Part Specific instructions - Financial Sector (Collection of Data) (reporting standard) determination No. 66 of 2008 - GRS 140.0 (2008) - Investments - Direct Interest Rate Holdings and Risk Charge - Specific instructions | Zoe
Financial Sector (Collection of Data) (reporting standard) determination No. 66 of 2008 - GRS 140.0 (2008) - Investments - Direct Interest Rate Holdings and Risk Charge
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Turn the raw legal text into a practical explanation grounded in Financial Sector (Collection of Data) (reporting standard) determination No. 66 of 2008 - GRS 140.0 (2008) - Investments - Direct Interest Rate Holdings and Risk Charge.
Do not include loans and advances in this section. These are to be included in the form headed “Loans and Advances”.
Specific disclosure of deposit and security holdings classified into short term and long term securities is required by the ABS.
Definitions/interpretation for specific items
Deposits or placements
These primarily include deposits or placements that are of a money market type basis. These may be available on demand (11am accounts, money market or 24-hour money), and must be held as part of the Insurer’s investments portfolio.
Do not include any deposits at call that are used by the Insurer for daily liquidity/operations (i.e. funds that are not specifically included as investment funds). These are to be disclosed as Money at short call in GRF 300.0 Statement of Financial Position.
This information is primarily required by the ABS.
1.1 ADIs
Includes funds lodged with Banks, Credit Unions, Building Societies and other authorised deposit taking institutions (ADIs) as defined below.
1.2 Other
Include placements and money market accounts held with entities other than included in the above classification.
Short term securities
The term short term refers to holding of securities with an original term to maturity (as opposed to residual term to maturity), that is equal to or less than 1 year.
Include:
Bills of Exchange, bank-accepted and other;
Certificates of deposits;
Commercial paper;
Other one name paper; and
Securities lent or sold under repurchase agreements
Bills of Exchange
2.1 Bank Accepted
Report bills of exchange that are accepted by a Bank.
2.2 Other
Report all other bills of exchange other than bank accepted bills.
Commercial paper and promissory notes Issued by:
The following provides guidelines to facilitate in the disclosure for this return of the counterparty/issuer of interest rate securities held by the insurer. The following specific disclosures are required by the ABS.
2.3 Banks and Authorised Deposit Taking Institutions (ADIs)
Banks refers to ADIs, in relation to which an authority under subsection 9(3) is in force and which hold a consent under section 66 of the Banking Act 1959 (Banking Act) to use the word bank.
Include:
Development banks; and
Foreign banks licensed to operate in Australia under the Banking Act.
Exclude:
Merchant banks (record as Other).
ADIs refer to corporations, which have an authority under subsection 9(3) in force, but which do not hold a consent under section 66 under the Banking Act to use the word bank. These include Building Societies and Credit unions.
Exclude:
Holding of securities issued by Finance Corporations, these are included under Registered Financial Corporations.
2.4 General Insurance Corporations
Includes corporations that provide general insurance (e.g. fire, accident, employer liability, public liability, household, marine).
2.5 Securitisers
These are financial vehicles that issue short and/or long-term securities (called asset-backed securities) using specifically selected assets (e.g. mortgages, receivables). They provide backing (collateral) for the securities and generate the payment streams necessary to fulfil interest and principal requirements for investors. Include holdings of the following:
Mortgage backed securities; and
Other asset backed securities (other than mortgage backed).
2.6 Private Trading Corporations
Include Intra group financiers and retailers registered under the Financial Sector (Collection of Data) Act 2001 and parent companies with significant holdings of shares in private trading companies.
2.7 Registered Financial Corporations
Registered Financial Corporations refers to corporations registered under the Financial Sector (Collection of Data) Act 2001 that are classified as Categories D or Other. A list of corporations registered under the Financial Sector (Collection of Data) Act 2001 and their classification are available on the APRA website.
Include:
Money market corporations (D); and
Other (formerly categories E, F and G).
Exclude:
Intra group financiers and retailers registered under Financial Sector (Collection of Data) Act 2001; and
Cash management trusts (Note: for the purpose of applying the required investment capital charge, cash management trusts are to be reported in GRF 140.4 Investments – Indirectly Held by Insurer and Risk Charge).
2.8 Australian Commonwealth Government Corporations
Trading enterprises owned by the Commonwealth are those businesses, which are owned and controlled by the Australian Commonwealth Government.
