Financial Sector (Collection of Data) (reporting standard) determination No. 115 of 2023
In ForceCTH
Jurisdiction
Commonwealth
Collection
legislative instrument
Plain English Summary
8/10 complexity
**What this instrument does (mechanics)
Establishes a data-reporting framework for APRA to collect information about a life insurer's Asset Risk Charge (the capital impact of asset-value stresses).
Requires every life insurance company (including friendly societies) registered under the Life Insurance Act 1995 to submit specified data for each reporting period ending on or after 1 July 2023 (paras 3–4).
Prescribes submission method (electronic via APRA’s portal or other APRA-notified method) and digital-signature/authorisation rules for submitters (paras 6, 14–15).
Sets reporting frequency and due dates: quarterly unaudited returns and an annual audited return (effectively five submissions per financial year); quarterly within 20 business days, annual within three months (paras 7, 9; Notes).
Requires auditor review and testing of the reporting systems, processes and controls (at least a limited assurance engagement annually) and places responsibility on the board and senior management for internal review and authorisation (paras 11–13).
Gives APRA power to vary reporting frequency or content for a particular life company, and to grant extensions (paras 8, 10, 16).
Specifies what items must be reported and how: look-through treatment, derivative treatment, which assets are excluded from stresses (e.g. assets backing investment-linked liabilities, assets deducted from capital base, assets subject to concentration charge) and the list of stress scenarios to be applied (General instructions; Definitions; Specific instructions; Tables 1–4).
This Reporting Standard sets out the requirements for the provision of information to APRA relating to a life insurance company’s Asset Risk Charge.
It includes associated specific instructions and must be read in conjunction with Reporting Standard LRS 001 Reporting Requirements (LRS 001), including the general instruction guide, and Prudential Standard LPS 114 Capital Adequacy: Asset Risk Charge (LPS 114).
Authority
This Reporting Standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001.
Purpose
The information reported to APRA under this Reporting Standard is used by APRA for the purpose of prudential supervision including assessing compliance with capital adequacy standards.
Application and commencement
This Reporting Standard applies to all life insurance companies including friendly societies (together referred to as ‘life companies’) registered under the Life Insurance Act 1995 (Life Act). This Reporting Standard applies for reporting periods ending on or after 1 July 2023.
Information required
A life company must provide APRA with the information required by this Reporting Standard for each reporting period.
The information reported to APRA under this Reporting Standard is not required to be given to policy owners pursuant to section 124 of the Life Act. It does not constitute a reporting document for the purposes of section 124.
Method of submission
The information required by this Reporting Standard must be given to APRA:
(a) in electronic format using an electronic method available on APRA’s website; or
(b) by a method notified by APRA prior to submission.
Reporting periods and due dates
Subject to paragraph 8, a life company must provide the information required by this Reporting Standard:
(a) in respect of each quarter based on the financial year of the life company on an unaudited basis; and
(b) in respect of each financial year of the life company on an audited basis.
Note 1: This means that information provided under this Reporting Standard will be submitted five times for a full financial year.
Note 2: The annual audited information provided under this Reporting Standard must be submitted in conjunction with the annual auditor’s report, as required under Prudential Standard LPS 310 Audit and Related Matters.
If, having regard to the particular circumstances of a life company, APRA considers it necessary or desirable to obtain information more or less frequently than as provided by subparagraph 7(a) or 7(b), APRA may, by notice in writing, change the reporting periods, or specify reporting periods, for the particular life company.
The information required by this Reporting Standard in respect of a life company must be provided to APRA:
(a) in the case of quarterly information, within 20 business days after the end of the reporting period to which the information relates;
(b) in the case of annual information, within three months after the end of the reporting period to which the information relates; or
(c) in the case of information provided in accordance with paragraph 8, within the time specified by notice in writing.
APRA may, in writing, grant a life company an extension of a due date, in which case the new due date will be the date on the notice of extension.
Note: For the avoidance of doubt, if the due date for a particular reporting period falls on a day other than a usual business day, a life company is nonetheless required to submit the information required no later than the due date.
Quality control
The information provided by a life company under this Reporting Standard must be the product of systems, processes and controls that have been reviewed and tested by the Auditor of the life company. This will require the Auditor to review and test the life company’s systems, processes and controls supporting the reporting of the information to enable the life company to provide reliable financial information to APRA. This review and testing must be done on:
(a) an annual basis or more frequently if necessary to enable the Auditor to form an opinion on the reliability and accuracy of data; and
(b) at least a limited assurance engagement consistent with professional standards and guidance notes issued by the Auditing and Assurance Standards Board as may be amended from time to time, to the extent that they are not inconsistent with the requirements of Prudential Standard LPS 310 Audit and Related Matters.
All information provided by a life company under this Reporting Standard must be subject to systems, processes and controls developed by the life company for the internal review and authorisation of that information. It is the responsibility of the Board and senior management of the life company to ensure that an appropriate set of policies and procedures for the authorisation of data submitted to APRA is in place.
Actuarial valuations and calculations included in or used in the preparation of the information provided to APRA must be in accordance with the prudential standards in force for the reporting period. However, life companies may use reasonable estimates when preparing information that will not be audited (i.e. for the first four submissions of information for a full financial year).
Authorisation
When an officer or agent of a life company provides the information required by this Reporting Standard using an electronic format, the officer or agent must digitally sign the relevant information using a digital certificate acceptable to APRA.
An officer or agent of a life company who submits information under this Reporting Standard must be authorised by either:
(a) the Principal Executive Officer of the life company; or
(b) the Chief Financial Officer of the life company.
Variations
APRA may, by written notice to the life company, vary the reporting requirements of this Reporting Standard in relation to that life company.
Transition
A life company must report under the old reporting standard in respect of a transitional reporting period. For these purposes:
old reporting standard means the reporting standard revoked in the determination making this Reporting Standard; and
transitional reporting period means a reporting period under the old reporting standard:
(a) which ended before 1 July 2023; and
(b) in relation to which the life company was required, under the old reporting standard, to report by a date on or after the date of revocation of the old reporting standard.
Note: For the avoidance of doubt, if a life company was required to report under an old reporting standard, and the reporting documents were due before the date of revocation of the old reporting standard, the life company is still required to provide any overdue reporting documents in accordance with the old reporting standard.
Interpretation
In this Reporting Standard:
(a) unless the contrary intention appears, words and expressions have the meanings given to them in Prudential Standard LPS 001 Definitions (LPS 001); and
(b) the following definitions are applicable:
Auditor means an auditor appointed under paragraph 83 of the Life Act.
capital adequacy standards means the prudential standards which relate to capital adequacy as defined in LPS 001.
Chief Financial Officer means the chief financial officer of the life company, by whatever name called.
financial year has the meaning in the Corporations Act 2001.
general instruction guide refers to the general instruction guide set out in Attachment A of LRS 001.
Life Act means the Life Insurance Act 1995.
Principal Executive Officer means the principal executive officer of the life company, by whatever name called, and whether or not he or she is a member of the governing board of the entity.
reporting period means a reporting period under subparagraph 7(a) or 7(b) or, if applicable, paragraph 8.
Unless the contrary intention appears, a reference to an Act, Prudential Standard, Reporting Standard, Australian Accounting or Auditing Standard is a reference to the instrument as in force from time to time.
This Reporting Standard sets out the requirements for the provision of information to APRA relating to a life insurance company’s Asset Risk Charge.
It includes associated specific instructions and must be read in conjunction with Reporting Standard LRS 001 Reporting Requirements (LRS 001), including the general instruction guide, and Prudential Standard LPS 114 Capital Adequacy: Asset Risk Charge (LPS 114).
Authority
This Reporting Standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001.
Purpose
The information reported to APRA under this Reporting Standard is used by APRA for the purpose of prudential supervision including assessing compliance with capital adequacy standards.
Application and commencement
This Reporting Standard applies to all life insurance companies including friendly societies (together referred to as ‘life companies’) registered under the Life Insurance Act 1995 (Life Act). This Reporting Standard applies for reporting periods ending on or after 1 July 2023.
Information required
A life company must provide APRA with the information required by this Reporting Standard for each reporting period.
The information reported to APRA under this Reporting Standard is not required to be given to policy owners pursuant to section 124 of the Life Act. It does not constitute a reporting document for the purposes of section 124.
Method of submission
The information required by this Reporting Standard must be given to APRA:
(a) in electronic format using an electronic method available on APRA’s website; or
(b) by a method notified by APRA prior to submission.
Reporting periods and due dates
Subject to paragraph 8, a life company must provide the information required by this Reporting Standard:
(a) in respect of each quarter based on the financial year of the life company on an unaudited basis; and
(b) in respect of each financial year of the life company on an audited basis.
Note 1: This means that information provided under this Reporting Standard will be submitted five times for a full financial year.
Note 2: The annual audited information provided under this Reporting Standard must be submitted in conjunction with the annual auditor’s report, as required under Prudential Standard LPS 310 Audit and Related Matters.
