Intra-group capital transactions

1. The matters APRA may consider in assessing whether an item included by a private health insurer as a component of capital resulting from intra-group transactions is not a genuine contribution to financial strength include, but are not limited to, whether the item:
   1. is clearly supplied from debt raised by other group members;
   2. results from intra-group transactions with no economic substance;
   3. is contributed by a member of the group using funding sources, directly or indirectly, from the private health insurer itself; and
   4. is contributed by a group member and the funding of which contains cross-default clauses that would be triggered as a result of the private health insurer failing to meet any servicing obligations.
2. In assessing the overall strength of the capital adequacy of a private health insurer, APRA will have regard to the level of capital adequacy of individual group members of a group to which the private health insurer belongs, including any limitations in the amount of capital that may be readily extracted from individual group members to provide support, if required, to recapitalise the private health insurer.
3. In assessing the overall strength of a private health insurer, APRA may request that the parent entity provide APRA with details of relevant intra-group exposures, including capital transactions and intra-group guarantees. The information on intra-group exposures would typically include details of all intra-group exposures provided by the private health insurer to other members of the group. APRA may also request details of material exposures between other members of the group to which it belongs.