Financial Sector (Collection of Data) (reporting standard) determination No. 86 of 2006 - Reporting Standard GRS 400.0 (2007) Statement of Risk by Country
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This form provides selected information of business written by authorised general insurers outside Australia; namely:
premium revenue;
reinsurance expense;
claims expense;
reinsurance recoveries;
investment income;
premium liabilities;
outstanding claims provision;
borrowings/loan capital;
expected reinsurance recoveries; and
investments.
This form only needs to be completed where the insurer has business operations outside of Australia (i.e. where they have items of income, expense, assets, liabilities or capital outside of Australia as defined in this instructions set).
Audit requirements
The information provided under the form is not required to be audited and has been exempted from the definition of ‘yearly statutory accounts’.
Reporting entities
Forms are to be completed for the following reporting entities where appropriate:
Branch operations of a foreign parent insurer (reference to licensed insurer in the form means total operations of the branch, excluding the parent operations);
Authorised insurance entities, including mutual entities (reference to licensed insurer in the form means total operations of the licensed entity); and
Authorised reinsurance entities (reference to licensed insurer in the form means total operations of the licensed entity).
Basis of preparation
In completing this form, unless otherwise specifically stated, insurers are recommended to adopt the measurement and recognition requirements as required by the prudential reporting framework, as appropriate (i.e. outstanding claims provision and premium liabilities).
Unit of measurement
This form is to be presented in Australian currency, rounded to thousands of dollars, with no decimal place.
Amounts denominated in foreign currency are to be converted to AUD in accordance with AASB 121 ‘The Effects of Changes in Foreign Exchange Rates’.
The general requirements of AASB 121 ‘The Effects of Changes in Foreign Exchange Rates’ for translation are:
Foreign currency monetary items[1] outstanding at the reporting date must be translated at the spot rate at the reporting date.
Part Instruction Guide - Financial Sector (Collection of Data) (reporting standard) determination No. 86 of 2006 - Reporting Standard GRS 400.0 (2007) Statement of Risk by Country - Instruction Guide | Zoe
Foreign currency non-monetary items[3] that are measured at historical cost in a foreign currency must be translated using the exchange rate at the date of the transaction.
Foreign currency non-monetary items that are measured at fair value will be translated at the exchange rate at the date when fair value was determined.
Transactions arising under foreign currency derivative contracts at the reporting date must be prepared in accordance with AASB 139 ‘Financial Instruments: Recognition and Measurement’. However, those foreign currency derivatives that are not within the scope of AASB 139 ‘Financial Instruments: Recognition and Measurement’ (eg some foreign currency derivatives that are embedded in other contracts) remain within the scope of AASB 121 ‘The Effects of Changes in Foreign Exchange Rates’.
For APRA purposes equity items must be translated using the foreign currency exchange rate at the date of investment or acquisition. Post acquisition changes in equity are required to be translated on the date of the movement.
As foreign currency derivatives are measured at fair value, the currency derivative contracts are translated at the spot rate at the reporting date.
Exchange differences should be recognised in profit and loss in the period which they arise. For foreign currency derivatives, the exchange differences would be recognised immediately in profit and loss if the hedging instrument is a fair value hedge. For derivatives used in a cash flow hedge, the exchange differences should be recognised directly in equity.
The ineffective portion of the exchange differences in all hedges would be recognised in profit and loss.
Translation of financial reports of foreign operations.
A foreign operation is defined in AASB 121 ‘The Effects of Changes in Foreign Exchange Rates’ as meaning an entity that is a subsidiary, associate, joint venture or branch of a reporting entity, the activities of which are based or conducted in a country or currency other than those of the reporting entity.
Exchange differences relating to foreign currency monetary items that form part of the net investment of an entity in a foreign operation, must be recognised as a separate component of equity.
Translation of financial reports should otherwise follow the requirements in AASB 121 ‘The Effects of Changes in Foreign Exchange Rates’.
Reporting period
Insurers are required to report the information in the reporting form on an annual basis.
The annual information is to be completed in respect of the financial year of the insurer.
The financial information requested in this form is to be reported as at the last day of the reporting period on a financial year to date basis of the insurer.
Reporting lag
This form must be lodged for each of the reporting units within the number of business days after the end of the quarter as set out in Reporting Standard GRS 400.0 Statement of Risk by Country.