If, having regard to the particular circumstances of a life company, APRA considers it necessary or desirable to obtain information more or less frequently than as provided by subparagraph 7(a) or 7(b), APRA may, by notice in writing, change the reporting periods, or specify reporting periods, for the particular life company.
The information required by this Reporting Standard in respect of a life company must be provided to APRA:
(a) in the case of quarterly information, within 20 business days after the end of the reporting period to which the information relates;
(b) in the case of annual information, within three months after the end of the reporting period to which the information relates; or
(c) in the case of information provided in accordance with paragraph 8, within the time specified by notice in writing.
APRA may, in writing, grant a life company an extension of a due date, in which case the new due date will be the date on the notice of extension.
Note: For the avoidance of doubt, if the due date for a particular reporting period falls on a day other than a usual business day, a life company is nonetheless required to submit the information required no later than the due date.
Quality control
The information provided by a life company under this Reporting Standard must be the product of systems, processes and controls that have been reviewed and tested by the Auditor of the life company. This will require the Auditor to review and test the life company’s systems, processes and controls supporting the reporting of the information to enable the life company to provide reliable financial information to APRA. This review and testing must be done on:
(a) an annual basis or more frequently if necessary to enable the Auditor to form an opinion on the reliability and accuracy of data; and
(b) at least a limited assurance engagement consistent with professional standards and guidance notes issued by the Auditing and Assurance Standards Board as may be amended from time to time, to the extent that they are not inconsistent with the requirements of Prudential Standard LPS 310 Audit and Related Matters.
All information provided by a life company under this Reporting Standard must be subject to systems, processes and controls developed by the life company for the internal review and authorisation of that information. It is the responsibility of the Board and senior management of the life company to ensure that an appropriate set of policies and procedures for the authorisation of data submitted to APRA is in place.
Actuarial valuations and calculations included in or used in the preparation of the information provided to APRA must be in accordance with the prudential standards in force for the reporting period. However, life companies may use reasonable estimates when preparing information that will not be audited (i.e. for the first four submissions of information for a full financial year).
Authorisation
When an officer or agent of a life company provides the information required by this Reporting Standard using an electronic format, the officer or agent must digitally sign the relevant information using a digital certificate acceptable to APRA.
An officer or agent of a life company who submits information under this Reporting Standard must be authorised by either:
(a) the Principal Executive Officer of the life company; or
(b) the Chief Financial Officer of the life company.
Variations
APRA may, by written notice to the life company, vary the reporting requirements of this Reporting Standard in relation to that life company.
Transition
A life company must report under the old reporting standard in respect of a transitional reporting period. For these purposes:
old reporting standard means the reporting standard revoked in the determination making this Reporting Standard; and
transitional reporting period means a reporting period under the old reporting standard:
(a) which ended before 1 July 2023; and
(b) in relation to which the life company was required, under the old reporting standard, to report by a date on or after the date of revocation of the old reporting standard.
Note: For the avoidance of doubt, if a life company was required to report under an old reporting standard, and the reporting documents were due before the date of revocation of the old reporting standard, the life company is still required to provide any overdue reporting documents in accordance with the old reporting standard.
Interpretation
In this Reporting Standard:
(a) unless the contrary intention appears, words and expressions have the meanings given to them in Prudential Standard LPS 001 Definitions (LPS 001); and
(b) the following definitions are applicable:
Auditor means an auditor appointed under paragraph 83 of the Life Act.
capital adequacy standards means the prudential standards which relate to capital adequacy as defined in LPS 001.
Chief Financial Officer means the chief financial officer of the life company, by whatever name called.
financial year has the meaning in the Corporations Act 2001.
general instruction guide refers to the general instruction guide set out in Attachment A of LRS 001.
Life Act means the Life Insurance Act 1995.
Principal Executive Officer means the principal executive officer of the life company, by whatever name called, and whether or not he or she is a member of the governing board of the entity.
reporting period means a reporting period under subparagraph 7(a) or 7(b) or, if applicable, paragraph 8.
Unless the contrary intention appears, a reference to an Act, Prudential Standard, Reporting Standard, Australian Accounting or Auditing Standard is a reference to the instrument as in force from time to time.
Objective of this Reporting Standard
Objective of this Reporting Standard
Objective of this Reporting Standard
This Reporting Standard sets out the requirements for the provision of information to APRA relating to a life insurance company’s Asset Risk Charge.
It includes associated specific instructions and must be read in conjunction with Reporting Standard LRS 001 Reporting Requirements (LRS 001), including the general instruction guide, and Prudential Standard LPS 114 Capital Adequacy: Asset Risk Charge (LPS 114).
Authority
Authority
Authority
This Reporting Standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001.
Purpose
Purpose
Purpose
The information reported to APRA under this Reporting Standard is used by APRA for the purpose of prudential supervision including assessing compliance with capital adequacy standards.
Application and commencement
Application and commencement
Application and commencement
This Reporting Standard applies to all life insurance companies including friendly societies (together referred to as ‘life companies’) registered under the Life Insurance Act 1995 (Life Act). This Reporting Standard applies for reporting periods ending on or after 1 July 2023.
Information required
Information required
Information required
A life company must provide APRA with the information required by this Reporting Standard for each reporting period.
The information reported to APRA under this Reporting Standard is not required to be given to policy owners pursuant to section 124 of the Life Act. It does not constitute a reporting document for the purposes of section 124.
Method of submission
Method of submission
Method of submission
The information required by this Reporting Standard must be given to APRA:
(a) in electronic format using an electronic method available on APRA’s website; or
(b) by a method notified by APRA prior to submission.
Reporting periods and due dates
Reporting periods and due dates
Reporting periods and due dates
Subject to paragraph 8, a life company must provide the information required by this Reporting Standard:
(a) in respect of each quarter based on the financial year of the life company on an unaudited basis; and
(b) in respect of each financial year of the life company on an audited basis.
Note 1: This means that information provided under this Reporting Standard will be submitted five times for a full financial year.
Note 2: The annual audited information provided under this Reporting Standard must be submitted in conjunction with the annual auditor’s report, as required under Prudential Standard LPS 310 Audit and Related Matters.
If, having regard to the particular circumstances of a life company, APRA considers it necessary or desirable to obtain information more or less frequently than as provided by subparagraph 7(a) or 7(b), APRA may, by notice in writing, change the reporting periods, or specify reporting periods, for the particular life company.
The information required by this Reporting Standard in respect of a life company must be provided to APRA:
(a) in the case of quarterly information, within 20 business days after the end of the reporting period to which the information relates;
(b) in the case of annual information, within three months after the end of the reporting period to which the information relates; or
(c) in the case of information provided in accordance with paragraph 8, within the time specified by notice in writing.
APRA may, in writing, grant a life company an extension of a due date, in which case the new due date will be the date on the notice of extension.
Note: For the avoidance of doubt, if the due date for a particular reporting period falls on a day other than a usual business day, a life company is nonetheless required to submit the information required no later than the due date.
Quality control
Quality control
Quality control
The information provided by a life company under this Reporting Standard must be the product of systems, processes and controls that have been reviewed and tested by the Auditor of the life company. This will require the Auditor to review and test the life company’s systems, processes and controls supporting the reporting of the information to enable the life company to provide reliable financial information to APRA. This review and testing must be done on:
(a) an annual basis or more frequently if necessary to enable the Auditor to form an opinion on the reliability and accuracy of data; and
(b) at least a limited assurance engagement consistent with professional standards and guidance notes issued by the Auditing and Assurance Standards Board as may be amended from time to time, to the extent that they are not inconsistent with the requirements of Prudential Standard LPS 310 Audit and Related Matters.
All information provided by a life company under this Reporting Standard must be subject to systems, processes and controls developed by the life company for the internal review and authorisation of that information. It is the responsibility of the Board and senior management of the life company to ensure that an appropriate set of policies and procedures for the authorisation of data submitted to APRA is in place.
Actuarial valuations and calculations included in or used in the preparation of the information provided to APRA must be in accordance with the prudential standards in force for the reporting period. However, life companies may use reasonable estimates when preparing information that will not be audited (i.e. for the first four submissions of information for a full financial year).
Authorisation
Authorisation
Authorisation
When an officer or agent of a life company provides the information required by this Reporting Standard using an electronic format, the officer or agent must digitally sign the relevant information using a digital certificate acceptable to APRA.
An officer or agent of a life company who submits information under this Reporting Standard must be authorised by either:
(a) the Principal Executive Officer of the life company; or
(b) the Chief Financial Officer of the life company.
Variations
Variations
Variations
APRA may, by written notice to the life company, vary the reporting requirements of this Reporting Standard in relation to that life company.
Transition
Transition
Transition
A life company must report under the old reporting standard in respect of a transitional reporting period. For these purposes:
old reporting standard means the reporting standard revoked in the determination making this Reporting Standard; and
transitional reporting period means a reporting period under the old reporting standard:
(a) which ended before 1 July 2023; and
(b) in relation to which the life company was required, under the old reporting standard, to report by a date on or after the date of revocation of the old reporting standard.
