Reporting Form MRF 140.3

Investments – Loans and Advances

Instruction Guide

Introduction

This form requires Medical Defence Organisations (MDOs) to report information about their investment profile.

Reporting Obligations

MDOs are required to report on a half-yearly basis (that is, six monthly intervals), based on their financial year.

For annual reporting, MDOs must lodge a form within four months of the end of their financial year. The information required on an annual basis must be reported as at the last day of the reporting period on a financial year-to-date basis of the MDO.

For half-yearly reporting (that is, the half-year that does not correspond with the MDO’s financial year end), MDOs must lodge a form within 20 business days of the end of that six month period.

Audit Requirements

This form must be subject to audit review and testing on an annual basis or more frequently if necessary to enable the auditor to form an opinion on the accuracy and reliability of the data. The auditor must provide a certificate to the MDO specifying whether, in their opinion, the data provided by the MDO are reliable. The MDO must submit this certificate to APRA on an annual basis.

The scope and nature of audit testing required is outlined in the applicable Auditing and Assurance Guidance Statement issued by the Auditing and Assurance Standards Board.

Definitions

Definitions for data reporting items required by this form have been provided where possible in the instructions under the section headed ‘Specific Instructions’.

Basis of Preparation

Unit of Measurement

This form is to be prepared in thousands of Australian dollars (AUD). Amounts denominated in a currency other than Australian currency are to be converted to AUD in accordance with AASB 121 The Effects of Changes in Foreign Exchange Rates (AASB 121).

Assets

The aggregate value of investments disclosed in the forms listed below must agree to the total of amounts reported as both current and non-current assets in items 3 and 8

Investments (relates to the MRF 140 series of forms) of MRF 300.0 Statement of Financial Position (MRF 300.0).

• MRF 140.0 Investments – Direct Interest Rate Holdings (MRF 140.0)
• MRF 140.1 Investments – Direct Equity Holdings (MRF 140.1)
• MRF 140.2 Investments – Direct Property Holdings (MRF 140.2)
• MRF 140.3 Investments – Loans and Advances (MRF 140.3)
• MRF 140.4 Investments – Assets Indirectly Held (MRF 140.4)

Holding of units in unit trusts

Where the entity’s investments are represented by holdings of units in unlisted or listed managed investment vehicles/entities, the following reporting is required:

• Units are to be reported in MRF 140.4. This form requires, amongst other things, disclosure of the value of the unit holding according to the nature of the underlying market exposure (i.e. interest rate related, equity related, property related). If the units are held in a diversified or balanced trust, the investment holding is to be disclosed in accordance with the funds advised asset allocation.
• Holdings must be disclosed as unlisted or listed units.

Securities purchased (sold) under agreements to resell (repurchase) and stock lending/borrowing

Reporting for the purposes of this return is to be consistent with AASB 139 Financial Instruments: Recognition and Measurement (AASB 139)

Where the transferee of the security effectively receives a lenders rate of return or a return that does not correlate with ownership of the securities (i.e. the risks and rewards of ownership of the underlying securities is not effectively transferred), these transactions are to be accounted for as collateralised borrowing or lending activities.

Under this method of accounting for transactions that satisfy the above, do not adjust (i.e. increase or decrease) the physical investment security holdings/portfolios (interest rate and equity investments) for the securities that are subject to these agreements.

Securities transacted not settled (i.e. trade date accounting)

Include market-related securities that are recorded on a trade date basis and transacted in accordance with accepted financial market settlements periods. Such securities are to be included in the MRF 140 series. These do not constitute forward asset purchases for the purposes of MRF 130.0 Off Balance Sheet Business – Direct Credit Substitutes Provided (MRF 130.0).

Related party/entity

Related parties/entities are to be interpreted in accordance with AASB 124 Related Party Disclosures (AASB 124) .

Parent

Parent entity is to be interpreted in accordance with AASB 127 Consolidated and Separate Financial Statements (AASB 127).

Subsidiaries

Subsidiaries are to be interpreted in accordance with AASB 127.

Associates

Associates are to be interpreted in accordance with AASB 128 Investments in Associates (AASB 128).