Specific instructions
The appropriate information is to be reported by country or geographic region specified on the form. This is to be reported according to where the items of income/expense are on risk, assets are invested, and liabilities are located. Enter the relevant details for each country as appropriate.
1. Premium Revenue - Direct & Inwards reinsurance
This is the premium revenue as required by the APRA forms (refer to instructions GRF 310.1 Premium Revenue and Reinsurance Expense). It is to be reported in respect of total direct business and inwards reinsurance business.
Premium revenue is not to be reported in accordance with AASB 1023 ‘General Insurance Contracts’ (i.e. earned and unearned components).
2. Reinsurance expense - Direct & Inwards reinsurance
This is the reinsurance expense as required by the APRA forms (refer to instructions GRF 310.1 Premium Revenue and Reinsurance Expense). It is to be reported in respect of total direct business and inwards reinsurance business.
Reinsurance expense is not to be reported in accordance with AASB 1023 ‘General Insurance Contracts’ (i.e. it is not to be amortised in accordance with the pattern of reinsurance service received).
3. Claims Expense - Direct & Inwards reinsurance
3.1 Relating to current and prior years
Represents claims expense in relation to claim payments made in the current year and movements in the Outstanding Claims Provision (i.e. relating to current and prior years) as recognised in GRF 310.0 Statement of Financial Performance.
3.2 Relating to future years
Represents claims expense in relation to movements in the premium liabilities (i.e. relating to future years) as recognised in GRF 310.0 Statement of Financial Performance.
4. Reinsurance recoveries revenue
4.1 Relating to current and prior years
Report the reinsurance recoveries that relate to claim payments made and movements in the Outstanding Claims Provision as recognised in GRF 310.0 Statement of Financial Performance.
4.2 Relating to future years
Report movement in the value of expected reinsurance recoveries that are recognised in relation to the recognition of premium liabilities as recognised in GRF 310.0 Statement of Financial Performance.
5. Investment Income
Include investment income as recognised in GRF 310.0 Statement of Financial Performance.
6. Amounts recoverable on reinsurance contracts and outstanding claims
Report the value of amounts recoverable on reinsurance contracts and outstanding claims. The total amount must reconcile with total net amount recoverable on reinsurance contracts net of provision for doubtful debts reported as current and non-current assets in GRF 300.0 Statement of Financial Position.
7. Expected reinsurance recoveries
The term “Expected reinsurance recoveries” is used to describe the expected value of reinsurance recoveries in respect of Premium Liabilities. The total amount must reconcile with expected reinsurance recoveries on Premium Liabilities reported as current and non-current assets in GRF 300.0 Statement of Financial Position.
8. Other reinsurance assets
Report the value of all other reinsurance assets (refer to instructions for GRF 300.0 Statement of Financial Position).
9. Investments
Report the value of the investments. The total amount must reconcile with investments integral to insurance operations (related to GRF 140 series of forms) reported as current and non-current assets in GRF 300.0 Statement of Financial Position.
10. Other investments
Report investments that do not constitute investments integral to insurance operations attributable to the respective countries listed. The total amount must reconcile with other investments as reported in GRF 300.0 Statement of Financial Position.
11. All Other assets
Report the value of other assets (other than those listed above) attributable to the respective countries listed in the form. The value of “Other Assets” must represent the remaining total assets of the reporting insurer.
12. Total Assets
Represent the total assets of the reporting insurer. This must reconcile with the total assets as reported in GRF 300.0 Statement of Financial Position.
13. Premium Liabilities
The amount reported is to be measured in accordance with GPS 310 Audit and Actuarial Reporting and Valuation. The total amount must reconcile with the total amount reported as current and non-current Premium Liabilities as reported in GRF 300.0 Statement of Financial Position.
14. Outstanding Claims Provision
The amount reported is to be measured in accordance with GPS 310 Audit and Actuarial Reporting and Valuation. The total amount must reconcile with the total amount reported as current and non-current Outstanding Claims Provision in GRF 300.0 Statement of Financial Position.
15. Borrowings/loan capital
Report the carrying value of any amount borrowed.
16. Other
Report the value of other liabilities (other than those listed above). The value of “Other Liabilities” must represent the remaining total liabilities of the reporting insurer.
17. Total Liabilities
Represent the total liabilities of the reporting insurer. This must reconcile with the total liabilities as reported in GRF 300.0 Statement of Financial Position.