Note: For the avoidance of doubt, if a life company was required to report under an old reporting standard, and the reporting documents were due before the date of revocation of the old reporting standard, the life company is still required to provide any overdue reporting documents in accordance with the old reporting standard.
Interpretation
Interpretation
Interpretation
In this Reporting Standard:
(a) unless the contrary intention appears, words and expressions have the meanings given to them in Prudential Standard LPS 001 Definitions (LPS 001); and
(b) the following definitions are applicable:
Auditor means an auditor appointed under paragraph 83 of the Life Act.
capital adequacy standards means the prudential standards which relate to capital adequacy as defined in LPS 001.
Chief Financial Officer means the chief financial officer of the life company, by whatever name called.
financial year has the meaning in the Corporations Act 2001.
general instruction guide refers to the general instruction guide set out in Attachment A of LRS 001.
Life Act means the Life Insurance Act 1995.
Principal Executive Officer means the principal executive officer of the life company, by whatever name called, and whether or not he or she is a member of the governing board of the entity.
reporting period means a reporting period under subparagraph 7(a) or 7(b) or, if applicable, paragraph 8.
Unless the contrary intention appears, a reference to an Act, Prudential Standard, Reporting Standard, Australian Accounting or Auditing Standard is a reference to the instrument as in force from time to time.
General instructions
General instructions
Reporting Standard LRS 114.0
Asset Risk Charge
General instructions
Reporting tables
Tables described in this Reporting Standard list each of the data fields required to be reported. The data fields are listed sequentially in the column order that they will appear in the reported data set. Constraints on the data that can be reported for each field have also been provided.
Any specific combination of values in a table must not appear on more than one row in that table when reported.
Look-through treatment
For asset and liability items that have been treated on a look-through basis for the purpose of LPS 114, report the effective underlying exposures after adjustments for look-through as well as their resultant impacts on capital base respectively.
Derivative treatment
All asset and liability items should be reported gross of impacts from derivatives. The fair value of open derivatives positions should be captured accordingly.
Assets and liabilities subject to stress
Exclude all components of assets that are either:
supporting investment-linked liabilities;
deducted from total assets for the purpose of determining capital base; or
subject to Asset Concentration Risk Charge
from the asset categories reported under this Reporting Standard.
Asset stress scenarios
Life companies are not required to report the components of impact on capital base for asset stress scenarios where it is determined that those scenarios would improve the capital base (i.e. result in a zero-risk charge component) as at the end of the relevant reporting period.
Life companies must report all asset stress scenarios that would give rise to a positive risk charge component.
Definitions
Terms highlighted in bold italics indicate that the definition is provided in these instructions.
This is the difference between the adjusted policy liabilities (gross of reinsurance) and the adjusted policy liabilities (net of reinsurance). The adjusted policy liabilities are determined in accordance with Prudential Standard LPS 112 Capital Adequacy: Measurement of Capital (LPS 112).
Adjusted policy liabilities (net of reinsurance) - exclude discretionary component(Items subject to Asset Risk Charge type)
This is the amount of adjusted policy liabilities (net of reinsurance) determined in accordance with LPS 112.This excludes the discretionary component of adjusted policy liabilities.This amount is net of additional tax benefits / (liabilities) recognised from liability adjustments. This amount must be reduced by the value of all tax effects associated with liability adjustments. Adjusted pre-stress amount of deferred tax assets and deferred tax liabilities must be increased by the tax effects. This reporting approach is consistent with the Reporting Standard LRS 112 Determination of Capital Base (LRS 112).
Adjusted pre-stress amount
This is the value of all relevant items of the reporting fund. This amount should be reported before the application of any designated asset stresses, net of the effect of any look-through adjustments and applying the fair value requirements outlined in LPS 112 and LPS 114.
Aggregated risk charge component
This is the aggregated result of applying the aggregation formula over risk charge components in accordance with LPS 114. The formula allows for the likelihood of the asset risk stress scenarios occurring simultaneously.
Assets deducted from capital base(Items subject to Asset Risk Charge type)
This is the value of assets that have been deducted from assets not supporting investment-linked liabilities for the purpose of determining the fund's capital base (other than deferred tax assets).These will not be subject to the asset risk stresses.
Assets not supporting investment-linked liabilities
This is the fair value of all assets not supporting investment-linked liabilities.This item is calculated as the sum of:cash;investment property;listed equities;unlisted equities;non-indexed interest-bearing securities;indexed interest-bearing securities;loans;other investment assets (exclude derivative financial instruments);current tax assets;deferred tax assets;derivative financial instruments (assets);premiums receivable;reinsurance recoveries receivable;other accounts receivable;other non-investment assets; andadjusted policy liabilities ceded (reinsurance assets) (for the calculation of default stress only).This item (hence the asset components outlined above) must exclude:assets supporting investment-linked liabilities;assets deducted from capital base; andassets subject to Asset Concentration Risk Charge.
Assets subject to Asset Concentration Risk Charge(Items subject to Asset Risk Charge type)
This is the value of assets in excess of their respective asset concentration limits and therefore is subject to asset concentration risk charge.These will not be subject to the asset risk stresses.
Assets subject to credit spreads stress type
This is the category of assets subject to credit spreads stress. The options are:bonds and other non-securitised assets;structured and securitised assets; andre-securitised assets.
Assets supporting investment-linked liabilities
This is the fair value of assets supporting investment-linked policies that do not have performance guarantees. The asset risk stresses are not applied to these assets or their associated adjusted policy liabilities.
C
Cash(Items subject to Asset Risk Charge type)
This is the amount of the cash assets which includes any cash at call up to 30 days as well as any cash held with non-bank financial institutions.Note that this item does not include negotiable certificates of deposits, which should be reported under non-indexed interest-bearing securities or indexed interest bearing securities.
Claims payable(Items subject to Asset Risk Charge type)
This is the amount related to claims due but not yet paid which has been recognised within insurance and reinsurance contract liabilities and assets reported on the balance sheet under AASB 17 Insurance Contracts (AASB 17).Life companies must exclude any amount already allowed in adjusted policy liabilities to avoid double counting.This amount must be consistent with claims payable reported in LRS 112.0 as a component of liability adjustment (gross of tax effect).This item must not be reported as a component of other asset and liability items including adjusted policy liability related items reported in this Reporting Standard.
Counterparty grade
This is the classification applied to an investment or exposure as per the requirements of LPS 001. Assets guaranteed by an Australian state or territory government must be reported in the counterparty grade that applies after rating up one grade in accordance with LPS 114.
Credit spread fair value amount
This is the fair value of assets that are subject to the credit spreads stress.
Credit spread stressed amount
This is the stressed value of assets that are subject to the credit spreads stress.
Credit spreads stress(Stress scenario type)
This is the impact on the fund's capital base of an increase in credit spreads and the risk of default and is calculated in accordance with LPS 114.This stress applies to interest-bearing assets, including cash deposits and floating rate assets. Credit derivatives and zero-coupon instruments such as bank bills must also be included. This stress also applies to liabilities whose value depends on the illiquidity premium.
Currency downwards stress(Stress scenario type)
This is the impact on the fund's capital base of downward changes in foreign currency exchange rates and is calculated in accordance with LPS 114.
Currency upwards stress(Stress scenario type)
This is the impact on the fund's capital base of upward changes in foreign currency exchange rates and is calculated in accordance with LPS 114.
Current tax assets(Items subject to Asset Risk Charge type)
This is the value of current tax assets determined in accordance with Australian Accounting Standards.
Current tax liabilities(Items subject to Asset Risk Charge type)
This is the value of current tax liabilities determined in accordance with Australian Accounting Standards.
D
Default stress(Stress scenario type)
This is the impact on a fund's capital base of the risk of counterparty default and is calculated in accordance with LPS 114.It applies to reinsurance assets, over the counter derivatives, unpaid premiums and all other credit or counterparty exposures that have not been affected by the credit spreads stress.
Deferred tax assets(Items subject to Asset Risk Charge type)
This is the value of deferred tax assets determined in accordance with Australian Accounting Standards.Adjusted pre-stress amounts of deferred tax assets must be increased by the value of tax effects associated with liability adjustments. This reporting approach is consistent with LRS 112.For stress scenario amount, this includes tax benefits arising from the application of the asset risk stresses, all of which would be recognised as admissible.
Deferred tax liabilities(Items subject to Asset Risk Charge type)
This is the value of deferred tax liabilities determined in accordance with Australian Accounting Standards.Adjusted pre-stress amounts of deferred tax liabilities must be increased by the value of tax effects associated with liability adjustments. This reporting approach is consistent with LRS 112.For stress scenario amount, this includes tax liabilities arising from the application of the asset risk stresses.
Derivative financial instruments (assets)(Items subject to Asset Risk Charge type)
This is the value of all open derivative positions reported as assets.
Derivative financial instruments (liabilities)(Items subject to Asset Risk Charge type)
This is the value of all open derivatives positions reported as liabilities.
