Financial Sector (Collection of Data) (reporting standard) determination No. 25 of 2009 - GRS 301.0_G (2009) - Reinsurance Assets and Risk Charge
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Amounts recorded are to be recognised in accordance with Australian accounting standards, notably AASB 1023 'General Insurance Contracts' except where otherwise indicated.
Investment capital factor %
This column for each form discloses the appropriate investment capital factor for the asset type in accordance with GPS 111.
Investment risk charge
This column for each form will calculate the appropriate investment risk charge in accordance with GPS 111.
Reinsurance recoverables on outstanding claims and paid claims
Reinsurance recoverables has the same meaning as in GPS 001, where any amounts due to an insurer from a reinsurer that arises from the recognition of outstanding claims liabilities referred to in the capital standards[14] and GPS 311. This is distinguished from expected reinsurance recoveries and forms part of reinsurance assets. Reinsurance recoverables on paid claims should also be recognised.
Reinsurance recoverables are to be reported on the same basis by which outstanding claims liabilities are valued and reported in GRF 210.0_G Outstanding Claims Liability – Insurance Risk Charge (Level 2 Insurance Group), i.e. at a 75 per cent probability of sufficiency. That is, the amount recorded on this form may differ from the amount recorded on GRF 300.0_G Statement of Financial Position (Level 2 Insurance Group) (GRF 300.0_G) at item 3.4 or item 3.6 particularly where Outstanding Claims Liability is recorded at a different probability of sufficiency in GRF 300.0_G.
Report assets which derive from reinsurance activities, other than unpaid premiums subject to the specific comments where a legal right of set-off exists.
Include the amount due from reinsurers or retrocessionaires. Reinsurance recoverables on outstanding claims is the reinsured portion of the outstanding claims to be recovered from reinsurers on settling the outstanding claims.
Reinsurance Documentation Test
The amounts reported under items 1.3 to 1.6 should only include the amounts due from reinsurers under reinsurance contracts that meet the reinsurance documentation test[15] (refer to Prudential Standard GPS 112 Capital Adequacy: Measurement of Capital (GPS 112)).
Report the net amount on Australian business due from reinsurers under reinsurance contracts that do not meet the reinsurance documentation test in item 1.7.
Report the net amount related to reinsurance contracts on international business that do not meet relevant reinsurance documentation tests in a local jurisdiction (and a deduction is required in that jurisdiction) in item 1.9. As these amounts are deducted from capital, they do not attract a risk charge in GRF 301.0_G Reinsurance Assets and Risk Charge (Level 2 Insurance Group).
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Governing Law Requirements
For reinsurance contracts entered into by the Level 2 insurance group incepting on or after 31 December 2008, the amounts reported under items 1.3 to 1.6 should only include the amounts due from reinsurers where the contract meets the ‘governing law requirements’[16], specified in the Prudential Standard GPS 230 Reinsurance Management (GPS 230). GPS 230 specifies that
The governing law of the reinsurance contract is Australian law; and
Any disputes that fall to be determined by a court are to be heard in an Australian court.
Report the net amount due from reinsurers under reinsurance contracts entered into by the Level 2 insurance group incepting on or after 31 December 2008 that do not meet the governing law requirements in item 1.8. As this amount is deducted from capital, it is not risk charged in GRF 301.0_G Reinsurance Assets and Risk Charge (Level 2 Insurance Group).
Reinsurance receivables from non-APRA-authorised reinsurers overdue for more than six months
The amounts reported under items 1.4 and 1.5 should not include the amounts that are receivable from non-APRA-authorised reinsurers where the following paragraph applies:
GPS 114 specifies that with effect from 1 January 2009, applicable risk charge of 100% applies to a reinsurance recoverable due from non-APRA-authorised reinsurers if:
The recoverable has become a receivable (i.e. it is due and payable); and
The receivable is overdue for more than six months since a request for payment has been made to the reinsurer; and
There is no formal dispute between the insurer and reinsurer in relation to that receivable. Any dispute between the insurer and reinsurer in relation to a receivable arising from a reinsurance recoverable would have been taken into account in the valuation processes provided for under GPS 311.
Report the amount of any receivable for which the above paragraph applies in item 1.6.