Joint ventures

Joint ventures are to be interpreted in accordance with AASB 131 Interests in Joint Ventures (AASB 131).

Specific Instructions

Loans and advances are treated for the purposes of this form as investments of the MDO. Generally include:

• overdrafts and revolving credit facilities;
• financial lease agreements;
• term loans;
• mortgage lending;
• commercial loans;
• equity participation in leveraged leases;
• subordinated loans; and
• secured and unsecured lending.

Balance outstanding (column 1)

Report the aggregate value of the outstanding loans gross of any provision for impairment for each loan classifications listed.

Value of security (column 2)

Report the aggregate fair value of property or other forms of assets that are taken as security for the loan provided by the MDO.

Provision for impairment (column 3)

Report the aggregate provision for impairment applying to the particular loan portfolio/classifications listed.

For the purposes of this form, 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 MDO.

Balance outstanding net of provision (column 4)

Represents the outstanding balance less associated provision for impairment.

1. Loans and advances

Report all loans and advances in accordance with the following categories.

1.1 Households

This comprises loans to households for any purpose.

1.2 Private unincorporated businesses

This comprises 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.

1.3 Private trading corporations

Private trading corporations are those owned and controlled by the private sector. Include:

• non-profit institutions;
• intra-group financiers, retailers and parent companies with significant holdings of shares in private trading companies;
• privately owned schools and hospitals;
• any unincorporated unit that is a branch in Australia of a non-resident company; and
• any unincorporated business owned and operated by trading corporations (e.g. joint ventures).

1.4 Other

Include all other loans and advances not disclosed on the form.

2. Total loans and advances

Report all loans and advances in accordance with the following categories.

2.1 Are contracted at fixed rates

Of the total loans and advances of the MDO, disclose the aggregate value of loans and advances that have been funded at a fixed interest rate.

2.2 Are contracted at a variable rate

Of the total loans and advances of the MDO, disclose the aggregate value of loans and advances that have been funded at a variable interest rate.

2.3 Are contracted on an unsecured basis

Of the total loans and advances of the MDO, disclose the value of any loans and advances where the MDO has taken no security from the counterparty.

2.4 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 MDO 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.

2.5 Repayment is past due date 1 year or more

Report the outstanding balance of the loan, the value of any security taken by the MDO 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.

3. Total Loans and advances

Report all loans and advances accordance to the applicable counterparty grade (and maturity where applicable) as detailed on the form (refer items 3.1-3.5). The grades are detailed at Attachment 1.

Also report the aggregate balance of loans and advances that are denominated in a currency other than the Australian currency (refer item 3.6).

4. Total loans and advances

Report all loans and advances to related entities in accordance with the categories detailed on the form.

ATTACHMENT 1: Counterparty Grades

Unrated assets or exposures should be classified as Grade 4.

An MDO must, in general, use the same rating agency for determining counterparty grades. An MDO may depart from this general rule where there are good reasons for doing so, such as under the following circumstances:

Where the rating agencies usually monitored by the insurer do not issue a solicited credit rating for a particular debt obligation and only one other rating agency issues a solicited credit rating for that debt obligation, the MDO may use that solicited credit rating.

Reporting Form MRF 140.3

Investments – Loans and Advances

Instruction Guide

Introduction

This form requires Medical Defence Organisations (MDOs) to report information about their investment profile.

Reporting Obligations

MDOs are required to report on a half-yearly basis (that is, six monthly intervals), based on their financial year.

For annual reporting, MDOs must lodge a form within four months of the end of their financial year. The information required on an annual basis must be reported as at the last day of the reporting period on a financial year-to-date basis of the MDO.

For half-yearly reporting (that is, the half-year that does not correspond with the MDO’s financial year end), MDOs must lodge a form within 20 business days of the end of that six month period.

Audit Requirements

This form must be subject to audit review and testing on an annual basis or more frequently if necessary to enable the auditor to form an opinion on the accuracy and reliability of the data. The auditor must provide a certificate to the MDO specifying whether, in their opinion, the data provided by the MDO are reliable. The MDO must submit this certificate to APRA on an annual basis.

