Document ID: chunk:federal_register_of_legislation:F2023L00673:body:0:p5
Version: federal_register_of_legislation:F2023L00673
Segment Type: other
Provision Reference: 
Character Range: 10796–13782

previous ICAAP report;
(d)          detail and outcomes of stress testing and scenario analysis used in undertaking the ICAAP;
(e)          a breakdown of capital usage over the planning horizon, as relevant, by material:
           (i)            business activity;
           (ii)         geographic spread of exposures; and
(i)            risk types;
(f)           an assessment of anticipated changes in the life company's risk profile or capital management processes over the planning horizon;
(g)          details of any review of the ICAAP since the previous ICAAP report, including any recommendations for change and how those recommendations have been, or are being, addressed; and
(h)          references to supporting documentation and analysis as relevant.
18.         The ICAAP report submitted to APRA by the life company must be accompanied by a declaration approved by the Board and signed by the CEO stating whether:
       (a)          capital management has been undertaken by the life company in accordance with the ICAAP over the period and, if not, a description of, and explanation for, deviations;
       (b)          the life company has assessed the capital targets contained in its ICAAP to be adequate given the size, business mix and complexity of its operations; and
       (c)          the information included in the ICAAP report is accurate in all material respects.

Capital base
19.         In assessing the adequacy of a fund's or a life company's capital base, attention must be paid not only to the risks it is likely to face, but also the quality of the support provided by various forms of capital. In assessing the quality of support provided by a particular form of capital, regard must be had to the extent to which it:
       (a)          provides a permanent and unrestricted commitment of funds;
       (b)          is freely available to absorb losses;
       (c)          does not impose any unavoidable servicing charges against earnings; and
       (d)          ranks behind the claims of policy owners and creditors in the event of the winding-up of the life company.
20.         Not all forms of capital meet these criteria equally. Due to the need to ensure that the capital base of a life company provides adequate support for its activities, APRA imposes some restrictions on the composition of the capital base. The forms of capital deemed eligible for inclusion in the capital base, and the conditions as to their inclusion, are specified in Prudential Standard LPS 112 Capital Adequacy: Measurement of Capital (LPS 112). LPS 112 defines the different categories and components of the capital base and the restrictions on the quality of the capital that is used to meet the required level of capital for regulatory purposes.
21.         A fund or life company's balance sheet may contain certain assets (such as deferred tax assets, goodwill and other intangibles) that are acceptable from an accounting perspective. However, for