Life Insurance (prudential standard) determination No. 11 of 2012 - Prudential Standard LPS 320 - Actuarial and Related Matters
Advice on calculating the capital base, Advice on calculating the capital base, prescribed capital amount and policy liabilities
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Advice on calculating the capital base, prescribed capital amount and policy liabilities
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Under the capital adequacy standards, responsibility for calculating the capital base and prescribed capital amount for a statutory fund, general fund or life company rests with the life company and its Board.
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Under Prudential Standard LPS 340 Valuation of Policy Liabilities, a life company is responsible for calculating the value of its policy liabilities.
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Reporting to APRA under the Financial Sector (Collection of Data) Act 2001 must be made in accordance with a methodology which has been the subject of advice provided by the Appointed Actuary. The methodology must be documented, with a copy provided to APRA on request along with explanation of any areas in which the methodology materially departs from that advised by the Appointed Actuary.
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A life company must arrange for its Appointed Actuary to calculate values for the policy liabilities, capital base and prescribed capital amount of the life company and each of its funds as at the end of every financial year and advise these amounts in the FCR. The Appointed Actuary must document in the FCR details of the calculation processes and the assumptions used in determining the amounts.
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If the life company adopts a value for the policy liabilities, capital base or prescribed capital amount that differs materially from the amounts advised by the Appointed Actuary, the life company must provide APRA with a written explanation of the differences on or before the day that the life company’s annual regulatory financial statements are required to be submitted to APRA.