Document ID: chunk:federal_register_of_legislation:F2023L00673:body:0:p3
Version: federal_register_of_legislation:F2023L00673
Segment Type: other
Provision Reference: 
Character Range: 5460–8410

obligations under a wide range of circumstances.

Internal Capital Adequacy Assessment Process
10.         A life company must have in place an Internal Capital Adequacy Assessment Process (ICAAP) that considers each fund of the life company, as well as the life company as a whole. The ICAAP must:
(a)          be adequately documented, with the documentation made available to APRA on request; and
(b)          be approved by the Board initially, and when significant changes are made.
11.         A life company's ICAAP must be appropriate to the life company's size, business mix and the complexity of its operations.
12.         A life company that is part of a group may rely on the ICAAP of the group provided that the Board of the life company is satisfied that the group ICAAP meets the criteria in paragraph 13 in respect of the life company.
13.         The ICAAP must include at a minimum:
(a)          adequate policies, procedures, systems, controls and personnel to identify, measure, monitor and manage the risks arising from the life company's activities on a continuous basis, and the capital held against such risks;
(b)          a strategy for ensuring adequate capital is maintained over time, including specific capital targets set in the context of the life company's risk profile, the Board's risk appetite and regulatory capital requirements. This includes plans for how target levels of capital are to be met and the means available for sourcing additional capital where required;
(c)          actions and procedures for monitoring the life company's compliance with its regulatory capital requirements and capital targets. This includes the setting of triggers to alert management to, and specified actions to avert and rectify, potential breaches of the regulatory capital requirements;
(d)          stress testing and scenario analysis relating to potential risk exposures and available capital resources;
(e)          processes for reporting on the ICAAP and its outcomes to the Board and senior management of the life company, and for ensuring that the ICAAP is taken into account in making business decisions;
(f)           policies to address the capital impact of material risks not covered by explicit regulatory capital requirements; and
(g)          an 'ICAAP summary statement' as defined in paragraph 14.
14.         The ICAAP summary statement is a high level document that describes and summarises the capital assessment and management processes of the life company. It must outline at a minimum the aspects of the ICAAP listed in paragraphs 13(a) to 13(f) and this paragraph. The ICAAP summary statement must also include:
(a)          a statement of the objectives of the ICAAP, the expected level of financial soundness associated with the capital targets and the time horizon over which the ICAAP applies;
(b)          a description of the key assumptions and methodologies utilised by the life company in