The scope and nature of audit testing required is outlined in the applicable Auditing and Assurance Guidance Statement issued by the Auditing and Assurance Standards Board.

Definitions

Definitions for data reporting items required by this form have been provided where possible in the instructions under the section headed ‘Specific Instructions’.

Basis of Preparation

Unit of Measurement

This form is to be prepared in thousands of Australian dollars (AUD). Amounts denominated in a currency other than Australian currency are to be converted to AUD in accordance with AASB 121 The Effects of Changes in Foreign Exchange Rates (AASB 121).

Assets

The aggregate value of investments disclosed in the forms listed below must agree to the total of amounts reported as both current and non-current assets in items 3 and 8

Investments (relates to the MRF 140 series of forms) of MRF 300.0 Statement of Financial Position (MRF 300.0).

• MRF 140.0 Investments – Direct Interest Rate Holdings (MRF 140.0)
• MRF 140.1 Investments – Direct Equity Holdings (MRF 140.1)
• MRF 140.2 Investments – Direct Property Holdings (MRF 140.2)
• MRF 140.3 Investments – Loans and Advances (MRF 140.3)
• MRF 140.4 Investments – Assets Indirectly Held (MRF 140.4)

Holding of units in unit trusts

Where the entity’s investments are represented by holdings of units in unlisted or listed managed investment vehicles/entities, the following reporting is required:

• Units are to be reported in MRF 140.4. This form requires, amongst other things, disclosure of the value of the unit holding according to the nature of the underlying market exposure (i.e. interest rate related, equity related, property related). If the units are held in a diversified or balanced trust, the investment holding is to be disclosed in accordance with the funds advised asset allocation.
• Holdings must be disclosed as unlisted or listed units.

Securities purchased (sold) under agreements to resell (repurchase) and stock lending/borrowing

Reporting for the purposes of this return is to be consistent with AASB 139 Financial Instruments: Recognition and Measurement (AASB 139)

Where the transferee of the security effectively receives a lenders rate of return or a return that does not correlate with ownership of the securities (i.e. the risks and rewards of ownership of the underlying securities is not effectively transferred), these transactions are to be accounted for as collateralised borrowing or lending activities.

Under this method of accounting for transactions that satisfy the above, do not adjust (i.e. increase or decrease) the physical investment security holdings/portfolios (interest rate and equity investments) for the securities that are subject to these agreements.

Securities transacted not settled (i.e. trade date accounting)

Include market-related securities that are recorded on a trade date basis and transacted in accordance with accepted financial market settlements periods. Such securities are to be included in the MRF 140 series. These do not constitute forward asset purchases for the purposes of MRF 130.0 Off Balance Sheet Business – Direct Credit Substitutes Provided (MRF 130.0).

Related party/entity

Related parties/entities are to be interpreted in accordance with AASB 124 Related Party Disclosures (AASB 124) .

Parent

Parent entity is to be interpreted in accordance with AASB 127 Consolidated and Separate Financial Statements (AASB 127).

Subsidiaries

Subsidiaries are to be interpreted in accordance with AASB 127.

Associates

Associates are to be interpreted in accordance with AASB 128 Investments in Associates (AASB 128).

Joint ventures

Joint ventures are to be interpreted in accordance with AASB 131 Interests in Joint Ventures (AASB 131).

Specific Instructions

Loans and advances are treated for the purposes of this form as investments of the MDO. Generally include:

• overdrafts and revolving credit facilities;
• financial lease agreements;
• term loans;
• mortgage lending;
• commercial loans;
• equity participation in leveraged leases;
• subordinated loans; and
• secured and unsecured lending.

Balance outstanding (column 1)

Report the aggregate value of the outstanding loans gross of any provision for impairment for each loan classifications listed.

Value of security (column 2)

Report the aggregate fair value of property or other forms of assets that are taken as security for the loan provided by the MDO.

Provision for impairment (column 3)

Report the aggregate provision for impairment applying to the particular loan portfolio/classifications listed.

For the purposes of this form, 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 MDO.

Balance outstanding net of provision (column 4)

Represents the outstanding balance less associated provision for impairment.

1. Loans and advances

Report all loans and advances in accordance with the following categories.

