidance Statement issued by the Auditing and Assurance Board of the Australian Accounting Research Foundation.

Information provided in the form in respect of a financial year of an insurer forms part of the insurer’s ‘yearly statutory accounts’ within the meaning of section 3 of the Insurance Act 1973. This means that:

• the completed form for the financial year must be audited by the approved auditor of the insurer (see paragraph 49J(1)(a) of the Act);

• the insurer must make such arrangements as to enable the auditor to do this (subsection 49J(2));

• the auditor must give the insurer a certificate relating to the completed form (and other completed forms that are part of the insurer’s yearly statutory accounts), which must contain statements of the auditor’s opinion on the matters required by the prudential standards to be dealt with in the certificate (subsection 49J(3));

• the certificate must be lodged with APRA as provided for in the prudential standards (paragraph 49L(1)(a)), namely by the due date for lodging the form in respect of the financial year for the insurer.

Reporting entity

1. Authorised insurance entities including a mutual (refer to form for ‘Licensed Insurer’); and
2. Authorised reinsurance entities (refer to form for ‘Licensed Insurer’).

An authorised insurance/reinsurance entity is required to maintain prudential capital of an amount at least equal to its MCR, where the MCR is calculated on the total operations of the entity.