Discretionary component of adjusted policy liabilities (net of reinsurance)(Items subject to Asset Risk Charge type)
This is the amount by which the adjusted policy liabilities would reduce if:future bonuses and discretionary additions were set to zero;policy owner retained profits, investment fluctuation reserves and unallocated surplus were set to zero; andsurrender values were reduced to minimum termination values (or contractual minimum surrender values if greater).
Dividend yield used in determination of equity stress (%) percent(Yields used in stress scenarios type)
This is the dividend yield of the ASX 200 index used in determining the reduction in equity asset values under the equity stress scenario.
E
Earnings yield used in determination of property stress percent(Yields used in stress scenarios type)
This is the average earnings yield before taxes used in determining the reduction in infrastructure asset values under the property stress scenario.
Equity stress(Stress scenario type)
This is the impact on the fund's capital base of a fall in equity and other asset values and is calculated in accordance with LPS 114.This stress applies to both listed and unlisted equity assets and to any other assets that are not considered in other asset risk stresses. This stress also includes an increase to equity volatility.
Expected inflation stress measures the impact on the fund's capital base of downward changes to expected Consumer Price Index inflation rates. It also affects nominal interest rates.This item reports the impact on the capital base of the fund arising from the application of the downward expected inflation stress and is calculated in accordance with LPS 114.
Expected inflation stress measures the impact on the fund's capital base of upward changes to expected Consumer Price Index inflation rates. It also affects nominal interest rates.This item reports the impact on the capital base of the fund arising from the application of the upward expected inflation stress and is calculated in accordance with LPS 114.
I
Impact of diversification
This item must be calculated as the sum of the risk charge components used in calculating the aggregated risk charge component, less the aggregated risk charge component as set out in LPS 114.
Impact on capital base
This shows the impact on the capital base of each asset risk stress scenario as set out in LPS 114.This item is calculated for each stress scenario type as the sum of:assets not supporting investment-linked liabilities;liabilities excluding adjusted policy liabilities;adjusted policy liabilities (net of reinsurance) - exclude discretionary component;discretionary component of adjusted policy liabilities (net of reinsurance);off-balance sheet exposures;seed capital; andTier 2 Capital.
Indexed interest-bearing securities(Items subject to Asset Risk Charge type)
This is the amount of all interest-bearing securities held that are indexed.
Investment property(Items subject to Asset Risk Charge type)
This is the amount of the investment property assets which includes properties acquired or held which is available for sale as well as infrastructure assets, after allowance for accumulated depreciation.Owner-occupied property should be reported as other non-investment assets.
L
Liabilities excluding adjusted policy liabilities
This is the value of liabilities of the fund and is calculated as the sum of:current tax liabilities;deferred tax liabilities;derivative financial instruments (liabilities);subordinated debt;claims payable;reinsurance premiums payable;other accounts payables; andother liabilities.This does not include any amount recognised as Tier 2 Capital and seed capital.
Liability adjustments
This is the difference between the adjusted policy liabilities determined in accordance with LPS 112 and net life contract liabilities after adjusting for accounts receivable and accounts payable. This item includes any tax effects.Net life contract liabilities is the sum of the insurance, reinsurance and investment contract liabilities (net of insurance and reinsurance assets) disclosed in the statutory accounts.
Life company fund
This means the type of life company fund. Possible types are:statutory fund;shareholder fund;benefit fund; andmanagement fund.
Listed equities(Items subject to Asset Risk Charge type)
This is the value of equity interests in companies listed on the ASX or overseas exchange, after allowance for look-through (if applicable).This also includes equities held within Australia and overseas, which are not treated differently for the purpose of determining Asset Risk Charge.
Loans(Items subject to Asset Risk Charge type)
This is the value of loans. Loans include financial leases and mortgages, and are typically non-negotiable on the secondary market.
N
Non-indexed interest-bearing securities(Items subject to Asset Risk Charge type)
This is the amount of all interest-bearing securities held that are not indexed.
O
Off-balance sheet exposures
This is the value of off-balance sheet exposures that are subject to the Asset Risk Charge. This is calculated as the sum of:total off-balance sheet assets; andtotal off-balance sheet liabilities.
Other accounts payable
This is the amount related to other amounts due but not yet paid which has been recognised within insurance and reinsurance contract liabilities and assets reported on the balance sheet under AASB 17. This may include (but is not limited to) rebates, fees and commissions.Life companies must exclude any amount already allowed in adjusted policy liabilities to avoid double counting.This amount must be consistent with other accounts payable reported in LRS 112.0 as a component of liability adjustment (gross of tax effect).This item must not be reported as a component of other asset and liability items including adjusted policy liability related items reported in this Reporting Standard.
Other accounts receivable
This is the amount related to other amounts due but not yet received which has been recognised within insurance and reinsurance contract liabilities and assets reported on the balance sheet under AASB 17. This may include (but is not limited to) rebates, fees and commissions.Life companies must exclude any amount already allowed in adjusted policy liabilities to avoid double counting.This amount must be consistent with other accounts receivable reported in LRS 112.0 as a component of liability adjustment (gross of tax effect).This item must not be reported as a component of other asset and liability items including adjusted policy liability related items reported in this Reporting Standard.
Other investment assets (exclude derivative financial instruments)(Items subject to Asset Risk Charge type)
This is the value of all other investment assets not specifically categorised as:cash;investment property;listed equities;unlisted equities;non-indexed interest-bearing securities;indexed interest-bearing securities; orloans.
Other liabilities(Items subject to Asset Risk Charge type)
This consists of all liabilities excluding adjusted policy liabilities not specifically categorised as:current tax liabilities;deferred tax liabilities;derivative financial instruments (liabilities);subordinated debt;claims payable;reinsurance premiums payable; orother accounts payables.
Other non-investment assets(Items subject to Asset Risk Charge type)
This is the value of all non-investment assets not categorised as:current tax assets;deferred tax assets;derivative financial instruments (assets);premiums receivable;reinsurance recoveries receivable; orother accounts receivable.
P
Premiums receivable(Items subject to Asset Risk Charge type)
This is the amount related to insurance premiums due but not yet received which has been recognised within insurance and reinsurance contract liabilities and assets reported on the balance sheet under AASB 17.Premiums should be gross of reinsurance and commissions, before profit share rebates, and inclusive of stamp duty, policy fees, loadings and discounts. This definition is consistent with the definition of premium defined in Reporting Standard LRS 750 Claims and Disputes (LRS 750.0). Life companies may use approximate methods to report this item if premiums which meet the outlined definition are not readily available (corresponding adjustments also need to be made in other accounts receivable or other accounts payable).Life companies must exclude any amount already allowed in adjusted policy liabilities to avoid double counting.This amount must be consistent with premiums receivable reported in LRS 112.0 as a component of liability adjustment (gross of tax effect).This item must not be reported as a component of other asset and liability items including adjusted policy liability related items reported in this Reporting Standard.
Property stress(Stress scenario type)
This is the impact on a fund's capital base of changes in property and infrastructure asset values and is calculated in accordance with LPS 114.
R
Real interest rates downwards stress(Stress scenario type)
Real interest rates stress measures the impact on a fund's capital base of downward changes in real interest rates. It also affects nominal interest rates.This item is calculated in accordance with LPS 114.
Real interest rates upwards stress(Stress scenario type)
Real interest rates stress measures the impact on a fund's capital base of upward changes in real interest rates. It also affects nominal interest rates.This item is calculated in accordance with LPS 114.
Reinsurance premiums payable
This is the amount related to reinsurance premiums due but not yet paid which has been recognised within insurance and reinsurance contract liabilities and assets reported on the balance sheet under AASB 17.Premiums should be gross of commissions, before profit share rebates, and inclusive of stamp duty, policy fees, loadings and discounts. This definition is consistent with the definition of premium defined in LRS 750.0. Life companies may use approximate methods to report this item if premiums which meet the outlined definition are not readily available (corresponding adjustments also need to be made in other accounts receivable or other accounts payable).Life companies must exclude any amount already allowed in adjusted policy liabilities to avoid double counting.This amount must be consistent with reinsurance premiums payable reported in LRS 112.0 as a component of liability adjustment (gross of tax effect).This item must not be reported as a component of other asset and liability items including adjusted policy liability related items reported in this Reporting Standard.
Reinsurance recoveries receivable(Items subject to Asset Risk Charge type)
This is the amount related to reinsurance recoveries due but not yet received which has been recognised within insurance and reinsurance contract liabilities and assets reported on the balance sheet under AASB 17.Life companies must exclude any amount already allowed in adjusted policy liabilities to avoid double counting.This amount must be consistent with reinsurance recoveries receivable reported in LRS 112.0 as a component of liability adjustment (gross of tax effect).This item must not be reported as a component of other asset and liability items including adjusted policy liability related items reported in this Reporting Standard.
Rental yield used in determination of property stress percent(Yields used in stress scenarios type)
This is the average rental yield for the property assets based on current leases and net of expenses.