1.1 Households

This comprises loans to households for any purpose.

1.2 Private unincorporated businesses

This comprises 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.

1.3 Private trading corporations

Private trading corporations are those owned and controlled by the private sector. Include:

• non-profit institutions;
• intra-group financiers, retailers and parent companies with significant holdings of shares in private trading companies;
• privately owned schools and hospitals;
• any unincorporated unit that is a branch in Australia of a non-resident company; and
• any unincorporated business owned and operated by trading corporations (e.g. joint ventures).

1.4 Other

Include all other loans and advances not disclosed on the form.

2. Total loans and advances

Report all loans and advances in accordance with the following categories.

2.1 Are contracted at fixed rates

Of the total loans and advances of the MDO, disclose the aggregate value of loans and advances that have been funded at a fixed interest rate.

2.2 Are contracted at a variable rate

Of the total loans and advances of the MDO, disclose the aggregate value of loans and advances that have been funded at a variable interest rate.

2.3 Are contracted on an unsecured basis

Of the total loans and advances of the MDO, disclose the value of any loans and advances where the MDO has taken no security from the counterparty.

2.4 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 MDO 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.

2.5 Repayment is past due date 1 year or more

Report the outstanding balance of the loan, the value of any security taken by the MDO 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.

3. Total Loans and advances

Report all loans and advances accordance to the applicable counterparty grade (and maturity where applicable) as detailed on the form (refer items 3.1-3.5). The grades are detailed at Attachment 1.

Also report the aggregate balance of loans and advances that are denominated in a currency other than the Australian currency (refer item 3.6).

4. Total loans and advances

Report all loans and advances to related entities in accordance with the categories detailed on the form.

ATTACHMENT 1: Counterparty Grades

Unrated assets or exposures should be classified as Grade 4.

An MDO must, in general, use the same rating agency for determining counterparty grades. An MDO may depart from this general rule where there are good reasons for doing so, such as under the following circumstances:

Where the rating agencies usually monitored by the insurer do not issue a solicited credit rating for a particular debt obligation and only one other rating agency issues a solicited credit rating for that debt obligation, the MDO may use that solicited credit rating.

Reporting Form MRF 140.3

Investments – Loans and Advances

Instruction Guide

Introduction

This form requires Medical Defence Organisations (MDOs) to report information about their investment profile.

Reporting Obligations

MDOs are required to report on a half-yearly basis (that is, six monthly intervals), based on their financial year.

For annual reporting, MDOs must lodge a form within four months of the end of their financial year. The information required on an annual basis must be reported as at the last day of the reporting period on a financial year-to-date basis of the MDO.

For half-yearly reporting (that is, the half-year that does not correspond with the MDO’s financial year end), MDOs must lodge a form within 20 business days of the end of that six month period.

Audit Requirements

This form must be subject to audit review and testing on an annual basis or more frequently if necessary to enable the auditor to form an opinion on the accuracy and reliability of the data. The auditor must provide a certificate to the MDO specifying whether, in their opinion, the data provided by the MDO are reliable. The MDO must submit this certificate to APRA on an annual basis.

The scope and nature of audit testing required is outlined in the applicable Auditing and Assurance Guidance Statement issued by the Auditing and Assurance Standards Board.

Definitions

Definitions for data reporting items required by this form have been provided where possible in the instructions under the section headed ‘Specific Instructions’.

Basis of Preparation

Unit of Measurement

This form is to be prepared in thousands of Australian dollars (AUD). Amounts denominated in a currency other than Australian currency are to be converted to AUD in accordance with AASB 121 The Effects of Changes in Foreign Exchange Rates (AASB 121).

Assets

The aggregate value of investments disclosed in the forms listed below must agree to the total of amounts reported as both current and non-current assets in items 3 and 8

Investments (relates to the MRF 140 series of forms) of MRF 300.0 Statement of Financial Position (MRF 300.0).

