Financial Sector (Collection of Data) (reporting standard) determination No. 81 of 2006 - Reporting Standard GRS 310.0 (2007) - Statement of Financial Performance
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Premium revenue – Direct business and Inwards reinsurance
Premium revenue must be reported separately for:
Direct business; and
Inwards reinsurance business.
Premium revenue must be recognised on a basis that is consistent with the measurement of premiums liabilities as measured in accordance with GPS 310 Audit and Actuarial Reporting and Valuation.
Premium revenue must be recognised in line with the following:
Premium recognition for direct business: Premium revenue must be recognised fully upfront on the date the policy is accepted (bound) by insurers writing direct business.
Premium recognition for inwards reinsurance business: Premium revenue for inwards reinsurance business is to be recognised from the date of acceptance of the reinsurance risk by the reinsurer. Reinsurers are required to recognise the premium based on the Gross Net Premium Income to be written by the direct insurer under the contract for proportional reinsurance. For excess of loss reinsurance contracts, the premium revenue is to be recognised on the basis of the agreed minimum/deposit premium, which will be subject to a final adjustment factor applied to the final declared values of the premium determinant.
Premium revenue includes the value of future premium receipts under existing insurance contracts through to the end of the period of insurance.
Premium revenue must be discounted where it is to be received beyond the current year of cover under an insurance/reinsurance contract. In these cases, use the discount rate as required in calculating insurance liabilities in accordance with GPS 310 Audit and Actuarial Reporting and Valuation.
Premium revenue excludes amounts collected on behalf of third parties i.e. government stamp duty and taxes.
Levies charged to insured, such as fire service levies, are to be included as premium revenue.
Premium refunds and rebates are to be deducted from premium revenue.
For installment premium policies, the amount of the annualised premium is to be used.
Where premium is calculated on an adjustment basis, the estimated annual premium is to be brought to account, with the estimated premium being replaced by the actual amount as it becomes known.
Where premium is accepted on a deposit basis, the full annual premium is to be brought into account.
Premium revenue must be gross of reinsurance expense.
Premium revenue includes premium receivable on unclosed business. This includes the business which has been accepted by the insurer/reinsurer prior to the balance date but there is insufficient information to fully identify the business.
Premium revenue relating to insurance/reinsurance contracts written on a long-term basis:
where the insurer/reinsurer accepting the risk has the option to cancel the contract at pre-agreed dates, premium revenue is to be recognised from the date of acceptance up to the next possible cancellation date.
where the insurer/reinsurer accepting the risk does not have the option to cancel the contract at pre-agreed dates, the full premium for the long-term insurance/reinsurance contract is to be recognised from the date of acceptance.
Total Premium Revenue
This is automatically calculated by the form and represents the total of premium revenue for direct business and inwards reinsurance.
Outwards Reinsurance Expense
Reinsurance expenses must be recognised on a basis that is consistent with the measurement of premiums liabilities as measured in accordance with GPS 310 Audit and Actuarial Reporting and Valuation.
Recognition of outwards reinsurance expenses will vary according to the type of reinsurance contract:
Proportional reinsurance (treaty) and all facultative
Premium ceded to the reinsurer(s) is recognised as an expense by the direct insurer on the date of acceptance (date bound) of the underlying insurance contract by the direct insurer.
Excess of loss reinsurance (treaty)
The recognition of outwards reinsurance expense depends on the basis of the cover being either on a ‘losses occurring during the period of reinsurance’ basis or ‘risks attaching during the period of reinsurance’.
Loss occurring during the period of reinsurance: The majority of excess of loss and catastrophe reinsurance is based on a ‘losses occurring during the period of reinsurance’ basis. Thus, the reinsurance will provide cover for risks that have been accepted in the prior period and to risks that are accepted and attach in the current period of the reinsurance contract. In the case where the risk profile of the insurer is evenly distributed throughout the year, an insurer must recognise 50 per cent of the excess of loss reinsurance expense in the current period. The reinsurance expense for the remaining 50 per cent is to be recognised at the mid point of the period for the reinsurance cover. Where the risk profile of the insurer is not evenly distributed throughout the year, with material peaks and troughs throughout the year, the insurer will need to recognise the apportionment of the reinsurance expense on the same business pattern as their risk portfolio. For seasonal insurers, with all policies incepting on the one date, all reinsurance expense will need to be recognised from the date of acceptance by the reinsurer of the reinsurance contract.
Risk attaching during the period of reinsurance: For these reinsurance contracts, the full amount of the excess of loss reinsurance expense is to be recognised from the date of acceptance of the reinsurance by the reinsurer. The minimum and deposit premium for the full period of the reinsurance that is payable to the reinsurer is to be recognised.
