CTHRepealedLegislation
Insurance (prudential standard) determination No. 7 of 2010 - Prudential Standard GPS 114 - Capital Adequacy: Investment Risk Capital Charge
CollateralCollateral
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Collateral
- Where an insurer possesses recognised collateral against an asset (other than reinsurance recoverables due from non-APRA-authorised reinsurers), it may apply the Investment Capital Factor relevant to the collateral to the value of the asset (instead of applying the Investment Capital Factor that would otherwise apply to the asset). For the purposes of this paragraph, collateral is recognised only to the extent that it takes the form of a charge, mortgage or other security interest in, or over, an Eligible Collateral Item. Eligible Collateral Items are cash, government securities, or debt obligations (as defined in paragraph 12) where the obligor has a counterparty rating in Grade 1, 2 or 3. The Eligible Collateral Item must also be held for the period for which the asset is held. Where the fair value of the collateral does not cover the full value of the asset, only that part of an asset that is covered by collateral may be assigned the Investment Capital Factor applicable to the collateral.