• MRF 140.0 Investments – Direct Interest Rate Holdings (MRF 140.0)
• MRF 140.1 Investments – Direct Equity Holdings (MRF 140.1)
• MRF 140.2 Investments – Direct Property Holdings (MRF 140.2)
• MRF 140.3 Investments – Loans and Advances (MRF 140.3)
• MRF 140.4 Investments – Assets Indirectly Held (MRF 140.4)

Holding of units in unit trusts

Where the entity’s investments are represented by holdings of units in unlisted or listed managed investment vehicles/entities, the following reporting is required:

• Units are to be reported in MRF 140.4. This form requires, amongst other things, disclosure of the value of the unit holding according to the nature of the underlying market exposure (i.e. interest rate related, equity related, property related). If the units are held in a diversified or balanced trust, the investment holding is to be disclosed in accordance with the funds advised asset allocation.
• Holdings must be disclosed as unlisted or listed units.

Securities purchased (sold) under agreements to resell (repurchase) and stock lending/borrowing

Reporting for the purposes of this return is to be consistent with AASB 139 Financial Instruments: Recognition and Measurement (AASB 139)

Where the transferee of the security effectively receives a lenders rate of return or a return that does not correlate with ownership of the securities (i.e. the risks and rewards of ownership of the underlying securities is not effectively transferred), these transactions are to be accounted for as collateralised borrowing or lending activities.

Under this method of accounting for transactions that satisfy the above, do not adjust (i.e. increase or decrease) the physical investment security holdings/portfolios (interest rate and equity investments) for the securities that are subject to these agreements.

Securities transacted not settled (i.e. trade date accounting)

Include market-related securities that are recorded on a trade date basis and transacted in accordance with accepted financial market settlements periods. Such securities are to be included in the MRF 140 series. These do not constitute forward asset purchases for the purposes of MRF 130.0 Off Balance Sheet Business – Direct Credit Substitutes Provided (MRF 130.0).

Related party/entity

Related parties/entities are to be interpreted in accordance with AASB 124 Related Party Disclosures (AASB 124) .

Parent

Parent entity is to be interpreted in accordance with AASB 127 Consolidated and Separate Financial Statements (AASB 127).

Subsidiaries

Subsidiaries are to be interpreted in accordance with AASB 127.

Associates

Associates are to be interpreted in accordance with AASB 128 Investments in Associates (AASB 128).

Joint ventures

Joint ventures are to be interpreted in accordance with AASB 131 Interests in Joint Ventures (AASB 131).

Specific Instructions

Loans and advances are treated for the purposes of this form as investments of the MDO. Generally include:

• overdrafts and revolving credit facilities;
• financial lease agreements;
• term loans;
• mortgage lending;
• commercial loans;
• equity participation in leveraged leases;
• subordinated loans; and
• secured and unsecured lending.

Balance outstanding (column 1)

Report the aggregate value of the outstanding loans gross of any provision for impairment for each loan classifications listed.

Value of security (column 2)

Report the aggregate fair value of property or other forms of assets that are taken as security for the loan provided by the MDO.

Provision for impairment (column 3)

Report the aggregate provision for impairment applying to the particular loan portfolio/classifications listed.

For the purposes of this form, 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 MDO.

Balance outstanding net of provision (column 4)

Represents the outstanding balance less associated provision for impairment.

1. Loans and advances

Report all loans and advances in accordance with the following categories.

1.1 Households

This comprises loans to households for any purpose.

1.2 Private unincorporated businesses

This comprises 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.

1.3 Private trading corporations

Private trading corporations are those owned and controlled by the private sector. Include:

• non-profit institutions;
• intra-group financiers, retailers and parent companies with significant holdings of shares in private trading companies;
• privately owned schools and hospitals;
• any unincorporated unit that is a branch in Australia of a non-resident company; and
• any unincorporated business owned and operated by trading corporations (e.g. joint ventures).

1.4 Other

Include all other loans and advances not disclosed on the form.

2. Total loans and advances

Report all loans and advances in accordance with the following categories.

2.1 Are contracted at fixed rates

Of the total loans and advances of the MDO, disclose the aggregate value of loans and advances that have been funded at a fixed interest rate.

2.2 Are contracted at a variable rate

Of the total loans and advances of the MDO, disclose the aggregate value of loans and advances that have been funded at a variable interest rate.

2.3 Are contracted on an unsecured basis

Of the total loans and advances of the MDO, disclose the value of any loans and advances where the MDO has taken no security from the counterparty.