Include:
All resident trading enterprises owned 50% or more by the Commonwealth Government or controlled by the Commonwealth Government through legislation, decree or regulation
2.9 Australian Commonwealth Government
Include:
Treasury notes.
Exclude:
Treasury bonds (include these in long term securities);
Government trading enterprises (record as Australian Commonwealth Government corporations);
Departments of the ACT and Northern Territory Governments (record as Other Australian Government (State, territory and local government); and
Reserve Bank of Australia and Commonwealth Government financial institutions such as AIDC and EFIC (record as Australian Commonwealth Government Corporations).
2.10 Other Australian Government (State, territory and local government)
State, territory and local governments provide non-market goods and services, principally financed by taxes, to regulate economic activity, maintain law and order and to redistribute income and wealth by means of transfers and hence provided free of charge or at nominal prices well below the cost of production.
2.11 National government of a foreign country:
(i) where the security has a Grade 1 rating or the country's long term foreign currency rating is Grade 1.
This is required by APRA to enable the calculation of the required investment risk charge.
Refer to GPS 114 for further information on classification of rating grades.
(ii) Other
Disclose all other investments in securities issued by the national government of a foreign country which are not reported in (i) above.
2.12 Other
Include securities issued by counterparties other than those specifically listed on the form.
Long term debt securities
The term long term refers to holding of securities which have an original term to maturity (as opposed to residual term to maturity), that is greater than 1 year.
Include:
Commercial paper;
Other one name paper; and
Securities lent or sold under repurchase agreements
Long term debt Securities Issued by:
The following provides guidelines to facilitate in the disclosure for this return of the counterparty/issuer of interest rate securities held by the insurer. The following specific disclosures are required by the ABS.
3.1 Banks and Authorised Deposit Taking Institutions (ADIs)
Banks refers to ADIs, in relation to which an authority under subsection 9(3) is in force and which hold a consent under section 66 of the Banking Act to use the word bank.
Include:
Development banks; and
Foreign banks licensed to operate in Australia under the Banking Act
Exclude:
Merchant banks (record as Other).
ADIs refer to corporations, which have an authority under subsection 9(3) in force, but which do not hold a consent under section 66 under the Banking Act to use the word bank. These include Building Societies and Credit unions.
Exclude:
Holding of securities issued by Finance Corporations, these are included under Registered Financial Corporations.
3.2 General Insurance Corporations
Includes corporations that provide general insurance (e.g. fire, accident, employer liability, public liability, household, marine).
3.3 Securitisers
These are financial vehicles that issue short and/or long-term securities (called asset-backed securities) using specifically selected assets (e.g. mortgages, receivables). They provide backing (collateral) for the securities and generate the payment streams necessary to fulfil interest and principal requirements for investors. Include holdings of the following:
Mortgage backed securities; and
Other asset backed securities (other than mortgage backed).
3.4 Private Trading Corporations
Include Intra group financiers and retailers registered under the Financial Sector (Collection of Data) Act 2001 and parent companies with significant holdings of shares in private trading companies.
3.5 Registered Financial Corporations
Registered Financial Corporations refers to corporations registered under the Financial Sector (Collection of Data) Act 2001 that are classified as Categories D or Other. A list of corporations registered under the Financial Sector (Collection of Data) Act 2001 and their classification are available on the APRA website.
Include:
Money market corporations (D); and
Other (formerly categories E, F and G).
Exclude:
Intra group financiers and retailers registered under Financial Sector (Collection of Data) Act 2001.
Cash management trusts (Note: for the purpose of applying the required investment capital charge, cash management trusts are to be reported in the ‘Assets Indirectly Held’ investment form).
3.6 Australian Commonwealth Government Corporations
Trading enterprises owned by the Commonwealth are those businesses, which are owned and controlled by the Australian Commonwealth Government.
Include:
All resident trading enterprises owned 50% or more by the Commonwealth Government or controlled by the Commonwealth Government through legislation, decree or regulation
3.7 Australian Commonwealth Government
Exclude:
Treasury Notes. Record as short term securities;
Government trading enterprises (record as Australian Commonwealth Government corporations);
Departments of the ACT and Northern Territory Governments (record as Other Australian Government (State, territory and local government); and
Reserve Bank of Australia and Commonwealth Government financial institutions such as AIDC and EFIC (record as Australian Commonwealth Government Corporations).