Reinsurance assets from non-APRA-authorised reinsurers
As mentioned above, different investment risk charges are applicable to certain reinsurance recoverables[17] due from non-APRA-authorised reinsurers calculated in accordance with GPS 111.
GPS 114 also applies different risk charges to reinsurance recoverables due from non-APRA-authorised reinsurers on and from the second annual balance date after the end of the financial year in which the event giving rise to each recoverable occurred.
In addition, GPS 111 applies a different treatment to reinsurance assets for international business consolidated into the Level 2 insurance group. As noted above, these assets attract the investment risk capital charges that apply to APRA-authorised reinsurers.
Disclosure is required as follows:
1.1 Net amounts recoverable from reinsurance contracts on outstanding claims and paid claims
Items 1.1.1 to 1.1.5 (inclusive) are to include amounts recoverable from both non-APRA-authorised reinsurers and APRA-authorised reinsurers. The amounts included under items 1.6 to 1.9 should also be included in the relevant items 1.1.1 to 1.1.5.
1.1.1 on Australian business;
Report the net amount (net of provision for doubtful debts) due from reinsurers on reinsurance contracts relating to outstanding claims and paid claims on Australian business.
1.1.2 on international business;
Report the net amount due from reinsurers on reinsurance contracts relating to outstanding claims and paid claims on international business.
1.1.3 Inter-region elimination;
Report the value of inter-region transactions which are eliminated on consolidation. Eliminations that reduce the amount recoverable should be entered as a negative value.
1.1.4 Paid claims (all business); and
Report the net amount due from reinsurers on reinsurance contracts relating to paid claims on both Australian and international business. This item is to be reported net of any inter-region eliminations.
Report the net amount due from reinsurers on reinsurance contracts relating to outstanding claims liabilities on both Australian and international business. This item is to be reported net of any inter-region eliminations.
1.2 Net amount recoverable from reinsurance contracts on outstanding claims and paid claims on international business
Report the net amount recoverable from reinsurance contracts on international business. Include in this item reinsurance recoverables that are supported by collateral, guarantee or a letter of credit, according to the counterparty rating before application of the collateral, guarantee or letter of credit.
Where there is collateral, guarantee or a letter of credit supporting the reinsurance recoverable, the adjustment to the risk charge will be reflected in GRF 131.0_G Off Balance Sheet Exposure (Level 2 Insurance Group).
Report the net amount recoverable according to their counterparty rating as follows:
1.2.1 Grade 1 or 2
1.2.2 Grade 3
1.2.3 Grade 4
1.2.4 Grade 5
1.3 Net amount recoverable from reinsurance contracts on outstanding claims and paid claims from APRA-authorised reinsurers on Australian business
Report the net amount recoverable on reinsurance contracts from APRA-authorised reinsurers on Australian business. Include in this item reinsurance recoverables that are supported by collateral, guarantee or a letter of credit, according to the counterparty rating before application of the collateral, guarantee or letter of credit.
Where there is collateral, guarantee or a letter of credit supporting the reinsurance recoverable, the adjustment to the risk charge will be reflected in GRF 131.0_G Off Balance Sheet Exposure (Level 2 Insurance Group).
Report the net amount recoverable according to their counterparty rating as follows:
1.3.1 Grade 1 or 2
1.3.2 Grade 3
1.3.3 Grade 4
1.3.4 Grade 5
1.4 Net amount recoverable from reinsurance contracts on outstanding claims and paid claims from non-APRA-authorised reinsurers on Australian business, except for amounts outstanding on and from second annual balance date after the event giving rise to the reinsurance recoverables
Report the net amount recoverable on reinsurance contracts and outstanding claims from non-APRA-authorised reinsurers on Australian business except for amounts relating to reinsurance contracts incepting on or after 31 December 2008 that are outstanding on and from second annual balance date after the event giving rise to the reinsurance recoverable. Include in this item reinsurance recoverables that are supported by collateral, guarantee or a letter of credit, according to the counterparty rating before application of the collateral, guarantee or letter of credit.
Where there is collateral, guarantee or a letter of credit supporting the reinsurance recoverable, the adjustment to the risk charge will be reflected in GRF 131.0_G Off Balance Sheet Exposure (Level 2 Insurance Group).
