International businessInternational business

International business

Level 2 insurance groups are required to report financial data on both Australian and international exposures. For the purposes of segment reporting, Level 2 insurance groups are not to follow the requirements under the Australian accounting standards when completing this form.

For prudential reporting purposes ‘Australian Business’ is as defined in Prudential Standard GPS 001 Definitions (GPS 001) and means insurance business carried on by any Level 1 insurer within a Level 2 Insurance group. Therefore, all insurance business written by Level 1 insurers is deemed to be Australian business. ‘International Business’[3] is insurance business carried on by an entity within the group that is not authorised under the Insurance Act 1973.[4] This treatment is different to the requirements of AASB 1023 ‘General Insurance Contracts’ and other Australian accounting standards.

For entities which are not insurers within the Level 2 insurance group, items should be reported as:

• ‘Australian Business’ when they relate to an entity incorporated in Australia; and
• ‘International Business’ where they relate to an entity incorporated outside of Australia.

For prudential reporting purposes ‘Level 1 insurer’ is as defined in Prudential Standard GPS 001 Definitions (GPS 001).

Inter-region elimination

The value of inter-region or inter-segment transactions, which are eliminated on consolidation, need to be reported as negative values under ‘Inter-region elimination’.

Reporting Supplement

In determining the Investment Risk Capital Charge for off-balance sheet exposures, the Level 2 insurance group will need to complete the necessary calculations outside of this reporting form. These calculations do not constitute part of the formal accounts but must be submitted to APRA separately unless APRA advises otherwise. The reporting supplement is to be submitted to the Level 2 insurance group’s APRA Responsible Supervisor.

Investment Capital Factors

For the purposes of this form use the asset grade scales and the applicable investment capital factors set out in GPS 114 Capital Adequacy: Investment Risk Capital Charge (GPS 114).

Specific instructions

This form is to be completed by separating out ‘Australian business’ and aggregate ‘international business’. The value of inter-region or inter-segment transactions, which are eliminated on consolidation, need to be reported under ‘Inter-region elimination’. The total business for the group will be the sum of the Australian business, international business and any inter-region elimination.

The form is separated into the following parts:

1. Credit Substitutes Provided and Risk Charge
2. Charges Granted and Risk Charge
3. Credit Support Received

The requirements for each of these are detailed below: