Document ID: chunk:federal_register_of_legislation:F2023L00738:body:0:p2
Version: federal_register_of_legislation:F2023L00738
Segment Type: other
Provision Reference: 
Character Range: 2924–5884

to each of its health benefits funds and its general fund, unless otherwise noted. The term 'private health insurer' refers to the private health insurer as a whole. The term 'fund' refers to each health benefits fund and the general fund, unless otherwise noted.
4.             This Prudential Standard applies to private health insurers from 1 July 2023.

Interpretation
5.             Terms that are defined in Prudential Standard HPS 001 Definitions appear in bold the first time they are used in this Prudential Standard.
6.             For the purposes of this Prudential Standard:
(a)          'Eligible Collateral Items' are cash, government securities or debt obligations (i.e. loans, deposits, placements, interest rate securities and other receivables) where the counterparty has a counterparty grade of 1, 2 or 3 as defined in Attachment A of HPS 001;
(b)          'non-reinsurance exposures' are the on- and off-balance sheet exposures of a fund other than exposures to a reinsurer;
(c)          'reinsurance exposures' are the on- and off- balance sheet exposures of a fund to reinsurance assets; and
(d)          'residual maturity' is the remaining time until the expiration or the repayment of a financial instrument.
7.             Where this Prudential Standard provides for APRA to exercise a power or discretion, this power or discretion is to be exercised in writing.

Asset Concentration Risk Charge
8.             This Prudential Standard sets out the method for calculating the Asset Concentration Risk Charge for each fund of a private health insurer. The Asset Concentration Risk Charge relates to the risk of a fund's concentrations in exposures to a particular asset, counterparty or group of related counterparties resulting in adverse movements in the fund's capital base.
9.             For the purposes of the Asset Concentration Risk Charge, exposures include all on- and off-balance sheet exposures of each fund within the private health insurer. On-balance sheet exposures of each fund should be net of any regulatory adjustments expressly related to the items that are required under Prudential Standard HPS 112 Capital Adequacy: Measurement of Capital.
10.         All exposures should be converted to Australian dollars (AUD) as at the reporting date.
11.         The portion of any exposure which is subject to the Asset Concentration Risk Charge must not be subject to the Asset Risk Charge as defined in Prudential Standard HPS 114 Capital Adequacy: Asset Risk Charge (HPS 114). The portion of any exposure which is not subject to the Asset Concentration Risk Charge must be subject to the Asset Risk Charge.
12.         If a look-through basis has been used for assets under HPS 114, the same look-through basis must be used for the purposes of this Prudential Standard.

Definitions
13.         Two or more counterparties will form a 'group of related counterparties' if they are linked by:
       (a)          cross