Reporting consultation package for life insurers
22 June 2012
Table of Contents
Section 1: General Instruction Guide............................................................................................ 1
1 Introduction .................................................................................................................................2
2 Reporting Level .............................................................................................................................4
3 Reporting period and timing of submission .............................................................................................9
4 Basis of preparation ...................................................................................................................... 11
5 Audit requirements ....................................................................................................................... 17
6 Interpretations ............................................................................................................................ 19
Section 2: Quarterly Forms ........................................................................................................ 20
LRF 110.1
LRF 110.2
LRF 112.0
LRF 112.1
LRF 112.2
LRF 112.3
LRF 114.0
LRF 114.2
LRF 114.3
LRF 115.0
LRF 115.1
LRF 117.0
LRF 118.0
LRF 200.0
Prescribed Capital Amount (SF, GF) ......................................................................................... 21
Prescribed Capital Amount (Entity) ......................................................................................... 24
Determination of Capital Base (SF) .......................................................................................... 26
Determination of Capital Base (GF) ......................................................................................... 30
Determination of Capital Base (Entity) ..................................................................................... 33
Related Party Exposures ...................................................................................................... 38
Asset Risk Charge............................................................................................................... 41
Derivatives Activity ............................................................................................................ 47
Off-balance Sheet Business ................................................................................................... 50
Insurance Risk Charge (SF) .................................................................................................... 55
Insurance Risk Charge (GF) ................................................................................................... 57
Asset Concentration Risk Charge ............................................................................................. 59
Operational Risk Charge ....................................................................................................... 64
Capital Adequacy Supplementary Information ............................................................................. 67
LRF 300.1
LRF 300.2
LRF 310.1
LRF 310.2
LRF 330.0
LRF 340.1
LRF 340.2
Statement of Financial Position (SF and SF Eliminations) ................................................................ 73
Statement of Financial Position (SF Total, GF, GF Elim, Entity) ........................................................ 80
Income Statement (SF and SF Eliminations) ................................................................................ 87
Income Statement (SF Total, GF, GF Elim, Entity) ........................................................................ 93
Summary of Revenue and Expenses ........................................................................................ 100
Retained Profits (SF and SF Eliminations) ................................................................................. 104
Retained Profits (SF Total, GF, GF Elim, Entity) ......................................................................... 106
Section 3: Annual Forms ........................................................................................................... 108
LRF 400.0 Statement of Policy Liabilities .............................................................................................. 109
LRF 420.0 Assets Backing Policy Liabilities ............................................................................................. 116
LRF 430.0 Sources of Profit............................................................................................................... 121
Section 1: General Instruction Guide
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Life Insurance Reporting Requirements
General Instruction Guide
1. Introduction
This General Instruction Guide is intended to assist in the completion and lodgement of the reporting forms required to be lodged with APRA
under the Reporting Standards made under section 13 of the Financial Sector (Collection of Data) Act 2001 by companies registered under the
Life Insurance Act 1995. In this guide 'life company' means any company registered under the Act, including a friendly society. References to
'life insurers' only apply to life companies other than friendly societies.
Detailed instructions for the individual reporting items are provided in the specific instructions included in the attached drafts of reporting forms
and need to be considered in conjunction with this guide and the relevant reporting standards and prudential standards1.
This guide covers the following reporting forms for life companies:
LRF 110.1 and LRF 110.2 Prescribed Capital Amount (LRF 110.1 & LRF 110.2);
LRF 112.0, LRF 112.1 and LRF 112.2 Determination of Capital Base; (LRF 112.0, LRF 112.1 & LRF 112.2 respectively)
LRF 112.3 Related Party Exposures (LRF 112.3)
LRF 114.0 Asset Risk Charge; (LRF 114.0)
LRF 114.2 Derivatives Activity; (LRF 114.2)
LRF 114.3 Off-balance Sheet Business; (LRF 114.3)
LRF 115.0 and LRF 115.1 Insurance Risk Charge; (LRF 115.0 & LRF 115.1)
1
Prudential standards determined by APRA under section 230A of the Life Insurance Act 1995.
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LRF 117.0 Asset Concentration Risk Charge; (LRF 117.0)
LRF 118.0 Operational Risk Charge; (LRF 118.0)
LRF 200.0 Capital Adequacy Supplementary Information; (LRF 200.0)
LRF 300.1 and LRF 300.2 Statement of Financial Position; (LRF 300.1 & LRF 300.2)
LRF 310.1 and LRF 310.2 Income Statement; (LRF 310.1 & LRF 310.2)
LRF 330.0 Summary of Revenue and Expenses; (LRF 330.0)
LRF 340.1 and LRF 340.2 Retained Profits; (LRF 340.1 & LRF 340.2)
LRF 400.0 Statement of Policy Liabilities; (LRF 400.0)
LRF 420.0 Assets Backing Policy Liabilities; (LRF 420.0) and
LRF 430.0 Sources of Profit. (LRF 430.0)
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2. Reporting level
This section details the reporting levels for completion of each reporting form. Reporting is required in respect of:
Each statutory fund for a life insurer & each approved benefit fund for a friendly society;
The shareholder fund for a life insurer & the management fund for a friendly society; and
The company as whole (for both life companies & friendly societies).
Form
Notes
LRF 110.1 and LRF 110.2 must be completed by all life companies.
LRF 110.1 and
LRF 110.2
LRF 110.1 must be completed for each statutory fund (approved benefit fund) and shareholders’ fund (management fund).
LRF 110.2 must be completed at the licensed insurer level.
LRF 112.0;
LRF 112.1; and
LRF 112.2
LRF 112.0, LRF 112.1 and LRF 112.2 must be completed by all life companies.
LRF 112.0 must be completed for each statutory fund (approved benefit fund). LRF 112.1 must be completed for the
shareholders’ fund (management fund). LRF 112.2 must be completed at the licensed insurer level.
LRF 112.3 must be completed by all life companies.
LRF 112.3
The form must be completed for each statutory (approved benefit fund) and the shareholders’ fund (management fund).
LRF 114.0 must be completed by all life companies.
LRF 114.0
The form must be completed for each statutory fund (approved benefit fund) and the shareholders’ fund (management
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fund).
LRF 114.2 must be completed by all life companies.
LRF 114.2
The form must be completed for each statutory fund (approved benefit fund) that does not write investment linked business.
Funds writing only investment linked business do not need to complete this form.
LRF 114.3 must be completed by all life companies.
LRF 114.3
The form must be completed for each statutory fund (approved benefit fund) that does not write investment linked business.
Funds writing only investment linked business do not need to complete this form.
LRF 115.0 must be completed by all life companies. LRF 115.1 needs to be completed by friendly societies only.
LRF 115.0; and
LRF 115.1
LRF 115.0 must be completed separately for each statutory fund. Approved benefit funds that do not write investment
linked business also need to complete LRF 115.0. Note that it is not mandatory to complete LRF 115.0 on a quarterly basis.
Refer to the specific reporting instruction for details.
LRF 115.1 must be completed for the management fund of the friendly societies.
LRF 117.0 must be completed by all life companies.
LRF 117.0
The form must be completed for the shareholders’ fund (management fund) and each statutory fund (approved benefit fund)
which does not write investment linked business. Funds providing only investment linked business do not need to complete
this form.
LRF 118.0 must be completed by all life companies.
LRF 118.0
The form must be completed for each statutory fund (approved benefit fund) of life insurers and the management fund of
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friendly societies.
In completing LRF 118.0 for the management fund, friendly societies must submit the information based on business
activities across all approved benefit funds. Refer to the specific reporting instructions for details.
LRF 200.0 must be completed by life insurers only. Friendly societies do not need to complete this form.
The form is to be completed separately for each statutory fund.
LRF 200.0
As set out in the form, data items are to be completed for each APRA product group (as defined in this guide).
In section 1 and section 2 of this form, it is not mandatory for life insurers to update the information on a quarterly basis.
Refer to specific reporting instructions for details.
LRF 300.1 and LRF 300.2 must be completed by all life companies.
The forms must be completed for each statutory fund (approved benefit fund) and the shareholders’ fund (management
fund) and must include eliminations between these funds.
LRF 300.1; and
LRF 300.2
LRF 300.1 must be submitted for each statutory fund (approved benefit fund) separately and if applicable the ‘Statutory
Fund Eliminations’ must be reported under LRF 300.1.
LRF 300.2 must be submitted for the shareholders’ fund (management fund) return and if applicable the ‘Shareholder
Eliminations’ must be reported under LRF 300.2.
‘Total Statutory Funds’ (allowing for eliminations) and ‘Total Entity’ results will be calculated automatically in LRF 300.2.
LRF 310.1; and
LRF 310.2
LRF 310.1 and LRF 310.2 must be completed by all life companies.
LRF 310.1 must be submitted for each statutory fund (approved benefit fund) separately and if applicable the ‘Statutory
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Fund Eliminations’ must be reported under LRF 310.1.
LRF 310.2 must be submitted for the shareholders’ fund (management fund) return and if applicable the ‘Shareholder
Eliminations’ must be reported under LRF 310.2.
‘Total Statutory Funds’ (allowing for eliminations) and ‘Total Entity’ results will be calculated automatically in LRF 310.2.
LRF 330.0 must be completed by life insurers only. Friendly societies do not need to complete this form.
LRF 330.0
The form must be submitted for each statutory fund.
Where relevant in the form, data items must be submitted for each APRA product group (as defined in this guide).
LRF 340.1 and LRF 340.2 must be completed by all life companies.
The forms must be completed for each statutory fund (approved benefit fund) and shareholders’ fund (management fund)
and must include eliminations between these funds.
LRF 340.1 must be submitted for each statutory fund (approved benefit fund) and if applicable the ‘Statutory Fund
Eliminations’ must be reported under LRF 340.1
LRF 340.1; and
LRF 340.2
LRF 340.2 must be submitted for the shareholders’ fund (management fund) and if applicable the ‘Shareholder
Eliminations’ must be reported under LRF 340.2.
‘Total Statutory Funds’ (allowing for eliminations) and ‘Total Entity’ results will be calculated automatically in LRF 340.2.
For data reported in LRF 340.1 by statutory fund (approved benefit fund), a breakdown of the data items is required by
geographic location (Australia or overseas) and whether these data items are designated as being attributable to policy
owner interests or shareholder interests.
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LRF 400.0 must be completed by all life companies.
The form must be completed for each statutory fund (approved benefit fund).
Where relevant in the form, data items must be completed for each APRA product group (as defined in this guide). Some of
these data items will be collected on the following three bases:
LRF 400.0
‘This Year’ – current position, based on current year’s valuation basis;
‘Last Year’ – current position, based on previous year’s valuation basis; and
‘LY/TY’ – current position, based on previous year’s valuation basis, except substituting current year’s investment
and economic assumptions.
LRF 420.0 must be completed by life insurers only. Friendly societies do not need to complete this form.
LRF 420.0
The form is to be completed separately for each statutory fund.
Where relevant in the form, data items are to be completed for each APRA product group (as defined in this guide).
LRF 430.0 must be completed by all life companies.
LRF 430.0
The form is to be completed for each statutory fund (approved benefit fund).
Where relevant in the form, data items must be completed for each APRA product group (as defined in this guide).
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3. Reporting period and timing of submission
Life companies are required to submit the following forms on both a quarterly and an annual basis:
LRF 110.1 & LRF 110.2;
LRF 112.0, LRF 112.1, LRF 112.2, & LRF 112.3;
LRF 114.0, LRF 114.2, & LRF 114.3;
LRF 115.0 & LRF 115.1;
LRF 117.0;
LRF 118.0;
LRF 200.0.
LRF 300.1 & LRF 300.2;
LRF 310.1 & LRF 310.2;
LRF 330.0;
LRF 340.0; and
Life companies are required to submit the following forms on an annual basis only:
LRF 400.0;
LRF 420.0; and
LRF 430.0.
Note that:
the quarterly information must be completed as at the end of each quarter of the financial year of the life companies, not the calendar
year;
the annual information must be completed as at the end of the financial year of the life companies; and
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the financial information required in the reporting forms covered by this guide must be reported as at the close of business on the last day
of the reporting period, or for the year to date period up to the close of business on the last day of the reporting period, as relevant.
In respect of the timing of submission of the reporting forms, unless granted for an extension by APRA:
the quarterly information required by this reporting standard in unaudited form must be provided to APRA within 20 business days after
the end of the reporting period to which the information relates; and
the annual information required by this reporting standard in audited form must be provided to APRA within four months after the end of
the reporting period to which the information relates.
Refer to section 5 for more details on auditing requirements.
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Basis of preparation
4.1. General accounting basis
In completing the forms covered by this guide, unless otherwise stated specifically, reporting life companies including friendly societies are to
follow the basis consistent with the relevant Australian Accounting Standards. In particular, appropriate consideration must be given to the
interpretation, the basis for measurement, and the netting between revenues/expenses items and financial assets/liabilities.
4.2. Actuarial valuation basis
All actuarial valuations and calculations included in, or used in the preparation of the forms covered by this guide must be performed in
accordance with the relevant prudential standards. The determination of policy liabilities as reported in the Statement of Financial Position must
be in accordance with Prudential Standard LPS 340 Valuation of Policy Liabilities.
APRA recognises that full actuarial and other valuation procedures may not be used for valuing policy liabilities in all reporting periods. In such
cases, reasonable estimation may be applied for valuing the policy liabilities and such estimation needs to be based on the detailed valuation
procedures. It must be noted that where such estimation processes have taken place, the approximating valuation methodology used by the life
company must be subject to the advice of the Appointed Actuary, in line with the requirements of Prudential Standard LPS 320 Actuarial and
Related Matters.
4.3. Fair value approach
For capital reporting purposes, all relevant assets and liabilities information in the capital reporting forms are to be reported in fair value. The
capital reporting forms include all reporting forms associated with the determination of the prescribed capital amount, the capital base, and other
forms providing supplementary capital information.
For the purposes of valuing derivative exposures in LRF 114.2, fair value should represent an estimate of the amount which could be expected to
be received from the disposal of the derivative instrument in an orderly market, ignoring transaction costs. It is not necessarily related to the
nominal value of the derivative.
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In preparing information for other reporting forms, all assets of a statutory fund are to be reported at fair value, with movements in fair values
recognised in profit or loss and reported as revenues or expenses where relevant.
As per Prudential Standard LPS 340 Valuation of Policy Liabilities, APRA also applies the fair value approach to measurement of assets
backing life investment contract liabilities for its regulatory reporting which is consistent with AASB 1038.
Fair value has the same meaning as defined in AASB 139, that is, the amount for which an asset could be exchanged, or a liability settled,
between knowledgeable, willing parties in an arm's-length transaction, and is determined as follows:
The quoted market price (i.e. bid or ask price) in an active and liquid market; or
When there is infrequent activity in a market, and the market is not well established, small volumes are traded relative to the asset or
liability to be valued, or a quoted market price is not available – a realistic estimate of fair value on the basis of the results of a valuation
technique that makes maximum use of market inputs, and relies as little as possible on entity-specific inputs2
4.4. Units of measurement
Unless otherwise indicated by the specific item instructions, all reporting forms covered by this guide are to be prepared in thousands of
Australian dollars (AUD). Amounts denominated in foreign currency are to be converted to AUD in accordance with AASB 121 The Effects of
Changes in Foreign Exchange Rates.
4.5. Definitions
Definitions for the individual data items are included in the specific reporting instructions for each of the forms.
Definitions, unless specified otherwise, apply to all life insurers and friendly societies. Accordingly, the term ‘statutory fund’ has been used to
refer to a statutory fund of a life company other than a friendly society or a benefit fund of a friendly society in the specific instructions. The
2
See AASB 139 ‘Financial Instruments: Recognition and Measurement’.
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term, ‘general fund’ has been used to refer to the shareholders’ fund of a life company other than a friendly society or the management fund of a
friendly society in the specific instructions. Additionally, reference to shareholders has been used to refer to ‘members’ of a mutual association
or society.
For the purpose of preparing the reporting forms covered by this guide, contracts are to be classified in accordance with Prudential Standard
LPS 340 Valuation of Policy Liabilities.
4.6. Related parties
Where this term is used or referred to in the reporting forms, it has the same meaning as it does in AASB 124 ‘Related Party Disclosures’ (AASB
124).
In accordance with AASB 124, related party means a party that directly or indirectly through one or more intermediaries:
a)
b)
c)
d)
e)
f)
g)
controls, is controlled by or is under common control with, the entity (this includes parents, subsidiaries and fellow subsidiaries); or
has significant influence over the entity or has joint control over the entity; or
is an associate (as defined in AASB 128 ‘Investments in Associates’) of the entity; or
is a joint venture in which the entity is a venturer (see AASB 131 ‘Interests in Joint Ventures’); or
is a member of the key management personnel of the entity or its parent; or
is a close member of the family of any individual referred to in (a), (b) or (e); or
is an entity that its controlled, jointly controlled or significantly influenced by, or for which significant voting power in such entity
resides with, directly or indirectly, any individual referred to in (e) or in (f); or
h) is a post-employment benefit plan for the benefit of the employees of the entity, or of any entity that is a related party of the entity.
4.7. APRA Product Group classification
For consistency of reporting across the range of forms applicable to life companies, APRA adopts a single set of product groupings for life
insurers and friendly societies. The appropriate APRA product groups should be used in accordance with the specific reporting form
instructions.
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The following tables specify the product groups applicable to life insurers and friendly societies.
4.7.1. Life insurers
Ref.
Product Group
Notes
Classification
L1
Conventional
Participating
Includes whole of life policies and endowment policies.
Participating
L2
Participating
Investment Account
Investment account business within the meaning of section 14 of the Act that
pays participating benefits within the meaning of section 15 of the Act.
Participating
L3
Annuity with
Longevity Risk
Annuities providing periodic payments that are dependent on the
continuance of human life.
Non-participating
L4
Individual Lump Sum
Risk
Lump sum risk policies issued on an individual (retail) basis. Includes nonparticipating conventional policies.
Non-participating
L5
Individual Disability
Income Insurance
Disability income insurance policies issued to individuals.
Non-participating
L6
Group Lump Sum Risk
Lump sum risk policies issued on a group (wholesale) basis.
Non-participating
L7
Group Disability
Income Insurance
Disability income insurance policies issued on a group basis.
Non-participating
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L83
Investment Linked
Investment linked policies where policy benefits are associated with the
performance of the supporting assets.
Non-participating
L9
Non-par Investment
Policy with
Discretionary
Additions
Investment account business within the meaning of section 14 of the Act that
pays non-participating benefits within the meaning of section 15 of the Act.
Non-participating
L10
Other Non-par
Investment Policy
Includes all other non-par investment products not specifically categorised in
L8 and L9. However, do not use this Product Group unless APRA has been
consulted beforehand.
Non-participating
L11
Annuity without
Longevity Risk
Annuities providing periodic payments that are not dependent on the
continuance of human life.
Non-participating
L12
Other
Includes all other policies not specifically categories above. However, do
not use this Product Group unless APRA has been consulted beforehand.
Both Participating and
Non-participating can be
reported
L13
Policy Owners’
Retained Profits
Retained profits allocated to participating policy owners generally, but not
yet vested as guaranteed amounts to participating policies.
Participating
L14
Shareholders’ Capital
and Retained Profits
Shareholders’ capital and retained profits allocated to shareholders.
Capital
3
The ‘L8 product group’ was previously defined as ‘Non-par Investment Policy’. Under the revised APRA product groups this has been split into ‘L8 Investment Linked’,
‘L9 Non-par Investment Policy with Discretionary Additions’, and ‘L10 Other Non-par Investment Policy’.
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Where certain Related Product Groups (as defined in the relevant prudential standards) comprise elements from multiple APRA product
groups, it is acceptable to combine these and report them in a single APRA product group.
4.7.2. Friendly Societies
Ref.
Product Group
Notes
F1
Education
F2
Investment Account
F3
Annuity and
Superannuation
F4
Defined Benefit Risk
All products classified as defined benefit, including defined benefit funeral products
F5
Capital Guaranteed
Defined Contribution
Funeral
Capital guaranteed funeral products that are classified as Defined Contribution.
F6
Investment Linked
As defined in section 14 of the Life Insurance Act 1995.
F7
Unallocated Benefit
Fund Reserve
Value of benefit funds which has not been allocated to either the benefit fund members or to management
fund.
F8
Members’ Capital and
Retained Profits
Members’ capital and retained profits allocated to members.
As defined in section 14 of the Life Insurance Act 1995.
The classification of participating and non-participating business does not apply to friendly societies.
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June 2012
Audit requirements
The specific auditing requirements in respect of the reporting forms are as follows:
Form Name
Form Number
Level of Assurance
Prescribed Capital Amount
LRF 110.1,
LRF 110.2
Reasonable4
2
Determination of Capital Base
LRF 112.0,
LRF 112.1,
LRF 112.2
Reasonable
3
Related Party Exposures
LRF 112.3
Reasonable
4
Asset Risk Charge
LRF 114.0
Reasonable
5
Derivatives Activity
LRF 114.2
Reasonable
6
Off-balance Sheet Business
LRF 114.3
Reasonable
7
Insurance Risk Charge
LRF 115.0,
LRF 115.1
Reasonable
8
Asset Concentration Risk Charge
LRF 117.0
Reasonable
9
Operational Risk Charge
LRF 118.0
Reasonable
10
Capital Adequacy Supplementary Information
LRF 200.0
None
LRF 300.1
Reasonable
11
Statement of Financial Position
LRF 300.2
Reasonable
1
4
Reasonable Assurance is defined in the Framework for Assurance Engagements issued by the AUASB.
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LRF 310.1
Reasonable
LRF 310.2
Reasonable
LRF 330.0
Reasonable
LRF 340.1
Reasonable
LRF 340.2
Reasonable
Income Statement
13
Summary of Revenue and Expenses
14
Retained Profits
June 2012
15
Statement of Policy Liabilities
LRF 400.0
None
16
Assets Backing Policy Liabilities
LRF 420.0
None
17
Sources of Profit
LRF 430.0
None
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June 2012
Interpretations
In this instruction guide:
AASB references made within this instruction guide relates to the latest versions of the Australian Account Standards;
Australian/overseas business relates to the business that is carried out in an Australian fund or outside Australia within an overseas fund.
The meaning of an Australian fund and an overseas fund is as defined in section 74 of the Life Insurance Act 1995; and
business days means ordinary business days, exclusive of Saturdays, Sundays or public holidays;
reporting period means a reporting period as relevant in section 3 of this instruction guide.
19
Section 2: Draft quarterly forms
20
LRF_110_1 Prescribed Capital Amount (SF, GF)
Australian Business Number
New Form
Entity identifier, to be provided
Institution Name
Life companies including friendly
societies
Reporting Period
As at end of each quarter and as at
financial year end
Scale Factor
Thousands of dollars no decimal
places
Reporting Consolidation
One form per statutory fund and
general fund
Section 1: Summary of prescribed capital amount
Specific Reporting Instructions
Definition and Instructions
1. LRF 114: Asset risk charge............................................................................................................................
The asset risk charge is the minimum amount of capital required to be held against asset risks. The
asset risk charge relates to the risk of adverse movements in the value of a fund’s on-balance sheet
and off-balance sheet exposures. Asset risk can be derived from a number of sources, including
market risk and credit risk.
This amount must correspond to item 9 of LRF 114.0.
2. LRF 115: Insurance risk charge.....................................................................................................................
The insurance risk charge is the minimum amount of capital required to be held against insurance
risks. The insurance risk charge relates to the risk of adverse impacts due to movements in future
mortality, morbidity, longevity, servicing expenses and lapses.
This amount must correspond to item 6 in LRF 115.0 (for statutory funds), or item 9 in LRF 115.1 (for
general funds of friendly societies).
= (1. + 2.) 3. Less: Aggregation benefit............................................................................................................................... sqrt(1.^2 + 2.^2 +
2*20%*1.*2.)
4. LRF 200: Aggregate risk charge for variable annuities..................................................................................
This amount relates to the recognition of diversification benefits between asset and insurance risks
for life business other than variable annuities.
This is calculated automatically in accordance with the prescribed formula in paragraph 38 of LPS
110.
This amount is the aggregate capital charge for variable annuity business that relates to asset and
insurance risks, after allowance for diversification.
This is determined in accordance with the prescribed approach set out in Attachment A of LPS 110.
This amount must correspond to table 5 item (6) in LRF 200.0.
21
The asset concentration risk charge is the minimum amount of capital required to be held against
asset concentration risks. The asset concentration risk charge relates to the risk of a fund’s
concentration in particular assets resulting in adverse movements in the fund’s capital base.
5. LRF 117: Asset concentration risk charge......................................................................................................
This amount must correspond to item 6 in LRF 117.0.
The operational risk charge is the minimum amount of capital required to be held against operational
risks. The operational risk charge relates to the risk of loss resulting from inadequate or failed
internal processes, people and systems or from external events.
6. LRF 118: Operational risk charge...................................................................................................................
This amount must correspond to item 5 in LRF 118.0.
This item is the adjustment to the prescribed capital amount in respect of the tax benefits and the
management actions that can be recognised in determining the insurance risk charge and the asset
risk charge. This item also recognises the second order interactions between the asset and
insurance risk stresses.
This item will be reported as a positive value to the extent where, under the combined asset and
insurance risk scenario:
7. Combined stress scenario adjustment...........................................................................................................
> the total admissible tax benefits cannot be fully offset against deferred tax liabilities; and/or
> the aggregate management actions taken under the individual stresses would be considered to be
inappropriate, unjustifiable and inequitable.
This must be determined in accordance with Attachment B of LPS 110.
8. Adjustments to prescribed capital amount as approved by APRA................................................................. = sum (3)
If APRA is of the view that the Standard Method for calculating the prescribed capital amount does
not produce an appropriate outcome in respect of a fund, or if a life company has used inappropriate
judgement or estimation in calculating the prescribed capital amount, APRA may adjust the
prescribed capital amount calculation for that fund
Approved regulatory adjustments are to be reported separately in the table below highlighting the
description of the adjustment given, transitional status and amount of adjustment applied.
This is calculated automatically as the sum of column 3 in the table below.
Description
(1)
Transitional?
(2)
Amount
(3)
Adjustments that would result in an increase to prescribed capital amount should be reported as a
positive value.
(Y/N)
9. Prescribed capital amount...........................................................................................................................
Where the adjustment is a transitional adjustment, the end date for the transitional period is to be
clearly included in the description of the item.
=1+2+4+5+
6+7+8-3
This amount is the prescribed capital amount reported for a fund which is intended to be sufficient,
such that if a fund was to start the year with a capital base equal to the prescribed capital amount,
and losses occurred at the 99.5 per cent confidence level then the assets remaining would be at
least sufficient to provide for the adjusted policy liabilities and other liabilities of the fund at the end of
the year.
This is calculated automatically as the sum of items 1, 2, 4, 5, 6, 7 and 8, less item 3.
22
Section 2: Capital adequacy assessment
General fund refers to the shareholder's fund of a life company other than friendly societies, or the
management fund of a friendly society, as relevant.
General fund ?..................................................................................................................................................
(Y/N)
Indicate "Y" if the reporting fund is a General Fund, and "N" otherwise.
Where the reporting fund is a general fund , items 10.1, item 11 and item 13 would not apply.
The capital base relates to the amount of capital eligible for the purpose of meeting the Prudential
Capital Requirement as set out in LPS 110.
10. Capital base................................................................................................................................................
This amount must correspond to item 6 in LRF 112.0 (for statutory funds) or item 4 in LRF 112.1 (for
general funds).
Of which:
This is the total eligible Tier 2 Capital net of adjustments reported for the fund.
10.1. Tier 2 Capital..................................................................................................................................
This amount must correspond to item 5 in LRF 112.0 (for statutory funds).
11. Capital base net of Tier 2 Capital................................................................................................................. = 10 - 10.1
12. Capital in excess of prescribed capital amount...................................................................................... = 10 - 9
This is calculated automatically as item 10 less item 10.1
This is the surplus or deficit of a fund's capital base over its prescribed capital amount.
This is calculated automatically as item 10 less item 9
13. Capital base (net of Tier 2 Capital) ratio (%)................................................................................................ = 11 / 9
This is calculated automatically as item 11 divided by item 9.
14. Prescribed capital amount coverage (%)...................................................................................................... = 10 / 9
This is calculated automatically as item 10 divided by item 9
23
LRF_110_2 Prescribed Capital Amount (Entity)
Australian Business Number
New Form
Entity identifier, to be provided
Institution Name
Life companies including friendly
societies
Reporting Period
As at end of each quarter and as at
financial year end
Scale Factor
Reporting Consolidation
Thousands of dollars no decimal
places
Life companies
Section 1: Summary of prescribed capital amount
Specific Reporting Instructions
1. Life company: Prescribed capital amount....................................................................................................
This is the total prescribed capital amount at the life company level. The prescribed capital amount is
intended to be sufficient, such that if a fund was to start the year with a capital base equal to the
prescribed capital amount, and losses occurred at the 99.5 per cent confidence level then the assets
remaining would be at least sufficient to provide for the adjusted policy liabilities and other liabilities of
the fund at the end of the year.
Definition and Instructions
This is calculated as the sum of the Item 9 across all LRF 110.1 forms. This sum is subjected to a
floor of $10 million at the life company level, except for friendly societies where exemption has been
granted by APRA regarding the minimum prescribed capital amount. The approved minimum would
replace the $10m floor accordingly.
Section 2: Capital adequacy assessment
2. LRF 112.2: Life company: Capital base.........................................................................................................
The capital base relates to the amount of capital eligible for the purpose of meeting the Prudential
Capital Requirement as set out in LPS 110.
This amount must correspond to item 3 in LRF 112.2.
Of which:
2.1. Common Equity Tier 1 Capital............................................................................................................
This is the highest quality component of capital within the life company as determined under the
eligibility criteria set out in LPS 112, net of all adjustments.
This amount must correspond to item 1.1 in LRF 112.2.
2.2. Additional Tier 1 Capital......................................................................................................................
This is the total value of capital instruments that meet the eligibility criteria for Additional Tier 1 Capital
but not the criteria for a higher quality capital, net of all adjustments.
This amount must correspond to item 1.2 in LRF 112.2.
24
2.3. Tier 2 Capital.......................................................................................................................................
This value relates to the total amount of capital instruments that meet the eligibility criteria for Tier 2
Capital but not the criteria for a higher quality capital, net of all adjustments.
This amount must correspond to item 2 in LRF 112.2.
3. Capital in excess of prescribed capital amount........................................................................................... = 2 - 1
This is calculated automatically as item 2 less item 1.
4. Common Equity Tier 1 Capital ratio (%)............................................................................................................ = 2.1 / 1
This is calculated automatically as item 2.1 divided by item 1.
5. Tier 1 Capital ratio (%)...................................................................................................................................... = (2.1 + 2.2) / 1
This is calculated automatically as (item 2.1 plus item 2.2) divided by item 1.
6. Prescribed capital amount coverage (%).......................................................................................................... = 2 / 1
This is calculated automatically as item 2 divided by item 1.
25
LRF_112_0 Determination of Capital Base (SF)
Australian Business Number
New Form
Entity identifier, to be provided
Institution Name
Life companies including friendly
societies
Reporting Period
As at end of each quarter and as at
financial year end
Scale Factor
Reporting Consolidation
Thousands of dollars no decimal
places
One form per statutory fund
Section 1: Statutory fund capital base
Specific Reporting Instructions
Definition and Instructions
This is the net assets of the fund as reported in the LRF 300.1.
1. LRF 300.1: Net assets as per Life Insurance Act.........................................................................................
This amount must correspond to item 23 in LRF 300.1.
2. Seed capital transferred from management fund........................................................................................
This is the amount of seed capital transferred with APRA's approval from the management fund to the
approved benefit fund of a friendly society.
This amount should be reported as a positive amount.
= sum (3.1 to
3. Less: Regulatory adjustments to net assets................................................................................................
3.14)
3.1. Holdings of life company's own Tier 1 Capital instruments.................................................................
This is the total amount of regulatory adjustments applied on the fund's net assets for the purpose of
determining capital base as per LPS 112.
This is calculated automatically as the sum of item 3.1 to item 3.14.
This is the total effective holdings of own Tier 1 Capital instruments that were issued by the life
company. This includes Common Equity Tier 1 Capital and Additional Tier 1 Capital instruments held
by the fund.
26
This is the amount of deferred tax assets in excess of deferred tax liabilities within the statutory fund.
This assumes that tax benefits in one fund can be offset by the deferred tax liabilities of another fund
provided that the offset is only used once across both funds.
3.2. Excess of deferred tax assets over deferred tax liabilities...................................................................
The deferred tax assets and deferred tax liabilities include any tax effect arising from the adjustment
of policy liabilities but excludes the tax effects arising from the asset and insurance stress scenarios
considered.
Where the deferred tax liabilities exceeds the deferred tax assets, this value should be reported as
zero. The netting of deferred tax assets and deferred tax liabilities must only be applied where the life
company has a legally enforceable right to set-off current tax assets against current tax liabilities.
3.3. Fair value gains and losses from changes in own creditworthiness....................................................
3.4. Goodwill and other intangible assets...................................................................................................
This is the unrealised gains (or losses) from changes in the fair values of the liabilities of the statutory
fund due to changes in creditworthiness of the life company.
This is to be reported as a positive value where there are unrealised gains or a negative value for
unrealised losses.
This is the value of goodwill and any other intangible assets, as defined in Attachment B of LPS 112,
net of adjustments to profit or loss reflecting changes arising from any impairment and amortisation.
The amounts reported must be net of any associated deferred tax liability that would be extinguished
if the assets involved become impaired or derecognised under Australian Accounting Standards.
This also includes the component of investments in certain categories of subsidiaries, joint ventures
and associates (as per LPS 112) that represents goodwill and any other intangible assets.
3.5. Surplus in defined benefit superannuation fund..................................................................................
This is the amount of surplus (if any) in defined benefit superannuation funds where the life company
is an employer-sponsor, net of any associated deferred tax liabilities that would be extinguished if the
assets involved become impaired or derecognised under Australian Accounting Standards.
Where the extinguished deferred tax liability of the defined benefit superannuation fund exceeds the
reported surplus, this value should be reported as zero. Representations may be made to APRA to
include the surplus in the capital base provided the criteria is met as per Attachment B of LPS 112.
This is the amount of deficit (if any) in defined benefit superannuation funds where the life company is
an employer-sponsor.
3.6. Deficit in defined benefit superannuation fund.....................................................................................
This only needs to be reported where the deficit is not already reflected in the net assets in LRF
300.1.
The deficit (if any) should be reported as a positive number.
3.7. Reinsurance assets not subjected to an executed and legally binding contract.................................
This is the value of reinsurance assets (if positive) reported in relation to each reinsurance
arrangement that, subject to a 6 month grace period from risk inception, does not comprise an
executed and legally binding contract.
This is the deduction for the regulatory capital requirement for investments in subsidiaries, joint
ventures and associates as detailed in paragraph 19 of LPS 112 Attachment B.
3.8. Regulatory capital requirement of investments in subsidiary, JV and associate.................................
The deduction should be taken as the lesser of the fund's share of regulatory capital requirement and
the value of the investment that is recorded on the fund's balance sheet after adjusting for any
intangible component.
If the investment subject to this deduction is a non-operating holding company, a look-through
approach must be applied.
This amount must correspond to the total of section 1 column 13 in LRF 112.3.
27
3.9. Assets under a fixed or floating charge...............................................................................................
3.10. Liability adjustments (see Section 2)................................................................................................. = 7
This is the value of assets of the fund that are under a fixed or floating charge, mortgage or other
security. This deduction may be reduced by the amount of any liability for the charge that is
recognised on the fund’s balance sheet.
This is the difference between the adjusted policy liabilities and the sum of the policy liabilities and
policy owners’ retained profits disclosed in the statutory accounts together with any tax effects that
would result from these adjustments.
This is reported automatically as item 7 of this form.
3.11. Fair value adjustments......................................................................................................................
3.12. Unallocated surplus that cannot be transferred to management fund...............................................
3.13. Adjustments to net assets of the fund due to shortfall in Tier 2 Capital.............................................
This is the amount of difference between the fair value of the assets on balance sheet and their
reported value in LRF 300.1.
Where the asset fair value is less than the reported value in LRF 300.1, a positive value should be
reported. Otherwise, a negative value should be reported.
This is the value of the unallocated benefit fund reserves reported in the net assets of the fund in LRF
300.1 that cannot be transferred to management fund.
This item must exclude the amount of unallocated surpluses that have been included as part of the
policy liabilities as reported in LRF 300.1. This only applies to the benefit funds of a friendly society.
This is the value, as at the relevant date, of any deductions (refer to Attachment B of LPS 112) from
the net assets of the fund due to a shortfall in Tier 2 Capital to absorb the required deductions from
this category of capital.
Any shortfall in Tier 2 Capital should be reported here as a positive amount.
3.14. Other net asset adjustments..............................................................................................................
4. Other adjustments to net assets as approved by APRA.............................................................................
This is the value of deductions from the net assets that the statutory fund must make as required
under any other prudential standards.
This is the total value of any other regulatory adjustments to the net assets of the statutory or benefit
fund that does not fall into the previous categories for the purpose of paragraph 40 in LPS 112.
Adjustments that would result in an increase to net assets should be reported as a positive value.
= 5.1 - 5.2 + 5.3
5. Tier 2 Capital....................................................................................................................................................
+ 5.4
Tier 2 Capital includes components of capital that, to varying degrees, fall short of the quality of Tier 1
Capital but nonetheless contribute to the overall strength of the fund and its capacity to absorb
losses.
This is calculated automatically as item 5.1 less item 5.2 plus item 5.3 plus item 5.4.
5.1. Eligible Tier 2 Capital instruments issued by the fund......................................................................... = 5.1.1 - 5.1.2
This is the value of capital instruments issued by the fund that meet the eligibility criteria of Tier 2
Capital.
This is calculated automatically as item 5.1.1 less item 5.1.2
5.1.1. Face value of instruments eligible for Tier 2 Capital..............................................................
5.1.2. Less: Amortised component of instruments excluded from capital base...............................
This is the face value of capital instruments issued by the fund that meet the eligibility criteria for Tier
2 Capital, before any amortisation.
This is the amount of straight-line amortisation on the face value of the Tier 2 Capital instruments for
the fund that meet the eligibility criteria as set out in Attachment E of LPS 112.
This item should be reported as a positive number where amortisation is being applied.
5.2. Less: All holdings of own Tier 2 Capital instruments...........................................................................
This is the effective holdings of own eligible Tier 2 Capital instruments issued by the fund.
The amount of holdings should be reported as a positive figure.
28
This is the amount of adjustments applied to the Tier 2 Capital that are specific to the application of
the requirements in paragraph 40 of LPS 112.
5.3. Adjustments and exclusions to Tier 2 Capital......................................................................................
Adjustments that would result in an increase to Tier 2 Capital should be reported as a positive value.
This is the amount of capital instrument that have been temporarily recognised and approved as Tier
2 Capital for transition purposes.
5.4. Transitional Tier 2 Capital....................................................................................................................
6. Capital base.....................................................................................................................................................
=1+2-3+4+
5
The capital base represents the amount of capital eligible for the purpose of meeting the Prudential
Capital Requirement at the fund level as set out in LPS 110.
This is calculated automatically as the sum of item 1, item 2, item 4 and item 5 less item 3.
Section 2: Additional information - Capital base
= 7.1 - 7.2 - 7.3 7. Liability adjustments......................................................................................................................................
7.4
This is the difference between the adjusted policy liabilities and the sum of the policy liabilities and
policy owners’ retained profits disclosed in the statutory accounts together with any tax effects that
would result from these adjustments.
This is calculated automatically as item 7.1 less item 7.2, less item 7.3, less item 7.4.
7.1. Fund TOTAL: Adjusted policy liabilities...............................................................................................
7.2. LRF 300.1: Less: Fund TOTAL: Net policy liabilities...........................................................................
7.3. LRF 300.1: Less: Fund TOTAL: Policy owner retained profits............................................................
7.4. Additional tax liabilities/(benefits) from adjustments............................................................................
This is the total adjusted policy liabilities determined in accordance with Attachment H of LPS 112 and
aggregated across all product groups within the statutory fund.
This is the policy liabilities as reported in LRF 300.1 net of all expected reinsurance recoveries.
This amount should be reported as a positive value where net policy liabilities are positive.
This is the policy owner retained profits as reported in LRF 300.1.
This is the value of all tax effect associated with adjusting the policy liabilities. All tax benefits arising
from this must be included when assessing the adjustment for deferred tax assets in item 3.2.
Where there are tax benefits arising from the policy liability adjustments, a positive value should be
reported for this item.
29
LRF_112_1 Determination of Capital Base (GF)
Australian Business Number
New Form
Entity identifier, to be provided
Institution Name
Life companies including friendly
societies
Reporting Period
As at end of each quarter and as at
financial year end
Scale Factor
Reporting Consolidation
Thousands of dollars no decimal
places
One form per general fund
Section 1: General fund capital base
Specific Reporting Instructions
Definition and Instructions
This is the net assets of the general fund as reported in the LRF 300.2.
1. LRF 300.2: Net assets as per Life Insurance Act.........................................................................................
This amount must correspond to item 23 in LRF 300.2.
= sum (2.1 to
2. Less: Regulatory adjustments to net assets................................................................................................
2.11)
2.1. Holdings of life company's own Tier 1 Capital instruments.................................................................
This is the total amount of regulatory adjustments applied on the general fund's net assets for the
purpose of determining capital base as per LPS 112.
This is calculated automatically as the sum of item 2.1 to item 2.11.
This is the total effective holdings of own Tier 1 Capital instruments that were issued by the life
company. This includes Common Equity Tier 1 Capital and Additional Tier 1 Capital instruments held
by the fund.
This is the amount of deferred tax assets in excess of deferred tax liabilities within the general fund.
This assumes that tax benefits in one fund can be offset by the deferred tax liabilities of another fund
provided that the offset is only used once across both funds.
2.2. Excess of deferred tax assets over deferred tax liabilities...................................................................
The deferred tax assets and deferred tax liabilities excludes the tax effects arising from the asset
stress scenarios considered.
Where the deferred tax liabilities exceeds the deferred tax assets, this value should be reported as
zero. The netting of deferred tax assets and deferred tax liabilities must only be applied where the life
company has a legally enforceable right to set-off current tax assets against current tax liabilities.
30
2.3. Fair value gains and losses from changes in own creditworthiness....................................................
2.4. Goodwill and other intangible assets...................................................................................................
This is the unrealised gains (or losses) from changes in the fair values of the liabilities of the general
fund due to changes in creditworthiness of the life company.
This amount is to be reported as a positive value where there are unrealised gains or a negative
value for unrealised losses.
This is the value of goodwill and any other intangible assets as per Attachment B of LPS 112, net of
adjustments to profit or loss reflecting changes arising from any impairment and amortisation. The
amounts reported must be net of any associated deferred tax liability that would be extinguished if the
assets involved become impaired or derecognised under Australian Accounting Standards.
This also includes the component of investments in certain categories of subsidiaries, associates and
joint ventures (as per LPS 112) that represents goodwill and any other intangible assets.
2.5. Surplus in defined benefit superannuation fund..................................................................................
This is the amount of surplus (if any) in defined benefit superannuation funds where the life company
is an employer-sponsor, net of any associated deferred tax liabilities that would be extinguished if the
assets involved become impaired or derecognised under Australian Accounting Standards.
Where the extinguished deferred tax liability of the defined benefit superannuation fund exceeds the
reported surplus, this value should be reported as zero. Representations may be made to APRA to
include the surplus in the capital base provided the criteria is met as per Attachment B of LPS 112.
This is the amount of deficit (if any) in a defined benefit superannuation fund where the life company
is an employer-sponsor.
2.6. Deficit in defined benefit superannuation fund.....................................................................................
This item only needs to be reported where the deficit is not already reflected in the net assets of the
fund.
The deficit (if any) should be reported as a positive number.
This is the dollar value of the component of investments in subsidiaries, joint ventures and associates
that are subject to regulatory capital requirements, which is treated as a deduction from capital base.
2.7. Regulatory capital requirement of investments in subsidiary, JV and associate.................................
The deduction should be taken as the lesser of the fund's share of regulatory capital requirement and
the value of the investment that is recorded on the fund's balance sheet after adjusting for any
intangible component as reported in item 2.4.
Look-through treatment should be applied where the investment concerned is a non-operating holding
company.
This amount should correspond to the total of section 1 column 13 in LRF 112.3.
2.8. Assets under a fixed or floating charge...............................................................................................
2.9. Fair value adjustments........................................................................................................................
2.10. Seed capital receivable from approved benefit fund.........................................................................
This is the value of assets of the fund that are under a fixed or floating charge, mortgage or other
security. This deduction may be reduced by the amount of any liability for the charge that is
recognised on the fund’s balance sheet.
This is the amount of difference between the fair value of the assets on the balance sheet and their
reported value in LRF 300.2.
Where the asset fair value is less than the reported value in LRF 300.2, a positive value should be
reported. Otherwise, a negative value should be reported.
This is the amounts that the management fund will receive from the approved benefit fund in respect
of its seed capital.
This item only applies for friendly societies and must correspond to item 10.3 in LRF 300.2.
2.11. Other net asset adjustments..............................................................................................................
This is the value of deductions from the net assets that the general fund must make as required under
any other prudential standards.
31
3. Other adjustments to net assets as approved by APRA.............................................................................
This is the total value of any other regulatory adjustments to the Net Assets of the general fund that
does not fall into any of the previous categories for the purpose of paragraph 40 in LPS 112.
Adjustments that would result in an increase to net assets should be reported as a positive value.
4. Capital base..................................................................................................................................................... = 1 - 2 + 3
The capital base relates to the amount of capital eligible for the purpose of meeting the Prudential
Capital Requirement as set out in LPS 110.
This is calculated automatically as item 1 less item 2 plus item 3
32
LRF_112_2 Determination of Capital Base (Entity)
Australian Business Number
New Form
Entity identifier, to be provided
Institution Name
Life companies including friendly
societies
Reporting Period
As at end of each quarter and as at
financial year end
Thousands of dollars no decimal
places
Scale Factor
Reporting Consolidation
Life company
Section 1: Life company capital base
Specific Reporting Instructions
Definition and Instructions
1. Tier 1 Capital
1.1. Common Equity Tier 1 Capital.............................................................................................................
1.1.1. Paid-up ordinary shares ........................................................................................................
1.1.2. Retained earnings..................................................................................................................
1.1.3. Undistributed current year earnings.......................................................................................
1.1.4. Accumulated other comprehensive income and other disclosed reserves............................
= sum (1.1.1,
1.1.2, 1.1.3,
1.1.4, 1.1.6) 1.1.5
This is the highest quality component of capital within the life company as determined under the
eligibility criteria as set out in LPS 112, net of all regulatory adjustments.
This is calculated automatically as the sum of Item 1.1.1 to Item 1.1.4 and Item 1.1.6, less Item 1.1.5.
This is the value of paid-up ordinary shares issued by the life company that meets the criteria for
classification as ordinary shares for regulatory purposes as set out in Attachment A of LPS 112.
This is the retained earnings consistent with the reported amount in LRF 300.2 Statement of Financial
Position, and LRF 340.2 Retained Profits.
The retained earnings reported here should not include the amount of undistributed current year
earnings reported in item 1.1.3.
The undistributed current year earnings reported should be consistent with the profit/(loss) amounts
reported by the life company in LRF 310.2.
This item must account for (where applicable) negative goodwill, expected tax expenses, and
dividends when declared in accordance with the Australian Accounting Standards.
This is the total of all accumulated other comprehensive income and disclosed reserves.
of which:
1.1.4.1. Unrealised gains or losses recognised on balance sheet.................................
This is the total value of unrealised gains or losses that has been recognised on the balance sheet.
1.1.4.2. Reserves from equity-settled share-based payments......................................
This is the value of reserves associated with equity-settled share-based payments granted to
employees as part of their remuneration package. Only the reserves relating to issue of new shares
should be reported.
33
This is the cumulative unrealised gains or losses on hedges offsetting the gains or losses of
components of Common Equity Tier 1 Capital.
1.1.4.3. Cumulative unrealised gains or losses on hedges offsetting gains or losses
in Common Equity Tier 1 Capital
This includes cumulative unrealised gains or losses on effective cash flow hedges as defined in the
Australian Accounting Standards and any fair value gains or losses on derivatives representing
effective economic hedges of assets.
1.1.4.4. Foreign currency translation reserve................................................................
This is the value, of the reserve relating to exchange rate differences arising on translation of assets
and liabilities to the presentation currency in accordance with Australian Accounting Standards.
1.1.4.5. Other gains and losses in accumulated comprehensive income and other
disclosed reserves
This is the value of any other gains and losses in accumulated comprehensive income and other
disclosed reserves that may be specified in writing by APRA as per LPS 112.
1.1.5. Less: Regulatory adjustments to Common Equity Tier 1 Capital...................................
= sum (1.1.5.1 to
1.1.5.13)
This is the total amount of regulatory adjustments applied to the life company's Common Equity Tier 1
Capital for the purpose of determining capital base as per LPS 112.
This is calculated automatically as the sum of item 1.1.5.1. to item 1.1.5.13.
This is the value of the life company's effective holdings of own Common Equity Tier 1 Capital
instruments unless exempted by APRA or eliminated under Australian Accounting Standards.
1.1.5.1. Holdings of own Common Equity Tier 1 Capital instruments............................
This item must also include:
> capital instruments the life company could be contractually obliged to purchase; and
> unused portion of the limits agreed with APRA as per paragraph 6 of Attachment B of LPS 112.
This is the amount of deferred tax assets in excess of deferred tax liabilities within the life company.
1.1.5.2. Excess of deferred tax assets over deferred tax liabilities.................................
The deferred tax assets and deferred tax liabilities include any tax effect arising from the adjustment
of policy liabilities but excludes the tax effects arising from the asset and insurance stress scenarios
considered.
Where the deferred tax liabilities exceeds the deferred tax assets, this value should be reported as
zero. The netting of deferred tax assets and deferred tax liabilities must only be applied where the life
company has a legally enforceable right to set-off current tax assets against current tax liabilities.
1.1.5.3. Fair value gains and losses from changes in own creditworthiness..................
1.1.5.4. Goodwill and other intangible assets.................................................................
This is the unrealised gains (or losses) from changes in the fair values of the liabilities that arose due
to changes in creditworthiness of the life company.
This amount is to be reported as a positive value where there are unrealised gains or a negative
value for unrealised losses.
This is the value of goodwill and any other intangible assets as defined in Attachment B of LPS 112,
net of adjustments to profit or loss reflecting changes arising from any impairment and amortisation.
The amounts reported must be net of any associated deferred tax liability that would be extinguished
if the assets involved become impaired or derecognised under Australian Accounting Standards.
This also includes that component of investments in certain categories of subsidiaries, associates and
joint ventures (as per LPS 112) that represents goodwill and any other intangible assets.
1.1.5.5. Surplus in defined benefit superannuation fund................................................
This is the amount of surplus (if any) in defined benefit superannuation funds where the life company
is an employer-sponsor, net of any associated deferred tax liabilities that would be extinguished if the
assets involved become impaired or derecognised under Australian Accounting Standards.
Where the extinguished deferred tax liability of the defined benefit superannuation fund exceeds the
reported surplus, this value should be reported as zero. Representations may be made to APRA to
include the surplus in the capital base provided the criteria is met as per Attachment B of LPS 112.
34
This is the amount of deficit (if any) in a defined benefit superannuation fund where the life company
is an employer-sponsor.
1.1.5.6. Deficit in defined benefit superannuation fund...................................................
This Item only needs to be reported where the deficit is not already reflected in the Common Equity
Tier 1 Capital.
The deficit (if any) should be reported as a positive number.
1.1.5.7. Reinsurance assets not subjected to an executed and legally binding contract
This is the value of reinsurance assets (if positive) reported in relation to each reinsurance
arrangement that, subject to a 6 month grace period from risk inception, does not comprise an
executed and legally binding contract.
This is the deduction for the regulatory capital requirement for investments in subsidiaries, joint
ventures and associates as detailed in paragraph 19 of Attachment B of LPS 112.
1.1.5.8. Regulatory capital requirement of investments in subsidiary, JV and
associate
The deduction should be taken as the lesser of the life company's share of regulatory capital
requirements and the value of the investment that is recorded on the life company's balance sheet
after adjusting for any intangible component as reported in item 1.1.5.4.
If the investment subject to this deduction is a non-operating holding company, a look-through
approach must be applied.
1.1.5.9. Assets under a fixed or floating charge.............................................................
1.1.5.10. Liability adjustments........................................................................................
This is the value of assets of the life company that are under a fixed or floating charge, mortgage or
other security. This deduction may be reduced by the amount of any liability for the charge that is
recognised on the life company’s balance sheet.
This is the difference between the adjusted policy liabilities and the sum of the policy liabilities and
policy owners’ retained profits disclosed in the statutory accounts together with any tax effects that
would result from these adjustments.
This item represents the aggregate liability adjustments made to the policy liabilities across all
statutory/benefit funds.
1.1.5.11. Fair value adjustments....................................................................................
This is the amount of difference between the fair value of the assets on balance sheet and their
reported value in LRF 300.2.
Where the asset fair value is less than the reported value in LRF 300.2, a positive value should be
reported. Otherwise, a negative value should be reported.
This is the value, as at the relevant date, of any deductions (refer to Attachment B of LPS 112) from
Common Equity Tier 1 Capital due to a shortfall in Additional Tier 1 Capital to absorb required
deductions from this category of capital.
1.1.5.12. Adjustments to Common Equity Tier 1 Capital due to shortfall in Additional
Tier 1 Capital
Where the amount of Tier 2 Capital is insufficient to cover the amount of deductions required to be
made from this category of capital, the shortfall must first be deducted from Additional Tier 1 Capital
and, if Additional Tier 1 Capital is insufficient to cover the amount of deductions required, the
remaining amount must be deducted from Common Equity Tier 1 Capital.
Any shortfall in Additional Tier 1 Capital and Tier 2 Capital must be reported here as a positive
amount.
1.1.5.13. Other Common Equity Tier 1 Capital adjustments..........................................
This is the value of deductions from Common Equity Tier 1 Capital that the life company must make
as required under any other prudential standards.
This is the amount of adjustments applied to the Common Equity Tier 1 Capital that are specific to the
application of the requirements in paragraph 40 of LPS 112.
1.1.6. Adjustments and exclusions to Common Equity Tier 1 Capital..............................................
Adjustments that would increase the amount of Common Equity Tier 1 Capital recognised should be
reported as a positive value. This item includes the amounts where a capital instrument is required to
be deducted and it is not possible to determine the category of capital from which it should be
deducted.
35
= sum (1.2.1,
1.2. Additional Tier 1 Capital....................................................................................................................... 1.2.4, 1.2.5) 1.2.2 - 1.2.3
1.2.1. Additional Tier 1 Capital instruments.....................................................................................
1.2.2. Less: Holdings of own Additional Tier 1 Capital instruments.................................................
1.2.3. Less: Adjustments to Additional Tier 1 Capital due to shortfall in Tier 2 Capital....................
This is the value of capital instruments issued by the life company that meet the criteria for inclusion
in Additional Tier 1 Capital in accordance with the relevant prudential standard, and which are not
included in Common Equity Tier 1 Capital. This is net of regulatory adjustments specified in the
relevant prudential standard.
This item is calculated automatically as the sum of item 1.2.1, item 1.2.4. and item 1.2.5, less item
1.2.2, less item 1.2.3.
This is the total amount of capital instruments issued by the life company that meet the eligibility
criteria for Additional Tier 1 Capital but not the criteria for the higher quality capital, i.e. Common
Equity Tier 1 Capital.
This is the total effective holdings of own Additional Tier 1 Capital instruments issued by the life
company.
This item is to be reported as a positive amount where the life company has holdings of its issued
Additional Tier 1 Capital instruments.
This is the value, as at the relevant date, of any deductions (refer to Attachment B of LPS 112) from
Additional Tier 1 Capital due to a shortfall in Tier 2 Capital to absorb required deductions from this
category of capital.
Any shortfall in Tier 2 Capital must be reported here as a positive number.
1.2.4. Adjustments and exclusions to Additional Tier 1 Capital.......................................................
1.2.5. Transitional Additional Tier 1 Capital......................................................................................
1.3. Tier 1 Capital.......................................................................................................................................... = 1.1 + 1.2
= sum (2.1, 2.3,
2. Tier 2 Capital....................................................................................................................................................
2.4) - 2.2
This is the amount of adjustments applied to the Additional Tier 1 Capital that are specific to the
application of the requirements in paragraph 40 of LPS 112.
Adjustments that would increase the amount of Additional Tier 1 Capital recognised should be
reported as a positive number.
This is the amount of capital instrument that have been temporarily recognised and approved as
Additional Tier 1 Capital for transitional purposes.
Tier 1 Capital comprises of Common Equity Tier 1 Capital and Additional Tier 1 Capital.
This is calculated automatically as the sum of item 1.1 and item 1.2.
Tier 2 Capital includes components of capital that, to varying degrees, fall short of the quality of Tier 1
Capital but nonetheless contribute to the overall strength of the fund and its capacity to absorb
losses.
This is calculated automatically as the sum of item 2.1, item 2.3 and item 2.4 less item 2.2.
2.1. Tier 2 Capital instruments....................................................................................................................... = 2.1.1 - 2.1.2
This is the total amount of capital instruments issued by the life company that meet the eligibility
criteria for Tier 2 Capital.
This is calculated automatically as item 2.1.1 less item 2.1.2.
2.1.1. Face value of eligible Tier 2 Capital instruments...................................................................
2.1.2. Less: Amortised component of Tier 2 Capital instruments....................................................
This is the face value of capital instruments issued by the life company that meet the eligibility criteria
for Tier 2 Capital, before applying amortisation.
This is the amount of straight-line amortisation on the face value of the eligible Tier 2 Capital
instruments.
This item should be reported as a positive number or zero.
36
2.2. Less: Holdings of own Tier 2 Capital instruments...................................................................................
2.3. Adjustments and exclusions to Tier 2 Capital.........................................................................................
2.4. Transitional Tier 2 Capital.......................................................................................................................
3. Capital base..................................................................................................................................................... = 1.3 + 2
This is the total effective holdings of own eligible Tier 2 Capital instruments that were issued by the
life company.
This item is to be reported as a positive amount where the life company has holdings of their issued
Tier 2 Capital instruments.
This is the amount of adjustments applied to the Tier 2 Capital that are specific to the application of
the requirements in paragraph 40 of LPS 112.
Adjustments that would increase the amount of Tier 2 Capital recognised should be reported as a
positive value.
This is the amount of capital instrument that have been temporarily recognised and approved as Tier
2 Capital for transitional purposes.
The capital base relates to the amount of capital eligible for the purpose of meeting the Prudential
Capital Requirement as set out in LPS 110.
This is calculated automatically as the sum of item 1.3 and item 2.
37
LRF_112_3 Related Party Exposures
Entity identifier, to be provided
Australian Business Number
Institution Name
Life companies including friendly
societies
Reporting Period
As at end of each quarter and as at
financial year end
Scale Factor
Thousands of dollars, no decimal
places
Reporting Consolidation
One form per statutory fund and
general fund
Section 1: Investments in subsidiaries, joint ventures and associates and contributions to regulatory adjustments
Name
(1)
ACN / ABN
(2)
Category
(3)
Description /
nature of
business
(4)
Country of
incorporation
(5)
Total assets
(6)
Net tangible
assets
(7)
Ownership
percentage (%)
(8)
Goodwill and
other
intangibles
(9)
(a) Subsidiary of
life company
Adjustment for
goodwill / other
intangibles
(10)
= (8) * (9)
Nature of regulatory capital
requirement
(11)
Regulatory
capital
requirement
(12)
Adjustment for
regulatory
capital
requirement
(13)
= min ( (8) * (12),
(8) * (7) )
(a) Prescribed capital amount
(b) Prescribed capital amount
equivalent
(c) Comparable regulatory capital
requirement
(b) Joint venture
(c) Associate
(d) No regulatory capital
requirement
Total
......................................................................................................................... = sum ((6))
= sum ((7))
= sum ((9))
= sum ((10))
= sum ((12))
= sum ((13))
38
Section 2: Other related party exposures
Name
(1)
ACN / ABN
(2)
Category
(3)
(a) Parent
Type of exposure
(4)
(a) Cash
(b) Subsidiary
(b) Investment property
(c) Associate
(c) Equities/unit trusts
(d) Joint venture
(e) Other related
parties
Fair value of
exposure
(5)
(d) Non-indexed IBS
(e) Indexed IBS
(f) Loans
(g) Other investment assets
(h) Receivables
(i) Non-investment assets
(j) Creditors
(k) Borrowings
(l) Other liabilities
(m) Off-balance sheet assets
(n) Off-balance sheet liabilities
Total
......................................................................................................................... = sum ((5))
General Reporting Instructions
All equity investments in subsidiaries, associates and joint ventures should be reported in Section 1 regardless of whether the investment has an associated regulatory capital adjustments.
Reported exposures
Any other related party exposures (both on and off-balance sheet) are to be reported in Section 2.
Exposures to the same related party across multiple types of exposures should be reported on separate lines.
For the purposes of this form, a joint operation as defined under Australian Accounting Standard AASB 11 Joint Arrangements (AASB 11) is to be treated as a joint venture.
Joint operations
Specific Reporting Instructions
Column
1(1) Name
1(2) ACN / ABN
Definition and Instructions
Column reports the registered business name of the subsidiary, joint venture or associate of the life company
Where relevant, column reports the Australian Company Number (ACN), or the Australian Business Number where an ACN is not available, of the reported subsidiary, associate or joint venture.
Input the number without spaces.
1(3) Category
Column reports the appropriate category of the related entity i.e. whether it is a subsidiary, joint venture or associate.
1(4) Description / nature of business
Column provides a brief description of the main business conducted by the subsidiary, joint venture or associate.
1(5) Country of incorporation
Column reports the country in which the subsidiary, joint venture or associate is incorporated.
1(6) Total assets
Column reports the total assets of the subsidiary, joint venture or associate as reported on the statement of financial position.
1(7) Net tangible assets
Column reports the net assets of the subsidiary, joint venture or associate as reported on the statement of financial position, adjusted for goodwill and intangible assets.
39
1(8) Ownership percentage (%)
1(9) Goodwill and other intangibles
Column reports the percentage of ownership interest held by the reporting life company in the subsidiary, joint venture or associate.
Figures are to be reported in percentage points.
This is the value of goodwill and any other intangible assets reported on the statement of financial position of the subsidiary, joint venture or associate, net of adjustments to profit or loss reflecting
changes arising from any impairment and amortisation. The amounts reported must be net of any associated deferred tax liability that would be extinguished if the assets involved become
impaired or derecognised under Australian Accounting Standards.
Column reports the amount of regulatory adjustments applied in respect of the goodwill and other intangible assets (net of impairment) in relation to the investment in subsidiary, joint venture or
associate.
1(10) Adjustment for goodwill / other intangibles
This adjustment must be reported as column 1(8) times column 1(9), unless the subsidiary, joint venture or associate:
> is operationally independent; and
> represents a genuine arm's-length investment; and
> is not subject to regulatory capital requirements; and
> does not undertake life insurance business or business related to insurance business.
Column reports the nature of the regulatory capital requirement (if any) of the subsidiary, joint venture or associate. An appropriate category is to be selected from the drop-down box, which is
either:
1(11) Nature of regulatory capital requirement
1(12) Regulatory capital requirement
> the prescribed capital amount if the investment is in a life company as defined under the Life Act 1995; or
> the equivalent amount to the prescribed capital amount if the investment is an entity carrying on life insurance business in a foreign jurisdiction; or
> a comparable regulatory capital requirement as agreed with APRA; or
> no regulatory capital requirement.
Column reports, where applicable, the regulatory capital requirement of the subsidiary, joint venture or associate.
Where such capital requirements do not exist, this item should be reported as zero.
Column reports the adjustment for investment in subsidiaries, joint ventures and associates that are subject to regulatory capital requirements.
1(13) Adjustment for regulatory capital requirement
2(1) Name
2(2) ACN / ABN
As per Attachment B of LPS 112, this adjustment is calculated automatically as the lesser of the life company's share of the regulatory capital requirements and the value of the investment that is
recorded on the life company's balance sheet after adjustment for any intangible component as reported in column (9).
Column reports the registered business name of the relevant individual related party that the life company has exposures to.
Where relevant, column reports the Australian Company Number (ACN), or the Australian Business Number where an ACN is not available, of the reported related party.
Input the number without spaces.
2(3) Category
Column reports the appropriate category of the related party i.e. whether it is the parent, subsidiary, associate, joint venture or other related parties.
2(4) Type of exposure
Column reports the appropriate category for the exposure to the reported related party.
2(5) Fair value of exposure
Column reports the fair value of the exposures to the reported related party.
40
New Form
LRF_114_0 Asset Risk Charge
Entity identifier, to be provided
Australian Business Number
Institution Name
Life companies including friendly
societies
Reporting Period
As at end of each quarter and as at
financial year end
Thousands of dollars no decimal
places
Scale Factor
One form per statutory fund, general
fund
Reporting Consolidation
Section 1: Asset risk charge calculation
Impact on capital base
Real interest rate
Adjusted balance
sheet - pre-stress
(1)
1. Total assets..........................................................................................
RIR Upwards
(2)
RIR Downwards
(3)
Expected inflation
INF Upwards
(4)
INF Downwards
(5)
Currency
CUR Upwards
(6)
CUR Downwards
(7)
Equity
(8)
Property
(9)
Credit Spreads
(10)
Default
(11)
= sum (1.1 to
1.6)
= sum (1.2 to
1.4)
= sum (1.2 to
1.4)
= sum (1.2 to
1.4)
= sum (1.2 to
1.4)
= sum (1.2 to
1.4)
= sum (1.2 to
1.4)
= sum (1.2 to
1.4)
= sum (1.2 to
1.4)
= sum (1.2 to
1.4)
= sum (1.2 to
1.4)
= sum (1.2.1 to
1.2.7)
= sum (1.2.1 to
1.2.7)
= sum (1.2.1 to
1.2.7)
= sum (1.2.1 to
1.2.7)
= sum (1.2.1 to
1.2.7)
= sum (1.2.1 to
1.2.7)
= sum (1.2.1 to
1.2.7)
= sum (1.2.1 to
1.2.7)
= sum (1.2.1 to
1.2.7)
= sum (1.2.1 to
1.2.7)
= sum (1.2.1 to
1.2.7)
= 1.2.3.1 +
1.2.3.2
= 1.2.3.1 +
1.2.3.2
= 1.2.3.1 +
1.2.3.2
= 1.2.3.1 +
1.2.3.2
= 1.2.3.1 +
1.2.3.2
= 1.2.3.1 +
1.2.3.2
= 1.2.3.1 +
1.2.3.2
= 1.2.3.1 +
1.2.3.2
= 1.2.3.1 +
1.2.3.2
= 1.2.3.1 +
1.2.3.2
= 1.2.3.1 +
1.2.3.2
1.1. Assets supporting investment-linked liabilities..........................
1.2. Assets not supporting investment-linked liabilities....................
1.2.1. Cash.......................................................................
1.2.2. Investment property...............................................
1.2.3. Equities..................................................................
1.2.3.1. Listed equities................................
1.2.3.2. Unlisted equities.............................
1.2.4. Interest bearing securities and loans.....................
1.2.5. Other investment assets........................................
1.2.6. Receivables...........................................................
1.2.7. Other non-investment assets.................................
1.3. Deferred tax assets....................................................................
1.4. Derivatives (positive position)....................................................
1.5. Assets deducted from capital base............................................
1.6. Assets subject to asset concentration risk charge.....................
41
2. Total liabilities.....................................................................................
= sum (2.1 to
2.8)
= sum (2.1 to
2.8)
= sum (2.1 to
2.8)
= sum (2.1 to
2.8)
= sum (2.1 to
2.8)
= sum (2.1 to
2.8)
= sum (2.1 to
2.8)
= sum (2.1 to
2.8)
= sum (2.1 to
2.8)
= sum (2.1 to
2.8)
= sum (2.1 to
2.8)
= 1 + 2 + 3 + 4.1
+ 4.2
= abs( min( 5,
zero) )
= 1 + 2 + 3 + 4.1
+ 4.2
= abs( min( 5,
zero) )
= 1 + 2 + 3 + 4.1
+ 4.2
= abs( min( 5,
zero) )
= 1 + 2 + 3 + 4.1
+ 4.2
= abs( min( 5,
zero) )
= 1 + 2 + 3 + 4.1
+ 4.2
= abs( min( 5,
zero) )
= 1 + 2 + 3 + 4.1
+ 4.2
= abs( min( 5,
zero) )
= 1 + 2 + 3 + 4.1
+ 4.2
= abs( min( 5,
zero) )
= 1 + 2 + 3 + 4.1
+ 4.2
= abs( min( 5,
zero) )
= 1 + 2 + 3 + 4.1
+ 4.2
= abs( min( 5,
zero) )
2.1. Gross policy liabilities................................................................
2.1.1. Of which: Discretionary component...........................
2.2. Policy owner retained profit.......................................................
2.3. Current tax liabilities..................................................................
2.4. Deferred tax liabilities................................................................
2.5. Derivatives (negative position)...................................................
2.6. Subordinated debt......................................................................
2.7. Seed capital ..............................................................................
2.8. Other liabilities...........................................................................
3. Liability adjustments..............................................................................
4. Off-balance sheet exposures
4.1. Total off-balance sheet assets................................................................................
4.2. Total off-balance sheet liabilities.............................................................................
5. Impact on capital base..................................................................................................... = 1 + 2 + 3 + 4.1
+ 4.2
6. Risk charge components................................................................................................. = abs( min( 5,
zero) )
7. Aggregated risk charge components........................................................................................................................................
7.1. Aggregation benefit recognised.........................................................................................................................................
8. Adjustments to asset risk charge as approved by APRA.............................................................................................................. = sum ( 8(3) )
Description
(1)
Transitional?
(2)
(Y/N)
Amount
(3)
9. Asset risk charge........................................................................................................................................................................ = 7 + 8
42
Section 2: Additional information - Asset risk charge
10. Assets fair values subject to credit spread stress
Grade 1
(government)
(1)
Grade 1
(other)
(2)
Grade 2
(3)
Grade 3
(4)
Grade 4
(5)
Grade 5
(6)
Grade 6
(7)
10.1. Bonds and other non-securitised assets..............................
10.2. Structured and securitised assets........................................
10.3. Re-securitised assets..........................................................
10.4. Total fair value by grade....................................................
11. Stressed asset values post credit spread stress
= sum (10.1 to
10.3)
Grade 1
(government)
(1)
= sum (10.1 to
10.3)
Grade 1
(other)
(2)
= sum (10.1 to
10.3)
Grade 2
(3)
= sum (10.1 to
10.3)
= sum (10.1 to
10.3)
Grade 3
(4)
Grade 4
(5)
= sum (10.1 to
10.3)
= sum (10.1 to
10.3)
Grade 5
(6)
Grade 6
(7)
Total fair value
by asset
(9)
= sum ((1) to
(8))
= sum ((1) to
(8))
= sum ((1) to
(8))
= sum (10.1 to
= sum ((1) to
10.3)
(8))
Grade 7
(8)
Grade 7
(8)
11.1. Bonds and other non-securitised assets..............................
11.2. Structured and securitised assets........................................
11.3. Re-securitised assets..........................................................
11.4. Total stressed assets by grade........................................
= sum (11.1 to
11.3)
= sum (11.1 to
11.3)
= sum (11.1 to
11.3)
= sum (11.1 to
11.3)
= sum (11.1 to
11.3)
= sum (11.1 to
11.3)
= sum (11.1 to
11.3)
= sum (11.1 to
11.3)
Total stressed
value
by asset
(9)
= sum ((1) to
(8))
= sum ((1) to
(8))
= sum ((1) to
(8))
= sum ((1) to
(8))
12. Yields used in stress events
12.1. Dividend yield used in determination of equity stress (%)...........................................................................................
12.2. Rental yield used in determination of property stress (%)...........................................................................................
12.3. Earnings yield used in determination of property stress (%).......................................................................................
General Reporting Instructions
Look-through treatment
For asset and liability items that have been treated on a look-through basis for the purpose of LPS 114, the effective underlying exposures after adjustments for look-through as well as their resultant impacts on
capital base respectively are to be reported in this form.
Derivative treatment
All asset and liability items should be reported gross of impacts from derivatives. The fair value of open derivatives positions should be captured accordingly in item 1.4 and item 2.5.
All components of assets that are either:
> Deducted from total assets for the purpose of determining capital base; and
> Subject to asset concentration risk charge
Assets subject to stress
are to be excluded from the asset categories reported from item 1.1 to item 1.4. These amounts should be reported accordingly in item 1.5 and item 1.6.
Where it is determined that under a certain asset stress scenario there would be an improvement of capital base (i.e. a zero risk charge component), it is not required to report the components of impact on
capital base for that asset stress scenario as at the end of the relevant reporting period. The Appointed Actuary needs to undertake the necessary steps to ensure that all asset stress scenarios that would give
rise to a positive risk charge component are reported.
Asset stress scenarios
Specific Reporting Instructions
Column
(1) Adjusted Balance Sheet - Pre-stress
(2) to (11) Impact on Capital Base
Definition and Instructions
This column reports all relevant items within the balance sheet of the fund as at the reporting date. The reported figures are before the application of any designated asset stresses, net of the effect of any lookthrough adjustments.
The columns report the impacts on the capital base of the fund arising from the application of the real interest rate stress (upwards and downwards), expected inflation stress (upwards and downwards), currency
stress (upwards and downwards), equity stress, property stress, credit spread stress and default stress respectively. Specifications of the stresses are determined in accordance with LPS 114.
The figures therein should report the contribution of the relevant items towards the change in capital base under the scenario considered. For example, positive values would be reported for increases to assets
and decreases to liabilities.
The real interest rates stress measures the impact on an insurer's capital base of changes in real interest rates.
(2) RIR Upwards
The upward movement represents the change in value from that in the statutory accounts of assets and liabilities whose values are dependent on real or nominal interest rates due to multiplying the nominal riskfree interest rates (before the application of an illiquidity premium) by 0.25.
43
The real interest rates stress measures the impact on an insurer's capital base of changes in real interest rates.
(3) RIR Downwards
The downward movement represents the change in value from that in the statutory accounts of assets and liabilities whose values are dependent on real or nominal interest rates due to multiplying the nominal
risk-free interest rates (before the application of an illiquidity premium) by -0.20.
The expected inflation stress measures the impact on an insurer's capital base of changes to expected Consumer Price Index inflation rates. It also affects nominal interest rates.
(4) INF Upwards
The upward movement represents the change in value from that in the statutory accounts of assets and liabilities whose values are dependent on expected inflation or nominal interest rates due to an increase of
125 basis points to expected inflation rates and nominal risk-free interest rates.
The expected inflation stress measures the impact on an insurer's capital base of changes to expected Consumer Price Index inflation rates. It also affects nominal interest rates.
(5) INF Downwards
The downward movement represents the change in value from that in the statutory accounts of assets and liabilities whose values are dependent on expected inflation or nominal interest rates due to an
decrease of 100 basis points to expected inflation rates and nominal risk-free interest rates.
The currency stress measures the impact on an insurer's capital base of changes in foreign currency exchange rates.
(6) CUR Upwards
The upward movement is the impact on the capital base from an increase of 25% in the value of the Australian dollar against all foreign currencies.
The currency stress measures the impact on an insurer's capital base of changes in foreign currency exchange rates.
(7) CUR Downwards
The downward movement is the impact on the capital base from a decrease of 25% in the value of the Australian dollar against all foreign currencies.
The equity stress measures the impact on an insurer's capital base of a fall in equity and other asset values.
(8) Equity
This stress applies to both listed and unlisted equity assets and to any other assets that are not considered in other asset risk stresses outside the equity stress. The equity stress also includes an increase to
equity volatility.
The property stress measures the impact on an insurer's capital base of changes in property and infrastructure asset values.
(9) Property
It measures the impact on the capital base from a fall in value of property assets due to an increase in rental yield of 2.75%, as well as a fall in value of infrastructure assets due to an increase in earnings yield of
2.75%. Rental yields are to be based on the most recent leases in force and are determined net of expenses. Earnings yields are to be before tax.
The credit spreads stress measures the impact on an insurer's capital base of an increase in credit spreads and the risk of default.
(10) Credit Spreads
It applies to interest bearing assets, credit derivatives and zero-coupon instruments.
The default stress measures the impact on an insurer's capital base of the risk of counterparty default and applies to reinsurance assets, over the counter derivatives, unpaid premiums, and all other credit or
counterparty exposures that have not been affected by the credit spreads stress.
(11) Default
Item
Definition and Instructions
This is the fair value of total assets of the fund, including income accrued but not received. This should be interpreted consistently with what is being reported in LRF 300.1 and LRF 300.2 Financial Position.
1. Total assets
This is calculated automatically as the sum of items 1.1 to 1.6 for column (1) or item 1.2 to item 1.4 for other columns. For statutory funds (benefit funds) and general funds this should be in line with what is
being reported in LRF 300.1 and LRF 300.2 respectively.
1.1. Assets supporting investment-linked liabilities
This is the fair value of assets supporting investment-linked liabilities, where the value of the policy liabilities of the fund move in harmony with the value of these supporting assets across all stress modules.
There is no need to determine the impact of asset risk stresses in respect of these assets, i.e. an impact on capital base of zero would be reported.
1.2. Assets not supporting investment-linked liabilities
This is the fair value of all other assets not considered to be supporting investment-linked liabilities.
1.2.1. Cash
1.2.2. Investment property
1.2.3. Equities
Cash assets include any cash at call up to 30 days as well any cash held with non-bank financial institutions.
Note that this item does not include negotiable certificates of deposits, which should be reported under item 1.2.4 Interest bearing securities and loans.
Investment property assets include properties acquired or held which is available for sale as well as infrastructure assets, after allowance for accumulated depreciation.
Owner-occupied property should be reported in item 1.2.7 Other non-investment assets.
Equity assets include all listed and unlisted equity exposures that are either directly or indirectly held. This also includes equities held within Australia and overseas, which are not treated differently for the
purpose of determining asset risk charge.
This is calculated automatically as the sum of item 1.2.3.1 and item 1.2.3.2.
1.2.3.1. Listed equities
This is the value of equity interests in companies listed on the ASX or overseas exchange, after allowance for look-through (if applicable).
1.2.3.2. Unlisted equities
This is the value of equity interests in companies not listed on any stock exchange, after allowance for look-through (if applicable).
1.2.4. Interest bearing securities and loans
This is the value of all interest bearing securities held, including loans and advances. Loans and advances include financial leases and mortgages, and are typically non-negotiable on the secondary market.
1.2.5. Other investment assets
This is the value of all other assets held for investment purposes and does not fall appropriately under any of the types above.
1.2.6. Receivables
Receivables reported does not include accrued income components from investment assets. This is to be included with the appropriate investment principal..
This includes the value of premium receivables outstanding on in-force life business, investment income receivables from the portfolio of investment assets.
44
1.2.7. Other non-investment assets
This is the value of all other assets not categorised as above. This would include expected reinsurance recoverables as well as owner occupied property, plant and equipments, but exclude deferred tax assets
and positive derivative positions. Also, consistent with item 11.5 in LRF 300.1 Financial Position this includes unreconciled suspense and clearing accounts with debit balances.
The deferred tax assets relates to the value of tax benefits that may be recognised in future financial periods, as consistent with the asset risk scenario under consideration.
1.3. Deferred tax assets
This includes tax benefits arising from the application of the asset risk losses, all of which would be recognised as admissible. The sum of the impact on capital base arising from this item across the selected
combination of asset risk stress scenarios gives the total tax benefit recognised.
1.4. Derivatives (positive position)
This is the value of all open derivative positions with positive fair values, which would be treated as assets for the purpose of determining asset risk charge.
1.5. Assets deducted from capital base
This is the total value of assets that have been deducted from the above asset categories for the purpose of determining the fund's capital base. These will not be subject to the asset risk stresses.
1.6. Assets subject to asset concentration risk charge
This is the total value of assets in excess of their respective asset concentration limits and therefore are subject to asset concentration risk charge. These will not be subject to the asset risk stresses.
2. Total liabilities
2.1. Gross policy liabilities
This is the fair value of total liabilities of the fund. This should be interpreted consistently with what is being reported in LRF 300.1 Statement of Financial Position.
This is calculated automatically as the sum of item 2.1 to item 2.8.
This is the value of policy liabilities gross of all expected reinsurance recoveries, determined in accordance with the methodologies stated in LPS 340 Valuation of Policy Liabilities.
The assumptions employed in valuing the gross policy liabilities should be consistent with the asset risk scenarios under consideration.
This discretionary component relates to the component of the gross policy liabilities of the fund whose valuation is subject to certain discretionary decisions made by the reporting company.
2.1.1. Of which: Discretionary component
2.2. Policy owner retained profit
This includes the present value of future best estimate bonuses for participating businesses and investment fluctuation reserve for investment account businesses. For friendly societies, as consistent with LRF
300 this also includes any provisions for unallocated surpluses distributable to policy owners that have been classified as liability.
This is the value of statutory fund profits allocated to policy owners, but have not yet been vested to the participating policies
Reporting of policy owner retained profits should be consistent with the reporting requirements in LRF 300.1 Statement of Financial Position.
2.3. Current tax liabilities
This is the value of the income taxes payable in respect of taxable profit for the current and prior period, to the extent unpaid. The definition is interpreted consistently with AASB 112 Income Taxes .
2.4. Deferred tax liabilities
This is the value of income taxes payable in future periods in respect of taxable temporary differences. The definition is interpreted consistently with AASB 112 Income Taxes.
2.5. Derivatives (negative position)
This is the value of all open derivative positions with negative fair values, which would be treated as liabilities for the purpose of determining asset risk charge.
2.6. Subordinated debt
The approved subordinated debt is the current total value of the subordinated debt that has been issued by the fund under an APRA-approved instrument of issue.
2.7. Seed capital
This is the value of seed capital that has been transferred from the management fund of a friendly society to its benefit fund.
2.8. Other liabilities
This includes all other liabilities not specifically categorised above. Consistent with item 21.1 in LRF 300.1 Statement of Financial Position this includes unreconciled suspense and clearing accounts with credit
balances.
3. Liability adjustments
The liability adjustment reflects the difference between adjusted policy liability and the net policy liability for the purpose of determining capital base under LPS 112.
Where the asset risk stress gives rise to a larger liability adjustment, the tax benefit recognised should be reported in item 1.3
4.1. Total off-balance sheet assets
This reports the impact of capital base from the changes in off-balance sheet assets under the respective asset risk stress scenarios, to the extent that the off-balance sheet assets affect the on-balance sheet
assets and liabilities.
4.2. Total off-balance sheet liabilities
This reports the impact of capital base from the changes in off-balance sheet liabilities under the respective asset risk stress scenarios, to the extent that the off-balance sheet assets affect the on-balance sheet
assets and liabilities.
5. Impact on capital base
The total impact on capital base is the aggregate effect on capital base from the components of on/off-balance sheet assets and liabilities under the respective asset risk stress scenarios. For the purpose of
determining asset risk charge, the total impact on capital base cannot be negative.
This is calculated automatically as the sum of item 1, item 2, item 3, item 4.1 and item 4.2.
6. Risk charge components
7. Aggregate risk charge components
7.1. Aggregation benefit recognised
This is the value of the risk charge components in respect of each of the asset stress scenarios, which would be used in the calculation of the aggregate risk charge as per LPS 114.
This is the calculated automatically as the absolute value of the minimum between item 5 and zero.
This is the value of the aggregate risk charge components across the most severe combination of asset risk stress scenarios, recognising diversification benefits between the different stresses.
This is to be determined in accordance with the aggregation formula and asset risk correlation matrix as set out in LPS 114.
This is the difference between the sum of the individual risk charge components representing the most severe combination of asset stresses before and after allowance for diversification.
If APRA is of the view that the Standard Method for calculating the asset risk charge component of the prescribed capital amount does not produce an appropriate outcome in respect of a life company, or a life
company has used inappropriate judgement or estimation in calculating the asset risk charge, APRA may adjust the asset risk charge calculation for that regulated institution.
8. Adjustments to asset risk charge as approved by APRA
Approved adjustments are to be reported separately in the associated table highlighting the description of the adjustment, transitional status and amount of adjustment applied.
This is calculated automatically as the sum of column 3 in the table that follows. Adjustments that would result in an increase to asset risk charge should be reported as a positive value. Where the adjustment is
a transitional adjustment, the end date for the transitional period is to be clearly included in the description of the item.
45
9. Asset risk charge
The asset risk charge is the minimum amount of capital required to be held against asset risks. The asset risk charge relates to the risk of adverse movements in the value of a fund’s on-balance sheet and offbalance sheet exposures. Asset risk can be derived from a number of sources, including market risk and credit risk.
This is calculated automatically as item 7 plus item 8.
This table reports the fair value of assets that are subject to the credit spread stress, categorised as:
10. Assets fair values subject to credit spread stress
> Bonds and other non-securitised assets;
> Structured and securitised assets; and
> Re-securitised assets
and reported by APRA counterparty grades.
10.4. Total fair value by Grade
This is the total fair value of assets subject to credit spread stress, by APRA counterparty grade.
This is calculated automatically as the sum of item 10.1 to item 10.3.
This table reports the stressed value of assets that are subject to the credit spread stress, categorised as:
11. Stressed asset values post credit spread stress
> Bonds and other non-securitised assets;
> Structured and securitised assets; and
> Re-securitised assets
and reported by APRA counterparty grades.
11.4. Total stressed assets by Grade
This is the total stressed value of assets subject to credit spread stress, by APRA counterparty grade.
This is calculated automatically as the sum of item 11.1 to item 11.3.
12.1. Dividend yield used in determination of equity stress
This is the dividend yield of the ASX 200 index as at the reporting date, used in determining the reduction in equity asset values under the equity stress scenario.
12.2. Rental yield used in determination of property stress
This is the average rental yield based on current leases as at the reporting date and net of expenses, used in determining the reduction in the property asset values under the property stress scenario.
12.3. Earnings yield used in determination of property stress
This is the average earnings yield before taxes as at the reporting date, used in determining the reduction in infrastructure asset values under the property stress scenario.
46
LRF_114_2 Derivatives Activity
Australian Business Number
Entity identifier, to be provided
Institution Name
Life companies including friendly
societies
Reporting Period
As at end of each quarter and as at
financial year end
Scale Factor
Reporting Consolidation
Section 1: Statement of derivative activity
Thousands of dollars, no decimal
places
One form per non-investment linked
statutory fund
Interest rate contracts
Principal
amount
(1)
Fair value
(2)
Foreign exchange contracts
Principal
amount
(3)
Fair value
(4)
Equity contracts
Principal
amount
(5)
Fair value
(6)
Precious metal contracts
(excluding gold)
Other derivative contracts
Principal
amount
(7)
Fair value
(8)
Principal
amount
(9)
= (1) + (2.1.) +
(2.2.) + (2.3.) +
(2.4.) + (2.5.) +
(2.6.) + (2.7.)
= (1) + (2.1.) +
(2.2.) + (2.3.) +
(2.4.) + (2.5.) +
(2.6.) + (2.7.)
Fair value
(10)
1. Exchange-traded derivatives (traded on recognised exchanges)...............................
2. Over-the-counter derivatives
2.1. Forwards....................................................................................................................
2.2. Swaps........................................................................................................................
2.3. Bought option positions.............................................................................................
2.4. Written option positions.............................................................................................
2.5. Credit derivatives - bought protection.......................................................................
2.6. Credit derivatives - sold protection............................................................................
2.7. Other..........................................................................................................................
3. Total derivatives..................................................................................................................
of which the amounts and values with:
3.1. Parent entity..............................................................................................................
3.2. Controlled entities.....................................................................................................
3.3. Associates / joint ventures........................................................................................
3.4. Other related entities................................................................................................
47
Specific Reporting Instructions
Column
Definition and Instructions
Principal amount
The principal amount must be reported as a positive value, even for short positions in derivative financial instruments.
Fair value
Fair value is the amount which could be expected to be received from the disposal of an asset in an orderly market; or in an arm's length transaction between knowledgeable, willing parties; after
deducting costs expected to be incurred in realising the proceeds of such a disposal.
This column is the principal amount of all open interest rate derivative contracts, whereby the contracts involves the transfer of interest rate risks on underlying interest bearing instruments from
one party to another.
(1) Interest rate contracts - Principal amount
(2) Interest rate contracts - Fair value
Include:
> single currency interest rate swaps;
> basis swaps;
> forward rate agreements;
> interest rate futures; and
> interest rate options purchased.
This column is the fair value of all open interest rate derivative contracts, whereby the contracts involve the transfer of interest rate risks on underlying interest bearing instruments from one party
to another.
This column is the principal amount of all open foreign exchange derivative contracts, whereby the contracts involve the transfer of foreign exchange risks on underlying foreign exchange
currencies from one party to another.
(3) Foreign exchange contracts - Principal amount
Include:
> cross currency swaps;
> forward foreign exchange contracts;
> currency futures;
> currency options purchased;
> hedge contracts; and
> gold contracts.
Outstanding spot transactions should be treated as forward foreign exchange contracts.
(4) Foreign exchange contracts - Fair value
This column is the fair value of all open foreign exchange derivative contracts, whereby the contracts involve the transfer of foreign exchange risks on underlying foreign exchange currencies
from one party to another.
This column is the principal amount of all open equity derivative contracts, whereby the contracts involve the transfer of equity risks on underlying equity security from one party to another.
(5) Equity contracts - Principal amount
Include:
> swaps;
> forwards;
> futures; and
> purchased options/warrants.
(6) Equity contracts - Fair value
This column is the fair value of all open equity derivative contracts, whereby the contracts involve the transfer of equity risks on underlying equity security from one party to another.
(7) Precious metal contracts (excluding gold) - Principal amount
This column is the principal amount of all open precious metal derivative contracts (excluding gold), whereby the contracts involve the transfer of asset pricing risks on the underlying precious
metal assets from one party to another.
(8) Precious metal contracts (excluding gold) - Fair value
This column is the fair value of all open precious metal derivative contracts (excluding gold), whereby the contracts involve the transfer of asset pricing risks on the underlying precious metal
assets from one party to another.
This column is the total principal amount of all other open derivative contracts not falling in the previous derivative categories.
(9) Other derivative contracts - Principal amount
(10) Other derivative contracts - Fair value
Include:
> credit derivatives;
> commodity derivatives; and
> any contracts covering other items, that give rise to credit risk.
This column is the total fair value of all other open derivative contracts not falling in the previous derivative categories.
48
Item
Definition and Instructions
1. Exchange-traded derivatives (traded on recognised exchanges)
Exchange-traded derivatives relate to the total of all derivatives traded on recognised exchanges.
2.1. Forwards
Forwards are agreements to exchange a predetermined amount of an underlying asset financial instrument at a specified future date and at a predetermined price.
2.2. Swaps
Swaps are financial instruments representing a transaction in which two parties agree to swap or exchange some obligation, generally a series of cash flows on differing terms.
2.3. Bought option positions
A bought option includes both put and call options that have been purchased by an entity. It provides the purchasing entity with the right but not the obligation to buy or sell a specific amount of an
underlying asset at a pre-agreed price, on or before a specific future date.
2.4. Written option positions
A sold, or written, option includes both put and call options that have been sold by an entity. It obliges the selling entity to buy or sell a specific amount of equity securities at a pre-agreed price, on or
before a specific future date.
2.5. Credit derivatives - bought protection
Bought protection credit derivatives enable users to transfer the credit risk of an underlying asset from one party, the protection buyer, to another, the protection seller, in isolation from other risks.
2.6. Credit derivatives - sold protection
Sold protection credit derivatives enable users to transfer the credit risk of an underlying asset from one party, the protection buyer, to another, the protection seller, in isolation from other risks.
2.7. Other
This is defined as the totality of all other financial instruments not categorised in above.
3. Total derivatives
This is the total value of derivatives across all contract types. It is calculated automatically as the sum of item 1, item 2.1 to item 2.7.
3.1. of which the amounts and values with:
Parent entity
This is the total value of derivatives where the counterparty is the parent entity.
3.2. of which the amounts and values with:
Controlled entities
This is the total value of derivatives where the counterparty is a controlled entity.
3.3. of which the amounts and values with:
Associates / joint ventures
This is the total value of derivatives where the counterparty is an associate or joint venture.
3.4. of which the amounts and values with:
Other related entities
This is the total value of derivatives where the counterparty is any other related entity.
49
LRF_114_3 Off-balance Sheet Business
Australian Business Number
Entity identifier, to be provided
Institution Name
Life companies including friendly
societies
Reporting Period
As at end of each quarter and as at
financial year end
Scale Factor
Reporting Consolidation
Thousands of dollars, no decimal
places
One form per non-investment linked
statutory fund
Section 1: Non-market related off-balance sheet items
Specific Reporting Instructions
Definition and Instructions
1. Transactions or commitments that entail
1.1. Direct credit substitutes
Principal
amount
(1)
Any irrevocable off-balance sheet obligations that carry the same credit risk as a direct extension of
credit, such as an undertaking to make a payment to a third party in the event that a counterparty
fails to meet a financial obligation, or an undertaking to a counterparty to acquire a potential claim on
another party in the event of default by that party, constitutes a direct credit substitute (i.e. the risk of
loss depends on the creditworthiness of the counterparty or the party on whom a potential claim is
acquired).
1.1.1. Guarantees...........................................................................................................................
This is the potential credit exposures arising from the issue of guarantees.
1.1.2. Credit derivatives - sold protection.......................................................................................
This is the credit derivative exposures where protection is sold.
1.1.3. Standby letters of credit........................................................................................................
This relates to the confirmation of letters of credit and issue of standby letters of credit serving as
financial guarantees for loans, securities and any other financial liabilities.
1.1.4. Bill endorsements.................................................................................................................
This is the bills endorsed under bill endorsement lines (but are not accepted by, or have the prior
endorsement of, an ADI).
1.1.5. Other credit substitutes.........................................................................................................
This is the value of all other credit substitutes that does not appropriately fall under the above
categories.
1.1.6. Total direct credit substitutes...........................................................................................
This item calculates automatically the total direct credit substitutes as the sum of item 1.1.1 to item
1.1.5.
50
1.2. Performance-related contingencies......................................................................................................
Contingent liabilities that involve an irrevocable obligation to pay a third party in the event that a
counterparty fails to fulfil or perform a contractual non-monetary obligation, such as delivery of goods
by a specified date, etc (i.e. the risk of loss depends on a future event that is not directly related to
the creditworthiness of the counterparty involved). Include:
> issue of performance bond;
> bid bonds;
> warranties;
> indemnities; and
> standby letters of credit in relation to a non-monetary obligation of a counterparty under a particular
transaction.
1.3. Trade-related contingencies..................................................................................................................
Contingent liabilities arising from trade-related obligations that are secured against an underlying
shipment of goods. Include:
> documentary letters of credit issued;
> acceptances on trade bills;
> shipping guarantees issued; and
> any other trade-related contingencies.
1.4. Sale and repurchase agreements.........................................................................................................
This relates to arrangements whereby a life company sells a loan, security or other asset to another
party with a commitment to repurchase the asset at an agreed price on an agreed future date.
1.5. Assets sold with recourse......................................................................................................................
This relates to any asset sales (to the extent that such assets are not included on-balance sheet) by
a life company where the holder of the asset is entitled to ‘put’ the asset back to the life company
within an agreed period or under certain prescribed circumstances, e.g. deterioration in the value or
credit quality of the asset concerned.
This relates to:
> commitments to purchase at a future date and on pre-arranged terms; and
> a loan, security or other asset from another party, including written put options on specified assets
with the character of a credit enhancement.
1.6. Forward asset purchases......................................................................................................................
Where a life company purchasing the asset has an unequivocal right to substitute cash settlement in
place of accepting delivery of the asset, and the price on settlement is calculated with reference to a
general market price indicator (and not to the financial condition of any specific entity), the purchase
may be treated as a market-related off-balance sheet transaction.
Written put options expressed in terms of market rates for currencies or financial instruments bearing
no credit risk are excluded.
51
1.7. Partly paid shares and securities..........................................................................................................
This relates to:
> any amounts owing on the uncalled portion of partly paid shares; and
> securities that represent commitments with certain draw down by the issuer at a future date.
1.8. Placements of forward deposits............................................................................................................
This relates to any agreement between a life company and another party whereby the life company
will place a deposit at an agreed rate of interest with that party at a predetermined future date.
1.9. Note issuance and revolving underwriting facilities..............................................................................
This involves arrangements whereby a borrower may draw down funds up to a prescribed limit over a
predefined period by making repeated note issues to the market, and where, should the issue prove
unable to be placed in the market, the unplaced amount is to be taken up or funds made available by
a life company being committed as an underwriter of the facility.
1.10. Other commitments
1.10.1. Loans approved but not yet advanced...........................................................................
This relates to loans that are approved but not yet drawn.
1.10.2. Any other irrevocable commitments
The amount of undrawn commitment to be included in calculating life companies’ off-balance sheet
non-market related credit exposures is the maximum unused portion of the commitment that could be
drawn during the remaining period to maturity. The drawn portion of a commitment forms part of a life
company’s on-balance sheet credit exposure.
1.10.2.1. Undrawn formal standby facilities and credit lines.................................
1.10.2.2. Other irrevocable commitments..............................................................
1.10.3. Commitments that can be unconditionally revoked at any time without notice.............
1.11. All other non-market related off-balance sheet items.........................................................................
For any non-market related off-balance sheet transactions that give rise to credit risk but are not
specifically identified above, a life company should consult APRA on the appropriate counterparty
grade to be used as a component of assets to be stressed under LPS 114.
1.12. Total non-market related off-balance sheet business...................................................................
of which the amounts with:
1.12.1. Parent entity....................................................................................................................
1.12.2. Controlled entities...........................................................................................................
1.12.3. Associates / joint ventures..............................................................................................
1.12.4. Other related parties.......................................................................................................
52
Section 2: Other off-balance sheet transactions
2. Off-balance sheet liquidity support facilities contracted for reporting entity's use
2.1. Standby facilities
Approved
balance
available
(1)
Undrawn
balance
available
(2)
Approved balance available relates to the total approved balance of the facility at the reporting date.
Undrawn balance available relates to the balance of the facility that has not been used or drawn
down by the life company at the reporting date.
This relates to facilities that are approved and committed. These generally require written notice by
the life company to trigger draw down (access to the funds).
2.1.1. Facilities with same day draw down..............................................................
This relates to those standby facilities that can be drawn down (funds accessed) on the same day
that notice is given by the life company of its intention to draw down on the standby facility.
2.1.2. Facilities with 2 - 5 day draw down................................................................
This relates to those standby facilities that can be drawn down (funds accessed) within two-five days
after notice is given by the life company of its intention to draw down on the standby facility (i.e. a twofive day waiting period).
2.1.3. Facilities with greater than 5 day draw down................................................
This relates to those standby facilities that can be drawn down (funds accessed) five days after
notice is given by the life company of its intention to draw down on the standby facility (i.e. a five day
waiting period).
2.2. Bill acceptance / discount facilities..........................................................................
This relates to another form of liquidity/funding. The funding is provided to the life company by a
facility that discounts bills (e.g. bank accepted bills). Principal and interest (discount) owing on the bill
is repaid or ‘rolled over’ by the life company on maturity of the bill.
2.3. Letter of credit facilities............................................................................................
This is an irrevocable and unconditional undertaking covering a life company to repay principal and
interest on a loan in the event of default by the life company.
2.4. Overdrafts................................................................................................................
These are accounts that may be overdrawn up to limits agreed to with an ADI.
2.5. Other liquidity support facilities................................................................................
This relates to all other off-balance sheet liquidity support facilities contracted for the life company’s
use that are not included in the categories above.
2.6. Total off-balance sheet liquidity support facilities.............................................
of which the approved balances with:
2.6.1. Parent entity..................................................................................................
2.6.2. Controlled entities.........................................................................................
2.6.3. Associates / joint ventures............................................................................
2.6.4. Other related parties.....................................................................................
53
3. Charges and encumbrances
Purpose of charge /
encumbrance
(1)
Type of charge / Principal value
encumbrance
of the charge
(2)
(3)
Outstanding
value of the
charge
(4)
Value of assets
subject to the
charge
(5)
Extent of
indebtedness
secured by
assets
(6)
3(1) Purpose of charge/encumbrance
The purposes are set out in the Life Insurance Act 1995 , Sections 38 and 40.
The appropriate description should be selected from the drop-down box.
3(2) Type of charge/encumbrance
The following is not an exhaustive list but is provided as an example:
(a) Overdraft
Fixed charge - A fixed charge is generally given in relation to a specific asset or assets and it will
generally limit the ability or right of the life company to deal with those assets.
Floating charge - A floating charge may be given over specific assets or all assets of the life
company and may generally only crystallise and become a fixed charge on the occurrence of a
specific event that is agreed between the parties (i.e. default on payment, or not maintaining
specified interest coverage ratios).
3(3) Principal value of the charge
(b) Derivatives
This refers to the principal or face value or amount of the charge or encumbrance given over assets
of the life company.
3(4) Outstanding value of the charge
(c) Major development project
This refers to the outstanding value of the charge or encumbrance (as at the reporting date) given
over assets of the life company.
3(5) Value of assets subject to the charge
(d) Other
For each separate charge listed, report in this column the value of the assets that are subject to the
charge or encumbrance.
3(6) Extent of Indebtedness secured by assets
This field is automatically calculated. For each separate charge listed, the form will calculate the
dollar value to which the assets are charged. It equals the minimum of the value of the assets subject
to the charge (column 5) and the outstanding value of the charge granted (column 4).
54
LRF_115_0 Insurance Risk Charge (SF)
Australian Business Number
Institution Name
New Form
Entity identifier, to be provided
Life companies including friendly
societies
General Reporting Instructions
Reporting Period
Scale Factor
Reporting Consolidation
As at end of each quarter and as at
financial year end
Thousands of dollars no decimal
places
One form per statutory fund and (noninvestment linked) benefit Fund
Section 1: Insurance risk charge calculation
Reporting Materiality
This form does not have to be completed at the end of each quarter if the Appointed Actuary
determines that the adjusted policy liabilities will exceed stressed policy liabilities by a material
amount for the businesses written in the fund.
However, this assessment must be done at least once per annum. This form must be completed in
full for the first reporting quarter after these reporting requirements become effective.
Specific Reporting Instructions
Definition and Instructions
1. Fund TOTAL: Stressed policy liabilities.....................................................................................................
= sum (1.1 to
1.3)
This is the total value of stressed policy liabilities across all product groups within the fund that is
determined in accordance with paragraph 13 to 15 of LPS 115.
This is calculated automatically as the sum of item 1.1 to item 1.3.
This is the total value of stressed policy liabilities in respect of policies providing non-participating
benefits but without entitlement to discretionary additions.
1.1. Non-participating benefits without entitlement to discretionary additions.............................................
This is to be reported net of expected reinsurance recoveries.
This is the total value of stressed policy liabilities in respect of policies providing non-participating
benefits with entitlement to discretionary additions.
1.2. Non-participating benefits with entitlement to discretionary additions..................................................
This is to be reported net of expected reinsurance recoveries.
This is the total value of stressed policy liabilities in respect of policies providing participating
benefits.
1.3. Participating benefits............................................................................................................................
This is to be reported net of expected reinsurance recoveries.
2. Fund TOTAL: Adjusted policy liabilities.....................................................................................................
2.1. Non-participating benefits without entitlement to discretionary additions.............................................
= sum (2.1 to
2.3)
This is the total adjusted policy liabilities determined in accordance with Attachment H of LPS 112
and aggregated across all product groups within the statutory fund.
This is calculated automatically as the sum of item 2.1 to item 2.3.
This is the total adjusted policy liabilities in respect of policies providing non-participating benefits but
without entitlement to discretionary additions.
This is to be reported net of expected reinsurance recoveries.
55
This is the total adjusted policy liabilities in respect of policies providing non-participating benefits
with entitlement to discretionary additions.
2.2. Non-participating benefits with entitlement to discretionary additions..................................................
This is to be reported net of expected reinsurance recoveries.
This is the total adjusted policy liabilities in respect of policies providing participating benefits.
2.3. Participating benefits............................................................................................................................
This is to be reported net of expected reinsurance recoveries.
3. Fund TOTAL: Stress impact on adjusted policy liabilities........................................................................ = max( 1 - 2, 0)
This is the excess (if any) of the fund total stressed policy liabilities over the fund total adjusted policy
liabilities.
This is calculated automatically as item 1 less item 2, subject to a floor of zero.
This is the total tax benefits arising from the increase in adjusted policy liabilities to stressed policy
liabilities due to the application of insurance risk stresses.
4. Less: Tax benefits..........................................................................................................................................
This should be reported as a positive value where tax benefits are recognised. Admissibility of tax
assets will be assessed in calculating the prescribed capital amount.
5. Adjustments to insurance risk charge as approved by APRA........................................................................ = sum ( 5(3) )
If APRA is of the view that the Standard Method for calculating the insurance risk charge component
of the prescribed capital amount does not produce an appropriate outcome in respect of a life
company, or a life company has used inappropriate judgement or estimation in calculating the
insurance risk charge, APRA may adjust the insurance risk charge calculation for that regulated
institution.
Approved adjustments are to be reported separately in the associated table highlighting the
description of the adjustment, transitional status and amount of adjustment applied.
This is calculated automatically as the sum of column 3 in the table that follows.
Description
(1)
Transitional?
(2)
Amount
(3)
(Y/N)
6. Insurance risk charge.................................................................................................................................. = 3 - 4 + 5
Adjustments that would result in an increase to insurance risk charge should be reported as a
positive value.
Where the adjustment is a transitional adjustment, the end date for the transitional period is to be
clearly included in the description of the item.
The insurance risk charge is the minimum amount of capital required to be held against insurance
risks. The insurance risk charge relates to the risk of adverse impacts due to movements in future
mortality, morbidity, longevity, servicing expenses and lapses.
This is calculated automatically as item 3 less item 4 plus item 5.
56
LRF_115_1 Insurance Risk Charge (GF)
Australian Business Number
New Form
Entity identifier, to be provided
Institution Name
Friendly societies
Reporting Period
As at end of each quarter and as at
financial year end
Scale Factor
Reporting Consolidation
Thousands of dollars no decimal
places
One form per general fund
Section 1: Insurance risk charge calculation
Specific Reporting Instructions
Definition and Instruction
This is the total amount of management fees expected to be received from benefit funds.
1. Expected management fees...........................................................................................................................
The reported expected management fees must allow for the effect of item 1.1 below and should
cover the period of 12 months subsequent to the reporting date.
This is the amount of reduction in management fees to be paid by a benefit fund that has been
assumed in response to the asset risk and insurance risk stress scenarios.
1.1. Of which: Reduction in management fees assumed under asset and/or insurance stress..................
Where a reduction in management fees has been assumed, the amount should be reported as a
negative figure.
This is the amount of servicing expenses expected to be incurred in servicing the policies of the
benefit fund, i.e. combination of maintenance expenses and investment management expenses.
2. Expected servicing expenses.........................................................................................................................
The reported amount should cover the period of 12 months subsequent to the reporting date.
3. Expected deficiency (before prescribed multiplier)......................................................................................... = max (2 - 1, 0)
This is the expected deficiency in management fees and the servicing expenses expected to arise
over the period of 12 months subsequent to the reporting date.
This is calculated automatically as item 2 less item 1, subject to a floor of zero.
4. Additional deficiency from prescribed servicing expense stress.....................................................................
= max (2 * 110%
- 1 - 3, 0)
This is the additional deficiency arising (if any) in management fees relative to servicing expenses
from the application of the servicing expense stress over and above the expected deficiency as
determined in item 3.
This is calculated automatically as item 2 times 110% less item 1 less item 3, subject to a floor of
zero.
57
5. Expected deficiency (post prescribed multiplier)............................................................................................. = 3 * 300%
This is the expected deficiency in management fees received relative to the servicing expenses
incurred over the next 12-month period, post the application of the prescribed multiplier.
This is calculated automatically as item 3 times by a factor of 3.
6. Total servicing expense reserve................................................................................................................. = 4 + 5
This is the servicing expense reserve component of the insurance risk charge.
This is calculated automatically as item 4 plus item 5.
This is the tax benefits arising from the inclusion of the servicing expense reserve in liabilities.
7. Less: Tax benefits..........................................................................................................................................
This should be reported as a positive value where there are tax benefits recognised. Admissibility of
tax assets will be assessed in calculating prescribed capital amount.
8. Adjustments to insurance risk charge as approved by APRA........................................................................ = sum ( 8(3) )
If APRA is of the view that the Standard Method for calculating the insurance risk charge component
of the prescribed capital amount does not produce an appropriate outcome in respect of a friendly
society, or a friendly society has used inappropriate judgement or estimation in calculating the
insurance risk charge, APRA may adjust the insurance risk charge calculation for that regulated
institution.
Approved adjustments are to be reported separately in the associated table highlighting the
description of the adjustment given, transitional status and amount of adjustment applied.
This is calculated automatically as the sum of column 3 in the table that follows.
Description
(1)
Transitional?
(2)
Amount
(3)
(Y/N)
9. Insurance risk charge.................................................................................................................................. = 6 - 7 + 8
Adjustments that would result in an increase to insurance risk charge should be reported as a
positive value.
Where the adjustment is a transitional adjustment, the end date for the transitional period is to be
clearly included in the description of the item.
The insurance risk charge is the minimum amount of capital required to be held against insurance
risks. The insurance risk charge for the general fund is the servicing expense reserve. This is
automatically calculated as item 6 less item 7 plus item 8.
58
LRF_117_0 Asset Concentration Risk Charge
Australian Business Number
New Form
Entity identifier, to be provided
Institution Name
Life companies including friendly
societies
Reporting Period
As at end of each quarter and as
at financial year end
Scale Factor
Thousands of dollars no decimal
places
Reporting Consolidation
One form per non investmentlinked statutory fund and general
fund
Section 1: Asset concentration risk charge calculation
1. Value of assets of the fund (VAF)
1.1. VAF used for asset concentration limits of non-reinsurance assets................
1.2. VAF used for asset concentration limits for reinsurance assets....................... = 1.2.1 - 1.2.2 +
1.2.1. LRF 300: Total assets.........................................................................
1.2.2. Less: Gross policy liabilities ceded under reinsurance.......................
1.2.3. Stressed policy liabilities gross of reinsurance....................................
1.2.4. Less: Stressed policy liabilities net of reinsurance..............................
1.2.3 - 1.2.4
2. Capital base.............................................................................................................................
3. Large Exposures and contributions to asset concentration risk charge
Specialist reinsurer?..................................................................................................................
(Y/N)
59
Name of counterparty
(1)
Name of counterparty group
(2)
ACN / ABN
(3)
Type of exposure
(4)
Name of
provider of
eligible
collateral or
guarantee
(5)
Type of exposure after
collateral or guarantee
(6)
(a) Bank bills
(a) Bank bills
(b) Assets guaranteed by OS
provincial government whose
currency the fund liabilities are
denominated
(b) Assets guaranteed by
OS provincial government
whose currency the fund
liabilities are denominated
(c) Bank deposits
(c) Bank deposits
(d) Reinsurance arrangement
with non-related registered life
company
(d) Reinsurance
arrangement with nonrelated registered life
company
(e) Approved reinsurance
arrangement in respect of
overseas business, with a
related entity of a registered
life company that has a
specialist reinsurer statutory
fund
(e) Approved reinsurance
arrangement in respect of
overseas business, with a
related entity of a registered
life company that has a
specialist reinsurer statutory
fund
(f) Outstanding premiums
receivable by reinsurer, under
reinsurance policy with
registered life company
(g) Other actively traded
security
(f) Outstanding premiums
receivable by reinsurer,
under reinsurance policy
with registered life company
(g) Other actively traded
security
(h) Non-traded security,
loan or reinsurance
arrangement with a
counterparty grade of 1, 2 or
3
(h) Non-traded security, loan or
reinsurance arrangement with
a counterparty grade of 1, 2 or
3
(i) real estate or other income
producing real property asset
(i) real estate or other
income producing real
property asset
(j) Reinsurance arrangement
with approved
retrocessionaires with current
counterparty grade of 1, 2, or 3
(Specialist reinsurers only)
(j) Reinsurance
arrangement with approved
retrocessionaires with
current counterparty grade
of 1, 2, or 3 (Specialist
reinsurers only)
(k) Reinsurance arrangement
with approved
retrocessionaires with
counterparty grade of 1, 2 or 3
at the time of agreement, but
currently below grade 3.
(Specialist reinsurers only)
(k) Reinsurance
arrangement with approved
retrocessionaires with
counterparty grade of 1, 2 or
3 at the time of agreement,
but currently below grade 3.
(Specialist reinsurers only)
(l) Any asset not covered by
any of the above categories
(l) Any asset not covered by
any of the above categories
Counterparty
grade after
collateral or
guarantee
(7)
Exposure amount
On-balance
sheet
(8)
Off-balance
sheet
(9)
Total
(10)
= (8) + (9)
Deductions
from total
exposure
(11)
Excess over
Asset
asset
Net exposure concentration concentration
amount
limit
limit
(12)
(13)
(14)
= max ( (12) = (10) - (11)
(13) , 0)
General Reporting Instructions
Reporting materiality
Where the Appointed Actuary is of the view that asset concentration limits associated with VAF (determined for reinsurance asset exposures) is irrelevant for the asset exposures in the fund, it is not required for the life
company to report a figure for the VAF. As an example, exposures in the fund may be significantly diversified such that they would be substantially under the limit expressed in terms of VAF. In this circumstance the
reporting of VAF used for asset concentration limits of reinsurance assets would be optional.
However, there must be periodic assessments (no less frequent than once a year) in place so that the VAF is calculated and reported to APRA accordingly. This form must be completed in full for the first reporting
quarter after these reporting requirements become effective.
Reported exposures
All exposures to counterparties and counterparty groups where the fair value of the exposure, after adjusting for derivatives, is greater than 1% of the fund's total assets is to be reported in the table regardless of whether
exposure is subject asset concentration risk charge.
60
Specific Reporting Instructions
Item
1.1. VAF used for concentration limits of non-reinsurance
assets
1.2. VAF used for concentration limits for reinsurance
assets
1.2.1. LRF 300: Total assets
1.2.2. Less: Gross policy liabilities ceded under
reinsurance
1.2.3. Stressed policy liabilities gross of reinsurance
1.2.4. Less: Stressed policy liabilities net of reinsurance
2. Capital base
Definition and Instructions
This is the value of the assets of the fund determined for the purpose of calculating asset concentration limits for non-reinsurance asset exposures in the fund. This must be equal to the total assets as reported in LRF
300.1.
This is the adjusted value of the assets of the fund determined for the purpose of calculating asset concentration limits for reinsurance asset exposures in the fund.
This is calculated automatically as item 1.2.1 less item 1.2.2 plus 1.2.3 less 1.2.4.
This is the total asset of the fund as reported in LRF 300.1.
This is the value of the gross policy liabilities expected to be recovered through reinsurance. Item reported must be consistent with the reinsurance assets reported under LRF 300.1.
Where the reinsurance asset is a positive amount, the amount should be reported with a positive sign.
This is the total value of stressed policy liabilities determined in accordance with LPS 115, but gross of all expected reinsurance recoveries.
This represents the total value of stressed policy liabilities determined in accordance with LPS 115, net of all expected reinsurance recoveries.
A positive value should be reported where the net stressed policy liabilities are positive.
The capital base relates to the amount of capital eligible for the purpose of meeting the Prudential Capital Requirement as set out in LPS 110.
The amount reported must correspond to item 6 in LRF 112.0 (for statutory funds), or item 4 in LRF 112.1 (for general funds).
Specialist reinsurer?
Specialist reinsurer refers to statutory fund of a registered life company where all policies referable to the fund are reinsurance policies and none of the policies is owned by a related entity of the life company.
Column
3(1) Name of counterparty
3(2) Name of counterparty group
3(3) ACN / ABN
3(4) Type of exposure
3(5) Name of provider of eligible collateral or guarantee
3(6) Type of exposure after eligible collateral or guarantee
3(7) Counterparty grade after collateral or guarantee
3(8) Exposure amount - on-balance sheet
3(9) Exposure amount - off-balance sheet
3(10) Exposure amount - Total
3(11) Deductions from total exposure
3(12) Net exposure amount
3(13) Asset concentration limit
3(14) Excess over asset concentration limit
Definition and Instructions
Column reports the registered business name of the counterparty entity to which the exposure is held.
Where the reporting life company has different exposures against the same counterparty, the name reported must be identical to ensure appropriate aggregation.
Column reports the registered business name of the corporate group to which the counterparty entity belongs to.
Where the reporting life company has different exposures against the same or different counterparties within the same corporate group, the name reported in this item must be identical to ensure appropriate aggregation.
Where relevant, column reports the Australian Company Number (ACN), or the Australian Business Number where an ACN is not available, of the individual counterparty reported in column (1).
Input the number without spaces.
Column reports the category of the reported exposure in accordance with the breakdown of asset exposures within Attachment A of LPS 117.
An appropriate asset exposure category is to be selected from the drop down list.
Column reports the registered business name of the counterparty (if any), providing eligible collateral and/or guarantee to the reporting life company's asset exposures.
Column reports the category of exposure where the eligible collateral held replaces the underlying asset exposure for the purpose of assessing asset concentration risks.
An appropriate asset exposure category is to be selected from the drop down list. Where no eligible collateral or guarantee has been provided, the same asset exposure category should be selected as in 3(3).
Column reports the APRA counterparty grade of the collateralised or guaranteed exposure.
Where no eligible collateral or guarantee has been provided, the APRA counterparty grade (if any) of the original counterparty of the underlying asset exposure should be reported.
Column reports the amount of on-balance sheet exposure (after allowance for collateral and guarantee).
Amounts reported here should be in fair value.
Column reports the amount of off-balance sheet exposure (after allowance for collateral and guarantee).
Amounts reported here should be in fair value.
Column reports the amount of total exposure (after allowance for collateral and guarantee).
This column is calculated automatically as the sum of table 3 column (8) and table 3 column (9).
Column reports the fair value of the total exposure amount that has been excluded for the purpose of determining asset concentration risk charge where it has already been treated as a deduction from capital base under
LPS 112. Report any deductions as a positive figure.
Column reports the net exposure amount, allowing for collaterals, guarantees and adjustments, that is used to determine asset concentration risk charge.
This column is calculated automatically as table 3 column (10) less table 3 column (11).
Column reports the appropriate asset concentration limit as per LPS 117 and its Attachment A for each asset exposure.
The determination of asset concentration limits are to account for any cumulative exposures through different classes of assets to a single counterparty or a counterparty group as per paragraph 19 of LPS 117.
Column reports the excess (if any) of the net exposure amount over and above their respective asset concentration limits.
This column is calculated automatically as table 3 column (12) less table 3 column (13), subject to a floor of zero.
61
Section 2: Summary of asset concentration risk charge
Specific Reporting Instructions
Definition and Instructions
4. LRF 220.0: Aggregate of excess exposures subjected to asset concentration risk
charge
= sum (4.1 to
4.12)
of which excess exposures that are:
4.1. Bank bills....................................................................................................................... = sum( 3(14) *)
4.2. Assets guaranteed by OS provincial government whose currency the fund.............
liabilities are denominated
= sum( 3(14) *)
4.3. Bank deposits............................................................................................................... = sum( 3(14) *)
4.4. Reinsurance with non-related registered life company................................................. = sum( 3(14) *)
4.5. APRA approved reinsurance for OS business, with a related entity of a registered
life company that has a specialist reinsurer statutory fund
= sum( 3(14) *)
4.6. Outstanding premiums receivable by reinsurer from registered life company............. = sum( 3(14) *)
4.7. Other actively trade security......................................................................................... = sum( 3(14) *)
4.8. Non-trade security, loan or reinsurance with grade 1, 2, or 3 counterparties............... = sum( 3(14) *)
4.9. Real estate or other income producing real property asset.......................................... = sum( 3(14) *)
4.10. Reinsurance with approved retrocessionaires (current grade 1, 2, or 3)................... = sum( 3(14) *)
4.11. Reinsurance with approved retrocessionaires (grade 1, 2, or 3 at time of
agreement)
= sum( 3(14) *)
4.12. Asset not covered by any of the above categories..................................................... = sum( 3(14) *)
This is the aggregation of the all the asset exposures in excess of their respective asset concentration risk limits.
This is calculated automatically as the sum of item 4.1 to item 4.12.
This is the total amount of bank bill exposures in excess of the determined asset concentration limits.
This is calculated automatically as the sum of the totals in Table 3 Column (14) where the exposure is category (a) in Table 3 Column (6).
This is the total amount of assets, which are guaranteed by an overseas provincial government in the country in whose currency the liabilities of this
statutory, benefit or general fund are denominated, in excess of the determined asset concentration limits.
This is calculated automatically as the sum of the totals in Table 3 Column (14) where the exposure is category (b) in Table 3 Column (6).
This is the total amount of bank deposit exposures in excess of the determined asset concentration limits.
This is calculated automatically as the sum of the totals in Table 3 Column (14) where the exposure is category (c) in Table 3 Column (6).
This is the total amount of assets associated with a reinsurance arrangement with a non-related, registered life company.
This is calculated automatically as the sum of the totals in Table 3 Column (14) where the exposure is category (d) in Table 3 Column (6).
This is the total amount of assets associated with an approved reinsurance arrangement in respect of overseas business, with a related entity of a
registered life company that has a specialist reinsurer statutory fund as defined in LPS 001.
This is calculated automatically as the sum of the totals in Table 3 Column (14) where the exposure is category (e) in Table 3 Column (6).
This is the total amount of outstanding premiums receivable by a reinsurer under a reinsurance policy with a registered life company.
This is calculated automatically as the sum of the totals in Table 3 Column (14) where the exposure is category (f) in Table 3 Column (6).
This is the total amount of actively traded security not captured in the above categories.
This is calculated automatically as the sum of the totals in Table 3 Column (14) where the exposure is category (g) in Table 3 Column (6).
This is the total amount of non-traded security, loan, or assets associated with reinsurance arrangements with APRA counterparty grades of 1, 2 or 3.
This is calculated automatically as the sum of the totals in Table 3 Column (14) where the exposure is category (h) in Table 3 Column (6).
This is the total amount of real estate assets and other income producing real property assets.
This is calculated automatically as the sum of the totals in Table 3 Column (14) where the exposure is category (i) in Table 3 Column (6).
This is the total amount of assets associated with a retrocession arrangement where the retrocessionaires has a current APRA counterparty grade of 1, 2 or
3.
This only applies to specialist reinsurers. This is calculated automatically as the sum of the totals in Table 3 Column (14) where the exposure is category (j)
in Table 3 Column (6).
This is the total amount of assets associated with a retrocession arrangement where the retrocessionaires is currently below APRA counterparty grade 3,
but had an APRA counterparty grade 1, 2 or 3 at the time of the arrangement.
This only applies specialist reinsurers. Amounts reported should sum up all excess retrocession exposures based on the determined asset concentration
limits. This is calculated automatically as the sum of the totals in Table 3 Column (14) where the exposure is category (k) in Table 3 Column (6).
This is the value of all other assets not falling within the above categories.
This is calculated automatically as the sum of the totals in Table 3 Column (14) where the exposure is category (l) in Table 3 Column (6).
If APRA is of the view that the Standard Method for calculating the asset concentration risk charge component of the prescribed capital amount does not
produce an appropriate outcome in respect of a life company, or a life company has used inappropriate judgement or estimation in calculating the asset
concentration risk charge, APRA may adjust the asset concentration risk charge calculation for that regulated institution.
5. Adjustments to asset concentration risk charge as approved by APRA.................................. = sum ( 5(3) )
Approved adjustments are to be reported separately in the associated table highlighting the description of the adjustment given, transitional status and
amount of adjustment applied.
This is calculated automatically as the sum of column 3 in the table that follows.
Description
(1)
Transitional?
(2)
(Y/N)
Amount
(3)
Adjustments that would result in an increase to asset concentration risk charge should be reported as a positive value.
Where the adjustment is a transitional adjustment, the end date for the transitional period is to be clearly included in the description of the item.
62
6. Asset concentration risk charge........................................................................................... = 4 + 5
The asset concentration risk charge is the minimum amount of capital required to be held against asset concentration risks. The asset concentration risk
charge relates to the risk of a life company’s concentration in particular assets resulting in adverse movements in the life company’s capital base.
This is calculated automatically as the sum of item 4 and item 5.
63
LRF_118_0 Operational Risk Charge
Australian Business Number
New Form
Entity identifier, to be provided
Institution Name
Life companies including friendly
societies
Reporting Period
As at end of each quarter and as at
financial year end
Scale Factor
Thousands of dollars no decimal
places
Reporting Consolidation
One form per statutory fund, and
general fund (friendly societies)
Section 1: Operational risk charge calculation
Specific Reporting Instructions
Definition and Instruction
Specialist reinsurer? .......................................................................................................................................
(Y/N)
Specialist reinsurer refers to a statutory fund of a registered life company where all policies referable
to the fund are inwards reinsurance policies and none of the policies are owned by a related entity of
the life company.
This item confirms whether or not the statutory fund is a specialist reinsurer, as defined in LPS 001.
= A * (max ( 1.1,
1.3 ) + max ( 0,
1. Operational risk charge for risk business..................................................................................................
abs ( 1.1 - 1.2. 20% * 1.2 ) ) )
1.1. Premium income (12 months ending on reporting date)......................................................................
1.2. Premium income (12 months ending on date 12 months prior to reporting date)................................
This is the operational risk charge relating to the fund's risk business.
This item is calculated automatically by the form using values reported in Item 1.1, Item 1.2 and Item
1.3, in accordance with paragraph 11 of LPS 118. The prescribed factors A is 2 per cent for a
statutory fund that is a specialist reinsurer and 3 per cent for other funds.
This is the total premium income gross of any outwards reinsurance expense in respect of risk
business, for the period of 12 months ending on the reporting date.
This amount may not always correspond to the premium reported in LRF 310.1 as data in LRF 310.1
is reported on a year-to-date basis.
This is the total premium income gross of any outwards reinsurance expense in respect of risk
business, for the period of 12 months ending on the date 12 months prior to the reporting date.
This amount may not always correspond to the premium reported in LRF 310.1 as data in LRF 310.1
is reported on a year-to-date basis.
64
1.3. Adjusted policy liabilities (net of reinsurance).......................................................................................
This adjusted policy liabilities refers to the policy liabilities to policy owners as defined for the purpose
of determining the capital base of statutory fund in Attachment H of LPS 112, in respect of risk
business.
The adjusted policy liabilities here are to be reported net of expected reinsurance recoveries at the
reporting date.
= B * ( 2.2 + max
( 0, 2.1 - 20% *
2. Operational risk charge for investment-linked business.......................................................................... 2.3 ) + max ( 0,
2.4 - 20% * 2.3 )
)
2.1. Premium income (12 months ending on reporting date)......................................................................
2.2. Adjusted policy liabilities (net of reinsurance).......................................................................................
This is the operational risk charge relating to the fund's investment-linked business.
This is calculated automatically by the form using values reported in item 2.1, item 2.2, item 2.3 and
item 2.4 in accordance with paragraph 14 of LPS 118. The prescribed factors B is 0.15 per cent for a
statutory fund that is a specialist reinsurer and 0.25 per cent for other funds.
This is the total premium income gross of any outwards reinsurance expense in respect of
investment-linked business, for the period of 12 months ending on the reporting date.
This amount may not always correspond to the premium reported in LRF 310.1 as data in LRF 310.1
is reported on a year-to-date basis.
The adjusted policy liabilities refers to the policy liabilities to policy owners as defined for the purpose
of determining the capital base of statutory fund in Attachment H of LPS 112 , in respect of
investment-linked business.
The adjusted policy liabilities here are to be reported net of expected reinsurance recoveries at the
reporting date.
2.3. Adjusted policy liabilities (gross of reinsurance)...................................................................................
The adjusted policy liabilities refers to the policy liabilities to policy owners as defined for the purpose
of determining the capital base of statutory fund in Attachment H of LPS 112, in respect of
investment-linked business.
The adjusted policy liabilities are to be reported gross of expected reinsurance recoveries at the date
which is 12 months prior to reporting date.
2.4. Gross claim payments to meet policy owner liabilities (12 months ending on reporting date)..............
This is the total claim payments to meet liabilities to policy owners gross of any reinsurance
recoveries in respect of investment-linked business, for the period of 12 months ending on the
reporting date.
The amounts reported excludes payments used as premium income for another life policy issued by
the life company to avoid double counting.
= B * ( 3.2 + max
( 0, 3.1 - 20% *
3. Operational risk charge for other business............................................................................................... 3.3 ) + max ( 0,
3.4 - 20% * 3.3 )
)
3.1. Premium income (12 months ending on reporting date)......................................................................
This is the operational risk charge relating to fund's businesses other than risk and investmentlinked.
This item is calculated automatically by the form using values reported in item 3.1, item 3.2, item 3.3
and item 3.4 in accordance with paragraph 14 of LPS 118. The prescribed factors B is 0.15 per cent
for a statutory fund that is a specialist reinsurer and 0.25 per cent for other funds.
This is the total premium income gross of any outwards reinsurance expense in respect of life
business other than risk and investment-linked business, for the period of 12 months ending on the
reporting date.
This amount may not always correspond to the premium reported in LRF 310.1 as data in LRF 310.1
is reported on a year-to-date basis.
3.2. Adjusted policy liabilities (net of reinsurance).......................................................................................
This adjusted policy liabilities refers to the policy liabilities to policy owners as defined for the purpose
of determining the capital base of statutory fund in Attachment H of LPS 112, in respect of life
business other than risk and investment-linked business.
The adjusted policy liabilities here are to be reported net of expected reinsurance recoveries at the
reporting date.
65
This adjusted policy liabilities refers to the policy liabilities to policy owners as defined for the purpose
of determining the capital base of statutory fund in Attachment H of LPS 112, in respect of life
business other than risk and investment-linked business.
3.3. Adjusted policy liabilities (gross of reinsurance)...................................................................................
The adjusted policy liabilities here are to be reported gross of expected reinsurance recoveries at the
date which is 12 months prior to reporting date.
This is the total claim payments to meet liabilities to policy owners gross of any reinsurance
recoveries in respect of life business other than risk and investment-linked business, for the period of
12 months ending on the reporting date.
3.4. Gross claim payments to meet policy owner liabilities (12 months ending on reporting date)..............
The amounts reported excludes payments used as premium income for another life policy issued by
the life company to avoid double counting.
4. Adjustments to operational risk charge as approved by APRA...................................................................... = sum ( 4(3) )
If APRA is of the view that the Standard Method for calculating the operational risk charge
component of the prescribed capital amount does not produce an appropriate outcome in respect of
a life company, or a life company has used inappropriate judgement or estimation in calculating the
operational risk charge, APRA may adjust the operational risk charge calculation for that regulated
institution.
Approved adjustments are to be reported separately in the associated table highlighting the
description of the adjustment given, transitional status and amount of adjustment applied.
This is calculated automatically as the sum of column 3 in the table that follows.
Description
(1)
Transitional?
(2)
Amount
(3)
(Y/N)
5. Operational risk charge............................................................................................................................... = 1 + 2 + 3 + 4
Adjustments that would result in an increase to operational risk charge should be reported as a
positive value.
Where the adjustment is a transitional adjustment, the end date for the transitional period is to be
clearly included in the description of the item.
The operational risk charge is the minimum amount of capital required to be held against operational
risks. The operational risk charge relates to the risk of loss resulting from inadequate or failed
internal processes, people and systems or from external events.
This item is calculated automatically as the sum of item 1, item 2, item 3 and item 4.
66
New Form
LRF_200_0 Capital Adequacy Supplementary Information
Entity identifier, to be provided
Australian Business Number
Institution Name
Life companies including friendly
societies
Reporting Period
As at the end of each quarter and as at
financial year end
Thousands of dollars, no decimal
places
Scale Factor
One form per statutory fund
Reporting Consolidation
Section 1: Capital base - Liability adjustments
1. Past premium liabilities
Pre-insurance stress
Product group
Annuity and
investment
liability value
(1)
CICP Reserve
(2)
RBNA Reserve
(3)
IBNR Reserve
(4)
Unearned
premium reserve
(5)
- L3. Annuity with Longevity Risk
Total past
premium
liabilities
(6)
= (1) + (2) + (3) +
(4) + (5)
- L4. Individual Lump Sum Risk
- L5. Individual Disability Income Insurance
- L6. Group Lump Sum Risk
- L7. Group Disability Income Insurance
- L8. Investment Linked
- L10. Other Non-par Investment Policy
- L11. Annuity without Longevity Risk
- L12. Other
Post-insurance stress
Product group
- L3. Annuity with Longevity Risk
- L4. Individual Lump Sum Risk
Annuity and
investment
liability value
(7)
CICP Reserve
(8)
RBNA Reserve
(9)
IBNR Reserve
(10)
Unearned
premium reserve
(11)
Stressed past
premium
liabilities
(12)
= (7) + (8) + (9) +
(10) + (11)
- L5. Individual Disability Income Insurance
- L6. Group Lump Sum Risk
- L7. Group Disability Income Insurance
- L8. Investment Linked
- L10. Other Non-par Investment Policy
- L11. Annuity without Longevity Risk
- L12. Other
67
2. Future premium liabilities
Pre-insurance stress
As at reporting date
(Discounted to reporting date)
Product group
Risk-free present Risk-free present Risk-free present
Value of future
value of future
value of future
claims
expenses
premiums
(1)
(2)
(3)
- L3. Annuity with Longevity Risk
Risk-free present
value of other
liability
components
(4)
As at 12 months after reporting date
(Discounted to reporting date)
Total future
premium
liabilities
(5)
Risk-free present
Risk-free present Risk-free present Risk-free present
value of tax
value of future
value of future
Risk-free present value of future
expenses
claims
expenses
premiums
value of net profit
(6)
(8)
(9)
(10)
(7)
=(5) - (1) - (2) +
(3)
- L4. Individual Lump Sum Risk
Risk-free present
value of other
liability
components
(11)
Total future
premium
liabilities
(12)
=(12) - (8) - (9) +
(10)
- L5. Individual Disability Income Insurance
- L6. Group Lump Sum Risk
- L7. Group Disability Income Insurance
- L8. Investment Linked
- L10. Other Non-par Investment Policy
- L11. Annuity without Longevity Risk
- L12. Other
Post-insurance stress
As at reporting date
(Discounted to reporting date)
Product group
Risk-free present Risk-free present Risk-free present
value of future
value of future
value of future
claims
expenses
premiums
(13)
(14)
(15)
- L3. Annuity with Longevity Risk
Risk-free present
value of other
liability
components
(16)
As at 12 months after reporting date
(Discounted to reporting date)
Stressed future
premium
liabilities
(17)
Risk-free present Risk-free present Risk-free present
value of future
value of future
value of future
claims
expenses
premiums
(18)
(19)
(20)
= (17) - (13) - (14)
+ (15)
- L4. Individual Lump Sum Risk
Risk-free present
value of other
liability
components
(21)
Stressed future
premium
liabilities
(22)
=(22) - (18) - (19)
+ (20)
- L5. Individual Disability Income Insurance
- L6. Group Lump Sum Risk
- L7. Group Disability Income Insurance
- L8. Investment Linked
- L10. Other Non-par Investment Policy
- L11. Annuity without Longevity Risk
- L12. Other
3. Adjusted policy liabilities
Total past
premium
liabilities
(1)
Product group
- L3. Annuity with Longevity Risk
= 1 (6)
Other
Premium refund components of Total termination
in excess of UPR termination value
value
(2)
(3)
(4)
= (1) + (2) + (3)
Total future
premium
liabilities
(5)
= 2 (5)
Risk-free best
estimate of
liabilities
(6)
=(1) + (5)
Adjusted policy
liability
(7)
= max ( (4) , (6) )
- L4. Individual Lump Sum Risk
- L5. Individual Disability Income Insurance
- L6. Group Lump Sum Risk
- L7. Group Disability Income Insurance
- L8. Investment Linked
- L10. Other Non-par Investment Policy
- L11. Annuity without Longevity Risk
- L12. Other
68
Section 2: Insurance risk charge
4. Impact of insurance stress margins
Valuation date........................................................................................ DD/MM/YYYY
85
Mortality
Random
(1)
Morbidity
Future
(2)
Random
(3)
Future
(4)
Event
(5)
Longevity
(6)
Total stress by
product group
(prediversification)
(7)
4.1. L1 - Conventional Participating.....
= (1) + (2) + (3) +
(4) + (5) + (6)
4.2. L2 - Participating
Investment.......... Account
= (1) + (2) + (3) +
(4) + (5) + (6)
4.3. L3 - Annuity with Longevity Risk...
= (1) + (2) + (3) +
(4) + (5) + (6)
4.4. L4 - Individual Lump Sum Risk.....
= (1) + (2) + (3) +
(4) + (5) + (6)
4.5. L5 - Individual Disability
Income...... Insurance
= (1) + (2) + (3) +
(4) + (5) + (6)
4.6. L6 - Group Lump Sum Risk..........
= (1) + (2) + (3) +
(4) + (5) + (6)
4.7. L7 - Group Disability Income
Insurance
= (1) + (2) + (3) +
(4) + (5) + (6)
4.8. L8 - Investment-linked..................
= (1) + (2) + (3) +
(4) + (5) + (6)
4.9. L9 - Non-par Investment Policy
with Discretionary Additions
= (1) + (2) + (3) +
(4) + (5) + (6)
4.10. L10 - Other non-par Investment
Policy
= (1) + (2) + (3) +
(4) + (5) + (6)
4.11. L11 - Annuity without Longevity
Risk
= (1) + (2) + (3) +
(4) + (5) + (6)
4.12. L12 - Other insured
contingencies
= (1) + (2) + (3) +
(4) + (5) + (6)
4.13. Total impact of stress
(pre-diversification)
=sum ( 4.1 to
4.12)
4.14. Insurance stress
diversification factor
= 4.13(8) /
4.13(7)
=sum ( 4.1 to
4.12)
=sum ( 4.1 to
4.12)
=sum ( 4.1 to
4.12)
=sum ( 4.1 to
4.12)
=sum ( 4.1 to
4.12)
= (1) + (2) + (3) +
(4) + (5) + (6)
Total stress by
product group
(postdiversification)
(8)
=sum ( 4.1 to
4.12)
Section 3: Variable annuities
5. Variable annuity capital charge calculation
Statutory fund name
(1)
Capital
requirement
(excluding
hedging)
(2)
Capital
requirement
(including
hedging)
(3)
Diversification
factor between
asset and
insurance risks
(4)
Effectiveness
factor
(5)
Aggregate risk
charge for
variable
annuities
(6)
69
General Reporting Instructions
Capital base - Liability adjustments
Consistent with the reporting requirements of LRF 115.0, this part does not have to be completed at the end of each quarter where the Appointed Actuary determines that the
adjusted policy liability will exceeds stressed policy liability by a material amount for the businesses written in this fund. Where LRF 115.0 has been completed as at the end
of relevant period, this part must be completed accordingly.
Insurance risk charge - Impact of insurance stress margins
The valuation date should relate to the valuation date at which the figures in the following table were updated. The table does not need to be updated at every reporting
date. It is subject to review only when the Appointed Actuary believes that the information used to derive the diversification factor is no longer accurate.
Specific Reporting Instructions
Item
Definition and Instruction
In respect of L3 and L11 product groups, these items report the total liability value comprising of future annuity payments and expenses arising from the premiums received
prior to the reporting date.
1. Past premium liabilities
Annuity and investment liability value (1) and (7)
In respect of L8 and L10 product groups, these items report the total liability value comprising of amounts owing to policyholders arising from deposit premiums received
prior to the reporting date.
These items should be present valued to as at the reporting date using the risk-free discount rate as per LPS 112. Column (1) should be reported prior to the application of
the insurance stress margins and column (7) should be reported post the application of the insurance stress margins.
1. Past premium liabilities
CICP Reserve (2) and (8)
1. Past premium liabilities
RBNA Reserve (3) and (9)
1. Past premium liabilities
IBNR Reserve (4) and (10)
1. Past premium liabilities
Unearned premium reserve (5) and (11)
1. Past premium liabilities
Total past premium liabilities (6)
1. Past premium liabilities
Stressed past premium liabilities (12)
These columns report the total expected claim payments and expenses in respect of claims in course of payment, that are associated with past premiums received prior to
the reporting date.
These columns should be present valued to as at the reporting date using the risk-free discount rate as per LPS 112. Column (2) should be reported prior to the application
of the insurance stress margins and column (8) should be reported post the application of the insurance stress margins.
These columns report the total expected claim payments and expenses in respect of claims reported but not assessed, that are associated with past premiums received prior
to the reporting date.
These columns should be present valued to as at the reporting date using the risk-free discount rate as per LPS 112. Column (3) should be reported prior to the application
of the insurance stress margins and column (9) should be reported post the application of the insurance stress margins.
These columns report the total expected claim payments and expenses in respect of claims incurred but not reported, that are associated with past premiums received prior
to the reporting date.
These columns should be present valued to as at the reporting date using the risk-free discount rate as per LPS 112. Column (4) should be reported prior to the application
of the insurance stress margins and column (10) should be reported post the application of the insurance stress margins.
These columns report the total expected future claim payments and expenses associated with unexpired proportion of past premiums received prior to the reporting date.
These columns should be present valued to as at the reporting date using the risk-free discount rate as per LPS 112. Column (5) should be reported prior to the application
of the insurance stress margins and column (11) should be reported post the application of the insurance stress margins.
This column reports the present value of total expected claims and expenses, arising from all premiums that have been received prior to the reporting date, before the effect
of the insurance risk stresses.
This column is calculated automatically as the sum of column (1) to column (5).
This column reports the present value of total expected claims and expenses, arising from all premiums that have been received prior to the reporting date, post the effect of
the insurance risk stresses.
This column is calculated automatically as the sum of column (7) to column (11).
These columns report the present value of all future expected claim payments arising from premiums expected to be received after the reporting date.
2. Future premium liabilities
Risk-free present value of future claims (1) and (8)
These columns should be present valued using the risk-free discount rate as per LPS 112, prior to the application of the insurance stress margins. Column (1) should report
the value of future expected claims as at the reporting date, discounted to the reporting date. Column (8) should report the value of future expected claims as at 12 months
following the reporting date, but discounted to the reporting date.
These columns report the present value of all future expected expenses arising from premiums expected to be received after the reporting date.
2. Future premium liabilities
Risk-free present value of future expenses (2) and (9)
These columns should be present valued using the risk-free discount rate as per LPS 112, prior to the application of the insurance stress margins. Column (2) should report
the value of future expected expenses as at the reporting date, discounted to the reporting date. Column (9) should report the value of future expected expenses as at 12
months following the reporting date, but discounted to the reporting date.
70
These columns report the present value of all future premiums expected to be received after the reporting date from policies remaining in force.
2. Future premium liabilities
Risk-free present value of future premiums (3) and (10)
2. Future premium liabilities
Total future premium liabilities (5) and (12)
2. Future premium liabilities
Risk-free present value of other liability component (4) and (11)
These columns should be present valued using the risk-free discount rate as per LPS 112, prior to the application of the insurance stress margins and management actions.
Column (3) should report the value of future expected premiums as at the reporting date, discounted to the reporting date. Column (10) should report the value of future
expected premiums as at 12 months following the reporting date, but discounted to the reporting date.
These columns report the value of liabilities arising from premiums expected to be received after the reporting, before the effect of insurance risk stress and management
actions.
These columns include any other specific liability components that do not fall under the categories of claims, expenses and premiums. See instructions for columns (4) and
(11). Column (5) should report the total future premium liabilities as at the reporting date. Column (12) should report the total future premium liability as at 12 months
following the reporting date, but discounted to the reporting date.
These columns report the value of other specific components of the future premium liability that do not fall under the categories of claims, expenses and premiums.
These columns are calculated automatically as a balancing item. Column (4) is calculated as column (5) less column (1) less column (2) plus column (3). Column (11) is
calculated as column (12) less column (8) less column (9) plus column (10).
This column reports the value of future tax expenses, in respect of profits emerging from premiums expected to be received after the reporting date.
2. Future premium liabilities
Risk-free present value of tax expenses (6)
2. Future premium liabilities
Risk-free present value of net profit (7)
This column only needs to be reported for businesses that are taxed on profits as defined in Attachment H of LPS 112. It is the expected tax expense associated with the
present value of the profit margins determined as the difference between the net policy liabilities (as consistent with LRF 300.1) and the RFBEL. It should report the future
expected tax expenses as at the reporting date.
This column reports the value of future net profits after tax that are attributable to shareholders, emerging from premiums expected to be received after the reporting date.
This column only needs to be reported for business that are taxed on profits as defined in Attachment H of LPS 112. It is the present value of future net profits after tax
associated with the present value of the profit margins determined as the difference between the net policy liabilities (as consistent with LRF 300.1) and the RFBEL..
These columns report the present value of all future expected claim payments arising from premiums expected to be received after the reporting date.
2. Future premium liabilities
Risk-free present value of future claims (13) and (18)
These items should be present valued using the risk-free discount rate as per LPS 112, post the application of the insurance stress margins. Item (13) should report the
value of future expected claims as at the reporting date, discounted to the reporting date. Item (18) should report the value of future expected claims as at 12 months
following the reporting date, but discounted to the reporting date.
These columns report the present value of all future expected expenses arising from premiums expected to be received after the reporting date.
2. Future premium liabilities
Risk-free present value of future expenses (14) and (19)
These columns should be present valued using the risk-free discount rate as per LPS 112, post the application of the insurance stress margins. Item (14) should report the
value of future expected expenses as at the reporting date, discounted to the reporting date. Item (19) should report the value of future expected expenses as at 12 months
following the reporting date, but discounted to the reporting date.
These columns report the present value of all future premiums expected to be received after the reporting date from policies remaining in force.
2. Future premium liabilities
Risk-free present value of future premiums (15) and (20)
2. Future premium liabilities
Stressed future premium liabilities (17) and (22)
3. Adjusted policy liabilities
Total past premium liabilities (1)
3. Adjusted policy liabilities
Premium refund in excess of UPR (2)
3. Adjusted policy liabilities
Other components of termination value (3)
These columns should be present valued using the risk-free discount rate as per LPS 112, post the application of the insurance stress margins and management actions.
Item (15) should report the value of future expected premiums as at the reporting date, discounted to the reporting date. Item (20) should report the value of future expected
premiums as at 12 months following the reporting date, but discounted to the reporting date.
These columns report the value of liabilities arising from premiums expected to be received after the reporting date, post the effect of insurance risk stresses and
management actions.
These columns include any other specific liability components that do not fall under the categories of claims, expenses and premiums. See instructions for columns (16) and
(21). Column (16) should report the stressed premium liabilities as at the reporting date, discounted to the reporting date. Column (21) should report the stressed future
premium liability as at 12 months following the reporting date, but discounted to the reporting date.
This column reports the present value of total expected claims and expenses, arising from all premiums that have been received prior to the reporting date, before the effect
of the insurance risk stresses.
This column is taken from the reported value of 1(6).
This column reports the value of any premium refund payable (in excess of the unearned premium reserve held) at policy's termination based on the policy document's
contractual agreement.
The premium refund should be present valued to the reporting date.
This column reports the value of any other components that must be included in the termination value (as defined in LPS 112 Attachment H) of the respective product group,
on top of the past premium liabilities and the excess premium refunds.
Other components reported should have allowance for surrender values paid in the event of voluntary termination, consistent with the requirement of LPS 360.
71
3. Adjusted policy liabilities
Total termination value (4)
3. Adjusted policy liabilities
Total future premium liabilities (5)
3. Adjusted policy liabilities
Risk-free best estimate liabilities (6)
3. Adjusted policy liabilities
Adjusted policy liability (7)
4. Impact of stress margins
4.14. Insurance stress diversification factor
This column reports the total termination value, in respect of each of the APRA product groups, used in calculating adjusted policy liabilities for the purpose of determining
capital base.
This column is calculated automatically as the sum of column (1) to column (3).
This column reports the value of liabilities arising from premiums expected to be received after the reporting date, before the effect of insurance risk stresses and
management actions.
This column is taken from the reported value of tables 2 column (5).
This column reports the value of the risk-free best estimate liabilities, as defined in LPS 112 Attachment H, used in calculating adjusted policy liability for the purpose of
determining capital base.
This column is calculated automatically as the sum of column (1) and column (5).
This column reports the value of the adjusted policy liability as defined in LPS 112 Attachment H for the purpose of determining capital base.
This column is calculated automatically as the greater of column (4) and column (6).
This table reports the change in risk-free best estimate liabilities or participating policy liability, whichever that is applicable as a result of applying the individual insurance
stresses for each APRA product group as indicated as per each of the following from item.
Columns (1) to (6) in respect of the impact of the specific individual stresses across the specified product groups from items 4.1 to 4.12 should be reported prior to any
allowance for diversification benefits between the insurance stresses.
This item reports the diversification factor to be applied on the individual insurance stress margins to arrive at the adjusted stress margins as per LPS 115.
This item is calculated automatically as item 4.13 column (8) divided by item 4.13 column (7).
5. Variable annuities
Statutory fund name (1)
This column reports the name of the statutory fund to which the variable annuity business is referrable.
5. Variable annuities
Capital requirement (excluding hedging) (2)
This column reports the estimate of capital requirement covering the associated insurance and asset risks under the combined scenario, in the absence of any hedging/risk
mitigation arrangements as per Attachment A of LPS 110.
5. Variable annuities
Capital requirement (including hedging) (3)
This column reports the estimate of capital requirement covering the associated insurance and asset risks under the combined scenario, allowing for the effect of any
hedging/risk mitigation arrangements as per Attachment A of LPS 110.
5. Variable annuities
Diversification factor between asset and insurance risks (4)
5. Variable annuities
Effectiveness factor (5)
5. Variable annuities
Aggregate risk charge for variable annuities (6)
This column reports the diversification factor, where readily determined, that has been estimated between asset and insurance risks in calculating the capital requirement
(including hedging).
Reported figures should range from 0 to 1.
This column reports the effectiveness factor E used to reflect the level of sophistication of the assumed model of dynamic hedging.
Reported figures should range from 0 to 1.
This item reports the aggregate risk charge for variable annuities determined in accordance with Attachment A of LPS 110.
This item is calculated automatically in accordance with the formula specified in Attachment A of LPS 110.
72
LRF_300_1 Statement of Financial Position (SF and SF Eliminations)
Australian Business Number
Entity identifier, to be provided
Institution Name
Life companies including friendly societies
Reporting Period
As at end of each quarter and as at financial year
end
Scale Factor
Thousands of dollars, no decimal places
Specific Reporting Instructions
Reporting Consolidation
One form per statutory fund
Australian
business
Overseas
business
Total
business
Definition and Instruction
This refers to the territory where the life insurance business is carried on, as defined in the Life
Insurance Act 1995 (the Act). All “Total business” values are derived items.
Assets
1. Cash
1.1. Held directly - in Australia..........................................................................................
1.2. Held directly - outside Australia.................................................................................
This differentiation refers to the territory where the asset is held, as opposed to the territory where
the life insurance business is carried on (see column headings).
1.3. Sub-total cash held directly........................................................................................
1.4. Look-through adjustment for assets held indirectly via unit trusts.............................
1.5. Sub-total cash held effectively (unhedged positions)..........................................
Include look-through adjustment for cash held indirectly via listed unit trusts, unlisted unit trusts or
controlled unit trusts.
This represents the effective holding in cash after adjustment for look-through of trusts and prior to
adjustment for hedging.
This is calculated automatically by derivations contained within the forms.
1.6. Hedging adjustments to or from cash........................................................................
The hedging adjustment item is intended to translate the aggregate cash balance to the effective
post-derivatives position.
1.7. Total cash held effectively (hedged positions).....................................................
This represents the effective exposure to cash after adjustment for look-through of trusts and also
after adjustment for hedging.
Property acquired or held which is available for sale, excluding owner-occupied property. Report the
value after deducting accumulated depreciation.
2. Investment property
2.1. Held directly - in Australia..........................................................................................
2.2. Held directly - outside Australia.................................................................................
Investment property should be consistent with the classification and measurement basis used in
AASB140 Investment Property .
This differentiation refers to the territory where the asset is held, as opposed to the territory where
the life insurance business is carried on (see column headings).
2.3. Sub-total investment property held directly................................................................
2.4. Look-through adjustment for assets held indirectly via unit trusts or by owner..........
Include look-through adjustment for investment property held indirectly via listed unit trusts, unlisted
unit trusts or controlled unit trusts, or for owner-occupied property initially entered as part of Item 11.
73
2.5. Sub-total investment property held effectively (unhedged positions)................
This represents the effective holding in property after adjustment for look-through of trusts/owneroccupied and prior to adjustment for hedging.
2.6. Hedging adjustments to or from investment property................................................
The hedging adjustment item is intended to translate the aggregate investment property balance to
the effective post-derivatives position.
2.7. Total investment property held effectively (hedged positions)...........................
This represents the effective exposure to Property after adjustment for look-through of trusts/owneroccupied and also after adjustment for hedging.
This is calculated automatically by derivations contained within the forms.
3. Equities/unit trusts
3.1. Held in Australia - directly as listed or unlisted equities.............................................
3.2. Held in Australia - directly in associated, subsidiary or controlled entities................
All holdings in unit trusts are initially included in this section, before applying the look-through
adjustments.
Include both listed (ownership interest in a company listed on the ASX or an overseas exchange)
and unlisted equities that are held directly.
Ownership interest in any associated, subsidiary and controlled entities, excluding preference
shares.
Refer to the Act for definitions of associated, subsidiary or controlled entities.
3.3. Held in Australia - directly as convertible notes (Equity exposure)............................
All equities-related items such as convertible notes and other hybrid securities which, taking into
account market conditions, have attributes that demonstrate exposure to equities markets.
3.4. Held in Australia - directly as controlled unit trusts....................................................
3.5. Held in Australia - directly as listed unit trusts...........................................................
3.6. Held in Australia - directly as unlisted unit trusts.......................................................
3.7. Held directly - outside Australia.................................................................................
This differentiation refers to the territory where the asset is held, as opposed to the territory where
the life insurance business is carried on (see column headings).
3.8. Sub-total equities/unit trusts held directly............................................................
3.9. Look-through adjustment for assets held indirectly via unit trusts etc.......................
Include look-through adjustment for equities held indirectly via listed unit trusts, unlisted unit trusts or
controlled unit trusts.
3.10. Sub-total equities held effectively (unhedged positions)...................................
This represents the effective holding in equity after adjustment for look-through of trusts and prior to
adjustment for hedging.
3.11. Hedging adjustments to or from equities.................................................................
The hedging adjustment item is intended to translate the aggregate equities balance to the effective
post-derivatives position.
3.12. Total equities held effectively (hedged positions)..............................................
This represents the effective exposure to equity after adjustment for look-through of trusts and also
after adjustment for hedging.
4. Non-indexed interest bearing securities (IBS)
4.1. Held in Australia - directly as non-indexed IBS assets..............................................
Non-indexed IBS are interest bearing securities that are not indexed (see item 5 below).
4.2. Held in Australia - directly as convertible notes (IBS exposure)................................
All IBS-related items such as convertible notes and other hybrid securities which, taking into account
market conditions, have attributes that demonstrate exposure to IBS markets.
4.3. Held directly - outside Australia.................................................................................
This differentiation refers to the territory where the asset is held, as opposed to the territory where
the life insurance business is carried on (see column headings).
4.4. Sub-total non-indexed IBS held directly................................................................
4.5. Look-through adjustment for assets held indirectly via unit trusts.............................
Include look-through adjustment for non-indexed IBS held indirectly via listed unit trusts, unlisted unit
trusts or controlled unit trusts.
4.6. Sub-total non-indexed IBS held effectively (unhedged positions)......................
This represents the effective holding in non-indexed IBS after adjustment for look-through of trusts
and prior to adjustment for hedging.
4.7. Hedging adjustments to or from non-indexed IBS.....................................................
The hedging adjustment item is intended to translate the aggregate non-indexed IBS balance to the
effective post-derivatives position.
4.8. Total non-indexed IBS held effectively (hedged positions).................................
This represents the effective exposure to non-indexed IBS after adjustment for look-through of trusts
and also after adjustment for hedging.
74
5. Indexed interest bearing securities (IBS)
5.1. Held directly - in Australia..........................................................................................
5.2. Held directly - outside Australia.................................................................................
Indexed IBS are interest bearing securities with a payment stream that increases by an indexation
factor; the most common being the rate of inflation.
This differentiation refers to the territory where the asset is held, as opposed to the territory where
the life insurance business is carried on (see column headings).
5.3. Sub-total indexed IBS held directly........................................................................
5.4. Look-through adjustment for assets held indirectly via unit trusts.............................
Include look-through adjustment for indexed IBS held indirectly via listed unit trusts, unlisted unit
trusts or controlled unit trusts.
5.5. Sub-total indexed IBS held effectively (unhedged positions)..............................
This represents the effective holding in indexed IBS after adjustment for look-through of trusts and
prior to adjustment for hedging.
5.6. Hedging adjustments to or from indexed IBS............................................................
The hedging adjustment item is intended to translate the aggregate Indexed IBS balance to the
effective post-derivatives position.
5.7. Total indexed IBS held effectively (hedged positions).........................................
This represents the effective exposure to Indexed IBS after adjustment for look-through of trusts and
also after adjustment for hedging.
6. Sub-total of non-indexed IBS and indexed IBS...............................................................
7. Loans
7.1. Held in Australia - directly as loans on policies.........................................................
Aggregate IBS balance. This is the internal sub-total of non-indexed IBS and indexed IBS, in terms
of effective exposure.
Include financial leases and mortgages. Please note that loans differ from interest bearing securities
as usually the asset is not negotiable (i.e. able to be traded on a secondary market).
Loans on policies are loans (usually to a policy owner) that are secured by the surrender value of the
policy.
7.2. Held in Australia - directly to associated, subsidiary and controlled entities.............
7.3. Held in Australia - directly in public sector or as secured..........................................
Include all loans to the public sector (loans to National, State or Local Governments or government
enterprises) and secured loans (loans secured by a charge over assets, including debentures) to
other borrowers.
7.4. Held in Australia - directly as unsecured...................................................................
Include loans (to private sector entities) that are not secured by a charge over assets.
7.5. Held directly - outside Australia.................................................................................
This differentiation refers to the territory where the asset is held, as opposed to the territory where
the life insurance business is carried on (see column headings).
7.6. Sub-total loans held directly...................................................................................
7.7. Look-through adjustment for assets held indirectly via unit trusts.............................
Include look-through adjustment for loans held indirectly via listed unit trusts, unlisted unit trusts or
controlled unit trusts.
7.8. Sub-total loans held effectively (unhedged positions).........................................
This represents the effective holding in loans after adjustment for look-through of trusts and prior to
adjustment for hedging.
7.9. Hedging adjustments to or from loans.......................................................................
The hedging adjustment item is intended to translate the aggregate loans balance to the effective
post-derivatives position.
7.10. Total loans held effectively (hedged positions)..................................................
This represents the effective exposure to loans after adjustment for look-through of trusts and also
after adjustment for hedging.
8. Sub-total of debt securities (IBS and loans)....................................................................
Aggregate debt assets balance. This is the internal sub-total of IBS and loans, in terms of effective
exposure.
9. Other investment assets
9.1. Held directly - in Australia..........................................................................................
9.2. Held directly - outside Australia.................................................................................
Other investment assets, for example, direct holdings of commodities such as gold.
This differentiation refers to the territory where the asset is held, as opposed to the territory where
the life insurance business is carried on (see column headings).
9.3. Sub-total other investment assets held directly...................................................
9.4. Look-through adjustment for assets held indirectly via unit trusts.............................
Include look-through adjustment for other investment assets held indirectly via listed unit trusts,
unlisted unit trusts or controlled unit trusts.
9.5. Sub-total other investment assets held effectively (unhedged positions).........
This represents the effective holding in other investment assets after adjustment for look-through of
trusts and prior to adjustment for hedging.
75
9.6. Hedging adjustments to or from other investment assets..........................................
The hedging adjustment item is intended to translate the aggregate other investment assets balance
to the effective post-derivatives position.
9.7. Total other investment assets held effectively (hedged positions).....................
This represents the effective exposure to other investment assets after adjustment for look-through
of trusts and also after adjustment for hedging.
Do not include accrued income from investment assets, which is to be included with the appropriate
investment principal.
Include outstanding premiums (item 10.1), but not deferred acquisition cost arising in respect of
policies, which are to be included as part of the calculation of policy liabilities.
10. Receivables
10.1. Held in Australia - as outstanding premiums...........................................................
Note that this treatment differs from the Australian Accounting Standards.
10.2. Held in Australia - as investment receivables..........................................................
Include the amount of any other receivables not categorised above.
10.3. Held in Australia - as other receivables...................................................................
Include sundry debtors and prepayments. Include accrued income for assets of the fund which are
not traded securities, such as operating assets. Do not include accrued income from traded
securities which is to be included with the principal amount.
10.4. Held outside Australia - all receivables....................................................................
This differentiation refers to the territory where the asset is held, as opposed to the territory where
the life insurance business is carried on (see column headings).
10.5. Total receivables....................................................................................................
11. Non-investment assets
11.1. Held in Australia - as (owner-occupied) property, plant and equipment..................
11.2. Held in Australia - as gross policy liabilities ceded under reinsurance....................
Include owner-occupied property, furniture, equipment (excluding information technology), remodelling costs to existing premises, and interest capitalised during the period of construction of
buildings in accordance with AASB116 Property, Plant and Equipment . Report the net value after
deducting accumulated depreciation from the total amount.
The sum of insurance liabilities, financial instrument liabilities and management services element
liabilities ceded under reinsurance held in Australia. For reinsurance held outside Australia, see Item
11.6.
Outwards reinsurance that meets the definition of an insurance contract consists of both a reinsured
best estimate liability and the value of reinsured profit margins.
11.3. Held in Australia - as deferred tax assets................................................................
11.4. Held in Australia - as goodwill and other intangible assets.....................................
This item reports the total value of all goodwill and intangible assets net of impairment as reflective
on the statement of financial position.
11.5. Held in Australia - as other assets...........................................................................
Include all other assets not specifically categorised above, including unreconciled suspense and
clearing accounts with debit balances.
11.6. Held outside Australia - as gross policy liabilities ceded under reinsurance...........
The sum of insurance liabilities, financial instrument liabilities and management services element
liabilities ceded under reinsurance held outside Australia. For reinsurance held in Australia, see Item
11.2.
Outwards reinsurance that meets the definition of an insurance contract consists of both a reinsured
best estimate liability and the value of reinsured profit margins.
11.7. Held outside Australia - other non-investment assets.............................................
This differentiation refers to the territory where the asset is held, as opposed to the territory where
the life insurance business is carried on (see column headings).
11.8. Look-through adjustment for owner-occupied property...........................................
This item is intended to translate the exposure to owner-occupied property from Item 11 to Item 2
(investment property).
11.9. Total non-investment assets.................................................................................
12. Total assets.......................................................................................................................
76
Liabilities
13. Borrowings
Include the outstanding balances of borrowings from financial institutions and other borrowings.
13.1. Direct - secured.......................................................................................................
Include borrowings that are secured by a charge over assets.
13.2. Direct - unsecured...................................................................................................
Include borrowings that are not secured by a charge over assets.
13.3. Direct - seed capital.................................................................................................
Seed capital must be reported separately from borrowings. This reporting item only applies to
friendly societies.
13.4. Sub-total direct borrowings..................................................................................
13.5. Look-through adjustment for borrowings drawn indirectly via unit trusts.................
Include look-through adjustment for borrowings drawn indirectly via listed unit trusts, unlisted unit
trusts or controlled unit trusts. This is in effect adjusting for recognition of ‘geared’ positions in unit
trusts.
13.6. Sub-total borrowings drawn effectively (unhedged positions).........................
13.7. Hedging adjustments to or from borrowings............................................................
The hedging adjustment item is intended to translate the aggregate Borrowings balance to the
effective post-derivatives position.
13.8. Total borrowings drawn effectively (hedged positions).....................................
14. Total creditors..................................................................................................................
Show the total of creditors, including account payables. Do not include overdrafts here, these should
be disclosed as borrowings.
15. Provisions
15.1. Current tax liabilities................................................................................................
Includes items of income tax described as inter-company tax liability by virtue of life company being
part of a tax consolidation group.
15.2. Deferred tax liabilities..............................................................................................
15.3. Other provisions.......................................................................................................
Include the amount of other provisions, for example, employee entitlements, etc.
15.4. Total provisions.....................................................................................................
Gross policy liabilities are to be valued in accordance with Prudential Standard LPS 340 Valuation of
Policy Liabilities .
16. Gross policy liabilities assumed directly.......................................................................
Include liabilities for deferred fee revenue and deferred acquisition costs, and non-life policy
liabilities. For participating benefits, include bonuses in respect of the current year.
For friendly societies, this item must include any unallocated surpluses that have been classified as
liabilities. Unallocated surplus classified as liabilities included in this item relates to all other
unallocated surpluses that have not been included in item 25.1 of this form.
As for reporting item 16 Gross policy liabilities, except that it pertains to inwards reinsurance
business.
17. Gross policy liabilities assumed under reinsurance....................................................
A life company whose principal business is reinsurance is expected to enter their policy liabilities at
this item.
Value of statutory fund profits allocated to participating policy owners generally, but not yet vested as
specific amounts to particular policies.
18. Policy owner retained profits..........................................................................................
AASB1038 Life Insurance Contracts prevents the recognition of negative policy owner retained
profits.
Negative policy owner retained profits should be disclosed in LRF 340.1 Retained Profits (SF and SF
Eliminations).
19. Premiums in advance......................................................................................................
77
20. Subordinated debt
20.1. Eligible amounts......................................................................................................
The non-eligible amount is the current total value of the subordinated debt which has been issued by
the statutory fund and meets the eligibility criteria as per Attachment E of LPS 112.
20.2. Non-eligible amounts...............................................................................................
The non-eligible amount is the current total value of the subordinated debt which has been issued by
the statutory fund but does not meet the eligibility criteria as per Attachment E of LPS 112.
20.3. Total subordinated debt........................................................................................
Total approved subordinated debt is the current total value of the subordinated debt which has been
issued by the statutory fund.
It is calculated automatically as the sum of item 20.1 and item 20.2.
21. Other liabilities
21.1. Other liabilities.........................................................................................................
Record all other liabilities that are not specifically categorised above, including unreconciled
suspense and clearing accounts with credit balances.
21.2. Hedging adjustments to or from other liabilities.......................................................
The hedging adjustment item is intended to translate the aggregate Other liabilities balance to the
effective post-derivatives position.
21.3. Total other liabilities..............................................................................................
22. Total liabilities..................................................................................................................
23. Net assets.................................................................................................................................
Total assets (item 12) less Total liabilities (item 22).
Components of net assets
The treatment of foreign currency translation is set out in the relevant accounting standards. Entities
must determine whether (some or all of) the resulting amounts represent a component of operating
profit (loss) for the purposes of the Act.
24. Foreign currency translations.........................................................................................
This item would generally only be expected to apply at the general fund level as all operating profit
(loss) of a statutory fund must be allocated to retained profits in accordance with sections 59 and 60
of the Act. A life insurer reporting a balance at the statutory fund level should be able to identify how
its creation is consistent with the requirements of the Act.
25. Reserves
25.1. Unallocated benefit fund reserves...........................................................................
For defined benefit businesses, this item includes:
> the unallocated surplus that must be transferred to the management fund under the approved
benefit fund rules; and
> the unallocated surplus that may be transferred to the management fund or used for benefit
enhancement under the approved benefit fund rules.
This item does not apply to defined contribution businesses.
25.2. Other reserves.........................................................................................................
Include all other reserves not specifically categorised above.
25.3. Total reserves.........................................................................................................
26. Share capital.....................................................................................................................
Includes all share capital, e.g. ordinary shares, preference shares etc recognised as capital for the
purposes of Prudential Standards LPS 001 Definitions .
27. Shareholders' retained profits........................................................................................
This represents the sum of shareholders’ retained profits (or accumulated losses) at beginning of the
period and the profit (or loss) after income tax attributable to shareholders for the reporting period,
after any transfers to or from reserves.
78
28. Total components = Life Insurance Act net assets.......................................................
Annual return reconciliations
This represents the sum of component items making up net assets, and must equal the derived item
for net assets shown at Item 23.
Reconciliation to net assets at the end of the period in the general purpose financial statements is
only required to be completed as part of the annual returns.
(Only complete for annual returns)
29. Reconciliation adjustments.............................................................................................
This is the adjustment necessary to reconcile the Total components of net assets (item 28) as
defined under the Act to the net assets per general purpose accounts (item 30). APRA does not
propose to routinely collect the components of the reconciliation. Additional information may,
however, be sought from the life companies where this figure is significant.
30. Net assets, per general purpose accounts - balance sheet.........................................
This is the corresponding figure to the total components of Life Insurance Act net assets (item 28),
except that it is taken from the general purpose accounts of the entity.
79
LRF_300_2 Statement of Financial Position (SF Total, GF, GF Elim, Entity)
Australian Business Number
Entity identifier, to be provided
Institution Name
Life companies including friendly societies
Reporting Period
As at end of each quarter and as at financial
year end
Scale Factor
Thousands of dollars, no decimal places
Specific Reporting Instructions
Reporting Consolidation
Life company
Total statutory funds
Australian
Overseas
Total
business
business
business
Definition and Instruction
General
fund
General fund
eliminations
Total
entity
Assets
1. Cash
1.1. Held directly - in Australia...............................................................................
1.2. Held directly - outside Australia......................................................................
This differentiation refers to the territory where the asset is held, as opposed to the
territory where the life insurance business is carried on (see column headings).
1.3. Sub-total cash held directly........................................................................
1.4. Look-through adjustment for assets held indirectly via unit trusts.................
1.5. Sub-total cash held effectively (unhedged positions)..............................
Include look-through adjustment for cash held indirectly via listed unit trusts, unlisted
unit trusts or controlled unit trusts.
This represents the effective holding in cash after adjustment for look-through of trusts
and prior to adjustment for hedging.
This is calculated automatically by derivations contained within the forms.
1.6. Hedging adjustments to or from cash............................................................
The hedging adjustment item is intended to translate the aggregate cash balance to
the effective post-derivatives position.
1.7. Total cash held effectively (hedged positions).........................................
This represents the effective exposure to cash after adjustment for look-through of
trusts and also after adjustment for hedging.
Property acquired or held which is available for sale, excluding owner-occupied
property. Report the value after deducting accumulated depreciation.
2. Investment property
2.1. Held directly - in Australia...............................................................................
2.2. Held directly - outside Australia......................................................................
Investment property should be consistent with the classification and measurement
basis used in AASB140 Investment Property .
This differentiation refers to the territory where the asset is held, as opposed to the
territory where the life insurance business is carried on (see column headings).
2.3. Sub-total investment property held directly..............................................
2.4. Look-through adjustment for assets held indirectly via unit trusts or by owner
Include look-through adjustment for investment property held indirectly via listed unit
trusts, unlisted unit trusts or controlled unit trusts, or for owner-occupied property
initially entered as part of Item 11.
2.5. Sub-total investment property held effectively (unhedged positions)....
This represents the effective holding in property after adjustment for look-through of
trusts/owner-occupied and prior to adjustment for hedging.
2.6. Hedging adjustments to or from investment property....................................
The hedging adjustment item is intended to translate the aggregate investment
property balance to the effective post-derivatives position.
2.7. Total investment property held effectively (hedged positions)...............
This represents the effective exposure to property after adjustment for look-through of
trusts/owner-occupied and also after adjustment for hedging.
This is calculated automatically by derivations contained within the forms.
80
3. Equities/unit trusts
3.1. Held in Australia - directly as listed or unlisted equities.................................
3.2. Held in Australia - directly in associated, subsidiary or controlled entities.....
All holdings in unit trusts are initially included in this section, before applying the lookthrough adjustments.
Include both listed (ownership interest in a company listed on the ASX or an overseas
exchange) and unlisted equities that are held directly.
Ownership interest in any associated, subsidiary and controlled entities, excluding
preference shares.
Refer to the Life Insurance Act 1995 (the Act) for definitions of associated, subsidiary
or controlled entities.
3.3. Held in Australia - directly as convertible notes (Equity exposure)................
All equities-related items such as convertible notes and other hybrid securities which,
taking into account market conditions, have attributes that demonstrate exposure to
equities markets.
3.4. Held in Australia - directly as controlled unit trusts........................................
3.5. Held in Australia - directly as listed unit trusts................................................
3.6. Held in Australia - directly as unlisted unit trusts............................................
3.7. Held directly - outside Australia......................................................................
This differentiation refers to the territory where the asset is held, as opposed to the
territory where the life insurance business is carried on (see column headings).
3.8. Sub-total equities/unit trusts held directly................................................
3.9. Look-through adjustment for assets held indirectly via unit trusts etc...........
Include look-through adjustment for equities held indirectly via listed unit trusts,
unlisted unit trusts or controlled unit trusts.
3.10. Sub-total equities held effectively (unhedged positions).......................
This represents the effective holding in equity after adjustment for look-through of
trusts and prior to adjustment for hedging.
3.11. Hedging adjustments to or from equities......................................................
The hedging adjustment item is intended to translate the aggregate equities balance to
the effective post-derivatives position.
3.12. Total equities held effectively (hedged positions)..................................
This represents the effective exposure to equity after adjustment for look-through of
trusts and also after adjustment for hedging.
4. Non-indexed interest bearing securities (IBS)
4.1. Held in Australia - directly as non-indexed IBS assets..................................
Non-indexed IBS are interest bearing securities that are not indexed (see item 5
below).
4.2. Held in Australia - directly as convertible notes (IBS exposure)....................
All IBS-related items such as convertible notes and other hybrid securities which,
taking into account market conditions, have attributes that demonstrate exposure to
IBS markets.
4.3. Held directly - outside Australia......................................................................
This differentiation refers to the territory where the asset is held, as opposed to the
territory where the life insurance business is carried on (see column headings).
4.4. Sub-total non-indexed IBS held directly....................................................
4.5. Look-through adjustment for assets held indirectly via unit trusts.................
Include look-through adjustment for non-indexed IBS held indirectly via listed unit
trusts, unlisted unit trusts or controlled unit trusts.
4.6. Sub-total non-indexed IBS held effectively (unhedged positions)..........
This represents the effective holding in non-indexed IBS after adjustment for lookthrough of trusts and prior to adjustment for hedging.
4.7. Hedging adjustments to or from non-indexed IBS.........................................
The hedging adjustment item is intended to translate the aggregate non-indexed IBS
balance to the effective post-derivatives position.
4.8. Total non-indexed IBS held effectively (hedged positions).....................
This represents the effective exposure to Non-indexed IBS after adjustment for lookthrough of trusts and also after adjustment for hedging.
5. Indexed interest bearing securities (IBS)
5.1. Held directly - in Australia...............................................................................
5.2. Held directly - outside Australia......................................................................
Indexed IBS are interest bearing securities with a payment stream that increases by
an indexation factor; the most common being the rate of inflation.
This differentiation refers to the territory where the asset is held, as opposed to the
territory where the life insurance business is carried on (see column headings).
5.3. Sub-total indexed IBS held directly............................................................
5.4. Look-through adjustment for assets held indirectly via unit trusts.................
Include look-through adjustment for indexed IBS held indirectly via listed unit trusts,
unlisted unit trusts or controlled unit trusts.
5.5. Sub-total indexed IBS held effectively (unhedged positions)..................
This represents the effective holding in indexed IBS after adjustment for look-through
of trusts and prior to adjustment for hedging.
5.6. Hedging adjustments to or from indexed IBS.................................................
The hedging adjustment item is intended to translate the aggregate indexed IBS
balance to the effective post-derivatives position.
81
5.7. Total indexed IBS held effectively (hedged positions).............................
6. Sub-total of non-indexed IBS and indexed IBS.....................................................
7. Loans
7.1. Held in Australia - directly as loans on policies..............................................
This represents the effective exposure to indexed IBS after adjustment for lookthrough of trusts and also after adjustment for hedging.
Aggregate IBS balance. This is the internal sub-total of non-indexed IBS and indexed
IBS, in terms of effective exposure.
Include financial leases and mortgages. Please note that loans differ from interest
bearing securities as usually the asset is not negotiable (i.e. able to be traded on a
secondary market).
Loans on policies are loans (usually to a policy owner) that are secured by the
surrender value of the policy.
7.2. Held in Australia - directly to associated, subsidiary and controlled entities..
7.3. Held in Australia - directly in public sector or as secured..............................
Include all loans to the public sector (loans to National, State or Local Governments or
government enterprises) and secured loans (loans secured by a charge over assets,
including debentures) to other borrowers.
7.4. Held in Australia - directly as unsecured........................................................
Include loans (to private sector entities) that are not secured by a charge over assets.
7.5. Held directly - outside Australia......................................................................
This differentiation refers to the territory where the asset is held, as opposed to the
territory where the life insurance business is carried on (see column headings).
7.6. Sub-total loans held directly.......................................................................
7.7. Look-through adjustment for assets held indirectly via unit trusts.................
Include look-through adjustment for loans held indirectly via listed unit trusts, unlisted
unit trusts or controlled unit trusts.
7.8. Sub-total loans held effectively (unhedged positions).............................
This represents the effective holding in loans after adjustment for look-through of
trusts and prior to adjustment for hedging.
7.9. Hedging adjustments to or from loans...........................................................
The hedging adjustment item is intended to translate the aggregate loans balance to
the effective post-derivatives position.
7.10. Total loans held effectively (hedged positions)......................................
This represents the effective exposure to loans after adjustment for look-through of
trusts and also after adjustment for hedging.
8. Sub-total of debt securities (IBS and Loans).........................................................
Aggregate debt assets balance. This is the internal sub-total of IBS and loans, in terms
of effective exposure.
Other investment assets, for example, direct holdings of commodities such as gold.
9. Other investment assets
9.1. Held directly - in Australia...............................................................................
9.2. Held directly - outside Australia......................................................................
This differentiation refers to the territory where the asset is held, as opposed to the
territory where the life insurance business is carried on (see column headings).
9.3. Sub-total other investment assets held directly.......................................
9.4. Look-through adjustment for assets held indirectly via unit trusts.................
Include look-through adjustment for other investment assets held indirectly via listed
unit trusts, unlisted unit trusts or controlled unit trusts.
9.5. Sub-total other investment assets held effectively (unhedged..............
positions)
This represents the effective holding in other investment assets after adjustment for
look-through of trusts and prior to adjustment for hedging.
9.6. Hedging adjustments to or from other investment assets..............................
The hedging adjustment item is intended to translate the aggregate other investment
assets balance to the effective post-derivatives position.
9.7. Total other investment assets held effectively (hedged positions)........
This represents the effective exposure to other investment assets after adjustment for
look-through of trusts and also after adjustment for hedging.
82
Do not include accrued income from investment assets, which is to be included with
the appropriate investment principal.
Include outstanding premiums (item 10.1), but not deferred acquisition cost arising in
respect of policies, which are to be included as part of the calculation of policy
liabilities.
10. Receivables
10.1. Held in Australia - as outstanding premiums...............................................
10.2. Held in Australia - as investment receivables..............................................
10.3. Held in Australia - as seed capital receivables............................................
Note that this treatment differs from the Australian Accounting Standards.
For friendly societies, this item is the value of seed capital that is a receivable for the
management fund.
Include the amount of any other receivables not categorised above.
10.4. Held in Australia - as other receivables.......................................................
10.5. Held outside Australia - all receivables........................................................
Include sundry debtors and prepayments. Include accrued income for assets of the
fund which are not traded securities, such as operating assets. Do not include accrued
income from traded securities which is to be included with the principal amount.
This differentiation refers to the territory where the asset is held, as opposed to the
territory where the life insurance business is carried on (see column headings).
10.6. Total receivables........................................................................................
11. Non-investment assets
11.1. Held in Australia - as (owner-occupied) property, plant and equipment......
11.2. Held in Australia - as gross policy liabilities ceded under reinsurance........
Include owner-occupied property, furniture, equipment (excluding information
technology), re-modelling costs to existing premises, and interest capitalised during
the period of construction of buildings in accordance with AASB116 Property, Plant
and Equipment . Report the net value after deducting accumulated depreciation from
the total amount.
The sum of insurance liabilities, financial instrument liabilities and management
services element liabilities ceded under reinsurance held in Australia. For reinsurance
held outside Australia, see Item 11.6.
Outwards reinsurance that meets the definition of an insurance contract consists of
both a reinsured best estimate liability and the value of reinsured profit margins.
11.3. Held in Australia - as deferred tax assets....................................................
11.4. Held in Australia - as goodwill and other intangible assets..........................
This item reports the total value of all goodwill and intangible assets net of impairment
as reflective on the statement of financial position.
11.5. Held in Australia - as other assets...............................................................
Include all other assets not specifically categorised above, including unreconciled
suspense and clearing accounts with debit balances.
11.6. Held outside Australia - as gross policy liabilities ceded under reinsurance
The sum of insurance liabilities, financial instrument liabilities and management
services element liabilities ceded under reinsurance held outside Australia. For
reinsurance held in Australia, see Item 11.2.
Outwards reinsurance that meets the definition of an insurance contract consists of
both a reinsured best estimate liability and the value of reinsured profit margins.
11.7. Held outside Australia - other non-investment assets.................................
This differentiation refers to the territory where the asset is held, as opposed to the
territory where the life insurance business is carried on (see column headings).
11.8. Look-through adjustment for owner-occupied property................................
This item is intended to translate the exposure to owner-occupied property from Item
11 to Item 2 (investment property).
11.9. Total non-investment assets.....................................................................
12. Total assets.............................................................................................................
83
Liabilities
13. Borrowings
Include the outstanding balances of borrowings from financial institutions and other
borrowings.
13.1. Direct - secured............................................................................................
Include borrowings that are secured by a charge over assets.
13.2. Direct - unsecured........................................................................................
Include borrowings that are not secured by a charge over assets.
13.3. Direct - seed capital.....................................................................................
Seed capital must be reported separately from borrowings. This reporting item only
applies to friendly societies.
13.4. Sub-total direct borrowings......................................................................
13.5. Look-through adjustment for borrowings drawn indirectly via unit trusts.....
Include look-through adjustment for borrowings drawn indirectly via listed unit trusts,
unlisted unit trusts or controlled unit trusts. This is in effect adjusting for recognition of
‘geared’ positions in unit trusts.
13.6. Sub-total borrowings drawn effectively (unhedged positions).............
13.7. Hedging adjustments to or from borrowings................................................
The hedging adjustment item is intended to translate the aggregate borrowings
balance to the effective post-derivatives position.
13.8. Total borrowings drawn effectively (hedged positions).........................
14. Total creditors........................................................................................................
Show the total of creditors, including account payables. Do not include overdrafts
here, these should be disclosed as borrowings.
15. Provisions
15.1. Current tax liabilities.....................................................................................
Includes items of income tax described as inter-company tax liability by virtue of life
company being part of a tax consolidation group.
15.2. Deferred tax liabilities...................................................................................
15.3. Other provisions...........................................................................................
Include the amount of other provisions, for example, employee entitlements, etc.
15.4. Total provisions..........................................................................................
Gross policy liabilities are to be valued in accordance with Prudential Standard LPS
340 Valuation of Policy Liabilities .
16. Gross policy liabilities assumed directly.............................................................
Include liabilities for deferred fee revenue and deferred acquisition costs, and non-life
policy liabilities. For participating benefits, include bonuses in respect of the current
year.
For friendly societies, this item must include any unallocated surpluses that have been
classified as liabilities. Unallocated surplus classified as liabilities included in this item
relates to all other unallocated surpluses that have not been included in item 25.1 of
this form.
As for reporting item 16 gross policy liabilities, except that it pertains to inwards
reinsurance business.
17. Gross policy liabilities assumed under reinsurance..........................................
A life company whose principal business is reinsurance is expected to enter their
policy liabilities at this item.
Value of statutory fund profits allocated to participating policy owners generally, but not
yet vested as specific amounts to particular policies.
18. Policy owner retained profits................................................................................
AASB1038 Life Insurance Contracts prevents the recognition of negative policy owner
retained profits.
Negative policy owner retained profits should be disclosed in LRF 340.1 Retained
Profits (SF and SF Eliminations).
19. Premiums in advance.............................................................................................
84
20. Subordinated debt
20.1. Eligible amounts...........................................................................................
The non-eligible amount is the current total value of the subordinated debt which has
been issued by the life company and meets the eligibility criteria as per Attachment E
of LPS 112.
20.2. Non-eligible amounts....................................................................................
The non-eligible amount is the current total value of the subordinated debt which has
been issued by the life company but does not meet the eligibility criteria as per
Attachment E of LPS 112.
20.3. Total subordinated debt............................................................................
Total approved subordinated debt is the current total value of the subordinated debt
which has been issued by the life company.
21. Other liabilities
21.1. Other liabilities..............................................................................................
Record all other liabilities that are not specifically categorised above, including
unreconciled suspense and clearing accounts with credit balances.
21.2. Hedging adjustments to or from other liabilities...........................................
The hedging adjustment item is intended to translate the aggregate Other liabilities
balance to the effective post-derivatives position.
21.3. Total other liabilities..................................................................................
22. Total Liabilities.......................................................................................................
23. Net assets........................................................................................................................
Total assets (item 12) less total liabilities (item 22).
Components of net assets
The treatment of foreign currency translation is set out in the relevant accounting
standards. Entities must determine whether (some or all of) the resulting amounts
represent a component of operating profit (loss) for the purposes of the Act.
24. Foreign currency translations...............................................................................
This item would generally only be expected to apply at the general fund level as all
operating profit (loss) of a statutory fund must be allocated to retained profits in
accordance with sections 59 and 60 of the Act. A life insurer reporting a balance at the
statutory fund level should be able to identify how its creation is consistent with the
requirements of the Act.
25. Reserves
25.1. Unallocated benefit fund reserves................................................................
For defined benefit businesses, this item includes:
> the unallocated surplus that must be transferred to the management fund under the
approved benefit fund rules; and
> the unallocated surplus that may be transferred to the management fund or used for
benefit enhancement under the approved benefit fund rules.
This item does not apply to defined contribution businesses.
25.2. Other reserves.............................................................................................
Include all other reserves not specifically categorised above.
25.3. Total reserves.............................................................................................
26. Share capital...........................................................................................................
Includes all share capital, e.g. ordinary shares, preference shares etc recognised as
capital for the purposes of Prudential Standards LPS 001 Definitions .
27. Shareholders' retained profits..............................................................................
This represents the sum of shareholders’ retained profits (or accumulated losses) at
beginning of the period and the profit (or loss) after income tax attributable to
shareholders for the reporting period, after any transfers to or from reserves.
28. Total components = Life Insurance Act net assets.............................................
This represents the sum of component items making up net assets, and must equal
the derived item for net assets shown at item 23.
85
Annual return reconciliations
Reconciliation to net assets at the end of the period in the general purpose financial
statements is only required to be completed as part of the annual returns.
(Only complete for annual returns)
29. Reconciliation adjustments...................................................................................
This is the adjustment necessary to reconcile the total components of net assets (item
28) as defined under the Act to the net assets per general purpose accounts (item 30).
APRA does not propose to routinely collect the components of the reconciliation.
Additional information may, however, be sought from the life companies where this
figure is significant.
30. Net Assets, per general purpose accounts - balance sheet...............................
This is the corresponding figure to the total components of net assets (item 28) as
defined under the Act, except that it is taken from the general purpose accounts of the
entity.
86
LRF_310_1 Income Statement (SF and SF Eliminations)
Australian Business Number
Institution Name
Entity identifier, to be provided
Life companies including friendly societies
General Reporting Instructions
Reporting Period
Scale Factor
Year to date (from last financial year end) up to
each quarter end and to financial year end
While these instructions apply to all life companies, including friendly societies, not all items may be
applicable to both: some items may not be applicable to friendly societies while others may not be
applicable to life insurers.
Thousands of dollars, no decimal places
Specific Reporting Instructions
Reporting Consolidation
One form per statutory fund
Australian
business
Overseas
business
Total
business
Definition and Instruction
This refers to the territory where the life insurance business is carried on, as defined in the Life
Insurance Act 1995 (the Act). All ‘Total business’ values are derived items.
Revenue
Only premiums received from life insurance policies are accounted for as insurance policy revenue.
Premiums for life investment business are recognised as deposits, and adjusted for as changes in
policy liabilities.
1. Insurance policy revenue
The revenue components of amounts contractually received or receivable for insurance policies
should be shown gross of reinsurance, with outwards reinsurance components to be shown
separately.
Direct insurance premiums, policy conversions (inwards) and inwards life reinsurance premiums
should be shown separately.
1.1. Life insurance direct premiums.................................................................................................................................
Report regular and single premiums received or receivable for life insurance business written directly.
Show amounts gross of outwards reinsurance, but exclude amounts for inwards reinsurance (see
item 1.3 below).
Include only revenue components of life insurance contracts, and exclude any deposit components.
Include premiums in respect of deferred and immediate annuities that are life insurance business.
1.2. Policy conversions - inwards.....................................................................................................................................
1.3. Inwards life reinsurance premium revenue...............................................................................................................
1.4. Total premiums from non-life insurance business....................................................................................................
Report the premium elements of conversions between statutory funds. The inward (premium) side of
the conversion is shown here, while the outward (claim) side is shown at item 6.5 (policy conversions
– outwards); any deposit components are to be taken into account in items 9.2 and/or 10.5.
Premium and claim elements of policy conversions are not expected to apply for life investment
contracts, due to section 5 of AASB 1038 Life Insurance Contracts (AASB 1038). In those cases,
only deposit components are expected to apply.
Report premiums for life insurance business written as inwards reinsurance. Show amounts gross of
outwards (retrocession) reinsurance.
Include only revenue components, and exclude any deposit components. Include premiums in respect
of deferred and immediate annuities that are life insurance business written as inwards reinsurance.
Is generally only expected to apply, if permitted to write general insurance business under section 234
of the Act.
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1.5. Outward reinsurance premiums expense.................................................................................................................
1.6. Total insurance policy revenue, net of reinsurance..........................................................................................
2. Fees for management services rendered
Outwards reinsurance premiums expense is to be entered as expense amounts (i.e. as negative
amounts).
Include only revenue components, and exclude any deposit components. Include premiums in respect
of deferred and immediate annuities that are life insurance business.
This item represents total insurance premium revenue net of outwards reinsurance, and is the sum of
the reporting items 1.1 to 1.5.
Fees for management services rendered include premium related fees received for life investment
contracts, non-premium related fees (e.g. those related to funds under management), and net
movement in liability for deferred fee revenue.
It should be entered gross of any reinsurance.
2.1. Premium-related fees revenue.................................................................................................................................
Include fees received or receivable that are directly related to premiums received or receivable.
2.2. Non-premium related fees........................................................................................................................................
Include fees received or receivable that are unrelated to premiums received or receivable, such as
policy fees and those related to funds under management.
2.3. Fees reported as movement in policy liability
(Net movement in liability for defd fee rev).............................................................................................................
2.4. Total fees for management services rendered...................................................................................................
3. Investment revenue
Include amortisation of liability for deferred fee revenue in respect of life investment contracts, less
additional deferral of fees during the reporting period.
Adjustments for Items 2.2 and 2.3 are automatically made by the form when calculating Item 11
effective movement in net policy liabilities.
This item represents total fee revenue for life investment contracts, and is the sum of the reporting
items above (i.e. Items 2.1 to 2.3).
Include interest, dividends, net rents, net realised gains and net unrealised gains. Amounts should be
gross of investment management expenses.
3.1. Investment income (excluding capital gains or losses) from
3.1.1. Cash holdings................................................................................................................................................
3.1.2. Investment property.......................................................................................................................................
3.1.3. Equity securities............................................................................................................................................
This item includes unit trust distributions.
3.1.4. Debt securities...............................................................................................................................................
Debt securities comprise interest bearing securities (both indexed IBS and non-indexed IBS) and
loans.
3.1.5. Other investment assets...............................................................................................................................
All other securities that are not cash, property, equity, or debt securities as categorised above.
3.1.6. Total investment income (excluding capital gains or losses)..............................................................
This item is calculated automatically by the form, as sum of items 3.1.1 to 3.1.5.
3.2. Realised and unrealised capital gains (or losses) from
3.2.1. Investment property.......................................................................................................................................
3.2.2. Equity securities............................................................................................................................................
3.2.3. Debt securities...............................................................................................................................................
See note under Item 3.1.4.
3.2.4. Other investment assets...............................................................................................................................
See note under Item 3.1.5.
3.2.5. Total realised and unrealised capital gains (or losses).........................................................................
This item is calculated automatically by the form, as sum of items 3.2.1 to 3.2.4.
3.3. Total investment revenue......................................................................................................................................
This item represents total investment revenue, and is the sum of the reporting items 3.1.6 and 3.2.5.
4. Other revenue......................................................................................................................................................................
Include all other revenue items not specifically categorised above.
5. Total revenue.......................................................................................................................................................................
This item is the sum of reporting items 1.6, 2.4, 3.3 and 4.
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Expenses
6. Insurance policy expense
6.1. Death and disability claims........................................................................................................................................
Report benefits paid or payable for death and/or disability claims on life insurance business, including
current period bonus and any interim or terminal bonuses included in claims amounts.
6.2. Maturities...................................................................................................................................................................
6.3. Annuities....................................................................................................................................................................
6.4. Surrenders and terminations.....................................................................................................................................
6.5. Policy conversions - outwards..................................................................................................................................
Report the claim elements of conversions between statutory funds. The outward (claim) side of the
conversion is shown here, while the inward (premium) side is shown at item 1.2 (policy conversions –
inwards); any deposit components are to be taken into account in items 9.2 and/or 10.5.
Premium and claim elements of policy conversions are not expected to apply for life investment
contracts, due to section 5 of AASB 1038 . In those cases, only deposit components are expected to
apply.
6.6. Other claims..............................................................................................................................................................
Include all other claims expense items not specifically categorised above.
6.7. Inwards reinsurance claims expense (including current year bonus).......................................................................
Inwards reinsurance claims expense should be gross of retrocession recoveries.
Include bonuses paid as a distribution of current year profit.
6.8. Total non-life policy expense.....................................................................................................................................
Is generally only expected to apply if permitted to write general insurance business under section 234
of the Act.
6.9. Outward reinsurance claims revenue.......................................................................................................................
Outward reinsurance claims revenue should be entered as revenue amounts, i.e. enter as negative
amounts.
6.10. Total insurance policy expense, net of reinsurance........................................................................................
This item represents total insurance policy expenses net of outwards reinsurance, and is the sum of
the reporting items above (i.e. Items 6.1 to 6.9).
Abnormal operating expenses are not to be excluded or shown separately, but included in the
relevant category. In total, all expenses are to be included.
7. Operating expenses
Policy acquisition items are prior to any component deferred to either policy liabilities or a deferred
acquisition cost asset.
7.1. Policy acquisition - commission and other incremental expenses...........................................................................
Include variable costs of acquiring new insurance business.
7.2. Policy acquisition - other expenses...........................................................................................................................
Include all other fixed and variable costs incurred when acquiring new business.
7.3. Policy maintenance - commission and other incremental expenses.......................................................................
Variable costs of:
> Administering policies subsequent to their sale; and
> Administering the general operations of the life company.
Include all normal operating costs and expenses other than acquisition and investment management
expenses.
7.4. Policy maintenance - other expenses.......................................................................................................................
7.5. Investment management expenses..........................................................................................................................
These are the fixed and variable costs of managing the investment portfolio.
7.6. Acquisition expenses reported as movement in policy liability
Include amortization and impairment of existing deferred acquisition costs (DAC) less additional
deferrals of acquisition expenses during the reporting period.
(Net movement in DAC)..........................................................................................................................................
7.7. Other administration expenses.................................................................................................................................
Note that amounts are as per AASB 1038, and not offset by any initial fee revenue.
An adjustment for this amount is automatically made by the form when calculating Item 11 effective
movement in net policy liabilities.
Including all other general administration expenses not specifically categorised above.
7.8. Interest expense on subordinated debt.....................................................................................................................
7.9. Interest expense on other borrowings.......................................................................................................................
7.10. Total non-life operating expenses...........................................................................................................................
This is generally only expected to apply if permitted to write general insurance business under section
234 of the Act.
7.11. Total operating expenses....................................................................................................................................
This item represents total operating expenses, and is the sum of the reporting items above (i.e. Items
7.1 to 7.10).
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8. Movement in net policy liabilities
This item is to be reported as the numerical result: net policy liabilities at end of reporting period, less
net policy liabilities at beginning of reporting period; thus if net policy liabilities increased the result is
an expense, while if they decreased the result is a negative expense. It is to be reported inclusive of
inwards reinsurance and net of outwards reinsurance at beginning and end of reporting period. Note
that for friendly societies this item also includes movements arising from unallocated surplus
classified as liability and current year bonus declared.
8.1. Increase/(decrease) in net policy liabilities...............................................................................................................
A number of adjustments to movement in net policy liabilities are required in order to obtain the
relevant measure of profit or loss for the reporting period. The adjustments involve
deposits/withdrawals, non-premium related fees for management services, and movements in the
liabilities for deferred fee revenue and deferred acquisition cost. The end result of these adjustments
is effective movement in net policy liabilities (Item 11).
Items 9 and 10 are two of these adjustments and represent the deposit/withdrawal components of
both life insurance and life investment contracts (which are recorded directly to policy liabilities).
8.1.1. Of which: Bonus declared in relation to current financial year profit (friendly society only)..................
This item is the value of the bonus declared in the current reporting period that relates only to the
current year profits.
This item is applicable for friendly societies only.
8.1.2. Of which: Increase/(decrease) in unallocated surplus classified as liability in relation to current
financial year profit (friendly society only)
This item is the change in unallocated surplus classified as liability that relates only to the current year
profits. Unallocated surplus classified as liabilities relates to all other unallocated surpluses that have
not been included in item 25.1 of LRF 300.1.
This item is applicable for friendly societies only.
9. Adjustment to movement in net policy liabilities - policy revenue
Policy revenue recognised as a deposit or as a change in policy liability
9.1. Contractual direct premiums.....................................................................................................................................
9.2. Policy conversions - inwards.....................................................................................................................................
Report the deposit components of regular and single premiums received or receivable for life
investment and life insurance investment account business written directly – i.e. exclude any revenue
components. Show amounts gross of outwards reinsurance, but exclude amounts for inwards
reinsurance (see item 9.3, below). Include the deposit component of premiums in respect of deferred
or immediate annuities that are life investment business.
Report the deposit elements of conversions between statutory funds. The inward side of the
conversion is shown here, while the outward side is shown at item 10.5 (policy conversions –
outwards); any revenue or expense components are to be taken into account in items 1.2 and/or 6.5.
As revenue and expense elements of policy conversions are not expected to apply for life investment
contracts due to section 5 of AASB 1038, the full conversion is expected to be treated as a deposit.
9.3. Inwards reinsurance premium revenue.....................................................................................................................
Report deposit elements for life investment and life insurance investment account business written as
inwards reinsurance – i.e. exclude any revenue components. Show amounts gross of outwards
(retrocession) reinsurance. Include the deposit component of premiums in respect of deferred or
immediate annuities that are life investment business written as inwards reinsurance.
9.4. Total non-life insurance premiums............................................................................................................................
Report any deposit elements corresponding to Item 1.4.
9.5. Outward reinsurance premiums expense.................................................................................................................
Report any deposit elements corresponding to Item 1.5.
9.6. Total policy revenue, net of reinsurance.............................................................................................................
10. Adjustment to movement in net policy liabilities - policy expense
Policy expense recognised as withdrawal of deposit or change in policy liability
10.1. Death and disability claims......................................................................................................................................
Report benefits paid or payable as withdrawal of any deposit elements for death and/or disability
claims on life investment business.
10.2. Maturities.................................................................................................................................................................
Report benefits paid or payable as withdrawal of any deposit elements for maturity claims on life
investment business.
10.3. Annuities..................................................................................................................................................................
Report benefits paid or payable as withdrawal of any deposit elements for annuity benefits on life
investment business.
10.4. Surrenders and terminations...................................................................................................................................
Report benefits paid or payable as withdrawal of any deposit elements for surrender and/or
termination benefits on life investment business.
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10.5. Policy conversions - outwards................................................................................................................................
Report the withdrawal of deposit elements on conversions between statutory funds. The outward side
of the conversion is shown here, while the inward side is shown at item 9.2 (policy conversions –
inwards); any revenue or expense components are to be taken into account in items 1.2 and/or 6.5.
As revenue and expense elements of policy conversions are not expected to apply for life investment
contracts due to section 5 of AASB 1038, the full conversion is expected to be treated as a
withdrawal.
10.6. Other claims............................................................................................................................................................
Report benefits paid or payable as withdrawal of any deposit elements for other claims on life
investment business.
10.7. Inwards reinsurance claims expense (including current year bonus).....................................................................
Report benefits paid or payable as withdrawal of any deposit elements for inwards reinsurance
claims, gross of any retrocession recoveries. (While field names for Items 10.1 to 10.9 correspond
exactly to those for Items 6.1 to 6.9, it is not expected that reference to “current year bonus” would be
applicable.)
10.8. Total non-life policy expense...................................................................................................................................
Report any withdrawal of deposit elements corresponding to Item 6.8.
10.9. Outward reinsurance claims revenue.....................................................................................................................
Outward reinsurance claims revenue as withdrawal of any deposit elements should be entered as
negative amounts.
10.10. Policy acquisition - commission and other incremental expenses.......................................................................
10.11. Policy acquisition - other expenses.......................................................................................................................
10.12. Total policy expense, net of reinsurance........................................................................................................
The effective movement in net policy liabilities is calculated as:
11. Effective movement in net policy liabilities...................................................................................................................
> increase/(decrease) in net policy liabilities (per Item 8.1);
> less deposits received (per Item 9.6);
> plus withdrawals of deposits (per Item 10.12);
> plus non-premium related fees for management services (which would otherwise be recognised as
a reduction in policy liabilities, per Item 2.2);
> plus movements in the liability for deferred fee revenue (which are reported as part of fees for
management services rendered but would otherwise result in a change in policy liabilities for life
investment contracts, per Item 2.3);
> less movements in the liability for deferred acquisition costs (which are reported as part of operating
expenses but would otherwise result in a change in policy liabilities for life investment contracts, per
Item 7.6).
12. Change in policy owner retained profits
12.1. Increase/(decrease) in policy owner retained profits..............................................................................................
Policy owner retained profits represent the value of statutory fund profits allocated to participating
policy owners generally, but not yet vested as specific amounts to particular policies. This item is
included under expenses in these forms for the purpose of ultimately deriving the profit that is
attributable to shareholders.
13. Other expenses.................................................................................................................................................................
Include all other expense items not specifically categorised above.
14. Total expenses..................................................................................................................................................................
This item is the sum of reporting items 6.10, 7.11, 11, 12.1 and 13.
15. Profit/(loss) before income tax........................................................................................................................................
This is item 5 total revenue less item 14 total expenses.
16. Tax
As a life insurance company is liable for tax partly on behalf of its policy owners and partly on behalf
of its shareholders, this item has two components.
16.1. Income tax attributable to profit/(loss) - shareholders............................................................................................
This component relates to that part of the total tax liability arising in the reporting period that is
incurred on behalf of shareholders.
16.2. Income tax attributable to profit/(loss) - policy owners...........................................................................................
This component relates to that part of the total tax liability arising in the reporting period that is
incurred on behalf of policy owners.
16.3. Total tax..................................................................................................................................................................
This item represents total tax liability arising in the reporting period, and is the sum of the reporting
items above (i.e. Items 16.1 and 16.2).
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This is item 15 profit/(loss) less item 16.3 total tax.
17. Profit/(loss) after income tax...........................................................................................................................................
18. Increase/(decrease) in unallocated benefit fund reserves..........................................................................................
This item represents the profit (or loss) result, after tax. Where there is no further data applicable to
enter on these forms (i.e. Item 18 does not apply), the result will represent the “profit (or loss) after
tax” that is attributable to shareholders.
Unallocated benefit fund reserves represent the value of benefit funds which has not been allocated
to either the benefit fund members or to the management fund. This item is only expected to be
applicable to friendly societies. This item is included in this section for the purpose of deriving the
profit that is attributable to shareholders.
For life companies other than friendly societies, enter zero under this item.
19. Profit/(loss) after income tax attributable to shareholders.........................................................................................
Annual return reconciliations
A derived item that equals profit/(loss) after income tax (item 17) less increase/(decrease) in
unallocated benefit fund reserves (item 18).
Reconciliation to operating profit/(loss) after tax at the end of the period in the general purpose
financial statements is only required to be completed as part of the annual returns.
(Only complete for annual returns)
20. Reconciliation adjustments.............................................................................................................................................
This is the adjustment necessary to reconcile the profit/(loss) after income tax attributable to
shareholders (item 19) to the operating profit/(loss) after tax, per general purpose accounts – profit &
loss account (item 21). APRA does not propose to routinely collect the components of the
reconciliation. Additional information may, however, be sought from the life companies where this
figure is significant.
21. Operating profit/(loss) after tax,
per general purpose accounts - profit & loss account.............................................................................................
This is the corresponding figure to the profit/(loss) after income tax attributable to shareholders (item
19), except that it is taken from the general purpose accounts of the entity.
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LRF_310_2 Income Statement (SF Total, GF, GF Elim, Entity)
Australian Business Number
Entity identifier, to be provided
Institution Name
Life companies including friendly societies
Reporting Period
Year to date (from last financial year end) up to
each quarter end and to financial year end
General Reporting Instructions
Scale Factor
While these instructions apply to all life companies, including friendly societies, not all
items may be applicable to both: some items may not be applicable to friendly societies
while others may not be applicable to life insurers.
Thousands of dollars, no decimal places
Specific Reporting Instructions
Life company
Reporting Consolidation
Definition and Instruction
This refers to the territory where the life insurance business is carried on, as defined
in the Life Insurance Act 1995 (the Act). All ‘Total Business’ values are derived
items.
Total statutory funds
Australian
business
Overseas
business
Total
business
General
fund
General fund
eliminations
Total
entity
Revenue
Only premiums received from life insurance policies are accounted for as insurance
policy revenue. Premiums for life investment business are recognised as deposits,
and adjusted for as changes in policy liabilities.
The revenue components of amounts contractually received or receivable for
insurance policies should be shown gross of reinsurance, with outwards reinsurance
components to be shown separately.
1. Insurance policy revenue
1.1. Life insurance direct premiums.............................................................................................
1.2. Policy conversions - inwards................................................................................................
Direct insurance premiums, policy conversions (inwards) and inwards life reinsurance
premiums should be shown separately.
Report regular and single premiums received or receivable for life insurance
business written directly. Show amounts gross of outwards reinsurance, but exclude
amounts for inwards reinsurance (see item 1.3, below).
Include only revenue components of life insurance contracts, and exclude any deposit
components. Include premiums in respect of deferred and immediate annuities that
are life insurance business.
Report the premium elements of conversions between statutory funds. The inward
(premium) side of the conversion is shown here, while the outward (claim) side is
shown at item 6.5 (policy conversions – outwards); any deposit components are to be
taken into account in items 9.2 and/or 10.5.
Premium and claim elements of policy conversions are not expected to apply for life
investment contracts, due to section 5 of AASB 1038 Life Insurance Contracts
(AASB 1038). In those cases, only deposit components are expected to apply.
Report premiums for life insurance business written as inwards reinsurance. Show
amounts gross of outwards (retrocession) reinsurance.
1.3. Inwards life reinsurance premium revenue...........................................................................
1.4. Total premiums from non-life insurance business.................................................................
Include only revenue components, and exclude any deposit components. Include
premiums in respect of deferred and immediate annuities that are life insurance
business written as inwards reinsurance.
This is generally only expected to apply, if permitted to write general insurance
business under section 234 of the Act.
93
Outwards reinsurance premiums expense is to be entered as expense amounts (i.e.
as negative amounts).
1.5. Outward reinsurance premiums expense..............................................................................
1.6. Total insurance policy revenue, net of reinsurance........................................................
Include only revenue components, and exclude any deposit components. Include
premiums in respect of deferred and immediate annuities that are life insurance
business.
This item represents total insurance premium revenue net of outwards reinsurance,
and is the sum of the reporting items 1.1 to 1.5.
Fees for management services rendered include premium related fees received for
life investment contracts, non-premium related fees (e.g. those related to funds under
management), and Net Movement in liability for deferred fee revenue.
2. Fees for management services rendered
It should be entered gross of any reinsurance.
2.1. Premium-related fees revenue.............................................................................................
Include fees received or receivable that are directly related to premiums received or
receivable.
2.2. Non-premium related fees....................................................................................................
Include fees received or receivable that are unrelated to premiums received or
receivable, such as policy fees and those related to funds under management.
2.3. Fees reported as movement in policy liability
(Net movement in liability for defd fee rev)..................................................................................
2.4. Total fees for management services rendered.................................................................
3. Investment revenue
Include amortisation of liability for deferred fee revenue in respect of life investment
contracts, less additional deferral of fees during the reporting period.
Adjustments for Items 2.2 and 2.3 are automatically made by the form when
calculating Item 11 Effective Movement in net policy liabilities.
This item represents total fee revenue for life investment contracts, and is the sum of
the reporting items above (i.e. Items 2.1 to 2.3).
Include interest, dividends, net rents, net realised gains and net unrealised gains.
Amounts should be gross of investment management expenses.
3.1. Investment income (excluding capital gains or losses) from
3.1.1. Cash holdings...........................................................................................................
3.1.2. Investment property..................................................................................................
3.1.3. Equity securities........................................................................................................
This item includes unit trust distributions.
3.1.4. Debt securities..........................................................................................................
Debt securities comprise interest bearing securities (both indexed IBS and nonindexed IBS) and loans.
3.1.5. Other investment assets...........................................................................................
All other securities that are not cash, property, equity, or debt securities as
categorised above.
3.1.6. Total investment income (excluding capital gains or losses).............................
This item is calculated automatically by the form, as sum of items 3.1.1 to 3.1.5.
3.2. Realised and unrealised capital gains (or losses) from
3.2.1. Investment property..................................................................................................
3.2.2. Equity securities........................................................................................................
3.2.3. Debt securities..........................................................................................................
See note under Item 3.1.4.
3.2.4. Other investment assets...........................................................................................
See note under Item 3.1.5.
3.2.5. Total realised and unrealised capital gains (or losses)........................................
This item is calculated automatically by the form, as sum of items 3.2.1 to 3.2.4.
3.3. Total investment revenue..................................................................................................
This item represents total investment revenue, and is the sum of the reporting items
3.1.6 and 3.2.5.
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4. Other revenue................................................................................................................................
Include all other revenue items not specifically categorised above.
5. Total revenue.................................................................................................................................
This item is the sum of reporting items 1.6, 2.4, 3.3 and 4.
Expenses
6. Insurance policy expense
6.1. Death and disability claims...................................................................................................
Report benefits paid or payable for death and/or disability claims on life insurance
business, including current period bonus and any interim or terminal bonuses
included in claims amounts.
6.2. Maturities.............................................................................................................................
6.3. Annuities..............................................................................................................................
6.4. Surrenders and terminations................................................................................................
6.5. Policy conversions - outwards..............................................................................................
Report the claim elements of conversions between statutory funds. The outward
(claim) side of the conversion is shown here, while the inward (premium) side is
shown at item 1.2 (policy Conversions – inwards); any deposit components are to be
taken into account in items 9.2 and/or 10.5.
Premium and Claim elements of policy conversions are not expected to apply for life
investment contracts, due to section 5 of AASB 1038. In those cases, only deposit
components are expected to apply.
6.6. Other claims.........................................................................................................................
Include all other claims expense items not specifically categorised above.
6.7. Inwards reinsurance claims expense (including current year bonus).....................................
Inwards reinsurance claims expense should be gross of retrocession recoveries.
Include bonuses paid as a distribution of current year profit.
6.8. Total non-life policy expense................................................................................................
Is generally only expected to apply if permitted to write general insurance business
under section 234 of the Act.
6.9. Outward reinsurance claims revenue....................................................................................
Outward reinsurance claims revenue should be entered as revenue amounts, i.e.
enter as negative amounts.
6.10. Total insurance policy expense, net of reinsurance......................................................
This item represents total insurance policy expenses net of outwards reinsurance,
and is the sum of the reporting items above (i.e. items 6.1 to 6.9).
Abnormal operating expenses are not to be excluded or shown separately, but
included in the relevant category. In total, all expenses are to be included.
