Related party disclosure

For the purposes of this form, related bodies corporate are to be interpreted consistently with the meaning as in AASB 124 ‘Related Party Disclosures’.

In accordance with AASB 124, related party means a party that directly or indirectly through one or more intermediaries:

(a) controls, is controlled by or is under common control with, the entity (this includes parents, subsidiaries and fellow subsidiaries);

(b) has significant influence over the entity or has joint control over the entity; or

(c) is an associate (as defined in AASB 128 ‘Investments in Associates’) of the entity; or

(d) is a joint venture in which the entity is a venturer (see AASB 131 ‘Interests in Joint Ventures’); or

(e) is a member of the key management personnel of the entity or its parent; or

(f) is a close member of the family of any individual referred to in (a), (b) or (e); or

(g) is an entity that its controlled, jointly controlled or significantly influenced by, or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (e) or in (f); or

(h) is a post-employment benefit plan for the benefit of the employees of the entity, or of any entity that is a related party of the entity.

Instructions for specific items

Insurers are to indicate "Yes" or "No" in GRF 301.0 Reinsurance Assets and Risk Charge on whether the reporting entity is a branch insurer. A branch insurer is a Category C insurer as defined in Prudential Standard GPS 001 Definitions (GPS 001).

Total Amount

Category C insurers, that do not have any dealings/balances “outside of Australia”, are not required to complete the column titled “Total Amount” within this form. Where a Category C insurer does have dealings/balances that are outside of Australia, then the amount reported under the column titled “Total Amount” must include the sum of the amounts that are outside of Australia and amounts "Inside Australia".

All other insurers, must complete the column titled "Total Amount" whether the insurer has any dealings/balances that are outside of Australia or not.

Amount –Inside Australia

The amounts reported under this column must be only those amounts deemed inside Australia under section 116A of the Act.

Category C insurers, must complete the column titled "Amount – Inside Australia" within this form, whether the insurer has any dealings/balances outside of Australia or not. Where a Category C insurer does have dealings/balances outside of Australia, then the insurer must also complete the column titled "Total Amount".

For all other insurers, this column titled "Amount – Inside Australia" is only required to be completed where the insurer has dealings/balances outside of Australia. In which case, the column titled "Total Amount" is also required to be completed.

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 calculate the appropriate investment risk charge in accordance with GPS 114.

1. Reinsurance recoverable on outstanding claims

Reinsurance recoverable has the same meaning as in Prudential Standard GPS 001 Definition, 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[12] and GPS 310. This is distinguished from expected reinsurance recoveries[13] and forms part of reinsurance assets.

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 provision to be recovered from reinsurers on settling the outstanding claims provision. Measurement of the outstanding claims is to be in accordance with GPS 310 (and not in accordance with the requirements of AASB 1023). Accordingly estimation of reinsurance recoveries relating to the outstanding claims provision is to be estimated on a basis similar with the measurement of the claims liabilities to which it relates.

• Reinsurance Documentation Test

The amounts reported under items 1.4 to 1.7 and 1.9 should only include the amounts due from reinsurers under reinsurance contracts that meet the reinsurance documentation test[14], specified in GPS 112 Capital Adequacy: Measurement of Capital (GPS 112).

Report the net amount due from reinsurers under reinsurance contracts that do not meet the reinsurance documentation test in items 1.8. As this amount is deducted from capital, it is not risk charged in GRF 301.0 Reinsurance Assets and Risk Charge.

• Governing Law Requirements

The amounts reported under items 1.4 to 1.7 should only include the amounts due from reinsurers under reinsurance contracts entered into by the insurer incepting on or after 31 December 2008 that meet the ‘governing law requirements’[15], specified in Prudential Standard GPS 230 Reinsurance Management (GPS 230). GPS 230 specifies that (except for Category E insurers[16]):

 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 that do not meet the governing law requirements in items 1.9. As this amount is deducted from capital, it is not risk charged in GRF 301.0 Reinsurance Assets and Risk Charge.

• Reinsurance receivables overdue for more than six months

The amounts reported under items 1.4 to 1.6 should not include the amounts that are receivable from reinsurers that have been overdue for more than six months. 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. Where 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 310.

Report the amount of the receivable that is overdue for more than six months in item 1.7.

• 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 114.

GPS 114 also applies different risk charges to reinsurance recoverables due from non-APRA-authorised reinsurers on and from the second balance date after the end of the financial year in which the event giving rise to each recoverable occurred.

Disclosure is required as follows:

1.1 Amounts recoverable on reinsurance contracts and outstanding claims

Report the amount due from reinsurers on reinsurance contracts related to outstanding claims, including amounts recoverable from non-APRA-authorised reinsurers. This value should include amounts recoverable on paid claims.

1.2 Provision for doubtful debts

Include the value of any recoveries where it is determined that collection is considered doubtful (full or partial).

1.3 Net amount recoverable

This is automatically calculated by the form and represents the value of the reinsurance recoveries due from reinsurers on reinsurance contracts related to outstanding claims after deducting any associated provision for doubtful debts disclosed.

Disclose the net amount recoverable on reinsurance contracts on outstanding claims as follows:

1.3.1 Of which: Current Assets