Risk charge components
This item is calculated for each stress scenario type as the greater of zero and the impact on capital base amount.If the impact on capital base is less than zero then the risk charge component is equal to the absolute value of the impact on capital base.If the impact on capital base is greater than zero then the risk charge component is zero.
S
Seed capital(Items subject to Asset Risk Charge type)
This is the value of seed capital that has been transferred from the management fund of a friendly society to its benefit fund.
Stress scenario amount
This the contribution of the relevant items towards the change in capital base under stress scenario type.Specifications of the stresses are determined in accordance with LPS 114.
Stress scenario type
This consists of the stress scenarios that must be applied to individual items subject to Asset Risk Charge type under LPS 114. The scenarios are:real interest rates upwards stress;real interest rates downwards stress;expected inflation upwards stress;expected inflation downwards stress;currency upwards stress;currency downwards stress;equity stress;property stress;credit spreads stress; anddefault stress.
Subordinated debt(Items subject to Asset Risk Charge type)
This is the value of the subordinated debt that has been issued by the fund.This must exclude any subordinated debt recognised as Tier 2 Capital. This amount must be reported under Tier 2 Capital.
T
Tier 2 Capital
Tier 2 Capital includes components of capital that, to varying degrees, fall short of the quality of Tier 1 Capital but nonetheless contribute to the overall strength of the fund and its capacity to absorb losses.
Total off-balance sheet assets
This is the impact on capital base from the changes in off-balance sheet assets under the respective asset risk stress scenarios, to the extent that the off-balance sheet assets affect the on-balance sheet assets and liabilities.
Total off-balance sheet liabilities
This is the impact on capital base from the changes in off-balance sheet liabilities under the respective asset risk stress scenarios, to the extent that the off-balance sheet assets affect the on-balance sheet assets and liabilities.
U
Unlisted equities(Items subject to Asset Risk Charge type)
This is the value of equity interests in companies not listed on any stock exchange, after allowance for look-through (if applicable).This also includes equities held within Australia and overseas, which are not treated differently for the purpose of determining Asset Risk Charge.
Reporting tables
Reporting tables
Reporting tables
Tables described in this Reporting Standard list each of the data fields required to be reported. The data fields are listed sequentially in the column order that they will appear in the reported data set. Constraints on the data that can be reported for each field have also been provided.
Any specific combination of values in a table must not appear on more than one row in that table when reported.
Look-through treatment
Look-through treatment
Look-through treatment
For asset and liability items that have been treated on a look-through basis for the purpose of LPS 114, report the effective underlying exposures after adjustments for look-through as well as their resultant impacts on capital base respectively.
Derivative treatment
Derivative treatment
Derivative treatment
All asset and liability items should be reported gross of impacts from derivatives. The fair value of open derivatives positions should be captured accordingly.
Assets and liabilities subject to stress
Assets and liabilities subject to stress
Assets and liabilities subject to stress
Exclude all components of assets that are either:
supporting investment-linked liabilities;
deducted from total assets for the purpose of determining capital base; or
subject to Asset Concentration Risk Charge
from the asset categories reported under this Reporting Standard.
Asset stress scenarios
Asset stress scenarios
Asset stress scenarios
Life companies are not required to report the components of impact on capital base for asset stress scenarios where it is determined that those scenarios would improve the capital base (i.e. result in a zero-risk charge component) as at the end of the relevant reporting period.
Life companies must report all asset stress scenarios that would give rise to a positive risk charge component.
Definitions
Definitions
Definitions
Terms highlighted in bold italics indicate that the definition is provided in these instructions.
This is the difference between the adjusted policy liabilities (gross of reinsurance) and the adjusted policy liabilities (net of reinsurance). The adjusted policy liabilities are determined in accordance with Prudential Standard LPS 112 Capital Adequacy: Measurement of Capital (LPS 112).
Adjusted policy liabilities (net of reinsurance) - exclude discretionary component(Items subject to Asset Risk Charge type)
This is the amount of adjusted policy liabilities (net of reinsurance) determined in accordance with LPS 112.This excludes the discretionary component of adjusted policy liabilities.This amount is net of additional tax benefits / (liabilities) recognised from liability adjustments. This amount must be reduced by the value of all tax effects associated with liability adjustments. Adjusted pre-stress amount of deferred tax assets and deferred tax liabilities must be increased by the tax effects. This reporting approach is consistent with the Reporting Standard LRS 112 Determination of Capital Base (LRS 112).
Adjusted pre-stress amount
This is the value of all relevant items of the reporting fund. This amount should be reported before the application of any designated asset stresses, net of the effect of any look-through adjustments and applying the fair value requirements outlined in LPS 112 and LPS 114.
Aggregated risk charge component
This is the aggregated result of applying the aggregation formula over risk charge components in accordance with LPS 114. The formula allows for the likelihood of the asset risk stress scenarios occurring simultaneously.
Assets deducted from capital base(Items subject to Asset Risk Charge type)
This is the value of assets that have been deducted from assets not supporting investment-linked liabilities for the purpose of determining the fund's capital base (other than deferred tax assets).These will not be subject to the asset risk stresses.
Assets not supporting investment-linked liabilities
This is the fair value of all assets not supporting investment-linked liabilities.This item is calculated as the sum of:cash;investment property;listed equities;unlisted equities;non-indexed interest-bearing securities;indexed interest-bearing securities;loans;other investment assets (exclude derivative financial instruments);current tax assets;deferred tax assets;derivative financial instruments (assets);premiums receivable;reinsurance recoveries receivable;other accounts receivable;other non-investment assets; andadjusted policy liabilities ceded (reinsurance assets) (for the calculation of default stress only).This item (hence the asset components outlined above) must exclude:assets supporting investment-linked liabilities;assets deducted from capital base; andassets subject to Asset Concentration Risk Charge.
Assets subject to Asset Concentration Risk Charge(Items subject to Asset Risk Charge type)
This is the value of assets in excess of their respective asset concentration limits and therefore is subject to asset concentration risk charge.These will not be subject to the asset risk stresses.
Assets subject to credit spreads stress type
This is the category of assets subject to credit spreads stress. The options are:bonds and other non-securitised assets;structured and securitised assets; andre-securitised assets.
Assets supporting investment-linked liabilities
This is the fair value of assets supporting investment-linked policies that do not have performance guarantees. The asset risk stresses are not applied to these assets or their associated adjusted policy liabilities.
C
C
C
Cash(Items subject to Asset Risk Charge type)
This is the amount of the cash assets which includes any cash at call up to 30 days as well as any cash held with non-bank financial institutions.Note that this item does not include negotiable certificates of deposits, which should be reported under non-indexed interest-bearing securities or indexed interest bearing securities.
Claims payable(Items subject to Asset Risk Charge type)
This is the amount related to claims due but not yet paid which has been recognised within insurance and reinsurance contract liabilities and assets reported on the balance sheet under AASB 17 Insurance Contracts (AASB 17).Life companies must exclude any amount already allowed in adjusted policy liabilities to avoid double counting.This amount must be consistent with claims payable reported in LRS 112.0 as a component of liability adjustment (gross of tax effect).This item must not be reported as a component of other asset and liability items including adjusted policy liability related items reported in this Reporting Standard.
Counterparty grade
This is the classification applied to an investment or exposure as per the requirements of LPS 001. Assets guaranteed by an Australian state or territory government must be reported in the counterparty grade that applies after rating up one grade in accordance with LPS 114.
Credit spread fair value amount
This is the fair value of assets that are subject to the credit spreads stress.
Credit spread stressed amount
This is the stressed value of assets that are subject to the credit spreads stress.
Credit spreads stress(Stress scenario type)
This is the impact on the fund's capital base of an increase in credit spreads and the risk of default and is calculated in accordance with LPS 114.This stress applies to interest-bearing assets, including cash deposits and floating rate assets. Credit derivatives and zero-coupon instruments such as bank bills must also be included. This stress also applies to liabilities whose value depends on the illiquidity premium.
Currency downwards stress(Stress scenario type)
This is the impact on the fund's capital base of downward changes in foreign currency exchange rates and is calculated in accordance with LPS 114.
Currency upwards stress(Stress scenario type)
This is the impact on the fund's capital base of upward changes in foreign currency exchange rates and is calculated in accordance with LPS 114.
Current tax assets(Items subject to Asset Risk Charge type)
This is the value of current tax assets determined in accordance with Australian Accounting Standards.
Current tax liabilities(Items subject to Asset Risk Charge type)
This is the value of current tax liabilities determined in accordance with Australian Accounting Standards.
D
D
D
Default stress(Stress scenario type)
This is the impact on a fund's capital base of the risk of counterparty default and is calculated in accordance with LPS 114.It applies to reinsurance assets, over the counter derivatives, unpaid premiums and all other credit or counterparty exposures that have not been affected by the credit spreads stress.