Disclose the amounts according to the reinsurer’s counterparty rating:
1.4.1 Grade 1 or 2
1.4.2 Grade 3
1.4.3 Grade 4
1.4.4 Grade 5
1.5 Net amount recoverable from reinsurance contracts on outstanding claims and paid claims from non-APRA-authorised reinsurers, on Australian business, that are amounts outstanding on and from second annual balance date after the event giving rise to the reinsurance recoverables
Report the net amount recoverable on reinsurance contracts on Australian business incepting on or after 31 December 2008 from non-APRA-authorised reinsurers that are amounts outstanding on and from the second annual balance date after the event giving rise to the reinsurance recoverables regardless of whether the reinsurance recoverables are supported by collateral, guarantee or a letter of credit, according to the counterparty rating before application of the collateral, guarantee or letter of credit.
Where there is collateral, guarantee or a letter of credit supporting the reinsurance recoverable, the adjustment to the risk charge will be reflected in GRF 131.0_G Off Balance Sheet Exposure (Level 2 Insurance Group).
Note: The disclosure relating to amounts which are supported by security arrangements in Australia requests disclosure of the net amounts to the extent that the reinsurance recoverables are supported by collateral, guarantee or a letter of credit. These are to be reported against the counterparty rating as if the security arrangements were not in place.
Disclose the amounts according to the reinsurer’s counterparty rating:
1.5.1 Grade 1
1.5.1.1 Of which supported by security arrangements in Australia
1.5.2 Grade 2
1.5.2.1 Of which supported by security arrangements in Australia
1.5.3 Grade 3
1.5.3.1 Of which supported by security arrangements in Australia
1.5.4 Grade 4
1.5.4.1 Of which supported by security arrangements in Australia
1.5.5 Grade 5
1.5.5.1 Of which supported by security arrangements in Australia
Amounts reported under items 1.6 to 1.8 should only be reported under one of those items, in order to avoid double-counting.
1.6 Net amount recoverable on Australian business from non-APRA-authorised reinsurers which are overdue for more than 6 months
Report the net amount recoverable on Australian business on reinsurance contracts due from non-APRA-authorised reinsurers, if:
(a) the recoverable has become a receivable (i.e. it is due and payable); and
(b) the receivable is overdue for more than six months since a request for payment has been made to the reinsurer; and
(c) there is no formal dispute between the insurer and reinsurer in relation to that receivable[18].
1.7 Net amount related to reinsurance contracts on Australian business that do not meet the reinsurance documentation test
If a Level 1 insurer of a Level 2 insurance group has not complied with the threshold levels of reinsurance documentation set out paragraph 35(b) of GPS 112, during the first and second transition periods,[19] then all reinsurance assets[20] of the Level 1 insurer are to be deducted from the Tier 1 capital of the Level 2 insurance group. Note, the reinsurance documentation test applies on an insurer level. Any deductions required at Level 1, as a result of reinsurance contracts that do not meet the reinsurance documentation test, will also be deducted at Level 2. Hence, the aggregate amount deducted from the Tier 1 capital of the Level 2 insurance group in relation to reinsurance assets from reinsurance contracts that do not meet the reinsurance documentation test will be the sum of the corresponding deductions required for Level 1 insurers.
Compliance with the thresholds for a Level 1 insurer is assessed by calculating the percentage of reinsurance assets that are derived from reinsurance arrangements meeting the reinsurance documentation test compared with total reinsurance assets of the Level 1 insurer.
A reinsurance arrangement meets the reinsurance documentation test if it satisfies the requirements in paragraph 36 of GPS 112.
For Australian business, after the second transition period, reinsurance assets receivable under each reinsurance arrangement that do not meet the reinsurance documentation test will be deducted from the Tier 1 capital of the Level 2 insurance group.
Report the net amount related to reinsurance contracts that do not meet the reinsurance documentation test. This includes reinsurance assets relating to reinsurance contracts that do meet the reinsurance documentation tests, but are required to be deducted from capital under paragraph 25(1) of GPS 112. This amount is deducted from capital, as such it is not risk charged in GRF 301.0_G Reinsurance Assets and Risk Charge (Level 2 Insurance Group).
1.8 Net amount recoverable under reinsurance contracts on Australian business that do not meet governing law requirements
Report the net amounts due from reinsurers under reinsurance contracts on Australian business entered into by the Level 2 insurance group incepting on or after 31 December 2008 that do not meet the ‘governing law requirements’[21], specified in GPS 230.
