Document ID: chunk:federal_register_of_legislation:F2023L00678:body:0:p11
Version: federal_register_of_legislation:F2023L00678
Segment Type: other
Provision Reference: 
Character Range: 29623–32747

potential quantum of any potential risks to policyholders, are reflected in the application for approval and the proposed accounting and disclosure arrangements;

       (d)          there will be no adverse effect on the insurer's balance sheet and capital position in any one period or over the entire term of the arrangement;

       (e)          the insurer has reviewed the effect of the arrangement within the context of its overall risk management and control systems; and

       (f)           the arrangement will not adversely affect the interests of policyholders.

    8.             For applications which are approved, APRA will consider the nature and purpose of the arrangement and deem the arrangement to be either reinsurance or financing (as appropriate) for the purposes of:

       (a)          the calculation of the insurer's prescribed capital amount; and
       (b)          reporting under reporting standards made under the Financial Sector (Collection of Data) Act 2011.
   APRA approvals of Limited Risk Transfer Arrangements will always be made in writing.

Attachment B – Level 2 insurance Groups
     1. This Attachment applies adjustments to the requirements outlined in this Prudential Standard for Level 2 insurance groups.

Reinsurance Management Strategy
    2.             A Level 2 insurance group must ensure that its ReMS covers its international business.

Reinsurance Arrangements Statement
3.             APRA may vary the requirements of paragraph 31 of this Prudential Standard in relation to a Level 2 insurance group Reinsurance Statement. A Level 2 insurance group's application for this variation must be made by the parent entity and set out how the proposed content of the Reinsurance Statement (as varied) will provide substantiation of the Level 2 insurance group's ReMS. In deciding whether to vary the requirements of paragraph 31, APRA must have regard to the matters stated in the application and any other relevant considerations.

Documentation of Reinsurance Arrangements
    4.             The requirement for documentation of reinsurance arrangements in paragraphs 32 to 35 of this Prudential Standard does not apply to the international business of a Level 2 insurance group.

Reinsurance declaration
    5.             The requirement to undertake a reinsurance declaration, as set out in paragraphs 36 to 40 of this Prudential Standard, does not apply to Level 2 insurance groups.

Limited Risk Transfer Arrangements
    6.             A Level 2 insurance group is not required to submit to APRA, for approval, any Limited Risk Transfer Arrangement proposed to be entered into by any entity in the Level 2 insurance group that is not an insurer. However, a Level 2 insurance group must provide details to APRA of the effect of any Limited Risk Transfer Arrangement entered into by any entities that are not insurers.

   [1]  References to 'reinsurance' throughout this Prudential Standard include 'retrocession'.
[2]  Regulated institutions must satisfy this requirement even where their strategy is to not purchase            a particular type