Deferred tax assets(Items subject to Asset Risk Charge type)
This is the value of deferred tax assets determined in accordance with Australian Accounting Standards.Adjusted pre-stress amounts of deferred tax assets must be increased by the value of tax effects associated with liability adjustments. This reporting approach is consistent with LRS 112.For stress scenario amount, this includes tax benefits arising from the application of the asset risk stresses, all of which would be recognised as admissible.
Deferred tax liabilities(Items subject to Asset Risk Charge type)
This is the value of deferred tax liabilities determined in accordance with Australian Accounting Standards.Adjusted pre-stress amounts of deferred tax liabilities must be increased by the value of tax effects associated with liability adjustments. This reporting approach is consistent with LRS 112.For stress scenario amount, this includes tax liabilities arising from the application of the asset risk stresses.
Derivative financial instruments (assets)(Items subject to Asset Risk Charge type)
This is the value of all open derivative positions reported as assets.
Derivative financial instruments (liabilities)(Items subject to Asset Risk Charge type)
This is the value of all open derivatives positions reported as liabilities.
Discretionary component of adjusted policy liabilities (net of reinsurance)(Items subject to Asset Risk Charge type)
This is the amount by which the adjusted policy liabilities would reduce if:future bonuses and discretionary additions were set to zero;policy owner retained profits, investment fluctuation reserves and unallocated surplus were set to zero; andsurrender values were reduced to minimum termination values (or contractual minimum surrender values if greater).
Dividend yield used in determination of equity stress (%) percent(Yields used in stress scenarios type)
This is the dividend yield of the ASX 200 index used in determining the reduction in equity asset values under the equity stress scenario.
E
E
E
Earnings yield used in determination of property stress percent(Yields used in stress scenarios type)
This is the average earnings yield before taxes used in determining the reduction in infrastructure asset values under the property stress scenario.
Equity stress(Stress scenario type)
This is the impact on the fund's capital base of a fall in equity and other asset values and is calculated in accordance with LPS 114.This stress applies to both listed and unlisted equity assets and to any other assets that are not considered in other asset risk stresses. This stress also includes an increase to equity volatility.
Expected inflation stress measures the impact on the fund's capital base of downward changes to expected Consumer Price Index inflation rates. It also affects nominal interest rates.This item reports the impact on the capital base of the fund arising from the application of the downward expected inflation stress and is calculated in accordance with LPS 114.
Expected inflation stress measures the impact on the fund's capital base of upward changes to expected Consumer Price Index inflation rates. It also affects nominal interest rates.This item reports the impact on the capital base of the fund arising from the application of the upward expected inflation stress and is calculated in accordance with LPS 114.
I
I
I
Impact of diversification
This item must be calculated as the sum of the risk charge components used in calculating the aggregated risk charge component, less the aggregated risk charge component as set out in LPS 114.
Impact on capital base
This shows the impact on the capital base of each asset risk stress scenario as set out in LPS 114.This item is calculated for each stress scenario type as the sum of:assets not supporting investment-linked liabilities;liabilities excluding adjusted policy liabilities;adjusted policy liabilities (net of reinsurance) - exclude discretionary component;discretionary component of adjusted policy liabilities (net of reinsurance);off-balance sheet exposures;seed capital; andTier 2 Capital.
Indexed interest-bearing securities(Items subject to Asset Risk Charge type)
This is the amount of all interest-bearing securities held that are indexed.
Investment property(Items subject to Asset Risk Charge type)
This is the amount of the investment property assets which includes properties acquired or held which is available for sale as well as infrastructure assets, after allowance for accumulated depreciation.Owner-occupied property should be reported as other non-investment assets.
L
L
L
Liabilities excluding adjusted policy liabilities
This is the value of liabilities of the fund and is calculated as the sum of:current tax liabilities;deferred tax liabilities;derivative financial instruments (liabilities);subordinated debt;claims payable;reinsurance premiums payable;other accounts payables; andother liabilities.This does not include any amount recognised as Tier 2 Capital and seed capital.
Liability adjustments
This is the difference between the adjusted policy liabilities determined in accordance with LPS 112 and net life contract liabilities after adjusting for accounts receivable and accounts payable. This item includes any tax effects.Net life contract liabilities is the sum of the insurance, reinsurance and investment contract liabilities (net of insurance and reinsurance assets) disclosed in the statutory accounts.
Life company fund
This means the type of life company fund. Possible types are:statutory fund;shareholder fund;benefit fund; andmanagement fund.
Listed equities(Items subject to Asset Risk Charge type)
This is the value of equity interests in companies listed on the ASX or overseas exchange, after allowance for look-through (if applicable).This also includes equities held within Australia and overseas, which are not treated differently for the purpose of determining Asset Risk Charge.
Loans(Items subject to Asset Risk Charge type)
This is the value of loans. Loans include financial leases and mortgages, and are typically non-negotiable on the secondary market.
N
N
N
Non-indexed interest-bearing securities(Items subject to Asset Risk Charge type)
This is the amount of all interest-bearing securities held that are not indexed.
O
O
O
Off-balance sheet exposures
This is the value of off-balance sheet exposures that are subject to the Asset Risk Charge. This is calculated as the sum of:total off-balance sheet assets; andtotal off-balance sheet liabilities.
Other accounts payable
This is the amount related to other amounts due but not yet paid which has been recognised within insurance and reinsurance contract liabilities and assets reported on the balance sheet under AASB 17. This may include (but is not limited to) rebates, fees and commissions.Life companies must exclude any amount already allowed in adjusted policy liabilities to avoid double counting.This amount must be consistent with other accounts payable reported in LRS 112.0 as a component of liability adjustment (gross of tax effect).This item must not be reported as a component of other asset and liability items including adjusted policy liability related items reported in this Reporting Standard.
Other accounts receivable
This is the amount related to other amounts due but not yet received which has been recognised within insurance and reinsurance contract liabilities and assets reported on the balance sheet under AASB 17. This may include (but is not limited to) rebates, fees and commissions.Life companies must exclude any amount already allowed in adjusted policy liabilities to avoid double counting.This amount must be consistent with other accounts receivable reported in LRS 112.0 as a component of liability adjustment (gross of tax effect).This item must not be reported as a component of other asset and liability items including adjusted policy liability related items reported in this Reporting Standard.
Other investment assets (exclude derivative financial instruments)(Items subject to Asset Risk Charge type)
This is the value of all other investment assets not specifically categorised as:cash;investment property;listed equities;unlisted equities;non-indexed interest-bearing securities;indexed interest-bearing securities; orloans.
Other liabilities(Items subject to Asset Risk Charge type)
This consists of all liabilities excluding adjusted policy liabilities not specifically categorised as:current tax liabilities;deferred tax liabilities;derivative financial instruments (liabilities);subordinated debt;claims payable;reinsurance premiums payable; orother accounts payables.
Other non-investment assets(Items subject to Asset Risk Charge type)
This is the value of all non-investment assets not categorised as:current tax assets;deferred tax assets;derivative financial instruments (assets);premiums receivable;reinsurance recoveries receivable; orother accounts receivable.
P
P
P
Premiums receivable(Items subject to Asset Risk Charge type)
This is the amount related to insurance premiums due but not yet received which has been recognised within insurance and reinsurance contract liabilities and assets reported on the balance sheet under AASB 17.Premiums should be gross of reinsurance and commissions, before profit share rebates, and inclusive of stamp duty, policy fees, loadings and discounts. This definition is consistent with the definition of premium defined in Reporting Standard LRS 750 Claims and Disputes (LRS 750.0). Life companies may use approximate methods to report this item if premiums which meet the outlined definition are not readily available (corresponding adjustments also need to be made in other accounts receivable or other accounts payable).Life companies must exclude any amount already allowed in adjusted policy liabilities to avoid double counting.This amount must be consistent with premiums receivable reported in LRS 112.0 as a component of liability adjustment (gross of tax effect).This item must not be reported as a component of other asset and liability items including adjusted policy liability related items reported in this Reporting Standard.
Property stress(Stress scenario type)
This is the impact on a fund's capital base of changes in property and infrastructure asset values and is calculated in accordance with LPS 114.
R
R
R
Real interest rates downwards stress(Stress scenario type)
Real interest rates stress measures the impact on a fund's capital base of downward changes in real interest rates. It also affects nominal interest rates.This item is calculated in accordance with LPS 114.
Real interest rates upwards stress(Stress scenario type)
Real interest rates stress measures the impact on a fund's capital base of upward changes in real interest rates. It also affects nominal interest rates.This item is calculated in accordance with LPS 114.
Reinsurance premiums payable
This is the amount related to reinsurance premiums due but not yet paid which has been recognised within insurance and reinsurance contract liabilities and assets reported on the balance sheet under AASB 17.Premiums should be gross of commissions, before profit share rebates, and inclusive of stamp duty, policy fees, loadings and discounts. This definition is consistent with the definition of premium defined in LRS 750.0. Life companies may use approximate methods to report this item if premiums which meet the outlined definition are not readily available (corresponding adjustments also need to be made in other accounts receivable or other accounts payable).Life companies must exclude any amount already allowed in adjusted policy liabilities to avoid double counting.This amount must be consistent with reinsurance premiums payable reported in LRS 112.0 as a component of liability adjustment (gross of tax effect).This item must not be reported as a component of other asset and liability items including adjusted policy liability related items reported in this Reporting Standard.