This amount is deducted from capital, as such it is not risk charged in GRF 301.0_G Reinsurance Assets and Risk Charge (Level 2 Insurance Group).
1.9 Net amount related to reinsurance contracts on international business that do not meet relevant reinsurance documentation tests in a local jurisdiction (and a deduction is required in that jurisdiction)
Report the net amount related to reinsurance contracts on international business that do not meet relevant reinsurance documentation tests in a local jurisdiction (and a deduction is required in that jurisdiction).
This amount is deducted from capital, as such it is not risk charged in GRF 301.0_G Reinsurance Assets and Risk Charge (Level 2 Insurance Group).
Expected recoveries on premium liabilities
Do not complete this section for premium liabilities that are reported on a AASB basis.
Where premiums liabilities have been reported on the Prudential Standard GPS 310 Audit and Actuarial Reporting and Valuation (GPS 310) basis in GRF 210.1_G Premiums Liabilities – Insurance Risk Charge (Level 2 Insurance Group), the expected reinsurance recoveries on these premiums liabilities are to be reported under item 2 'Expected reinsurance recoveries on premiums liabilities'.
'Expected reinsurance recoveries' has the same meaning as in GPS 001.
Where advice of an Appointed Actuary is required in regard to the valuation of the premiums liabilities, the Appointed Actuary should also consider the estimation of the expected reinsurance recoveries on the premiums liabilities recognised. Actuarial judgement should be used in the application of the principles of GPS 311 in those circumstances.
Expected reinsurance recoveries do not include other forms of reinsurance assets or other form of non-reinsurance recoveries. Non-reinsurance recoveries are amounts that may be recovered under arrangements other than reinsurance arrangements. These include salvage and subrogation.
Recognition of expected reinsurance recoveries on premiums liabilities will vary according to the type of reinsurance contract:
- Proportional reinsurance and all facultative
Expected reinsurance recoveries on premiums liabilities are to be recognised, by the Level 2 insurance group, from the date the underlying risk is accepted and the outwards reinsurance expense is recognised.
- Excess of loss
Where excess of loss reinsurance is used, the recognition depends on the basis of the cover being either on a ‘risks attaching during the period of reinsurance’ basis or ‘losses occurring during the period of insurance’ basis.
‘Losses occurring during the period of reinsurance’:
Where the risk profile is evenly distributed throughout the year, the Level 2 insurance group must recognise 50 per cent of the expected reinsurance recoveries in the current period. The expected reinsurance recoveries for the remaining 50 per cent of the period are to be recognised at the midpoint of the period for the reinsurance cover. Where the risk profile is not evenly distributed throughout the year, the Level 2 insurance group will need to recognise the apportionment of expected reinsurance recoveries on the same business pattern as their risk profile. For seasonal business, with all policies incepting on the one date, all expected reinsurance recoveries will need to be recognised from the date of acceptance by the reinsurer(s) of the reinsurance contract.
‘Risks attaching during the period of reinsurance’:
For these contracts, the expected reinsurance recoveries are to be recognised on the date of acceptance by the reinsurer.
'Expected reinsurance recoveries' are to be allocated according to the counterparty grades set out below and in the form, which are detailed in GPS 114. The investment risk charge will be calculated based on the capital factor applicable to the rating grades.
Note: the amounts recorded in item 2.3 and 2.4 should not include expected recoveries from reinsurance contracts that do not fully meet the reinsurance documentation tests in GPS 112[22]. Instead this should be reported under item 2.5. For international business, where a deduction is required in a local jurisdiction, these amounts should be reported under item 2.7. Also do not include expected recoveries from reinsurance contracts that do not meet the governing law requirements in items 2.3 to 2.4. Instead report the amount under item 2.6. Since these amounts are deducted from capital, they do not attract a risk charge in GRF 301.0 G Reinsurance Assets and Risk Charge (Level 2 Insurance Group).
Disclosure is required as follows:
2.1 Expected reinsurance recoveries on premium liabilities attributed to:
Items 2.1.1 to 2.1.3 are to include expected reinsurance recoveries from both non-APRA-authorised reinsurers and APRA-authorised reinsurers.
2.1.1 Australian business;
Report the expected reinsurance recoveries on premiums liabilities attributed to Australian business.
2.1.2 International business;
Report the expected reinsurance recoveries on premiums liabilities attributed to international business.
