Document ID: chunk:federal_register_of_legislation:F2023L00671:body:0:p3
Version: federal_register_of_legislation:F2023L00671
Segment Type: other
Provision Reference: 
Character Range: 5777–8797

or relationships that exist between counterparties, that in the regulated institution's assessment, constitute exposure to the counterparties as a single risk.

8.             In respect of any overseas entities within a Level 2 insurance group carrying on international business, identification of asset or counterparty exposures is to be carried out on a best endeavours basis using information held by entities within the Level 2 insurance group, or otherwise publicly available information, in a manner consistent with the group's documented risk management policies.
9.             For the purposes of the limits in respect of non-reinsurance exposures in Attachment A, exposures are classified depending on whether or not the counterparty is APRA-regulated or part of an APRA-regulated group. A counterparty meets this requirement if the specific counterparty or its ultimate parent is:
       (a)          authorised by APRA under the Act as a general insurer or authorised NOHC; or

       (b)          authorised by APRA under the Banking Act 1959 as an authorised deposit-taking institution (ADI) or authorised NOHC of an ADI; or

       (c)          registered by APRA under the Life Insurance Act 1995 as a life company or authorised NOHC of a life company.

10.         For the purposes of the limits in Table 2(c) of Attachment A, exposures are classified as either short-term or long-term. 'Short-term' means a residual maturity of less than or equal to one year. 'Long-term' means perpetual or a residual maturity of greater than one year.

Asset Concentration Risk Charge principles
11.         This Prudential Standard sets out the method for calculating the Asset Concentration Risk Charge for a regulated institution using the Standard Method to determine its prescribed capital amount.
12.         The Asset Concentration Risk Charge relates to the risk of a regulated institution's concentrations in exposures to a particular asset, counterparty or group of related counterparties resulting in adverse movements in the regulated institution's capital base.
13.         For the purposes of the Asset Concentration Risk Charge, exposures include all on- and off-balance sheet exposures of the regulated institution. On-balance sheet exposures of the institution should be net of any regulatory adjustments expressly related to the item that are required under Prudential Standard GPS 112 Capital Adequacy: Measurement of Capital.
14.         All exposures should be converted to Australian dollars (AUD) as at the reporting date.
15.         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 GPS 114 Capital Adequacy: Asset Risk Charge. The portion of any exposure which is not subject to the Asset Concentration Risk Charge must be subject to the Asset Risk Charge.
16.         If a look-through basis has been used for assets under GPS 114, the same look-through basis must be used