2.4 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 MDO 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.

2.5 Repayment is past due date 1 year or more

Report the outstanding balance of the loan, the value of any security taken by the MDO 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.

3. Total Loans and advances

Report all loans and advances accordance to the applicable counterparty grade (and maturity where applicable) as detailed on the form (refer items 3.1-3.5). The grades are detailed at Attachment 1.

Also report the aggregate balance of loans and advances that are denominated in a currency other than the Australian currency (refer item 3.6).

4. Total loans and advances

Report all loans and advances to related entities in accordance with the categories detailed on the form.

ATTACHMENT 1: Counterparty Grades

Unrated assets or exposures should be classified as Grade 4.

An MDO must, in general, use the same rating agency for determining counterparty grades. An MDO may depart from this general rule where there are good reasons for doing so, such as under the following circumstances:

Where the rating agencies usually monitored by the insurer do not issue a solicited credit rating for a particular debt obligation and only one other rating agency issues a solicited credit rating for that debt obligation, the MDO may use that solicited credit rating.

Introduction

This form requires Medical Defence Organisations (MDOs) to report information about their investment profile.

Reporting Obligations

MDOs are required to report on a half-yearly basis (that is, six monthly intervals), based on their financial year.

For annual reporting, MDOs must lodge a form within four months of the end of their financial year. The information required on an annual basis must be reported as at the last day of the reporting period on a financial year-to-date basis of the MDO.

For half-yearly reporting (that is, the half-year that does not correspond with the MDO’s financial year end), MDOs must lodge a form within 20 business days of the end of that six month period.

Audit Requirements

This form must be subject to audit review and testing on an annual basis or more frequently if necessary to enable the auditor to form an opinion on the accuracy and reliability of the data. The auditor must provide a certificate to the MDO specifying whether, in their opinion, the data provided by the MDO are reliable. The MDO must submit this certificate to APRA on an annual basis.

The scope and nature of audit testing required is outlined in the applicable Auditing and Assurance Guidance Statement issued by the Auditing and Assurance Standards Board.

Definitions

Definitions for data reporting items required by this form have been provided where possible in the instructions under the section headed ‘Specific Instructions’.

Basis of Preparation

Unit of Measurement

This form is to be prepared in thousands of Australian dollars (AUD). Amounts denominated in a currency other than Australian currency are to be converted to AUD in accordance with AASB 121 The Effects of Changes in Foreign Exchange Rates (AASB 121).

Assets

The aggregate value of investments disclosed in the forms listed below must agree to the total of amounts reported as both current and non-current assets in items 3 and 8

Investments (relates to the MRF 140 series of forms) of MRF 300.0 Statement of Financial Position (MRF 300.0).

• MRF 140.0 Investments – Direct Interest Rate Holdings (MRF 140.0)
• MRF 140.1 Investments – Direct Equity Holdings (MRF 140.1)
• MRF 140.2 Investments – Direct Property Holdings (MRF 140.2)
• MRF 140.3 Investments – Loans and Advances (MRF 140.3)
• MRF 140.4 Investments – Assets Indirectly Held (MRF 140.4)

Holding of units in unit trusts

Where the entity’s investments are represented by holdings of units in unlisted or listed managed investment vehicles/entities, the following reporting is required:

• Units are to be reported in MRF 140.4. This form requires, amongst other things, disclosure of the value of the unit holding according to the nature of the underlying market exposure (i.e. interest rate related, equity related, property related). If the units are held in a diversified or balanced trust, the investment holding is to be disclosed in accordance with the funds advised asset allocation.
• Holdings must be disclosed as unlisted or listed units.

Securities purchased (sold) under agreements to resell (repurchase) and stock lending/borrowing

Reporting for the purposes of this return is to be consistent with AASB 139 Financial Instruments: Recognition and Measurement (AASB 139)

Where the transferee of the security effectively receives a lenders rate of return or a return that does not correlate with ownership of the securities (i.e. the risks and rewards of ownership of the underlying securities is not effectively transferred), these transactions are to be accounted for as collateralised borrowing or lending activities.