Where payments under a reinsurance contract extend beyond the current year of cover, reinsurance expense is to be discounted using similar discount rates as required in measuring insurance liabilities in accordance with GPS 310 Audit and Actuarial Reporting and Valuation.
Reinsurance expense is not to be recognised in accordance with the pattern of reinsurance service received as required by AASB 1023 ‘General Insurance Contracts’.
Reinsurance expense is to be split into the following:
Relating to future years cover
Disclose in this data item, the reinsurance expense that relates to cover that will be applicable for future years.
Relating to current and prior years
Disclose in this data item, the reinsurance expense that relates to cover applicable for the current and past years.
Net Premium Revenue
This is automatically calculated by the form and represents the difference between Premium revenue and Outwards reinsurance expense.
Claims Expense
The claims expense for the reporting period is to be reported in relation to the following:
Direct business; and
Inwards reinsurance business.
For both of these items the following is to be further provided:
Relating to future years
This will reflect any movement in the value of Premium Liabilities reported in GRF 300.0 Statement of Financial Position. The value of Premium Liabilities reported in GRF 300.0 Statement of Financial Position does not have to be equal to, but must not be less than the respective amounts required by GPS 310 Audit and Actuarial Reporting and Valuation and hence amounts reported in the form GRF 210.1 Premium Liabilities - Insurance Risk Charge.
Note: Claims expense relating to future years reported in this form must correspond with Premium Liabilities at the end of period less Premium Liabilities at the beginning of the financial year from GRF 310.2 Claims Expense and Reinsurance Recoveries for both direct business and inwards reinsurance.
Relating to current and prior years
This will reflect the claim payments made in the current year plus any movement in the value of the Outstanding Claims Provision reported in GRF 300.0 Statement of Financial Position. The OCP reported in GRF 300.0 Statement of Financial Position does not have to be equal to, but must not be less than the amounts required by GPS 310 Audit and Actuarial Reporting and Valuation and hence the amounts reported in the form GRF 210.0 Outstanding Claims Provision - Insurance Risk Charge.
Note: Claims expense relating to current and prior years reported in this form must correspond with Claim payments made in the current year plus OCP at the end of period less OCP at the beginning of the financial year from GRF 310.2 Claims Expense and Reinsurance Recoveries for both direct business and inwards reinsurance.
Further, where the insurer only has insurance liabilities and claims within Australia, the claims expense reported in this form will correspond to the total claims expense reported in GRF 430.0 Claims Expense by State and Territory of Australia.
Gross Claims Expense which is Attributable to Changes in Valuation Assumptions/model
Disclose in this field that component of gross claims expense which is due to changes in modeling assumptions applied to outstanding claims provision. This is a memo item of total gross claims expense and is not added into the calculation of Net Incurred Claims or Underwriting Result.
Reinsurance Recoveries Revenue
Reinsurance recoveries revenue for the reporting period is to be reported in relation to the following:
Relating to future years
This will reflect any movement in the value of Expected Reinsurance Recoveries that are associated with insurance liabilities recognised in the measurement of Premium Liabilities. This is in relation to:
direct business; and
inward reinsurance business.
Note: Reinsurance recoveries revenue relating to future years reported in this form must correspond with Reinsurance recoveries revenue relating to future years from GRF 310.2 Claims Expense and Reinsurance Recoveries for the total of direct business and inwards reinsurance.
Relating to current and prior years
This will reflect recoveries received or receivable associated with claims expense recognised for the following:
direct business; and
inwards reinsurance business.
Include amounts that the insurer has recovered or is entitled to recover from reinsurers on claim expense during the reporting period. Some estimates previously made in the context of reinsurance recoverables will have been revised in the course of the year’s business. Such adjustments are to be reflected in the next reporting period as appropriate.
Note: Reinsurance recoveries revenue relating to current and prior years reported in this form must correspond with Reinsurance recoveries revenue relating to current and prior years from GRF 310.2 Claims Expense and Reinsurance Recoveries for the total of direct business and inwards reinsurance.
Total Reinsurance Recoveries Revenue
This represents the sum of reinsurance recoveries revenue disclosed for:
Relating to future years
Relating to current and prior years.
Other Recoveries Revenue
This is the revenue from recoveries other than reinsurance recoveries, in respect of claims. Where appropriate it is to be reported after deducting the reinsurer’s share of the ‘other recoveries revenue’.
Total Recoveries
This is automatically calculated by the form and represents the sum of the values reported for “Total reinsurance recoveries revenue” and “Other recoveries revenue”.
Net Incurred Claims
This is automatically calculated by the form and represents the difference between “Gross claims expense” and “Total recoveries”.
Acquisition Costs
Report the fully expensed component of the Acquisition Costs as recognised under AASB 1023 i.e. these should not be deferred and recognised as assets. Acquisition costs are incurred in obtaining and recording general insurance contracts. They include commission or brokerage paid to agent or brokers for obtaining business for the insurer, selling and underwriting costs such as advertising and risk assessment, the administrative costs of recording policy information and premium collection costs.