2.1.3 Inter-region elimination;
Report the value of inter-region transactions which are eliminated on consolidation. Eliminations that reduce the amount recoverable should be entered as a negative value.
2.2 Expected reinsurance recoveries on international business
GPS 111 applies a different treatment to reinsurance assets for international business consolidated into the Level 2 insurance group. As noted above, these assets attract the investment risk capital charges that apply to APRA-authorised reinsurers.
Report the expected reinsurance recoveries on premiums liabilities associated with international business. Include in this item expected reinsurance recoveries that are supported by collateral, guarantee or a letter of credit, according to the counterparty rating before application of the collateral, guarantee or letter of credit.
Where there is collateral, guarantee or a letter of credit supporting expected reinsurance recoveries, the adjustment to the risk charge will be reflected in GRF 131.0_G Off Balance Sheet Exposure (Level 2 Insurance Group).
Report the expected reinsurance recoveries on premiums liabilities according to their counterparty rating as follows:
2.2.1 Grade 1 or 2
2.2.2 Grade 3
2.2.3 Grade 4
2.2.4 Grade 5
2.3 Expected reinsurance recoveries attributed to APRA-authorised reinsurers on Australian business
Report the amount of expected reinsurance recoveries on premiums liabilities (on Australian business) due from APRA-authorised reinsurers. Include in this item expected reinsurance recoveries that are supported by collateral, guarantee or a letter of credit, according to the counterparty rating before application of the collateral, guarantee or letter of credit.
Where there is collateral, guarantee or a letter of credit supporting expected reinsurance recoveries, the adjustment to the risk charge will be reflected in GRF 131.0_G Off Balance Sheet Exposure (Level 2 Insurance Group).
Disclose the amounts according to the reinsurer’s counterparty rating as follows:
2.3.1 Grade 1 or 2
2.3.2 Grade 3
2.3.3 Grade 4
2.3.4 Grade 5
2.4 Expected reinsurance recoveries attributed to non-APRA-authorised reinsurers on Australian business
Through GPS 111 and the application of other applicable Prudential Standards, different investment risk charge apply to reinsurance assets due from non-APRA-authorised reinsurers.
Report the amount of expected reinsurance recoveries on premiums liabilities (on Australian business) due from non-APRA-authorised reinsurers. Include in this item expected reinsurance recoveries that are supported by collateral, guarantee or a letter of credit, according to the counterparty rating before application of the collateral, guarantee or letter of credit.
Where there is collateral, guarantee or a letter of credit supporting expected reinsurance recoveries, the adjustment to the risk charge will be reflected in GRF 131.0_G Off Balance Sheet Exposure (Level 2 Insurance Group).
Disclose the amounts according to the reinsurer’s counterparty rating as follows:
2.4.1 Grade 1 or 2
2.4.2 Grade 3
2.4.3 Grade 4
2.4.4 Grade 5
Amounts reported under items 2.5 to 2.6 should only be reported under one of those items, in order to avoid double-counting.
2.5 Expected reinsurance recoveries related to reinsurance contracts on Australian business that do not meet the reinsurance documentation test
Report the net amount of expected reinsurance recoveries (on Australian business) related to reinsurance contracts that do not meet the reinsurance documentation test.
As this amount is deducted from capital, it does not attract a risk charge in GRF 301.0_G Reinsurance Assets and Risk Charge (Level 2 Insurance Group).
2.6 Expected reinsurance recoveries related to reinsurance contracts on Australian business that do not meet governing law requirements
Report the net amount of expected reinsurance recoveries (on Australian business) under reinsurance contracts that do not meet the governing law requirements.
As this amount is deducted from capital, it does not attract a risk charge in GRF 301.0_G Reinsurance Assets and Risk Charge (Level 2 Insurance Group).
2.7 Expected reinsurance recoveries related to reinsurance contracts on international business that do not meet relevant reinsurance documentation tests in a local jurisdiction (and a deduction is required in that jurisdiction)
Report the net amount of expected reinsurance recoveries related to reinsurance contracts on international business that do not meet relevant reinsurance documentation tests in a local jurisdiction (and a deduction is required in that jurisdiction).
As this amount is deducted from capital, it does not attract a risk charge in GRF 301.0_G Reinsurance Assets and Risk Charge (Level 2 Insurance Group)..