Reinsurance recoveries receivable(Items subject to Asset Risk Charge type)
This is the amount related to reinsurance recoveries due but not yet received which has been recognised within insurance and reinsurance contract liabilities and assets reported on the balance sheet under AASB 17.Life companies must exclude any amount already allowed in adjusted policy liabilities to avoid double counting.This amount must be consistent with reinsurance recoveries receivable reported in LRS 112.0 as a component of liability adjustment (gross of tax effect).This item must not be reported as a component of other asset and liability items including adjusted policy liability related items reported in this Reporting Standard.
Rental yield used in determination of property stress percent(Yields used in stress scenarios type)
This is the average rental yield for the property assets based on current leases and net of expenses.
Risk charge components
This item is calculated for each stress scenario type as the greater of zero and the impact on capital base amount.If the impact on capital base is less than zero then the risk charge component is equal to the absolute value of the impact on capital base.If the impact on capital base is greater than zero then the risk charge component is zero.
S
S
S
Seed capital(Items subject to Asset Risk Charge type)
This is the value of seed capital that has been transferred from the management fund of a friendly society to its benefit fund.
Stress scenario amount
This the contribution of the relevant items towards the change in capital base under stress scenario type.Specifications of the stresses are determined in accordance with LPS 114.
Stress scenario type
This consists of the stress scenarios that must be applied to individual items subject to Asset Risk Charge type under LPS 114. The scenarios are:real interest rates upwards stress;real interest rates downwards stress;expected inflation upwards stress;expected inflation downwards stress;currency upwards stress;currency downwards stress;equity stress;property stress;credit spreads stress; anddefault stress.
Subordinated debt(Items subject to Asset Risk Charge type)
This is the value of the subordinated debt that has been issued by the fund.This must exclude any subordinated debt recognised as Tier 2 Capital. This amount must be reported under Tier 2 Capital.
T
T
T
Tier 2 Capital
Tier 2 Capital includes components of capital that, to varying degrees, fall short of the quality of Tier 1 Capital but nonetheless contribute to the overall strength of the fund and its capacity to absorb losses.
Total off-balance sheet assets
This is the impact on capital base from the changes in off-balance sheet assets under the respective asset risk stress scenarios, to the extent that the off-balance sheet assets affect the on-balance sheet assets and liabilities.
Total off-balance sheet liabilities
This is the impact on capital base from the changes in off-balance sheet liabilities under the respective asset risk stress scenarios, to the extent that the off-balance sheet assets affect the on-balance sheet assets and liabilities.
U
U
U
Unlisted equities(Items subject to Asset Risk Charge type)
This is the value of equity interests in companies not listed on any stock exchange, after allowance for look-through (if applicable).This also includes equities held within Australia and overseas, which are not treated differently for the purpose of determining Asset Risk Charge.
More sections below
Source text: opening excerpt
Sourced from the Federal Register of Legislation (legislation.gov.au), CC BY 4.0.
Reporting Standard LRS 114.0 Reporting Standard LRS 114.0
Reporting Standard LRS 114.0
Asset Risk Charge
Objective of this Reporting Standard
This Reporting Standard sets out the requirements for the provision of information to APRA relating to a life insurance company’s Asset Risk Charge.
It includes associated specific instructions and must be read in conjunction with Reporting Standard LRS 001 Reporting Requirements (LRS 001), including the general instruction guide, and Prudential Standard LPS 114 Capital Adequacy: Asset Risk Charge (LPS 114).
Authority
This Reporting Standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001.
Purpose
The information reported to APRA under this Reporting Standard is used by APRA for the purpose of prudential supervision including assessing compliance with capital adequacy standards.
Application and commencement
This Reporting Standard applies to all life insurance companies including friendly societies (together referred to as ‘life companies’) registered under the Life Insurance Act 1995 (Life Act). This Reporting Standard applies for reporting periods ending on or after 1 July 2023.
Information required
A life company must provide APRA with the information required by this Reporting Standard for each reporting period.
The information reported to APRA under this Reporting Standard is not required to be given to policy owners pursuant to section 124 of the Life Act. It does not constitute a reporting document for the purposes of section 124.
Method of submission
The information required by this Reporting Standard must be given to APRA:
(a) in electronic format using an electronic method available on APRA’s website; or
(b) by a method notified by APRA prior to submission.
Reporting periods and due dates
Subject to paragraph 8, a life company must provide the information required by this Reporting Standard:
(a) in respect of each quarter based on the financial year of the life company on an unaudited basis; and
(b) in respect of each financial year of the life company on an audited basis.
Provides detailed reporting tables and field definitions: (1) pre-stress adjusted balance sheet by fund; (2) impact of each stress scenario on capital base; (3) credit‑spread exposures by counterparty grade; and (4) yields used in stress calculations (Specific instructions, Tables 1–4).
**Who this affects
Directly affects all life insurance companies and friendly societies registered under the Life Insurance Act 1995: their finance, actuarial, risk and compliance teams, and external auditors (paras 3, 11, 14–15).
Indirect effects: asset managers, custodians and reinsurance counterparties who must supply data or be modelled on a look-through basis.
**Why APRA says it matters (stated purpose) and how that maps to costs and choices
Stated purpose: APRA will use the information for prudential supervision and to assess compliance with capital adequacy standards (para 2).
Testing that claim against trade-offs and implementation effects:
Data quality vs cost: APRA requires audited/limited-assurance review of systems and at least five submissions per year (paras 7, 11). That increases assurance and frequency of supervisory data but raises ongoing audit and systems costs for life companies (paras 11–13).
Standardisation vs operational burden: the instrument standardises definitions and requires look‑through and detailed breakdowns (Definitions; General instructions). This improves comparability for supervision but forces firms to align accounting, actuarial and portfolio systems to LPS/LRS definitions (cross-references to LPS 114, LPS 112, LPS 001 and LRS 001), creating implementation and mapping effort.
Supervisory flexibility vs regulatory uncertainty: APRA may vary reporting requirements or frequencies for particular firms (paras 8, 16). That allows tailored supervision (useful for outliers) but creates potential uncertainty for firms about future reporting burdens.
Incentives for asset allocation and structuring: detailed, stress-based reporting and explicit exclusion of certain assets (e.g. assets supporting investment-linked liabilities or assets subject to concentration charge) exposes which holdings generate higher risk charges (General instructions; Definitions). Firms may reallocate portfolios, change use of reinsurance or alter product design to reduce reported risk charges — the instrument therefore alters commercial incentives.
Concentrated compliance costs: the level of detail (counterparty grades, asset types, fund-level breakdown) and auditor assurance disproportionately benefits larger firms with stronger data infrastructure; smaller life companies may face higher relative compliance costs.
**Who pays, who decides, and likely behaviour changes (plain sentences)
Who pays: the reporting life company bears the cost of data collection, internal controls, auditor review and any system changes (paras 4, 11–13).
Who decides: APRA sets the reporting format and can issue written notices to vary periods or requirements for a particular company; the board and senior management authorise submissions; auditors perform the assurance work (paras 8, 10, 11, 14–16).
Behaviour changes likely: firms will invest in systems and controls; may adjust asset allocations and concentrations to reduce stress impacts; and may change contract or reinsurance structures to alter look-through exposures or the allocation of assets across fund types (Definitions; Specific instructions).
**Implementation and compliance risks
Cross-referencing to multiple prudential and accounting standards requires precise mapping from statutory accounts to the reporting fields (see links to LPS 114, LPS 112, LPS 001, LRS 001 and LPS 310 in text).
Duplicate and highly detailed definitions increase the chance of operational error and inconsistent interpretation across firms.
APRA discretion to change reporting for particular firms can lead to uneven reporting burdens and planning difficulty.
**Bottom line (mechanical summary in one line)
This instrument imposes standardized, frequent and audited data submissions on life insurers about their asset exposures and the capital impact of specified stress scenarios so APRA can monitor capital adequacy under LPS 114, while giving APRA scope to tailor reporting to individual firms (paras 2–9, 11–16).
Note 1: This means that information provided under this Reporting Standard will be submitted five times for a full financial year.
Note 2: The annual audited information provided under this Reporting Standard must be submitted in conjunction with the annual auditor’s report, as required under Prudential Standard LPS 310 Audit and Related Matters.
If, having regard to the particular circumstances of a life company, APRA considers it necessary or desirable to obtain information more or less frequently than as provided by subparagraph 7(a) or 7(b), APRA may, by notice in writing, change the reporting periods, or specify reporting periods, for the particular life company.
The information required by this Reporting Standard in respect of a life company must be provided to APRA:
(a) in the case of quarterly information, within 20 business days after the end of the reporting period to which the information relates;
(b) in the case of annual information, within three months after the end of the reporting period to which the information relates; or
(c) in the case of information provided in accordance with paragraph 8, within the time specified by notice in writing.