Other Underwriting Expenses
This will include all other underwriting expenses which are not included in Acquisition Costs.
Levies and charges
This item will include levies and charges payable by the insurer. It excludes the amounts collected on behalf of third parties.
Commission Revenue
This item should be recognised upfront and includes commission revenue related to the insurance business. Do not include ‘premium rebates’ received from reinsurers in this line item.
Total Underwriting Expenses
Underwriting expenses are calculated automatically and are derived from:
Acquisition costs
Plus:
Other underwriting expenses
Levies and charges
Less:
Commission revenue received
Underwriting Result
The underwriting result is calculated automatically and is derived from:
Net Premium Revenue
Less:
Net Incurred Claims
Less:
Total underwriting expenses
Investment Income
Report the investment income in this item. This item must correspond to the ‘Total Investment Income’ reported in GRF 310.3 Investment and Operating Income and Expense.
Other Operating Income
Report all other income not reported above in this item. This item must correspond to the ‘Total Other Operating Income’ reported in GRF 310.3 Investment and Operating Income and Expense.
Other Operating Expenses
Report the operating expenses in this item. This item must correspond to the ‘Total Operating Expenses’ reported in GRF 310.3 Investment and Operating Income and Expense.
Negative goodwill immediately recognised in profit or loss
This item represents the excess of the interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over cost in a business acquisition. This item must be completed in accordance with the requirements of AASB 3 ‘Business Combinations’.
Profit (loss) from non-current assets and disposal groups classified as held for sale not qualifying as discontinued operations.
Report any gain or loss on the measurement of a non-current asset (or disposal group) classified as held for sale that does not meet the definition of a discontinued operation.
This item must be completed in accordance with the requirements of AASB 5 ‘Non-current Assets Held for Sale and Discontinued Operations’.
Profit (loss) from continuing operations before income tax expense (benefit)
The profit (loss) from continuing operations calculated automatically and is derived from:
Underwriting result
Plus:
Investment income
Other operating income
Less:
Other operating expenses
Plus:
Negative goodwill immediately recognised in profit or loss.
Profit (loss) from non-current assets and disposal groups classified as held for sale not qualifying as discontinued operations
Income tax expense (benefit) from continuing operations
Represents the income tax expense or benefit attributable to the profit or loss from continuing operations.
This item must be completed in accordance with the requirements of AASB 112 ‘Income Taxes’.
Profit (loss) from continuing operations after income tax
This item is calculated automatically and is derived from:
Profit (loss) from continuing operations before income tax expense (benefit)
Less:
Income tax expense (benefit) from continuing operations
Profit (loss) from discontinued operations after income tax
Profit (loss) from after income tax from discontinued operations are to be classified and recorded in accordance with the Australian accounting standards.
Net profit (loss) after income tax
This is calculated automatically and is derived from:
Profit (loss) from continuing operations after income tax
Less:
Profit (loss) from discontinued operations after income tax
Retained profits at the beginning of the financial year
Report here the relevant retained profit (loss) amount at the beginning of the current financial year. For the first year of reporting the APRA forms, use the retained profits figure as per the insurers statutory accounts prepared in accordance with Australian accounting standards.
Adjustments to retained profits due to change in accounting policies/standards
Include the value of aggregate adjustments to retained earnings due to changes in accounting treatment required by an accounting standard.
Note: All financial adjustments stemming from the changes in accounting treatment from AASB 1023 that are required for prudential purposes, are to be effected against current year profits in the line items provided in this form. Adjustments are not to be aggregated and posted against this line item or against the opening balance of retained earnings.
Amounts transferred from/to reserves
Disclose the amount of funds transferred from other reserves to Retained Earnings or to other reserves from Retained Earnings during the reporting period.
Amounts Transferred from/to parent entity
Disclose the amount of dividends or funds transferred from/to the parent entity during the reporting period.
Retained profits at the end of the reporting period
This is calculated automatically and is derived from:
Net Profit (loss) after income tax
Adjusted for the following:
Retained profits at the beginning of the financial year;
Adjustment (positive or negative) to retained profits due to change in accounting policies/standards;
Aggregate of amounts transferred from/to reserves;
Aggregate of amounts transferred from the parent entity;
Aggregate of amounts transferred to the parent entity; and
Aggregate of other amounts (positive or negative).
Note: If capital is provided by the parent entity, which is not required to be repaid by the branch, this contribution of capital is to be disclosed in this form as funds transferred from the parent entity.
If the capital provided by the parent is in the form of debt and must be repaid, the amount should be disclosed in the liability section of GRF 300.0 Statement of Financial Position under “Loan Capital”.