7. Operating expenses
Policy acquisition items are prior to any component deferred to either policy liabilities
or a deferred acquisition cost asset.
7.1. Policy acquisition - commission and other Incremental expenses.........................................
Include variable costs of acquiring new insurance business.
7.2. Policy acquisition - other expenses.......................................................................................
Include all other fixed and variable costs incurred when acquiring new business.
7.3. Policy maintenance - commission and other incremental expenses......................................
Variable costs of:
> Administering policies subsequent to their sale; and
> Administering the general operations of the life company.
Include all normal operating costs and expenses other than acquisition and
investment management expenses.
7.4. Policy maintenance - other expenses...................................................................................
7.5. Investment management expenses......................................................................................
These are the fixed and variable costs of managing the investment portfolio.
7.6. Acquisition expenses reported as movement in policy liability
95
Include amortization and impairment of existing deferred acquisition costs (DAC) less
additional deferrals of acquisition expenses during the reporting period.
(Net movement in DAC)......................................................................................................
7.7. Other administration expenses.............................................................................................
Note that amounts are as per AASB 1038, and not offset by any initial fee revenue.
An adjustment for this amount is automatically made by the form when calculating
Item 11 effective movement in net policy liabilities.
Including all other general administration expenses not specifically categorised
above.
7.8. Interest expense on subordinated debt.................................................................................
7.9. Interest expense on other borrowings...................................................................................
7.10. Total non-life operating expenses.......................................................................................
Is generally only expected to apply if permitted to write general insurance business
under section 234 of the Act.
7.11. Total operating expenses................................................................................................
This item represents total operating expenses, and is the sum of the reporting items
above (i.e. Items 7.1 to 7.10).
8. Movement in net policy liabilities
This item is to be reported as the numerical result: net policy liabilities at end of
reporting period, less net policy liabilities at beginning of reporting period; thus if net
policy liabilities increased the result is an expense, while if they decreased the result
is a negative expense. It is to be reported inclusive of inwards reinsurance and net of
outwards reinsurance at beginning and end of reporting period. Note that for friendly
societies this item also includes movements arising from unallocated surplus
classified as liability and current year bonus declared.
8.1. Increase/(decrease) in net policy liabilities............................................................................
A number of adjustments to movement in net policy liabilities are required in order to
obtain the relevant measure of profit or loss for the reporting period. The adjustments
involve deposits/withdrawals, non-premium related fees for management services,
and movements in the liabilities for deferred fee revenue and deferred acquisition
cost. The end result of these adjustments is effective movement in net policy
liabilities (Item 11).
Items 9 and 10 are two of these adjustments and represent the deposit/withdrawal
components of both life insurance and life investment contracts (which are recorded
directly to policy liabilities).
8.1.1. Of which: Bonus declared in relation to current financial year profit (friendly
society only)
8.1.2. Of which: Increase/(decrease) in unallocated surplus classified as Liability in
relation to current financial year profit (friendly Society only)
This item is the value of the bonus declared in the current reporting period that
relates only to the current year profits.
This item is applicable for friendly societies only.
This item is the change in unallocated surplus classified as liability that relates only to
the current year profits. Unallocated surplus classified as liabilities relates to all other
unallocated surpluses that have not been included in item 25.1 of LRF 300.1.
This item is applicable for friendly societies only.
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9. Adjustment to movement in net policy liabilities - policy revenue
Policy revenue recognised as a deposit or as a change in policy liability
9.1. Contractual direct premiums.................................................................................................
9.2. Policy conversions - inwards................................................................................................
Report the deposit components of regular and single premiums received or
receivable for life investment and life insurance investment account business written
directly – i.e. exclude any revenue components. Show amounts gross of outwards
reinsurance, but exclude amounts for inwards reinsurance (see item 9.3, below).
Include the deposit component of premiums in respect of deferred or immediate
annuities that are life investment business.
Report the deposit elements of Conversions between statutory funds. The inward
side of the conversion is shown here, while the outward side is shown at item 10.5
(policy conversions – outwards); any revenue or expense components are to be
taken into account in items 1.2 and/or 6.5.
As revenue and expense elements of policy conversions are not expected to apply
for life investment contracts due to section 5 of AASB 1038, the full conversion is
expected to be treated as a deposit.
9.3. Inwards reinsurance premium revenue.................................................................................
Report deposit elements for life investment and life insurance investment account
business written as inwards reinsurance – i.e. exclude any revenue components.
Show amounts gross of outwards (retrocession) reinsurance. Include the deposit
component of premiums in respect of deferred or immediate annuities that are life
investment business written as inwards reinsurance.
9.4. Total non-life insurance premiums........................................................................................
Report any deposit elements corresponding to Item 1.4.
9.5. Outward reinsurance premiums expense..............................................................................
Report any deposit elements corresponding to Item 1.5.
9.6. Total policy revenue, net of reinsurance..........................................................................
97
10. Adjustment to movement in net policy liabilities - policy expense
Policy expense recognised as withdrawal of deposit or change in policy liability
10.1. Death and disability claims.................................................................................................
Report benefits paid or payable as withdrawal of any deposit elements for death
and/or disability claims on life investment business.
10.2. Maturities...........................................................................................................................
Report benefits paid or payable as withdrawal of any deposit elements for maturity
claims on life investment business.
10.3. Annuities............................................................................................................................
Report benefits paid or payable as withdrawal of any deposit elements for annuity
benefits on life investment business.
10.4. Surrenders and terminations..............................................................................................
Report benefits paid or payable as withdrawal of any deposit elements for surrender
and/or termination benefits on life investment business.
10.5. Policy conversions - outwards............................................................................................
Report the withdrawal of deposit elements on conversions between statutory funds.
The outward side of the conversion is shown here, while the inward side is shown at
item 9.2 (policy conversions – inwards); any revenue or expense components are to
be taken into account in items 1.2 and/or 6.5.
As revenue and expense elements of policy conversions are not expected to apply
for life investment contracts due to section 5 of AASB 1038, the full conversion is
expected to be treated as a withdrawal.
10.6. Other claims.......................................................................................................................
Report benefits paid or payable as withdrawal of any deposit elements for other
claims on life investment business.
10.7. Inwards reinsurance claims expense (including current year bonus)...................................
Report benefits paid or payable as withdrawal of any deposit elements for inwards
reinsurance claims, gross of any retrocession recoveries. (While field names for
Items 10.1 to 10.9 correspond exactly to those for Items 6.1 to 6.9, it is not expected
that reference to “current year bonus” would be applicable.)
10.8. Total non-life policy expense..............................................................................................
Report any withdrawal of deposit elements corresponding to Item 6.8.
10.9. Outward reinsurance claims revenue..................................................................................
Outward reinsurance claims revenue as withdrawal of any deposit elements should
be entered as negative amounts.
10.10. Policy acquisition - commission and other incremental expenses......................................
10.11. Policy acquisition - other expenses...................................................................................
10.12. Total policy expense, net of reinsurance......................................................................
The effective movement in net policy liabilities is calculated as:
11. Effective movement in net policy liabilities...............................................................................
> increase/(decrease) in net policy liabilities (per Item 8.1);
> less deposits received (per Item 9.6);
> plus withdrawals of deposits (per Item 10.12);
> plus non-premium related fees for management services (which would otherwise
be recognised as a reduction in policy liabilities, per Item 2.2);
> plus movements in the liability for deferred fee revenue (which are reported as part
of fees for management services rendered but would otherwise result in a change in
policy liabilities for life investment contracts, per Item 2.3);
> less movements in the liability for deferred acquisition costs (which are reported as
part of operating expenses but would otherwise result in a change in policy liabilities
for life investment contracts, per Item 7.6).
98
12. Change in policy owner retained profits
12.1. Increase/(decrease) in policy owner retained profits...........................................................
Policy owner retained profits represent the value of statutory fund profits allocated to
participating policy owners generally, but not yet vested as specific amounts to
particular policies. This item is included under expenses in these forms for the
purpose of ultimately deriving the profit that is attributable to shareholders.
13. Other expenses............................................................................................................................
Include all other expense items not specifically categorised above.
14. Total expenses.............................................................................................................................
This item is the sum of reporting items 6.10, 7.11, 11, 12.1 and 13.
15. Profit/(loss) before income tax...................................................................................................
This is item 5 total revenue less item 14 total expenses.
16. Tax
As a life insurance company is liable for tax partly on behalf of its policy owners and
partly on behalf of its shareholders, this item has two components.
16.1. Income tax attributable to profit/(loss) - shareholders.........................................................
This component relates to that part of the total tax liability arising in the reporting
period that is incurred on behalf of shareholders.
16.2. Income tax attributable to profit/(loss) - policy owners........................................................
This component relates to that part of the total tax liability arising in the reporting
period that is incurred on behalf of policy owners.
16.3. Total tax............................................................................................................................
This item represents total tax liability arising in the reporting period, and is the sum of
the reporting items above (i.e. Items 16.1 and 16.2).
This is item 15 profit/(loss) less item 16.3 total tax.
17. Profit/(loss) after income tax......................................................................................................
18. Increase/(decrease) in unallocated benefit fund reserves........................................................
This item represents the profit (or loss) result, after tax. Where there is no further
data applicable to enter on these forms (i.e. Item 18 does not apply), the result will
represent the “profit (or loss) after tax” that is attributable to shareholders.
Unallocated benefit fund reserves represent the value of benefit funds which has not
been allocated to either the benefit fund members or to the management fund. This
item is only expected to be applicable to friendly societies. This item is included in
this section for the purpose of deriving the profit that is attributable to shareholders.
For life companies other than friendly societies, enter zero under this item.
19. Profit/(loss) after income tax attributable to shareholders.......................................................
Annual return reconciliations
A derived item that equals profit/(loss) after income tax (item 17) less
increase/(decrease) in unallocated benefit fund reserves (item 18).
Reconciliation to operating profit/(loss) after tax at the end of the period in the general
purpose financial statements is only required to be completed as part of the annual
returns.
(Only complete for annual returns)
20. Reconciliation adjustments........................................................................................................
This is the adjustment necessary to reconcile the profit/(loss) after income tax
attributable to shareholders (item 19) to the operating profit/(loss) after tax, per
general purpose accounts – profit & loss account (item 21). APRA does not propose
to routinely collect the components of the reconciliation. Additional information may,
however, be sought from the life companies where this figure is significant.
21. Operating profit/(loss) after tax,
per general purpose accounts - profit & loss account...........................................................
This is the corresponding figure to the profit/(loss) after income tax attributable to
shareholders (item 19), except that it is taken from the general purpose accounts of
the entity.
99
LRF_330_0 Summary of Revenue and Expenses
Entity identifier, to be provided
Australian Business Number
Institution Name
Life companies other than friendly
societies
Reporting Period
Year to date (from last financial year
end) up to each quarter end and to
financial year end
Thousands of dollars no decimal place
Scale Factor
One form per statutory fund
Reporting Consolidation
1. All statutory fund products
Class of business
Product group
- Australia - Ordinary business
- L1. Conventional Participating
- Australia - Superannuation business
- L2. Participating Investment Account
- Overseas - All business
- L3. Annuity with Longevity Risk
Insurance
Insurance
policy revenue, policy revenue,
gross of
net of
reinsurance
reinsurance
(1)
(2)
Fees for
management
services
rendered
(3)
Investment
revenue
(4)
Other revenue
(5)
Total revenue
(6)
Insurance
Insurance
policy expense, policy expense,
gross of
net of
reinsurance
reinsurance
(7)
(8)
Operating
expenses
(9)
Movement in net
policy liabilities
(10)
Adjustment to
movement in net
policy liabilities policy revenue
(11)
- L4. Individual Lump Sum Risk
- L5. Individual Disability Income Insurance
- L6. Group Lump Sum Risk
- L7. Group Disability Income Insurance
- L8. Investment Linked
- L9. Non-par Investment Policy with Discretionary Additions
- L10. Other Non-par Investment Policy
- L11. Annuity without Longevity Risk
- L12. Other
- L13. Policy Owners’ Retained Profits
- L14. Shareholders’ Capital & Retained Profits
100
Class of business
Product group
- Australia - Ordinary business
- L1. Conventional Participating
- Australia - Superannuation business
- L2. Participating Investment Account
- Overseas - All business
- L3. Annuity with Longevity Risk
Adjustment to
movement in
net policy
liabilities policy expense
(12)
Effective
movement In
net policy
liabilities
(13)
Change in
policy owner
retained profits Other expenses Total expenses
(14)
(15)
(16)
Profit/(loss)
before income
tax
(17)
Income tax
attributable to
profit/(loss) of
policy owners
(18)
Income tax
attributable to
profit/(loss) of
shareholders
(19)
Total income
tax
(20)
Profit/(loss) after
income tax
(21)
Profit/(loss) after
income tax
attributable to
shareholders
(22)
Movement in net
policy liabilities
(10)
Adjustment to
movement in net
policy liabilities policy revenue
(11)
Profit/(loss) after
income tax
(21)
Profit/(loss) after
income tax
attributable to
shareholders
(22)
- L4. Individual Lump Sum Risk
- L5. Individual Disability Income Insurance
- L6. Group Lump Sum Risk
- L7. Group Disability Income Insurance
- L8. Investment Linked
- L9. Non-par Investment Policy with Discretionary Additions
- L10. Other Non-par Investment Policy
- L11. Annuity without Longevity Risk
- L12. Other
- L13. Policy Owners’ Retained Profits
- L14. Shareholders’ Capital & Retained Profits
2. Totals by class of business
Insurance
Insurance
policy revenue, policy revenue,
gross of
net of
reinsurance
reinsurance
(1)
(2)
Fees for
management
services
rendered
(3)
Investment
revenue
(4)
Other revenue
(5)
Total revenue
(6)
Change in
policy owner
retained profits Other expenses Total expenses
(15)
(16)
(14)
Profit/(loss)
before income
tax
(17)
Insurance
Insurance
policy expense, policy expense,
gross of
net of
reinsurance
reinsurance
(7)
(8)
Operating
expenses
(9)
2.1. Australian business
2.1.1. Ordinary business............................................................................................
2.1.2. Superannuation business................................................................................
2.1.3. Total Australian business.............................................................................
2.2. Overseas - All business.............................................................................................
2.3. Total statutory fund business...................................................................................
Adjustment to
movement in
net policy
liabilities policy expense
(12)
Effective
movement In
net policy
liabilities
(13)
Income tax
attributable to
profit/(loss) of
policy owners
(18)
Income tax
attributable to
profit/(loss) of
shareholders
(19)
Total income
tax
(20)
2.1. Australian business
2.1.1. Ordinary business............................................................................................
2.1.2. Superannuation business................................................................................
2.1.3. Total Australian business.............................................................................
2.2. Overseas - All business.............................................................................................
2.3. Total statutory fund business...................................................................................
101
General Reporting Instructions
APRA product group
Refer to General Instruction Guide for details on the list of APRA product groups.
This section is to be completed for each class of business, as specified in the drop-down box list:
> Australia – Superannuation business
> Australia – Ordinary business
> Overseas – All business
Class of business
The expressions ‘ordinary business’ and ‘superannuation business’ are defined in the Life Insurance Act 1995.
Specific Reporting Instructions
Column
Definition and Instructions
This column is as per Item 1 in Instructions to LRF 310.1 and LRF 310.2.
Column 1 Insurance policy revenue, gross of reinsurance
Column 2 Insurance policy revenue, net of reinsurance
Column 3 Fees for management services rendered
Column 4 Investment revenue
Column 5 Other revenue
Column 6 Total revenue
Column 7 Insurance policy expense, gross of reinsurance
Column 8 Insurance policy expense, net of reinsurance
This reporting item is therefore expected to apply in full to life insurance contracts (i.e. APRA Product Groups L1 to L7), apart from Par Invest Account (L2). Par Invest Account (L2) has been deemed life insurance
contracts under Prudential Standard LPS 340 Valuation of Policy Liabilities . Under AASB 1038 Life Insurance Contracts the contracts must be split into life insurance and life investment components in accordance with
Section 5 (premiums and claims splitting). Only premium-related fees for such contracts should be included in insurance policy receipts.
This column is as per item 1 in Instructions to LRF 310.1 and LRF 310.2, except that it is net of all outwards reinsurance expenses.
This reporting item is expected to apply only to life insurance contracts.
This column is as per Item 2 in Instructions to LRF 310.1 and LRF 310.2.
This reporting item is expected to apply only to life investment contracts (i.e. APRA Product Groups L8, L9 and L10).
This column is as per Item 3 in Instructions to LRF 310.1 and LRF 310.2.
Change in fair value should be included here; likewise the imputed (self-paid) rent for owner-occupied property should be included as investment revenue.
This column is as per Item 4 in Instructions to LRF 310.1 and LRF 310.2.
This column is as per Item 5 in Instructions to LRF 310.1 and LRF 310.2.
It is calculated by the form automatically, as the sum of columns 2 to 5.
This column is as per Item 6 in Instructions to LRF 310.1 and LRF 310.2.
This column should exclude (from claims) the withdrawals of deposit components that are included in participating investment account (L2) contracts.
This column is as per item 6 in Instructions to LRF 310.1 and LRF 310.2, except that it is net of all expected reinsurance recoveries.
This reporting item is expected to apply only to life insurance contracts.
Column 9 Operating expenses
This column is as per Item 7 in Instructions to LRF 310.1 and LRF 310.2.
Column 10 Movement in net policy liabilities
This column is as per Item 8 in Instructions to LRF 310.1 and LRF 310.2.
Column 11 Adjustment to movement in net policy liabilities – policy revenue
This column is as per Item 9 in Instructions to LRF 310.1 and LRF 310.2.
Column 12 Adjustment to movement in net policy liabilities – policy expense
This column is as per Item 10 in Instructions to LRF 310.1 and LRF 310.2.
Column 13 Effective movement in net policy liabilities
This column corresponds to Item 11 on the form LRF 310.1, however in this form the figures need to be input (in LRF 310.1 the item is derived). The reason for the difference is that LRF 330.0 does not specifically
identify all the components of ‘effective movement in net policy liabilities’ at the APRA product group level.
Column 14 Change in policy owner retained profits
Column 15 Other expenses
Column 16 Total expenses
This column is as per Item 12 in Instructions to LRF 310.1 and LRF 310.2.
Change in policy owner retained profits applies only to participating business (APRA product groups L1 and L2, and any participating business reported under group L10).
This column is as per Item 13 in Instructions to LRF 310.1 and LRF 310.2.
This column is as per Item 14 in Instructions to LRF 310.1 and LRF 310.2.
The number entered should equal the sum of columns 6, 7, 11, 12 and 13.
102
Column 17 Profit/(loss) before income tax
This column is as per Item 15 in Instructions to LRF 310.1 and LRF 310.2.
The number entered should equal column 6 ‘total revenue’ less column 16 ‘total expenses’.
Column 18 Income tax attributable to profit/(loss) of policy owners
This column is as per Item 16.2 in Instructions to LRF 310.1 and LRF 310.2.
Column 19 Income tax attributable to profit/(loss) of shareholders
This column is as per Item 16.1 in Instructions to LRF 310.1 and LRF 310.2.
Column 20 Total income tax
This column is as per Item 16.3 in Instructions to LRF 310.1 and LRF 310.2.
This column is calculated automatically as the sum of column 18 and column 19.
This column is as per Item 17 in Instructions to LRF 310.1 and LRF 310.2.
Column 21 Profit/(loss) after income tax
Column 22 Profit/(loss) after income tax attributable to shareholders
This column represents the profit (or loss) result after tax, for each APRA product group. As Item 18 on LRF 310.1 (increase/decrease in unallocated benefit fund reserve) is only expected to be applicable for friendly
societies (who are not required to complete this form), the result at Item 17 therefore represents ‘profit (or loss) after tax’ attributable to shareholders, for each APRA product group.
This column is as per Item 19 in Instructions to LRF 310.1 and LRF 310.2.
103
LRF_340_1 Retained Profits (SF and SF Eliminations)
Australian Business Number
Entity identifier, to be provided
Institution Name
Life company including friendly societies
Reporting Period
Year to date (from last financial year end) up to
each quarter end and to financial year end
Scale Factor
Reporting Consolidation
General Reporting Instructions
While these instructions apply to all life companies, including friendly societies, not all items may
be applicable to both: some items may not be applicable to friendly societies while others may not
be applicable to life insurers.
Thousands of dollars, no decimal places
One form per statutory fund
Specific Reporting Instructions
Definition and Instruction
Column headings – Australian/Overseas business:
Australian business
Overseas business
This refers to the territory where the life insurance business is carried on, as defined in the Life
Insurance Act 1995 (the Act). In most cases ‘Total business’ values are derived items, the
exception being Total shareholder retained profits at beginning of year.
Total business
Column headings – Policy owner interests/Shareholder interests:
Policy owner
interests
1. Life Insurance Act retained profits at end of prior financial year...................................
Shareholder
interests
Policy owner
interests
Shareholder
interests
Policy owner
interests
Shareholder
interests
Total
This refers to the components of each item being reported as an item of profit that is attributable to
the interests of policy owners vs. shareholders respectively. All ‘total amounts’ results are derived
items.
NOTE: Without prejudice, unallocated benefit fund reserves are to be treated as attributable to the
interests of policy owners for the purposes of this form.
This is the ‘brought forward’ result. i.e. this amount should equal retained profits at the end of the
prior financial year.
This section provides a derivation of operating profit which is specifically defined in the Act – refer
Division 5 of Part 4 (Sections 56-60) for life insurers other than friendly societies. A simpler regime,
which is still catered for in this return, applies to a friendly society.
2. Profit/(loss) after tax for period
2.1. Profit/(loss) after income tax attributable to shareholders.......................................
This item for LRF 340.1 and LRF 340.2 comes directly from Item 19 on LRF 310.1 Income
Statement (SF and SF Eliminations) and LRF 310.2 Income Statement (SF Total, GF, GF Elim,
Entity) respectively.
2.2. Interim & terminal bonuses on claims paid.............................................................
This item is only attributable to the interests of policy owners. Therefore, only enter values under
‘policy owner interests’ columns.
2.3. Declared bonuses on in force policies....................................................................
Declared bonuses valued in accordance with Prudential Standard LPS 340 Valuation of Policy
Liabilities (LPS 340).
Only report under ‘policy owner interests’ columns.
2.4. Increase/(decrease) in policy owner retained profits..............................................
Only report under ‘policy owner interests’ columns.
2.5. Increase/(decrease) in unallocated benefit fund reserves......................................
As noted above, unallocated benefit fund reserves are to be treated as attributable to the interests
of policy owners for the purposes of this form. This item only applies to friendly societies.
2.6. Life Insurance Act operating profit after tax for period......................................
This is the sum of the items above (items 2.1 to 2.5) and is automatically calculated by derivations
contained within the forms.
3. Transfers in period
These items affect the development and/or disposition of retained profits, and are to be reported in
the following separate components.
3.1. From other statutory funds.....................................................................................
Transfers from other statutory funds should be shown as a positive number.
3.2. To other statutory funds.........................................................................................
Transfers to other statutory funds should be shown as a negative number.
For each statutory fund, this amount should be shown as a positive number.
3.3. From general funds................................................................................................
For general fund (under LRF 340.2), this is an outward transfer and therefore should be shown as
a negative number.
104
Only expected to be applicable to life companies other than friendly societies.
3.4. To general funds - from participating business.......................................................
Similar to item 3.3, as this is an outward transfer from statutory fund to general fund, a negative
amount should be reported under LRF 340.1 for each statutory fund.
Given that it is an inward transfer for general fund, this should be shown as a positive number
under LRF 340.2.
3.5. To general funds - from non-participating business................................................
See item 3.4.
3.6. To/from foreign currency translations.....................................................................
This item should be shown as a positive/negative number if it is an inward/outward transfer.
3.7. To/from reserves....................................................................................................
See item 3.6.
3.8. Total transfers in period.......................................................................................
This is the sum of items 3.1 to 3.7, and is automatically calculated by derivations contained within
the form.
4. Provisions for bonuses to participating policy owners..................................................
5. Life Insurance Act retained profits at end of period.......................................................
This is calculated automatically by derivations contained within the forms.
Annual return reconciliations
Reconciliation to retained profit at the end of the period in the general purpose financial statements
is only required to be completed as part of the annual returns.
(Only complete for annual returns)
6. Reconciliation adjustments..............................................................................................
This is the adjustment necessary to reconcile Life Insurance Act retained profits at end of period
(item 5) to the retained profits, per general purpose accounts – balance sheet (item 7). APRA does
not propose to routinely collect the components of the reconciliation. Additional information may,
however, be sought from the life companies where this figure is significant.
7. Retained profits, per general purpose accounts - balance Sheet..................................
This is the corresponding figure to the Life Insurance Act retained profits at end of period (item 5),
except that it is taken from the general purpose accounts of the entity.
105
LRF_340_2 Retained Profits (SF Total, GF, GF Elim, Entity)
Australian Business Number
Entity identifier, to be provided
Institution Name
Life company including friendly societies
Reporting Period
Year to date (from last financial year end) up to each
quarter end and to financial year end
Scale Factor
General Reporting Instructions
While these instructions apply to all life companies, including friendly societies, not all items may be
applicable to both: some items may not be applicable to friendly societies while others may not be
applicable to life insurers.
Thousands of dollars, no decimal places
Life company
Reporting Consolidation
Specific Reporting Instructions
Definition and Instruction
Column headings – Policy owner interests/Shareholder interests:
Total statutory funds
Policy owner
interests
1. Life Insurance Act retained profits at end of prior financial year...............
2. Profit/(loss) after tax for period
Shareholder
interests
Total
General
General fund
Total
fund
eliminations
entity
This refers to the components of each item being reported as an item of profit that is attributable to
the interests of policy owners vs. shareholders respectively. All ‘total amounts’ results are derived
items.
NOTE: Without prejudice, unallocated benefit fund reserves are to be treated as attributable to the
interests of policy owners for the purposes of this form.
This is the ‘brought forward’ result. i.e. this amount should equal retained profits at the end of the
previous reporting period.
This section provides a derivation of operating profit which is specifically defined in the Life
Insurance Act 1995 (the Act) – refer Division 5 of Part 4 (Sections 56-60) for life insurers other than
friendly societies. A simpler regime, which is still catered for in this return, applies to a friendly
society.
2.1. Profit/(loss) after income tax attributable to shareholders.....................
This item for LRF 340.1 and LRF 340.2 comes directly from Item 19 on LRF 310.1 Income Statement
(SF and SF Eliminations) and LRF 310.2 Income Statement (SF Total, GF, GF Elim, Entity)
respectively.
2.2. Interim & terminal bonuses on claims paid...........................................
This item is only attributable to the interests of policy owners. Therefore, only enter values under
‘policy owner interests’ columns.
2.3. Declared bonuses on in force policies..................................................
Declared bonuses valued in accordance with Prudential Standard LPS 340 Valuation of Policy
Liabilities (LPS 340) .
Only report under ‘policy owner interests’ columns.
2.4. Increase/(decrease) in policy owner retained profits............................
Only report under ‘policy owner interests’ columns.
2.5. Increase/(decrease) in unallocated benefit fund reserves....................
As noted above, unallocated benefit fund reserves are to be treated as attributable to the interests of
policy owners for the purposes of this form. This item only applies to friendly societies.
2.6. Life Insurance Act operating profit after tax for period...................
This is the sum of the items above (items 2.1 to 2.5) and is automatically calculated by derivations
contained within the forms.
106
3. Transfers in period
These items affect the development and/or disposition of retained profits, and are to be reported in
the following separate components.
3.1. From other statutory funds....................................................................
Transfers from other statutory funds should be shown as a positive number.
3.2. To other statutory funds........................................................................
Transfers to other statutory funds should be shown as a negative number.
For each statutory fund, this amount should be shown as a positive number.
3.3. From general funds...............................................................................
For shareholders’ fund (under LRF 340.2), this is an outward transfer and therefore should be shown
as a negative number.
Only expected to be applicable to life companies other than friendly societies.
3.4. To general funds - from participating business.....................................
Similar to item 3.3, as this is an outward transfer from statutory fund to the general fund, a negative
amount should be reported under LRF 340.1 for each statutory fund.
Given that it is an inward transfer for general fund, this should be shown as a positive number under
LRF 340.2.
3.5. To general funds - from non-participating business..............................
See item 3.4.
3.6. To/from foreign currency translations...................................................
This item should be shown as a positive/negative number if it is an inward/outward transfer.
3.7. To/from reserves...................................................................................
See item 3.6.
3.8. Dividends..............................................................................................
Report the amount of dividend that was paid from the general' fund to the parent company (if
applicable).
3.9. Other transfers......................................................................................
Enter the net amount, include all other inward and outward transfers not specifically categorised
above.
3.10. Total transfers in period...................................................................
This is the sum of items 3.1 to 3.9, and is automatically calculated by derivations contained within the
form.
4. Provisions for bonuses to participating policy owners..............................
5. Life Insurance Act retained profits at end of period....................................
This is calculated automatically by derivations contained within the forms.
Annual return reconciliations
Reconciliation to retained profit at the end of the period in the general purpose financial statements is
only required to be completed as part of the annual returns.
(Only complete for annual returns)
6. Reconciliation adjustments............................................................................
This is the adjustment necessary to reconcile Life Insurance Act retained profits at end of period
(item 5) to the retained profits, per general purpose accounts – balance sheet (item 7). APRA does
not propose to routinely collect the components of the reconciliation. Additional information may,
however, be sought from the life companies where this figure is significant.
7. Retained profits, per general purpose accounts - balance sheet...............
This is the corresponding figure to the Life Insurance Act retained profits at end of period (item 5),
except that it is taken from the general purpose accounts of the entity.
107
Section 3: Draft annual forms
108
LRF_400_0 Statement of Policy Liabilities
Entity identifier, to be provided
Australian Business Number
Institution Name
Life company including friendly societies
Reporting Period
As at end of financial year only
Thousands of dollars, no decimal places
Scale Factor
One form per statutory fund
Reporting Consolidation
1. Policy liabilities - All statutory fund products
1.1. In force business and movements in gross contractual regular contributions over the year
Class of business
Product group
Policy count
(actual number,
not scaled)
(1)
Member count
(actual number,
not scaled)
(2)
Reinsured
insurance
Gross insurance
amount, account amount, account
balance or
balance or
equivalent
equivalent
(4)
(3)
Gross
contractual
regular
contributions
(5)
Reinsured
contractual
regular
contributions
(6)
Gross
contractual
regular
contribution
increases over
the year
(7)
Gross
Gross
Other
contractual
contractual
movements in
regular
regular
Gross
contribution
contribution
contractual
decreases due to decreases due to
regular
claims and/or
voluntary
contributions
maturities
discontinuance
over the year
(8)
(9)
(10)
- Australia - Ordinary business - F1. Education
- Australia - Superannuation business
- F2. Investment Account
- Overseas - All business
- F3. Annuity & Superannuation
- F4. Defined Benefit Risk
- F5. Capital Guaranteed Defined Contribution Funeral
- F6. Investment Linked
- L1. Conventional Participating
- L2. Participating Investment Account
- L3. Annuity with Longevity Risk
- L4. Individual Lump Sum Risk
- L5. Individual Disability Income Insurance
- L6. Group Lump Sum Risk
- L7. Group Disability Income Insurance
- L8. Investment Linked
- L9. Non-par Investment Policy with Discretionary Additions
- L10. Other Non-par Investment Policy
- L11. Annuity without Longevity Risk
- L12. Other
109
1.2. Components of gross policy liability
Gross best estimate liability
Class of business
Product group
Basis
Gross value of
future policy
benefits
(1)
Gross value of
future expenses
(2)
Gross reduction
in respect of
Gross value of
unrecouped
(balance of)
acquisition
future premiums
expenses
(3)
(4)
Total gross best
estimate liability
(5)
Gross value of
future profits:
policy owner
bonuses
(6)
Gross value of
future profits:
shareholder
profit margins
(7)
Gross
investment
contract liability
(8)
Gross
management
services asset
or liability
(9)
Gross policy
liability
(10)
Total reinsured
best estimate
liability
(5)
Reinsured value
of future profits:
policy owner
bonuses
(6)
Reinsured value
of future profits:
s/h profit
margins
(7)
Reinsured
investment
contract liability
(8)
Reinsured
management
services asset
or liability
(9)
Reinsured
policy liability
(10)
- Australia - Ordinary business - F1. Education
- Last year
- Australia - Superannuation Business
- F2. Investment Account
- LY / TY
- Overseas - All business
- F3. Annuity & Superannuation
- This year
- F4. Defined Benefit Risk
- F5. Capital Guaranteed Defined Contribution Funeral
- F6. Investment Linked
- L1. Conventional Participating
- L2. Participating Investment Account
- L3. Annuity with Longevity Risk
- L4. Individual Lump Sum Risk
- L5. Individual Disability Income Insurance
- L6. Group Lump Sum Risk
- L7. Group Disability Income Insurance
- L8. Investment Linked
- L9. Non-par Investment Policy with Discretionary Additions
- L10. Other Non-par Investment Policy
- L11. Annuity without Longevity Risk
- L12. Other
1.3. Components of reinsured policy liability and net policy liability
Reinsured best estimate liability
Class of business
Product group
Basis
Reinsured value
of future policy
benefits
(1)
Reinsured value
of future
expenses
(2)
Reinsured value
of (balance of)
future premiums
(3)
Reinsured
reduction in
respect of
unrecouped
acquisition
expenses
(4)
Net policy
liability
(11)
- Australia - Ordinary business - F1. Education
- Last year
- Australia - Superannuation Business
- F2. Investment Account
- LY / TY
- Overseas - All business
- F3. Annuity & Superannuation
- This year
- F4. Defined Benefit Risk
- F5. Capital Guaranteed Defined Contribution Funeral
- F6. Investment Linked
- L1. Conventional Participating
- L2. Participating Investment Account
- L3. Annuity with Longevity Risk
- L4. Individual Lump Sum Risk
- L5. Individual Disability Income Insurance
- L6. Group Lump Sum Risk
- L7. Group Disability Income Insurance
- L8. Investment Linked
- L9. Non-par Investment Policy with Discretionary Additions
- L10. Other Non-par Investment Policy
- L11. Annuity without Longevity Risk
- L12. Other
110
1.4. Sundry items
Class of business
Product group
Cost of previous
year best
estimate bonus
(1)
Cost of current
period best
estimate bonus
(2)
S/h profit
margins on cost
of current period
best estimate
bonus
(3)
Gross policy
liability in
respect of
inwards
reinsurance
(4)
Cost of declared
bonus excl
terminal, interim
(5)
Percentage of
Profit carrier or profit carrier or
acquisition
acquisition
Accumulated
expense
expense
loss recognition
recovery
recovery
at end of period
carrier
carrier
(9)
(10)
(11)
Amount of
terminal bonus
paid
(6)
Amount of
interim bonus
paid
(7)
Accumulated
loss recognition
at beginning of
period
(8)
Reinsured
contractual
regular
contributions
(6)
Gross
contractual
regular
contribution
increases over
the year
(7)
Gross
Gross
Other
contractual
contractual
movements in
regular
regular
Gross
contribution
contribution
contractual
decreases due to decreases due to
regular
claims and/or
voluntary
contributions
maturities
discontinuance
over the year
(8)
(9)
(10)
- Australia - Ordinary business - F1. Education
- Australia - Superannuation Business
- F2. Investment Account
- Overseas - All business
- F3. Annuity & Superannuation
- F4. Defined Benefit Risk
- F5. Capital Guaranteed Defined Contribution Funeral
- F6. Investment Linked
- L1. Conventional Participating
- L2. Participating Investment Account
- L3. Annuity with Longevity Risk
- L4. Individual Lump Sum Risk
- L5. Individual Disability Income Insurance
- L6. Group Lump Sum Risk
- L7. Group Disability Income Insurance
- L8. Investment Linked
- L9. Non-par Investment Policy with Discretionary Additions
- L10. Other Non-par Investment Policy
- L11. Annuity without Longevity Risk
- L12. Other
2. Totals by class of business and basis
2.1. In force business and movements in gross contractual regular contributions over the year
Policy count
(actual number,
not scaled)
(1)
Member count
(actual number,
not scaled)
(2)
Reinsured
Gross insurance
insurance
amount, account amount, account
balance or
balance or
equivalent
equivalent
(3)
(4)
Gross
contractual
regular
contributions
(5)
2.1.1. Australian business
2.1.1.1. Ordinary business..........................................
2.1.1.2. Superannuation business...............................
2.1.1.3. Total Australian business...........................
2.2.2. Overseas - All business..........................................
2.2.3. Total statutory fund business................................
111
2.2. Components of gross policy liability
Gross best estimate liability
Gross value of
future policy
benefits
(1)
Gross value of
future expenses
(2)
Gross reduction
in respect of
Gross value of
unrecouped
(balance of)
acquisition
future premiums
expenses
(3)
(4)
Total gross best
estimate liability
(5)
Gross value of
future profits:
policy owner
bonuses
(6)
Gross value of
future profits:
shareholder
profit margins
(7)
Gross
Gross
management
investment
services asset or
contract liability
liability
(8)
(9)
Gross policy
liability
(10)
2.2.1. Australian business
2.2.1.1. Ordinary business
2.2.1.1.1. This year............................................
2.2.1.1.2. LY / TY...............................................
2.2.1.1.3. Last year............................................
2.2.1.2. Superannuation business
2.2.1.2.1. This year............................................
2.2.1.2.2. LY / TY...............................................
2.2.1.2.3. Last year............................................
2.2.1.3. Total Australian business
2.2.1.3.1. This year...........................................
2.2.1.3.2. LY / TY...............................................
2.2.1.3.3. Last year...........................................
2.2.2. Overseas - All business
2.2.2.1. This year.......................................................
2.2.2.2. LY / TY..........................................................
2.2.2.3. Last year.......................................................
2.2.3. Total statutory fund business
2.2.3.1. This year......................................................
2.2.3.2. LY / TY..........................................................
2.2.3.3. Last year......................................................
112
2.3. Components of reinsured policy liability and net policy liability
Reinsured best estimate liability
Reinsured value
of future policy
benefits
(1)
Reinsured value
of future
expenses
(2)
Reinsured value
of (balance of)
future premiums
(3)
Reinsured
reduction in
respect of
unrecouped
acquisition
expenses
(4)
Cost of current
period best
estimate bonus
(2)
S/h profit
margins on cost
of current period
best estimate
bonus
(3)
Gross policy
liability in
respect of
inwards
reinsurance
(4)
Total reinsured
best estimate
liability
(5)
Reinsured value
of future profits:
policy owner
bonuses
(6)
Reinsured value
of future profits:
s/h profit
margins
(7)
Reinsured
Reinsured
management
investment
services asset or
Reinsured
contract liability
liability
policy liability
(8)
(9)
(10)
Net policy
liability
(11)
2.3.1. Australian business
2.3.1.1. Ordinary business
2.3.1.1.1. This year............................................
2.3.1.1.2. LY / TY...............................................
2.3.1.1.3. Last year............................................
2.3.1.2. Superannuation business
2.3.1.2.1. This year............................................
2.3.1.2.2. LY / TY...............................................
2.3.1.2.3. Last year............................................
2.3.1.3. Total Australian business
2.3.1.3.1. This year...........................................
2.3.1.3.2. LY / TY...............................................
2.3.1.3.3. Last year...........................................
2.3.2. Overseas - All business
2.3.2.1. This year.......................................................
2.3.2.2. LY / TY..........................................................
2.3.2.3. Last year.......................................................
2.3.3. Total statutory fund business
2.3.3.1. This year......................................................
2.3.3.2. LY / TY..........................................................
2.3.3.3. Last year......................................................
2.4. Sundry items
Cost of previous
year best
estimate bonus
(1)
Cost of declared
bonus excl
terminal, interim
(5)
Amount of
terminal bonus
paid
(6)
Amount of
interim bonus
paid
(7)
Accumulated
loss recognition
at beginning of
period
(8)
Percentage of
Profit carrier or profit carrier or
acquisition
acquisition
Accumulated
expense
expense
recovery
loss recognition
recovery
at end of period
carrier
carrier
(11)
(9)
(10)
2.4.1. Australian business
2.4.1.1. Ordinary business..........................................
2.4.1.2. Superannuation business...............................
2.4.1.3. Total Australian business...........................
2.4.2. Overseas - All business..........................................
2.4.3. Total statutory fund business................................
113
General Reporting Instructions
APRA product group
Refer to General Instruction Guide for details on the list of APRA product groups.