3.8 Other Australian Government (State, territory and local government)
State, territory and local general government provide non-market goods and services, principally financed by taxes, to regulate economic activity, maintain law and order and to redistribute income and wealth by means of transfers and hence provided free of charge or at nominal prices well below the cost of production.
3.9 National government of a foreign country:
(i) where the security has a Grade 1 rating or the country’s long term foreign currency rating is Grade 1
Disclose the investments in securities issued by the national government of a foreign country with a rating of Grade 1.
Refer to GPS 114 for further information on classification of rating grades.
(ii) Other
Disclose all other investments in securities issued by the national government of a foreign country which are not reported in (i) above.
3.10 Other
Include securities issued by counterparties other than those specifically listed on the form.
Total direct interest rate investments
This item is calculated automatically by the form. It represents the sum of the items 1.1 to 3.10 as listed above.
of which: Investments denominated in a currency other than the Australian currency
Disclose the aggregate balance of interest rate investments that are denominated in a currency other than the Australian currency.
Total direct interest rate investments classified into the following:
4.1 Debt obligations with a Rating Grade of 1 that matures or is redeemable:
in less than 1 year
in 1 year or more
Refer to GPS 114 for further information on classification of rating grades.
4.2 Debt obligations with a Rating Grade of 2 that matures or is redeemable:
in less than 1 year
in 1 year or more
Refer to GPS 114 for further information on classification of rating grades.
4.3 Debt obligations with a Rating Grade of 3
Refer to GPS 114 for further information on classification of rating grades.
4.4 Debt obligations with a Rating Grade of 4 or are unrated
Refer to GPS 114 for further information on classification of rating grades.
4.5 Debt obligations with a Rating Grade of 5
Refer to GPS 114 for further information on classification of rating grades.
Total Direct Interest rate investments classified into the following:
5.1 Policyholders Funds
Policyholders funds is also referred to as ‘technical reserves/funds’. Use of the term does not imply ownership of these funds by policyholders, like under life insurance. The term is used particularly in establishing the investment management mandates to reflect the different cashflow/risk and return requirements from that of shareholders funds. Disclose the aggregate balance of direct interest rate investments that are designated by the Insurer as representing policyholders’ funds (where this is done by the insurer).
5.2 Shareholders Funds
Where the insurer has established the investment management mandates along these terms to reflect the different cashflow/risk and return requirements of shareholders funds from policyholders funds/technical reserves, disclose the aggregate balance of direct interest rate investments designated as representing shareholders funds (where this is done by the insurer).
Total Direct Interest rate investments classified into the following:
Deposits/placements with, or debt securities issued by (do not include loans and advances here):
6.1 The reporting Insurer (i.e. holdings in own debt securities)
Of the total direct interest rate investment portfolio of the insurer that is reported as required by this form, disclose holdings of debt securities issued by the licensed insurer that are held by the licensed insurer.
6.2 Parent entity
Of the total direct interest rate investment portfolio of the insurer that is reported as required by this form, disclose any deposits/placements or holdings of debt securities that are issued by the parent entity of the licensed insurer.
6.2.1. Controlled entities/Controlled entities of the parent entity
For branches, the line item “Controlled entities/Controlled entities of the parent entity” is to be interpreted as amounts in relation to “Controlled entities of the parent entity”, and for licensed insurance entities amounts are in relation to “Controlled entities” of the reporting insurer.
Of the total direct interest rate investment portfolio of the insurer that is reported as required by this form, disclose any deposits/placements or holdings of debt securities that are issued by controlled entities of the licensed reporting insurer.
6.3 Associates/Joint Ventures
Of the total direct interest rate investment portfolio of the insurer that is reported as required by this form, disclose any deposits/placements or holdings of debt securities that are issued by Associates or Joint Ventures of the licensed insurer. Associates is a reference to associates as defined in the Australian Accounting Standards and is to be read as also applying to joint ventures unless otherwise indicated.
6.4 Other related parties
Of the total direct interest rate investment portfolio of the insurer that is reported as required by this form, disclose any deposits/placements or holdings of debt securities held by the licensed insurer that are issued by any other related entity of the licensed insurer that is not specifically identified above.
Total investment risk charge
The total investment risk charge for direct interest rate holdings is automatically calculated.