Financial Sector (Collection of Data) (reporting standard) determination No. 4 of 2009 - LRS 110.0 - Capital Adequacy
Capital Adequacy Requirement to be calcuCapital Adequacy Requirement to be calculated on a gross of reinsurance basis
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Capital Adequacy Requirement to be calculated on a gross of reinsurance basis
APRA would like to remind reporting entities that LPS 3.04 applies on a gross of reinsurance basis. This includes CTV and Capital Adequacy Liability as elements of the Capital Adequacy Requirement. In effect, the gross policy liabilities ceded under reinsurance are no longer to be set off against the liabilities side (i.e. netting against gross policy liabilities assumed, either directly and/or as reinsurance inwards), but are to be added to the assets side.
For further background, refer to subsection 3.5 (‘Reinsurance’) in LPS 3.04; and in particular, paragraph 7.4 of LPS 3.04 (under Part B – Methodologies).