Insurance Act 1973 - Determination of Prudential Standards - GPS 110 - Capital Adequacy for General Insurers; GPS 120 - Assets in Australia for General Insurers; GPS 210 - Liability Valuation for General Insurers; GPS 220 - Risk Management for General Insurers; GSP 230 - Reinsurance Arrangements for General Insurers; GPS 410 - Transfer and Amalgamation of Insurance Business for General Insurers and Transitional Prudential Standard GPS 900- Early Approvals of Auditors and Actuaries (07/02/2002)
Charged and Encumbered AssetsCharged and Encumbered Assets
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Turn the raw legal text into a practical explanation grounded in Insurance Act 1973 - Determination of Prudential Standards - GPS 110 - Capital Adequacy for General Insurers; GPS 120 - Assets in Australia for General Insurers; GPS 210 - Liability Valuation for General Insurers; GPS 220 - Risk Management for General Insurers; GSP 230 - Reinsurance Arrangements for General Insurers; GPS 410 - Transfer and Amalgamation of Insurance Business for General Insurers and Transitional Prudential Standard GPS 900- Early Approvals of Auditors and Actuaries (07/02/2002).
Charged and Encumbered Assets
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Subject to paragraph 15, assets of the insurer that are under a fixed or floating charge, mortgage or other security are subject to an Investment Capital Factor of 100%, to the extent of the indebtedness secured on those assets. This will replace the Investment Capital Factor that would otherwise apply to the secured assets.
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Where the security supports an insurer’s insurance liabilities, the Investment Capital Factor of 100% is applicable only to the amount by which the market value of the charged assets exceeds the insurer’s supported liabilities.