Part Specific instructions - Financial Sector (Collection of Data) (reporting standard) determination No. 69 of 2008 - GRS 140.3 (2008) - Investments - Loans and Advances and Risk Charge - Specific instructions | Zoe
Financial Sector (Collection of Data) (reporting standard) determination No. 69 of 2008 - GRS 140.3 (2008) - Investments - Loans and Advances 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. 69 of 2008 - GRS 140.3 (2008) - Investments - Loans and Advances and Risk Charge.
Loans and advances are treated for the purposes of this return as investments of the Licensed Insurer.
Generally Include:
Overdrafts and revolving credit facilities;
Financial lease agreements;
Term loans;
Mortgage lending;
Commercial loans;
Equity participation in leveraged leases; and
Secured and unsecured lending.
Balance Outstanding
Report the aggregate value of the outstanding loans gross of any provision for impairment for each loan classifications listed (i.e. households).
Value of Security
Report the aggregate fair value of property or other forms of assets that are taken as security for the loan provided by the insurer.
Provision for Impairment
Report the aggregate provision for impairment applying to the particular loan portfolio/classifications listed (i.e. households).
For the purposes of the APRA forms, impairment means that there exists reasonable doubt that amounts of principal (or fair value) and any associated amounts of accrued income (e.g. interest, dividends, distributions associated with the investment/asset) will be able to be collected by the Insurer.
Balance Outstanding net of Provision for Impairment
Represents the outstanding balance less associated provision for impairment.
Do not enter a value as this is automatically calculated by the form.
Investment Capital Factor %
This column for each form discloses the appropriate investment capital factor for the asset type in accordance with GPS 114.
Investment Risk Charge
This column for each form will automatically calculate the appropriate investment risk charge in accordance with GPS 114.
Loan classifications:
Households
This comprises loans and advances to households for any purpose.
Private unincorporated businesses
This comprises loans and advance to individuals acting as sole proprietors or in partnerships, for commercial or professional purposes. The major businesses to be included are unincorporated farms, unincorporated retailers, unincorporated professional practices (medical, legal, dental, accounting, etc.), unincorporated businesses of tradesmen such as plumbers, carpenters, etc.
Private Trading Corporations
Private trading corporations are those owned and controlled by the private sector.
Include loans and advances to:
(i) Non-profit institutions;
(ii) Intra-group financiers, Retailers and parent companies with significant holdings of shares in private trading companies;
(iii) Privately owned schools and hospitals;
(iv) Any unincorporated unit that is a branch in Australia of a non-resident company; and
(v) Any unincorporated business owned and operated by trading corporations (e.g. joint ventures).
Other
Include all other loans and advances not disclosed in the categories listed above.
Total loans and advances which:
1.1 Are contracted at fixed rates
Of the total loans and advances of the reporting insurer reported as required by this form, disclose the aggregate value of loans and advances that have been funded at a fixed interest rate.
1.2 Are contracted at a variable rate
Of the total loans and advances of the reporting insurer reported as required by this form, disclose the aggregate value of loans and advances that have been funded at a variable interest rate.
1.3 Are contracted on an unsecured basis
Of the total loans and advances of the reporting insurer reported as required by this form, disclose the value of any loans and advances where the Insurer has taken no security from the counterparty.
1.4 Repayment is past due date 90 days or more but less than 1 year
Report the outstanding balance of the loan, the value of any security taken by the insurer as collateral for the loan and the value of any provision for impairment provided against the loan, for all loans where repayment is past the due date by 90 days or more, but less than 1 year.
1.5 Repayment is past due date 1 year or more
Report the outstanding balance of the loan, the value of any security taken by the insurer as collateral for the loan and the value of any provision for impairment provided against the loan, for all loans where repayment is past the due date by 1 year or more.
1.6 Represent Shareholders funds
Disclose the aggregate balance of loans and advances that are designated as representing 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/technical reserves.
1.7 Constitute premium funding business
Of the total loans and advances of the reporting insurer reported as required by this form, disclose the aggregate value of loans and advances that constitute premium funding business.