APRA may, in writing, grant a life company an extension of a due date, in which case the new due date will be the date on the notice of extension.
Note: For the avoidance of doubt, if the due date for a particular reporting period falls on a day other than a usual business day, a life company is nonetheless required to submit the information required no later than the due date.
Quality control
The information provided by a life company under this Reporting Standard must be the product of systems, processes and controls that have been reviewed and tested by the Auditor of the life company. This will require the Auditor to review and test the life company’s systems, processes and controls supporting the reporting of the information to enable the life company to provide reliable financial information to APRA. This review and testing must be done on:
(a) an annual basis or more frequently if necessary to enable the Auditor to form an opinion on the reliability and accuracy of data; and
(b) at least a limited assurance engagement consistent with professional standards and guidance notes issued by the Auditing and Assurance Standards Board as may be amended from time to time, to the extent that they are not inconsistent with the requirements of Prudential Standard LPS 310 Audit and Related Matters.
All information provided by a life company under this Reporting Standard must be subject to systems, processes and controls developed by the life company for the internal review and authorisation of that information. It is the responsibility of the Board and senior management of the life company to ensure that an appropriate set of policies and procedures for the authorisation of data submitted to APRA is in place.
Actuarial valuations and calculations included in or used in the preparation of the information provided to APRA must be in accordance with the prudential standards in force for the reporting period. However, life companies may use reasonable estimates when preparing information that will not be audited (i.e. for the first four submissions of information for a full financial year).
Authorisation
When an officer or agent of a life company provides the information required by this Reporting Standard using an electronic format, the officer or agent must digitally sign the relevant information using a digital certificate acceptable to APRA.
An officer or agent of a life company who submits information under this Reporting Standard must be authorised by either:
(a) the Principal Executive Officer of the life company; or
(b) the Chief Financial Officer of the life company.
Variations
APRA may, by written notice to the life company, vary the reporting requirements of this Reporting Standard in relation to that life company.
Transition
A life company must report under the old reporting standard in respect of a transitional reporting period. For these purposes:
old reporting standard means the reporting standard revoked in the determination making this Reporting Standard; and
transitional reporting period means a reporting period under the old reporting standard:
(a) which ended before 1 July 2023; and
(b) in relation to which the life company was required, under the old reporting standard, to report by a date on or after the date of revocation of the old reporting standard.
Note: For the avoidance of doubt, if a life company was required to report under an old reporting standard, and the reporting documents were due before the date of revocation of the old reporting standard, the life company is still required to provide any overdue reporting documents in accordance with the old reporting standard.
Interpretation
In this Reporting Standard:
(a) unless the contrary intention appears, words and expressions have the meanings given to them in Prudential Standard LPS 001 Definitions (LPS 001); and
(b) the following definitions are applicable:
Auditor means an auditor appointed under paragraph 83 of the Life Act.
capital adequacy standards means the prudential standards which relate to capital adequacy as defined in LPS 001.
Chief Financial Officer means the chief financial officer of the life company, by whatever name called.
financial year has the meaning in the Corporations Act 2001.
general instruction guide refers to the general instruction guide set out in Attachment A of LRS 001.
Life Act means the Life Insurance Act 1995.
Principal Executive Officer means the principal executive officer of the life company, by whatever name called, and whether or not he or she is a member of the governing board of the entity.
reporting period means a reporting period under subparagraph 7(a) or 7(b) or, if applicable, paragraph 8.
Unless the contrary intention appears, a reference to an Act, Prudential Standard, Reporting Standard, Australian Accounting or Auditing Standard is a reference to the instrument as in force from time to time.
Asset Risk Charge Asset Risk Charge
Reporting Standard LRS 114.0
Asset Risk Charge
Objective of this Reporting Standard
This Reporting Standard sets out the requirements for the provision of information to APRA relating to a life insurance company’s Asset Risk Charge.
It includes associated specific instructions and must be read in conjunction with Reporting Standard LRS 001 Reporting Requirements (LRS 001), including the general instruction guide, and Prudential Standard LPS 114 Capital Adequacy: Asset Risk Charge (LPS 114).
Authority
This Reporting Standard is made under section 13 of the Financial Sector (Collection of Data) Act 2001.
Purpose
The information reported to APRA under this Reporting Standard is used by APRA for the purpose of prudential supervision including assessing compliance with capital adequacy standards.
Application and commencement
This Reporting Standard applies to all life insurance companies including friendly societies (together referred to as ‘life companies’) registered under the Life Insurance Act 1995 (Life Act). This Reporting Standard applies for reporting periods ending on or after 1 July 2023.
Information required
A life company must provide APRA with the information required by this Reporting Standard for each reporting period.
The information reported to APRA under this Reporting Standard is not required to be given to policy owners pursuant to section 124 of the Life Act. It does not constitute a reporting document for the purposes of section 124.
Method of submission
The information required by this Reporting Standard must be given to APRA:
(a) in electronic format using an electronic method available on APRA’s website; or
(b) by a method notified by APRA prior to submission.
Reporting periods and due dates
Subject to paragraph 8, a life company must provide the information required by this Reporting Standard:
(a) in respect of each quarter based on the financial year of the life company on an unaudited basis; and
(b) in respect of each financial year of the life company on an audited basis.
Note 1: This means that information provided under this Reporting Standard will be submitted five times for a full financial year.
Note 2: The annual audited information provided under this Reporting Standard must be submitted in conjunction with the annual auditor’s report, as required under Prudential Standard LPS 310 Audit and Related Matters.
If, having regard to the particular circumstances of a life company, APRA considers it necessary or desirable to obtain information more or less frequently than as provided by subparagraph 7(a) or 7(b), APRA may, by notice in writing, change the reporting periods, or specify reporting periods, for the particular life company.
The information required by this Reporting Standard in respect of a life company must be provided to APRA:
(a) in the case of quarterly information, within 20 business days after the end of the reporting period to which the information relates;
(b) in the case of annual information, within three months after the end of the reporting period to which the information relates; or
(c) in the case of information provided in accordance with paragraph 8, within the time specified by notice in writing.
APRA may, in writing, grant a life company an extension of a due date, in which case the new due date will be the date on the notice of extension.
Note: For the avoidance of doubt, if the due date for a particular reporting period falls on a day other than a usual business day, a life company is nonetheless required to submit the information required no later than the due date.
Quality control
The information provided by a life company under this Reporting Standard must be the product of systems, processes and controls that have been reviewed and tested by the Auditor of the life company. This will require the Auditor to review and test the life company’s systems, processes and controls supporting the reporting of the information to enable the life company to provide reliable financial information to APRA. This review and testing must be done on:
(a) an annual basis or more frequently if necessary to enable the Auditor to form an opinion on the reliability and accuracy of data; and
(b) at least a limited assurance engagement consistent with professional standards and guidance notes issued by the Auditing and Assurance Standards Board as may be amended from time to time, to the extent that they are not inconsistent with the requirements of Prudential Standard LPS 310 Audit and Related Matters.
All information provided by a life company under this Reporting Standard must be subject to systems, processes and controls developed by the life company for the internal review and authorisation of that information. It is the responsibility of the Board and senior management of the life company to ensure that an appropriate set of policies and procedures for the authorisation of data submitted to APRA is in place.
Actuarial valuations and calculations included in or used in the preparation of the information provided to APRA must be in accordance with the prudential standards in force for the reporting period. However, life companies may use reasonable estimates when preparing information that will not be audited (i.e. for the first four submissions of information for a full financial year).
Authorisation
When an officer or agent of a life company provides the information required by this Reporting Standard using an electronic format, the officer or agent must digitally sign the relevant information using a digital certificate acceptable to APRA.
An officer or agent of a life company who submits information under this Reporting Standard must be authorised by either:
(a) the Principal Executive Officer of the life company; or
(b) the Chief Financial Officer of the life company.
Variations
APRA may, by written notice to the life company, vary the reporting requirements of this Reporting Standard in relation to that life company.
Transition
A life company must report under the old reporting standard in respect of a transitional reporting period. For these purposes:
old reporting standard means the reporting standard revoked in the determination making this Reporting Standard; and
transitional reporting period means a reporting period under the old reporting standard:
(a) which ended before 1 July 2023; and
(b) in relation to which the life company was required, under the old reporting standard, to report by a date on or after the date of revocation of the old reporting standard.
Note: For the avoidance of doubt, if a life company was required to report under an old reporting standard, and the reporting documents were due before the date of revocation of the old reporting standard, the life company is still required to provide any overdue reporting documents in accordance with the old reporting standard.
Interpretation
In this Reporting Standard:
(a) unless the contrary intention appears, words and expressions have the meanings given to them in Prudential Standard LPS 001 Definitions (LPS 001); and
(b) the following definitions are applicable:
Auditor means an auditor appointed under paragraph 83 of the Life Act.
capital adequacy standards means the prudential standards wh
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