Within each APRA product group, some data will be collected on up to three bases, indicated as follows:
Valuation basis
> ‘This year’ – current position, based on current year’s valuation basis;
> ‘Last year’ – current position, based on previous year’s valuation basis; and
> ‘LY/TY’ – current position, based on previous year’s valuation basis, except substituting current year’s investment and economic assumptions.
This section is to be completed for each class of business, as specified in the drop-down box list:
> Australia – Superannuation business
> Australia – Ordinary business
> Overseas – All business
Class of business
The expressions ‘ordinary business’ and ‘superannuation business’ are defined in the dictionary of the Life Insurance Act 1995 .
Specific Reporting Instructions
Column
1.1. In force business and movements in gross contractual regular
contributions over the year
Column 1 Policy count (actual number, not scaled)
Definition and Instruction
This is the number of policies in the statutory fund at the end of the period.
This column is required to report on ‘This year’ basis only.
1.1. In force business and movements in gross contractual regular
contributions over the year
This is the number of members in the statutory fund at the end of the period. A member with more than one policy is considered as one member. This would be based on the number of lives insured for group
policies, joint-life individual policies, or policies that allow the insurance of auxiliary lives.
Column 2 member count (actual number, not scaled)
This column is required to report on ‘This year’ basis only.
1.1. In force business and movements in gross contractual regular
contributions over the year
Include any business that is accepted through direct debit, has a specific contractual requirement for future on-going premiums, has an expectation of renewal each year (e.g. Yearly renewable term products)
or generally causes a policy to discontinue on cessation of future payment. It should be gross of all reinsurance.
Column 5 Gross contractual regular contributions
This column is required to report on ‘This year’ basis only.
1.1. In force business and movements in gross contractual regular
contributions over the year
Refer to all increases to contractual regular premiums due to new policies sold during the period, including CPI increases.
Column 7 Gross contractual regular contribution increases over the
year
1.1. In force business and movements in gross contractual regular
contributions over the year
Column 8 Gross contractual regular contribution decreases due to
claims and/or maturities
1.1. In force business and movements in gross contractual regular
contributions over the year
Column 9 Gross contractual regular contribution decreases due to
voluntary discontinuance
1.1. In force business and movements in gross contractual regular
contributions over the year
Column 10 Other movements in gross contractual regular
contributions over the year
This column is required to report on ‘This year’ basis only.
Decreases due to claims refer to the reduction in contractual regular contributions following a claim arising from the occurrence of an insured event. Note that it is only included when an insurance claim causes
alteration or cessation of the premium, e.g. premiums paid on disability income policies will sometimes remain unaffected following a claim, depending on the policy terms and conditions.
Decreases due to maturities refer to the cessation of contractual regular contributions due to the maturity of a policy, i.e. following the completion of a policy’s term. This would occur when a member retires and
is paid his/her superannuation benefit, a policy owner reaches a defined age on an Endowment policy or the termination of a savings plan on or after the contractual period.
This column is required to report on ‘This year’ basis only.
Include any decrease in contractual regular contributions due to lapses or surrenders of policies, i.e. the cessation of regular premiums prior to the completion of the policy’s term.
This column is required to report on ‘This year’ basis only.
Include the increase/decrease in contractual contributions following transfers of business from one statutory fund to another or any other movements not recorded in previous columns.
This column is required to report on ‘This year’ basis only.
Where business is valued using techniques other than projection techniques, gross value of future policy benefits includes the total liability, before deducting the value of unrecouped acquisition expenses.
1.2. Components of gross policy liability
Column 1 Gross value of future policy benefits
For participating benefits, the best estimate liability includes past declared bonuses only. Current year bonuses are excluded (see LPS 340 Valuation of Policy Liabilities ). For non-participating benefits with an
entitlement to Discretionary additions, the cost of the current year discretionary additions should be included as part of the best estimate liability.
This column is required to be reported separately on the three bases defined above (‘This year’, ‘Last year’ & ‘LY / TY’).
1.2. Components of gross policy liability
Column 4 Gross reduction in respect of unrecouped acquisition
expenses
Only for business valued using techniques other than a projection technique.
This column is required to be reported separately on the three bases defined above (‘This year’, ‘Last year’ & ‘LY / TY’).
114
1.2. Components of gross policy liability
This column will be calculated automatically by derivations contained within the form and represents the sum of columns 1 to 4.
Column 5 Total gross best estimate liability
This column is required to be reported separately on the three bases defined above (‘This year’, ‘Last year’ & ‘LY / TY’).
1.2. Components of gross policy liability
For participating benefits, the value of future profits includes future bonuses only. Current year bonuses are excluded.
Column 6 Gross value of future profits: policy owner bonuses
This column is required to be reported separately on the three bases defined above (‘This year’, ‘Last year’ & ‘LY / TY’).
1.2. Components of gross policy liability
Refer to LPS 340 for definition and calculation of profit margins
Column 7 Gross value of future profits: shareholder profit margins
This column is required to be reported separately on the three bases defined above (‘This year’, ‘Last year’ & ‘LY / TY’).
1.2. Components of gross policy liability
Column 8 Gross investment contract liability
The net contractual obligation under a life investment contract which arises under the financial instrument element is referred to as the life investment contract liability, this is consistent with the terminology
adopted under AASB 1038 Life Insurance Contracts .
The investment contract liability is a component of the policy liability under the financial instrument element. It is to be determined according to the fair value through profit and loss provisions of the relevant
accounting standards. (Refer to LPS 340).
This column is required to be reported separately on the three bases defined above (‘This year’, ‘Last year’ & ‘LY / TY’).
1.2. Components of gross policy liability
This is the liability in respect of the management services element, determined as the difference between the policy liability and the life investment contract liability (Column 8). Include liabilities for deferred
acquisition cost and deferred fee revenues.
Column 9 Gross management services asset or liability
This column is required to be reported separately on the three bases defined above (‘This year’, ‘Last year’ & ‘LY / TY’).
1.2. Components of gross policy liability
This column will be calculated automatically by derivations contained within the form and represents the total amount of gross policy liability.
Column 10 Gross policy liability
This column is required to be reported separately on the three bases defined above (‘This year’, ‘Last year’ & ‘LY / TY’).
1.3. Components of reinsured policy liability and net policy liability
LPS 340 paragraph 122 requires that the reinsured policy liability consists of a reinsured best estimate liability and the value of the reinsured profit margins. Reinsurance must meet the definition of an
insurance contract and involve the transfer of insurance risk.
Columns 1 to 11 are required to report on the three bases defined above. Columns 1 to 7 are for life insurance contracts. Columns 8 and 9 are for life investment contracts.
1.3. Components of reinsured policy liability and net policy liability
For participating benefits, the best estimate liability includes past declared bonuses only. Current year bonuses are excluded.
Columns 1 to 5 Reinsured best estimate liability
For non-participating benefits with an entitlement to Discretionary additions, the cost of the current year Discretionary Additions should be included as part of the best estimate liability.
1.3. Components of reinsured policy liability and net policy liability
Column 10 Reinsured policy liability
1.3. Components of reinsured policy liability and net policy liability
Column 11 Net policy liability
This column is derived by the form as the sum of columns 5 to 9, and represents total amount of reinsurance policy liability.
This column represents the net amount of policy liability and the number entered should equal gross policy liability minus reinsured policy liability.
This section is to be completed for all products, i.e. including non-participating products.
1.4. Sundry items
All figures in this section are to be reported on the ‘This year’ basis.
Where applicable, figures in this section are to be reported on a net of reinsurance basis.
1.4. Sundry items
Columns 1 and 2
1.4. Sundry items
Column 10 Profit carrier or acquisition expense recovery carrier
1.4. Sundry items
Column 11 Percentage of profit carrier or acquisition expense
recovery carrier
These columns capture the cost of previous year and current period best estimate bonus. Refer to LPS 001 Definitions for definition of best estimate bonus.
As defined in LPS 340.
This column will be calculated automatically by the form and equals ‘shareholder profit margins on cost of current period best estimate bonus’ (Column 3) divided by ‘profit carrier or acquisition expense
recovery carrier’ (Column 10).
115
LRF_420_0 Assets Backing Policy Liabilities
Entity identifier, to be provided
Australian Business Number
Institution Name
Life company other than friendly societies
Reporting Period
As at end of financial year only
Thousands of dollars, no decimal places
Scale Factor
One form per statutory fund
Reporting Consolidation
1. All statutory fund products
Class of business
Product group
- Australia - Ordinary business
- L1. Conventional Participating
- Australia - Superannuation business
- L2. Participating Investment Account
- Overseas - All business
- L3. Annuity with Longevity Risk
Cash
(1)
Investment
property
(2)
Equities
(3)
Non-indexed IBS
(4)
Indexed IBS
(5)
Loans
(6)
Other investment
assets
(7)
Receivables
(8)
Gross policy
liabilities ceded
under
reinsurance
(9)
Deferred tax
assets
(10)
- L4. Individual Lump Sum Risk
- L5. Individual Disability Income Insurance
- L6. Group Lump Sum Risk
- L7. Group Disability Income Insurance
- L8. Investment Linked
- L9. Non-par Investment Policy with
Discretionary Additions
- L10. Other Non-Par Investment Policy
- L11. Annuity without Longevity Risk
- L12. Other
116
Class of business
Product group
- Australia - Ordinary business
- L1. Conventional Participating
- Australia - Superannuation business
- L2. Participating Investment Account
- Overseas - All business
- L3. Annuity with Longevity Risk
Other noninvestment
assets
(11)
Total assets
attributable to
product groups
(12)
Effective
borrowings on a
look-through
basis
(13)
Tax liabilities
(14)
Other liabilities,
apart from
borrowings and
tax liabilities
(15)
Total liabilities
attributable to
product groups
(16)
Net total of
assets backing
policy liabilities
(17)
Proportion (%)
exposed to
foreign
currencies
(18)
- L4. Individual Lump Sum Risk
- L5. Individual Disability Income Insurance
- L6. Group Lump Sum Risk
- L7. Group Disability Income Insurance
- L8. Investment Linked
- L9. Non-par Investment Policy with
Discretionary Additions
- L10. Other Non-Par Investment Policy
- L11. Annuity without Longevity Risk
- L12. Other
2. Assets allocated to support sub-groups of participating/non-participating benefits
Class of business
Product group
Sub-group
description
- Australia - Ordinary Business
- L1. Conventional Participating
- Australia - Superannuation Business
- L2. Participating Investment Account
- Overseas - All Business
- L9. Non-par Investment Policy with Discretionary Additions
Class of Business
Product group
Sub-group
description
- Australia - Ordinary Business
- L1. Conventional Participating
- Australia - Superannuation Business
- L2. Participating Investment Account
- Overseas - All Business
- L9. Non-par Investment Policy with Discretionary Additions
Cash
(1)
Investment
property
(2)
Equities
(3)
Non-indexed IBS
(4)
Deferred tax
assets
(10)
Other noninvestment
assets
(11)
Total assets
attributable to
product groups
(12)
Effective
borrowings on a
look-through
basis
(13)
Indexed IBS
(5)
Loans
(6)
Other investment
assets
(7)
Receivables
(8)
Gross policy
liabilities ceded
under
reinsurance
(9)
Tax liabilities
(14)
Other liabilities,
apart from
borrowings and
tax liabilities
(15)
Total liabilities
attributable to
product groups
(16)
Net total of
assets backing
policy liabilities
(17)
Proportion (%)
exposed to
foreign
currencies
(18)
117
2. Totals by class of business
Cash
(1)
Investment
property
(2)
Equities
(3)
Other noninvestment
assets
(11)
Total assets
attributable to
product groups
(12)
Effective
borrowings on a
look-through
basis
(13)
Non-indexed IBS
(4)
Indexed IBS
(5)
Loans
(6)
Other investment
assets
(7)
Tax liabilities
(14)
Other liabilities,
apart from
borrowings and
tax liabilities
(15)
Total liabilities
attributable to
product groups
(16)
Net total of
assets backing
policy liabilities
(17)
Receivables
(8)
Gross policy
liabilities ceded
under
reinsurance
(9)
Deferred tax
assets
(10)
2.1.1. Australian business
2.1.1.1. Ordinary business...................................................................................
2.1.1.2. Superannuation business........................................................................
2.1.1.3. Total Australian business....................................................................
2.1.2. Overseas - All business...................................................................................
2.1.3. Total statutory fund business.........................................................................
2.1.1. Australian business
2.1.1.1. Ordinary business...................................................................................
2.1.1.2. Superannuation business........................................................................
2.1.1.3. Total Australian business....................................................................
2.1.2. Overseas - All business...................................................................................
2.1.3. Total statutory fund business.........................................................................
General Reporting Instructions
This section is to be completed for each class of business, as specified in the drop-down box list:
Class of business
> Australia – Superannuation business
> Australia – Ordinary business
> Overseas – All business
The expressions ‘ordinary business’ and ‘superannuation business’ are defined in the Life Insurance Act 1995 .
Reporting basis
The values of assets reported in each asset class in this form are to be consistent with the effective positions shown in LRF 300.1. I.e. after the look-through and hedging adjustments to individual
asset categories.
118
Specific Reporting Instructions
Item
1. All statutory fund products
Column 1. Cash
1. All statutory fund products
Column 2. Investment property
1. All statutory fund products
Column 3. Equities
1. All statutory fund products
Column 4. Non-indexed IBS
1. All statutory fund products
Column 5. Indexed IBS
1. All statutory fund products
Column 6. Loans
1. All statutory fund products
Column 7. Other investment assets
1. All statutory fund products
Column 8. Receivables
1. All statutory fund products
Column 9. Gross policy liabilities ceded under reinsurance
1. All statutory fund products
Column 12. Total assets attributable to product groups
1. All statutory fund products
Column 13. Effective borrowings on a look-through basis
1. All statutory fund products
Column 14. Tax liabilities
1. All statutory fund products
Column 15. Other liabilities, apart from borrowings and tax liabilities
1. All statutory fund products
Column 16. Total liabilities attributable to product groups
Definition and Instruction
This item is as per item 1 in Instructions to LRF 300.1 and LRF 300.2 (as adjusted for look-through and hedging).
This item is as per Item 2 in Instructions to LRF 300.1 and LRF 300.2 (as adjusted for look-through and hedging). Note that the look through adjustment results in the inclusion of owner-occupied
property.
This item is as per Item 3 in Instructions to LRF 300.1 and LRF 300.2 (as adjusted for look-through and hedging).
This item is as per Item 4 in Instructions to LRF 300.1 and LRF 300.2 (as adjusted for look-through and hedging).
This item is as per Item 5 in Instructions to LRF 300.1 and LRF 300.2 (as adjusted for look-through and hedging).
This item is as per Item 7 in Instructions to LRF 300.1 and LRF 300.2 (as adjusted for look-through and hedging).
This item is as per Item 9 in Instructions to LRF 300.1 and LRF 300.2 (as adjusted for look-through and hedging).
This item is as per Item 10 in Instructions to LRF 300.1 and LRF 300.2.
This item is as per Items 11.2 and 11.6 in Instructions to LRF 300.1 and LRF 300.2.
The item is the sum of columns 1 to 11.
This item is as per item 13 in Instructions to LRF 300.1 and LRF 300.2 (as adjusted for look-through and hedging).
This item is as per items 15.1 and 15.2 in Instructions to LRF 300.1 and LRF 300.2.
This represents any other liabilities, excluding borrowings and tax liabilities.
This is the sum of columns 13 to 15.
119
1. All statutory fund products
Column 17. Net total of assets backing policy liabilities
1. All statutory fund products
Column 18. Proportion (%) exposed to foreign currencies
2. Assets allocated to support sub-groups of participating/non-participating benefits
Column 1 to 18
This is derived by netting column 12 and column 16. The result must equal total gross policy liabilities for each product group (since the value of outwards reinsurance is included as one of the
assets that back policy liabilities).
Borrowings are included as one of the categories above, to cater for the situation where investment assets exceed total policy liabilities and the asset classes are effectively ‘geared’. Tax assets
are also catered for where appropriate.
This represents the proportion (as a percentage) of the total assets in Item 19 that are exposed to unhedged currency risks associated with currencies other than AUD.
This part reports, where applicable within the fund, the assets allocated to support sub-groups of participating/non-participating policy benefits where the policy benefit is determined in reference to
the performance of the assets supporting the sub-group of benefits.
Refer to the previous part for detailed definitions (i.e. table 1 column 1 to column 18).
For each APRA product group, only report the main sub-group within the product category and provide brief description in Column 1
120
LRF_430_0 Sources of Profit
Australian Business Number
Entity identifier, to be provided
Institution Name
Life company including friendly societies
Reporting Period
As at end of financial year only
Scale Factor
Reporting Consolidation
Thousands of dollars, no decimal places
One form per statutory fund
121
1. All statutory fund products
1.1. Life Insurance Act operating profit after income tax
Components of experience profit or loss
Class of business
- Australia - Ordinary business
Product group
- F1. Education
- Australia - Superannuation business
- F2. Investment Account
- Overseas - All business
Profit allocation
Investment
earnings on
assets in excess
of policy
liabilities
(1)
Profit margins
emerging
(2)
Acquisition
expenses
(3)
Maintenance
expenses
(4)
Mortality (net of
reinsurance)
(5)
Morbidity (net of
reinsurance)
(6)
Surrender &
discontinuance
(incl. profits on
terminated
benefits)
(7)
- Policy owner
- Shareholder
- F3. Annuity & Superannuation
- F4. Defined Benefit Risk
- F5. Capital Guaranteed Defined Contribution Funeral
- F6. Investment Linked
- F7. Unallocated Benefit Fund Reserve
- F8. Members' Capital & Retained Profit
- L1. Conventional Participating
- L2. Participating Investment Account
- L3. Annuity with Longevity Risk
- L4. Individual Lump Sum Risk
- L5. Individual Disability Income
Insurance
- L6. Group Lump Sum Risk
- L7. Group Disability Income Insurance
- L8. Investment Linked
- L9. Non-par Investment Policy with Discretionary Additions
- L10. Other Non-par Investment Policy
- L11. Annuity without Longevity Risk
- L12. Other
- L13. Policy Owners’ Retained Profits
- L14. Shareholders’ Capital & Retained Profits
122
Components of experience profit or loss
Class of business
- Australia - Ordinary business
Product group
- F1. Education
- Australia - Superannuation business
- F2. Investment Account
- Overseas - All business
Profit allocation
Investment
profits from
current year
earnings
(8)
Investment
profits from
change in
assumed future
net earned rates
(9)
Tax differences
(10)
Other items
(11)
Total experience
profit or loss
(12)
- Policy owner
- Shareholder
- F3. Annuity & Superannuation
- F4. Defined Benefit Risk
- F5. Capital Guaranteed Defined Contribution Funeral
- F6. Investment Linked
- F7. Unallocated Benefit Fund Reserve
- F8. Members' Capital & Retained Profit
- L1. Conventional Participating
- L2. Participating Investment Account
- L3. Annuity with Longevity Risk
- L4. Individual Lump Sum Risk
- L5. Individual Disability Income
Insurance
- L6. Group Lump Sum Risk
- L7. Group Disability Income Insurance
- L8. Investment Linked
- L9. Non-par Investment Policy with Discretionary Additions
- L10. Other Non-par Investment Policy
- L11. Annuity without Longevity Risk
- L12. Other
- L13. Policy Owners’ Retained Profits
- L14. Shareholders’ Capital & Retained Profits
123
Class of business
- Australia - Ordinary business
Product group
- F1. Education
- Australia - Superannuation business
- F2. Investment Account
- Overseas - All business
Profit allocation
New business
losses
recognised
(13)
Loss recognition/
Total
reversal in
capitalisation of
respect of inforce loss / reversal of
Financial
business
capitalised loss instrument profit
(14)
(15)
(16)
Management
services profit
(17)
Change in
valuation
methods and
assumptions
(18)
Total Life
Insurance Act
operating profit
after income tax
(19)
Cumulative
losses carried
forward at the
end of the Year
(20)
- Policy owner
- Shareholder
- F3. Annuity & Superannuation
- F4. Defined Benefit Risk
- F5. Capital Guaranteed Defined Contribution Funeral
- F6. Investment Linked
- F7. Unallocated Benefit Fund Reserve
- F8. Members' Capital & Retained Profit
- L1. Conventional Participating
- L2. Participating Investment Account
- L3. Annuity with Longevity Risk
- L4. Individual Lump Sum Risk
- L5. Individual Disability Income
Insurance
- L6. Group Lump Sum Risk
- L7. Group Disability Income Insurance
- L8. Investment Linked
- L9. Non-par Investment Policy with Discretionary Additions
- L10. Other Non-par Investment Policy
- L11. Annuity without Longevity Risk
- L12. Other
- L13. Policy Owners’ Retained Profits
- L14. Shareholders’ Capital & Retained Profits
124
2. Totals by class of business and profit allocation
2.1. Life Insurance Act operating profit after income tax
Components of experience profit or loss
Investment
earnings on
assets in excess
of policy
liabilities
(1)
Profit margins
emerging
(2)
Acquisition
expenses
(3)
Maintenance
expenses
(4)
Mortality (net of
reinsurance)
(5)
Morbidity (net of
reinsurance)
(6)
Surrender &
discontinuance
(incl. profits on
terminated
benefits)
(7)
2.1.1. Australian business
2.1.1.1. Ordinary business
2.1.1.1.1. Policy owner...............................................................................
2.1.1.1.2. Shareholder................................................................................
2.1.1.1.3. Total Australian - Ordinary business......................................
2.1.1.2. Superannuation business
2.1.1.2.1. Policy owner...............................................................................
2.1.1.2.2. Shareholder................................................................................
2.1.1.2.3. Total Australian - Superannuation business..........................
2.1.1.3. Total Australian business
2.1.1.3.1. Policy owner...............................................................................
2.1.1.3.2. Shareholder................................................................................
2.1.1.3.3. Total Australian business........................................................
2.1.2. Overseas - All business
2.1.2.1. Policy owner..........................................................................................
2.1.2.2. Shareholder...........................................................................................
2.1.2.3. Total overseas - All business.............................................................
2.1.3. Total statutory fund business
2.1.3.1. Policy owner........................................................................................
2.1.3.2. Shareholder.........................................................................................
2.1.3.3. Total statutory fund business............................................................
125
Components of experience profit or loss
Investment
profits from
current year
earnings
(8)
Investment
profits from
change in
assumed future
net earned rates
(9)
Tax differences
(10)
Other items
(11)
Total experience
profit or loss
(12)
2.1.1. Australian business
2.1.1.1. Ordinary business
2.1.1.1.1. Policy owner...............................................................................
2.1.1.1.2. Shareholder................................................................................
2.1.1.1.3. Total Australian - Ordinary business......................................
2.1.1.2. Superannuation business
2.1.1.2.1. Policy owner...............................................................................
2.1.1.2.2. Shareholder................................................................................
2.1.1.2.3. Total Australian - Superannuation business..........................
2.1.1.3. Total Australian business
2.1.1.3.1. Policy owner...............................................................................
2.1.1.3.2. Shareholder................................................................................
2.1.1.3.3. Total Australian business........................................................
2.1.2. Overseas - All business
2.1.2.1. Policy owner..........................................................................................
2.1.2.2. Shareholder...........................................................................................
2.1.2.3. Total overseas - All business.............................................................
2.1.3. Total statutory fund business
2.1.3.1. Policy owner........................................................................................
2.1.3.2. Shareholder.........................................................................................
2.1.3.3. Total statutory fund business............................................................
126
New business
losses
recognised
(13)
Loss
Total
recognition/rever capitalisation of
sal in respect of loss / reversal of
Financial
inforce business capitalised loss instrument profit
(14)
(15)
(16)
Management
services profit
(17)
Change in
valuation
methods and
assumptions
(18)
Total Life
Insurance Act
operating profit
after income tax
(19)
Cumulative
losses carried
forward at the
end of the Year
(20)
2.1.1. Australian business
2.1.1.1. Ordinary business
2.1.1.1.1. Policy owner...............................................................................
2.1.1.1.2. Shareholder................................................................................
2.1.1.1.3. Total Australian - Ordinary business......................................
2.1.1.2. Superannuation business
2.1.1.2.1. Policy owner...............................................................................
2.1.1.2.2. Shareholder................................................................................
2.1.1.2.3. Total Australian - Superannuation business..........................
2.1.1.3. Total Australian business
2.1.1.3.1. Policy owner...............................................................................
2.1.1.3.2. Shareholder................................................................................
2.1.1.3.3. Total Australian business........................................................
2.1.2. Overseas - All business
2.1.2.1. Policy owner..........................................................................................
2.1.2.2. Shareholder...........................................................................................
2.1.2.3. Total overseas - All business.............................................................
2.1.3. Total statutory fund business
2.1.3.1. Policy owner........................................................................................
2.1.3.2. Shareholder.........................................................................................
2.1.3.3. Total statutory fund business............................................................
General Reporting Instructions
Refer to General Instruction Guide for details on the list of APRA product groups.
APRA product group
Application of items
For each APRA product group, two iterations of reporting are required to capture the breakdown of sources of profit between policy owners and
shareholders. This is controlled by the drop-down box titled profit allocation.
While these instructions apply to all life insurance companies, including friendly societies, not all items may be applicable to both: some items may not be
applicable to friendly societies while others may not be applicable to life insurers.
This section is to be completed for each class of business, as specified in the drop-down box list.
Classes of business
> Australia – Superannuation business
> Australia – Ordinary business
> Overseas – All business
The expressions ‘ordinary business’ and ‘superannuation business’ are defined in the Life Insurance Act 1995 .
127
Specific Reporting Instructions
Column
1.1. Life Insurance Act operating profit after income tax
Definition and Instruction
While there is no specific data to be entered directly against this major heading, it introduces the basis of profit for this form as operating profit which is
specifically defined in the Life Insurance Act 1995 – refer Division 5 of Part 4 (Sections 56-60) for life insurers other than friendly societies. A simpler
regime, which is still catered for in this return, applies to a friendly society.
The quantum of total profit for the period, for which the sources listed in this form are required to be reported, is determined in LRF 340.1 Retained
Profits (SF and SF Eliminations), at Item 2.6.
1.1. Life Insurance Act operating profit after income tax
Column 1 Investment earnings on assets in excess of policy liabilities
1.1. Life Insurance Act operating profit after income tax
Column 2 Profit margins emerging
1.1. Life Insurance Act operating profit after income tax
Columns 3 – 12 Components of Experience Profit or Loss
1.1. Life Insurance Act operating profit after income tax
Assets in excess of policy liabilities are intended to be accommodated in APRA product groups L13 (Policy Owners’ Retained Profits) and L14
(Shareholders’ Capital & Retained Profits) for life insurers; and F7 (Unallocated Benefit Fund Reserves) and F8 (Members’ Capital & Retained Profits) for
friendly societies. Include investment revenue of these groups for the period; earnings are to be reported net of relevant investment expenses.
This is profit arising in the period from applying the profit margin(s) determined at the beginning of the period to the expected value of the profit carrier(s)
on the basis of best estimate assumptions at the beginning of the period.
The total experience profit or loss is the profit or loss arising in the period from differences between the actual experience during the period and the
expected experience on the basis of the best estimate assumptions at the beginning of the period.
The total experience profit or loss is to be broken down into the components arising in respect of applicable categories from the following items.
The fixed and variable expenses of the company to the extent they are, either directly or indirectly, referable to those activities of the company related to
the acquiring of that new business expected to derive from the expenditure.
Column 3 Acquisition expenses
Include any profit arising from a situation where establishment fee revenue is greater than acquisition expenses, and the surplus is not required to
support future expense.
1.1. Life Insurance Act operating profit after income tax
The fixed and variable expenses of the company to the extent they are, either directly or indirectly, referable to those activities of the company related to
the administration of (a) policies subsequent to their sale, including policies subject to claim; and (b) the general operations, including maintenance of the
overall health of the company.
Column 4 Maintenance expenses
1.1. Life Insurance Act operating profit after income tax
Column 5 Mortality (net of reinsurance)
1.1. Life Insurance Act operating profit after income tax
Column 6 Morbidity (net of reinsurance)
1.1. Life Insurance Act operating profit after income tax
Column 7 Surrender & discontinuances
1.1. Life Insurance Act operating profit after income tax
Column 9 Investment profits from change in assumed future net earned rates
1.1. Life Insurance Act operating profit after income tax
Column 11 Other items
1.1. Life Insurance Act operating profit after income tax
Column 12 Total Experience Profits or Loss
1.1. Life Insurance Act operating profit after income tax
Column 13 New business losses recognised
1.1. Life Insurance Act operating profit after income tax
Column 14 Loss recognition/reversal in respect of in force business
This is to be reported net of reinsurance.
This is to be reported net of reinsurance.
Include profits (or losses) on terminated benefits.
Include profits (or losses) due to asset liability mismatch.
Include other components of experience profit or loss not specifically categorised above.
The number entered should equal the sum of all experience profit items listed above (columns 3 to 11).
This column arises in respect of business written at a loss which is not otherwise absorbed in profit margins for existing in force business. Losses should
be entered as negative numbers.
Include (as a positive number) any new business profits that have been used to offset in force business losses. In such circumstances, the gross in-force
loss is to be reported in Column 14.
This column arises from changes in assumptions which eliminate (or reinstate) the value of profit margins in respect of in force business.
Include (as a positive number) any in force business profits that have been used to offset new business losses. In such circumstances, the gross new
business loss is to be reported in Column 13.
128
1.1. Life Insurance Act operating profit after income tax
Column 15 Total capitalisation of loss / reversal of capitalised loss
1.1. Life Insurance Act operating profit after income tax
Column 16 Financial instrument profit
1.1. Life Insurance Act operating profit after income tax
Column 17 Management services profit
1.1. Life Insurance Act operating profit after income tax
Column 18 Change in valuation methods and assumptions
1.1. Life Insurance Act operating profit after income tax
Column 19 Total Life Insurance Act operating profit after income tax
1.1. Life Insurance Act operating profit after income tax
Column 20 Cumulative losses carried forward at the end of the Year
This column is calculated automatically by the form, as sum of columns 13 and 14.
Financial instrument profit is determined as the sum of all cash flows relating to the financial instrument element of life investment contracts, including
investment earnings on the underlying assets, less the change in the value of the life investment contract liability (i.e. the financial instrument liability).
Essentially, any profit arising from changes in fair values of financial instruments that are not matched by changes in fair values of the underlying assets.
Management services profit is determined as the sum of all cash flows relating to the management service element of life investment contracts,
plus/(less) the change in the value of any asset/(liability) arising in respect of the management services element. Essentially fees less expenses for that
component of the business, where fees include changes in deferred fee revenue and expenses include changes in deferred acquisition costs.
Include one-off changes in the amortisation of deferred fee revenue and deferred acquisition costs
The number entered should equal the sum of all profit items above.
This item is recorded for keeping track of total amounts of losses recognised and not reversed. Losses should be entered as negative numbers.
129