2.8 Expected non-reinsurance recoveries on premium liabilities attributed to:
Items 2.8.1 to 2.8.3 are to include expected non-reinsurance recoveries from both non-APRA-authorised reinsurance and APRA-authorised reinsurers.
2.8.1 Australian business;
Report the expected non-reinsurance recoveries on premiums liabilities attributed to Australian business.
2.8.2 International business;
Report the expected non-reinsurance recoveries on premiums liabilities attributed to international business.
2.8.3 Inter-region elimination;
Report the value of inter-region transactions which are eliminated on consolidation. Eliminations that reduce the amount recoverable should be entered as a negative value.
2.9 Expected non-reinsurance recoveries on premium liabilities that are from counterparties with a rating of:
Report the expected non-reinsurance recoveries on premiums liabilities according to their counterparty rating as follows:
2.9.1 Grade 1 or 2
2.9.2 Grade 3
2.9.3 Grade 4
2.9.4 Grade 5
Deferred reinsurance expense
Do not complete this section for premium liabilities that are reported on a GPS 310 basis.
Where premiums liabilities have been reported using the AASB basis in GRF 210.1_G Premiums Liabilities – Insurance Risk Charge (Level 2 Insurance Group), the deferred reinsurance expenses associated with these premiums liabilities are to be reported under item 3 'Deferred reinsurance expense'.
Deferred reinsurance expense is to be recognised consistent with the requirements of the Australian accounting standards, in particular AASB 1023 ‘General Insurance Contracts’.
3.1 Deferred reinsurance expense attributed to:
Items 3.1.1 to 3.1.3 are to include deferred reinsurance expense related to both non-APRA-authorised reinsurers and APRA-authorised reinsurance.
Report the total of deferred reinsurance expense attributed to:
3.1.1 Australian business;
3.1.2 International business; and
3.1.3 Inter-region elimination.
Report the value of inter-region transactions which are eliminated on consolidation. Any elimination reported should be entered as a negative value.
Amounts reported under items 3.5 to 3.7 should not be reported under items 3.2 to 3.4.
3.2 Deferred reinsurance expense on international business
Report the amount of deferred reinsurance expense on international business attributed to a counterparty of:
3.2.1 Grade 1 or 2
3.2.2 Grade 3
3.2.3 Grade 4
3.2.4 Grade 5
3.3 Deferred reinsurance expense attributed to APRA-authorised reinsurers on Australian business
Report the amount of deferred reinsurance expense attributed to APRA-authorised reinsurers on Australian business according to the following counterparty grades.
3.3.1 Grade 1 or 2
3.3.2 Grade 3
3.3.3 Grade 4
3.3.4 Grade 5
Amounts reported under items 3.5 to 3.6 should only be reported under one of those items, in order to avoid double-counting.
3.4 Deferred reinsurance expense attributed to non-APRA-authorised reinsurers on Australian business
Report the amount of deferred reinsurance expense attributed to non-APRA-authorised reinsurers on Australian business according to the following counterparty grades.
3.4.1 Grade 1 or 2
3.4.2 Grade 3
3.4.3 Grade 4
3.4.4 Grade 5
3.5 Deferred reinsurance expense related to reinsurance contracts on Australian business that do not meet the reinsurance documentation test
Report the deferred reinsurance expense related to reinsurance contracts on Australian business that do not meet the reinsurance documentation test. As this amount is deducted from capital, it does not attract a risk charge in GRF 301.0_G Reinsurance Assets and Risk Charge (Level 2 Insurance Group).
3.6 Deferred reinsurance expense related to reinsurance contracts on Australian business that do not meet governing law requirements
Report the deferred reinsurance expense related to reinsurance contracts on Australian business that do not meet the governing law requirements. As this amount is deducted from capital, it does not attract a risk charge in GRF 301.0_G Reinsurance Assets and Risk Charge (Level 2 Insurance Group).
3.7 Deferred reinsurance expense related to reinsurance contracts on international business that do not meet relevant reinsurance documentation tests in a local jurisdiction (and a deduction is required in that jurisdiction)
Report the deferred reinsurance expense related to reinsurance contracts on international business that do not meet relevant reinsurance documentation tests in a local jurisdiction (and a deduction is required in that jurisdiction).