Total Loans and advances, which can be classified into the following:
2.1 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.
2.2 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.
2.3 Debt obligations with a Rating Grade of 3
Refer to GPS 114 for further information on classification of rating grades.
2.4 Debt obligations with a Rating Grade of 4 or are unrated
Refer to GPS 114 for further information on classification of rating grades.
2.5 Debt obligations with a Rating Grade of 5
Refer to GPS 114 for further information on classification of rating grades.
2.6 Investments denominated in a currency other than the Australian currency
Disclose the aggregate balance of loans and advances that are denominated in a currency other than the Australian currency.
Total loans and advances which can be classified into the following:
Total loans and advances to:
3.1. Parent entity
Of the total loans and advances of the reporting insurer that is reported as required by this form, disclose the value of any loans and advances to the parent entity of the licensed insurer (i.e. ultimate parent entity).
3.1.1. 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 loans and advances of the reporting insurer that is reported as required by this form, disclose loans and advances issued to controlled entities of the licensed insurer.
3.2. Associates/Joint Ventures
Of the total loans and advances of the reporting insurer that is reported as required by this form, disclose loans and advances issued to Associates or Joint Ventures of the licensed insurer. Associates and Joint Ventures are defined in accordance with AASB 131 ‘Interests in Joint Ventures’ and AASB 128 ‘Investments in Associates’.
3.3. Other related parties
Of the total loans and advances of the reporting insurer that is reported as required by this form, disclose loans and advances issued to any other related entity of the licensed insurer not specifically listed in the form.
3.4. Directors of the reporting Insurer or directors of related entities of the reporting Insurer
Of the total loans and advances of the reporting insurer that is reported as required by this form, disclose loans and advances issued to Directors of the reporting Insurer or directors of related entities of the reporting insurer. For this purpose related entity has the meaning as set out above.
Loans of this nature are levied an investment capital factor of 100% in accordance with GPS 114.
3.4.1 Rebate (Directors of the reporting Insurer or directors of related entities of the reporting Insurer)
This reporting line effectively calculates the rebate of the investment risk charge calculated on item 3.4 in section 2 of this form. This is required to ensure that the total Investment Capital Factor on item 3.4 does not exceed 100%.
In this line item, the appropriate Investment Capital Factor levied on the value of loans to directors or directors of related entities of the reporting insurer (i.e. the value of item 3.4) in section 2 of this form (i.e. items 2.1 to 2.4) has been determined in accordance with GPS 114. The form will automatically calculate the appropriate Investment Risk Charge rebate in the column headed “Investment Risk Charge”.
3.5. Insurance brokers
Of the total loans and advances of the reporting insurer that is reported as required by this form, disclose loans and advances issued to insurance brokers.
3.6. General Insurance companies
Of the total loans and advances of the reporting insurer that is reported as required by this form, disclose loans and advances issued to general insurance companies. This may include loans and advances to subsidiaries of the reporting insurer that are licensed general insurance entities.
3.7. Unsecured loans to employees (> $1000 individually)
Of the total loans and advances of the reporting insurer that is reported as required by this form, disclose unsecured loans and advances issued to employees of the licensed insurance entity that are individually greater than $1,000.
For this purpose related entity has the meaning as set out in this instruction guide.
Loans of this nature are levied an investment capital factor of 100% in accordance with GPS 114.
3.7.1. Rebate (unsecured loans to employees (> $1000 individually))
This reporting line effectively calculates the rebate of the investment risk charge calculated on item 3.7 in section 2 of this form. This is required to ensure that the total Investment Capital Factor on item 3.7 does not exceed 100%.
In this line item, the appropriate Investment Capital Factor levied on the value of unsecured loans to employees that exceed $1,000 individually (i.e. the value of item 3.7) in section 2 of this form (i.e. items 2.1 to 2.4) has been determined in accordance with GPS 114. The form will automatically calculate the appropriate Investment Risk Charge rebate in column headed “Investment Risk Charge”.
Total investment risk charge
The total investment risk charge for loans and advances is automatically calculated.