Under this method of accounting for transactions that satisfy the above, do not adjust (i.e. increase or decrease) the physical investment security holdings/portfolios (interest rate and equity investments) for the securities that are subject to these agreements.

Securities transacted not settled (i.e. trade date accounting)

Include market-related securities that are recorded on a trade date basis and transacted in accordance with accepted financial market settlements periods. Such securities are to be included in the MRF 140 series. These do not constitute forward asset purchases for the purposes of MRF 130.0 Off Balance Sheet Business – Direct Credit Substitutes Provided (MRF 130.0).

Related party/entity

Related parties/entities are to be interpreted in accordance with AASB 124 Related Party Disclosures (AASB 124) .

Parent

Parent entity is to be interpreted in accordance with AASB 127 Consolidated and Separate Financial Statements (AASB 127).

Subsidiaries

Subsidiaries are to be interpreted in accordance with AASB 127.

Associates

Associates are to be interpreted in accordance with AASB 128 Investments in Associates (AASB 128).

Joint ventures

Joint ventures are to be interpreted in accordance with AASB 131 Interests in Joint Ventures (AASB 131).

Specific Instructions

Loans and advances are treated for the purposes of this form as investments of the MDO. Generally include:

• overdrafts and revolving credit facilities;
• financial lease agreements;
• term loans;
• mortgage lending;
• commercial loans;
• equity participation in leveraged leases;
• subordinated loans; and
• secured and unsecured lending.

Balance outstanding (column 1)

Report the aggregate value of the outstanding loans gross of any provision for impairment for each loan classifications listed.

Value of security (column 2)

Report the aggregate fair value of property or other forms of assets that are taken as security for the loan provided by the MDO.

Provision for impairment (column 3)

Report the aggregate provision for impairment applying to the particular loan portfolio/classifications listed.

For the purposes of this form, 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 MDO.

Balance outstanding net of provision (column 4)

Represents the outstanding balance less associated provision for impairment.

1. Loans and advances

Report all loans and advances in accordance with the following categories.

1.1 Households

This comprises loans to households for any purpose.

1.2 Private unincorporated businesses

This comprises 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.

1.3 Private trading corporations

Private trading corporations are those owned and controlled by the private sector. Include:

• non-profit institutions;
• intra-group financiers, retailers and parent companies with significant holdings of shares in private trading companies;
• privately owned schools and hospitals;
• any unincorporated unit that is a branch in Australia of a non-resident company; and
• any unincorporated business owned and operated by trading corporations (e.g. joint ventures).

1.4 Other

Include all other loans and advances not disclosed on the form.

2. Total loans and advances

Report all loans and advances in accordance with the following categories.

2.1 Are contracted at fixed rates

Of the total loans and advances of the MDO, disclose the aggregate value of loans and advances that have been funded at a fixed interest rate.

2.2 Are contracted at a variable rate

Of the total loans and advances of the MDO, disclose the aggregate value of loans and advances that have been funded at a variable interest rate.

2.3 Are contracted on an unsecured basis

Of the total loans and advances of the MDO, disclose the value of any loans and advances where the MDO has taken no security from the counterparty.

2.4 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 MDO 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.

2.5 Repayment is past due date 1 year or more

Report the outstanding balance of the loan, the value of any security taken by the MDO 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.

3. Total Loans and advances

Report all loans and advances accordance to the applicable counterparty grade (and maturity where applicable) as detailed on the form (refer items 3.1-3.5). The grades are detailed at Attachment 1.

Also report the aggregate balance of loans and advances that are denominated in a currency other than the Australian currency (refer item 3.6).

4. Total loans and advances

Report all loans and advances to related entities in accordance with the categories detailed on the form.

ATTACHMENT 1: Counterparty Grades

Unrated assets or exposures should be classified as Grade 4.

An MDO must, in general, use the same rating agency for determining counterparty grades. An MDO may depart from this general rule where there are good reasons for doing so, such as under the following circumstances:

Where the rating agencies usually monitored by the insurer do not issue a solicited credit rating for a particular debt obligation and only one other rating agency issues a solicited credit rating for that debt obligation, the MDO may use that solicited credit rating.