As this amount is deducted from capital, it does not attract a risk charge in GRF 301.0_G Reinsurance Assets and Risk Charge (Level 2 Insurance Group).
Other reinsurance assets receivable from reinsurers
For Australian business, a different investment risk capital charge applies to certain reinsurance assets[23] due from non-APRA-authorised reinsurers calculated in accordance with GPS 111. The applicable investment risk charge is based on whether the amount is recoverable from APRA-authorised reinsurers or non-APRA-authorised reinsurers. In addition, GPS 111 applies a different treatment to reinsurance assets for international business consolidated into the Level 2 insurance group. For these entities, the reinsurance assets attract the investment risk capital charges that apply to APRA-authorised reinsurers.
4.1. Net amount of other reinsurance assets
Report any other asset not reported in items 1, 2 or 3, which relates to reinsurance, including deposits retained by reinsurers. This should include amounts that do not meet the reinsurance documentation test and amounts that do not meet the governing law requirements.
Report the net amount of other reinsurance assets attributed to:
4.1.1 Australian business;
4.1.2 International business; and
4.1.3 Inter-region elimination.
Report the value of inter-region transactions which are eliminated on consolidation. Any elimination reported should be entered as a negative value.
Amounts reported under items 4.5 to 4.7 should not be reported under items 4.2 to 4.4.
4.2. Net amount of other reinsurance assets on international business
Report the net amount of other reinsurance assets receivable from reinsurers on international business according to their counterparty rating.
4.2.1. Grade 1 or 2
4.2.2. Grade 3
4.2.3. Grade 4
4.2.4. Grade 5
4.3. Net amount of other reinsurance assets on Australian business receivable from APRA-authorised reinsurers
Report the net amount of other reinsurance assets on Australian business receivable from APRA-authorised reinsurers according to their counterparty ratings as follows:
4.3.1. Grade 1 or 2
4.3.2. Grade 3
4.3.3. Grade 4
4.3.4. Grade 5
4.4. Net amount of other reinsurance assets on Australian business receivable from non-APRA-authorised reinsurers
Report the net amount of other reinsurance assets on Australian business receivable from non-APRA-authorised reinsurers according to their counterparty ratings as follows:
3.5.1. Grade 1 or 2
3.5.2. Grade 3
3.5.3. Grade 4
3.5.4. Grade 5
Amounts reported under items 4.5 to 4.6 should only be reported under on of those items, in order avoid double-counting.
4.5. Net amounts related to reinsurance contracts on Australian business that do not meet the reinsurance documentation test
The treatment of other reinsurance assets on Australian business which relate to reinsurance contracts that do not meet the reinsurance documentation will be similar to the treatment of item 1.7.
Report the net amount related to reinsurance contracts that do not meet the reinsurance documentation test. As this amount is deducted from capital, it does not attract a risk charge in GRF 301.0_G Reinsurance Assets and Risk Charge (Level 2 Insurance Group).
4.6. Net amounts related to reinsurance contracts on Australian business that do not meet governing law requirements
The treatment of other reinsurance assets on Australian business which relate to reinsurance contracts that do not meet the governing law requirements under GPS 221, will be similar to the treatment of item 1.8.
Report the net amount of recoveries under reinsurance contracts that do not meet governing law requirements. As this amount is deducted from capital, it does not attract a risk charge in GRF 301.0_G Reinsurance Assets and Risk Charge (Level 2 Insurance Group).
4.7. Net amounts related to reinsurance contracts on international business that do not meet relevant reinsurance documentation tests in a local jurisdiction (and a deduction is required in that jurisdiction)
Report the net amount related to reinsurance contracts on international business that do not meet relevant reinsurance documentation tests in a local jurisdiction (and a deduction is required in that jurisdiction).
As this amount is deducted from capital, it does not attract a risk charge in GRF 301.0_G Reinsurance Assets and Risk Charge (Level 2 Insurance Group)..
Net reinsurance assets
This is automatically calculated by the form and represents the sum of the net reinsurance assets reported in items 1.1, 2.1,3.1 and 4.1. Note this may not reconcile to GRF 300.0_G Statement of Financial Position (Level 2 Insurance Groups) where outstanding claims liabilities are recorded on a different basis on GRF 210.0_G and / or where premiums liabilities are recorded on a different basis on GRF 210.1_G.